Security firm challenged on whether guards are contractors or employees for tax purposes

A congressional leader is looking into Blackwater Worldwide's practice of paying its guards as independent contractors and not withholding taxes, the Wall Street Journal reported today.

Rep. Henry Waxman (D-Calif.), chair of the House Oversight and Government Reform Committee, wrote in an Oct. 22 letter to Blackwater that he believes the company "may have avoided paying millions of dollars in Social Security, Medicare, unemployment, and related taxes for which it is legally responsible," according to the Journal.

Blackwater, which provides security for the U.S. government in Iraq and elsewhere, said its tax policy follows the law.