June 21, 2004 (Computerworld) --
Bermuda-based IT services vendor Accenture Ltd. is taking heat from Illinois lawmakers who want to prevent the company from receiving taxpayer-funded contracts. At issue is the offshore location of Accenture's headquarters. At least four contracts awarded to Accenture have come under fire in the state, where legislators, local unions and the state's comptroller have attempted in recent weeks to block all payments to the company. State Comptroller Dan Hynes has asked the Illinois Procurement Policy Board for guidance on his desire to block all payments on four Accenture contracts totaling more than $2 million. The five-member board voted 3-2 on May 19 to send the issue to the board's legal adviser for review before making a recommendation. There is no word on when the board will make its decision. However, Alan Henry, a spokesman for Hynes, said the comptroller believes that "he's in the right" on the issue and that the policy board doesn't have the power to force him to make payments to Accenture. 'Unpatriotic' Contracts In a written statement, Hynes characterized Accenture as an "expatriate" company that moved offshore to avoid paying taxes. He also said awarding contracts to such companies is "unfair and unpatriotic." James McAvoy, a spokesman for Accenture, said the company "did not undertake a corporate inversion" by moving its headquarters from the U.S. to Bermuda to avoid taxes. "Accenture has never been a U.S.-operated organization," he said. McAvoy added that Accenture pays taxes in Illinois and is a taxpayer in good standing. "We pay and have always been subject to U.S. taxes," he said, noting that the company's tax rate for fiscal 2004 is expected to be 34.8%. But that's not enough for several unions, including the Communications Workers of America Local 4250 and the University Professionals of Illinois Local 4100, both of which are based in Chicago. The unions are urging Procurement Policy Board Chairman Terrence Healy to support a ban on contracting with companies that move their headquarters offshore in an attempt to avoid paying state and federal taxes.
Taking Action "I do not think that the state of Illinois should be doing business with a company that is based offshore and that would likely send jobs offshore," said Sue Kaufman, president of UPI Local 4100. Kaufman added that tax breaks for companies like Accenture enable them to outbid their U.S. competitors for contracts. Hynes drafted a bill, introduced on his behalf by state lawmakers in the Illinois House and Senate, that would block contracts to all so-called expatriate companies. The bill, which passed the House in February by a vote of 113-0, also closes a loophole in the Illinois tax code
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