A defense contractor is a business that provides the military or intelligence community with either products or services. These military contractors provide products like aircraft, ships, weaponry, and electronics, or services like technical support, training, communications support, or logistics.

Working for a Defense Contractor

There are a lot of benefits to working for a defense installation. Contractors who have a security clearance (a necessary aspect for those who work with the secure information of military contracts) are often paid substantially more than what their counterparts working directly for the government earn. Many defense installation employees are drawn in by the prospect of doing important work, or by working with state-of-the-art technology.

Unfortunately, there may be some serious drawbacks to working for defense contractors—drawbacks that can even affect their taxes.

Defense Contractor Employee Tax Problems

There are three major tax-related issues that employees of U.S. defense contractors or installations may face that could have a significant effect on the taxes they pay.

• Defense contractors or the IRS may have falsely told employees that they are not allowed to take the Foreign Earned Income Exclusion (FEIE) on their income taxes. However, tax law experts say there is nothing legally preventing these employees from taking the FEIE, which would save them a good chunk of money.
• Employers may even have coerced or compelled their employees into signing a Closing Agreement, a Consent to Disclose, or another form in order to take away their right to shield their tax information from their employer.
• The IRS may also be involved in this attempt to prevent employees from claiming the FEIE, colluding with defense contractors by illegally sharing information about employees.

Using these methods, a defense contractor may be actively working to prevent employees from claiming the FEIE on their taxes and therefore unnecessarily overpaying taxes.

Current or former employees at the Pine Gap U.S. military installation in Australia may be particularly affected by these tax-related issues. Pine Gap employees were allegedly coerced into signing Closing Agreements in an attempt by their employer to take away their ability to claim the FEIE on their taxes. Because employees claim that they only signed these agreements under duress or facing threats, these documents may not be considered valid.

Filing a Defense Contractor Lawsuit

Employees of defense contractor companies—including AECOM, Boeing, E&M Technologies, General Dynamics, IBM, Northrop Grumman, and more who work with U.S. military bases or similar facilities overseas—may face a number of tax-related problems that could result in a significant overpayment on their taxes. These issues include being falsely told they cannot take the FEIE on their taxes, compelled to sign a Consent to Disclose form, or subjected to IRS collusion with their employer to ensure they did not claim the FEIE.

If you are a current or former employee of a defense contractor or installation like Pine Gap and have experienced any of these tax issues, you may have been forced to pay more on your taxes than necessary. Experienced tax attorneys connected with Top Class Actions can help you.

This article is not legal advice. It is presented
for informational purposes only.