Tax Debt Superior to Claim of Surety

B-187903: Dec 21, 1976

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The Army Corps of Engineers requested an advance decision with regard to the propriety of paying the balance due on a contract with a private firm to the Internal Revenue Service. The right of the United States to collect the tax indebtedness of the contractor by offsetting an obligation against the balance due under a government contract is superior to the claim of the payment bond surety by the contractor.