Blackwater Walks the Line

Government Reform and Oversight Committee Chairman Henry Waxman called for a federal probe yesterday into Blackwater Worldwide, alleging that the private security contractor violated tax and labor law by erroneously classifying its guards as independent contractors instead of  employees. Waxman alleges that Blackwater has evaded up to $50 Million in federal taxes by classifying these workers as Independent Contractors. Blackwater has denied wrongdoing, pointing out the Small Business Administration does not consider the firm’s guards to be employees under its definitions.

Waxman has been quoted as stating that,  “The SBA doesn’t determine the tax status for Blackwater or any other taxpayer. It’s a question for the IRS and, in this case, common sense. The IRS and common sense both tell us Blackwater shouldn’t evade its responsibilities by wrongly designating their employees as independent contractors.” 

More interesting is Blackwater's defense to last year's shootings in Baghdad that the company has kept tight control on its guards and even fired 122 of them. This claim does not help to support Blackwater argument that the guards were operating as Independent Contractors.