[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8146]


[[Page Unknown]]

[Federal Register: April 6, 1994]



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 48 CFR Part 31

[FAR Case 92-604]

 

Federal Acquisition Regulation; Nonallowability of Excise Taxes 
on Nondeductible Contributions To Deferred Compensation Plans

agencies: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

action: Proposed rule.

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summary: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to revise the cost 
principle concerning taxes. This regulatory action was not subject to 
Office of Management and Budget review pursuant to Executive Order 
12866, dated September 30, 1993.

dates: Comments should be submitted on or before June 6, 1994 to be 
considered in the formulation of a final rule.

addresses: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (VRS), 18th & F 
Streets, NW, room 4037, Washington, DC 20405.
    Please cite FAR case 92-604 in all correspondence related to this 
case.

for further information contact: Jeremy F. Olson at (202) 501-3221 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite Far case 92-604.

SUPPLEMENTARY INFORMATION:

A. Background

    Under the current FAR 31.205-41(b)(6), excise taxes on accumulated 
funding deficiencies or prohibited transactions involving employee 
deferred compensation plans pursuant to sections 4971 and 4975 of the 
Internal Revenue Code of 1954, as amended, are unallowable. This 
reflects a long-standing Government policy that punitive-type excise 
taxes are not reimbursable costs on Government contracts. Over the 
years, subsequent legislation has added several new excise taxes to 
subtitle D, chapter 43 of the Internal Revenue Service Code such that 
the Code currently lists 13 such taxes. The Councils have agreed that 
it is appropriate to revise FAR 31.205-41(b)(6) to insert a general 
prohibition on all excise taxes found at subtitle D, chapter 43 of the 
Internal Revenue Service Code. Such a general prohibition will ensure 
that future legislative changes to subtitle D, chapter 43 of the 
Internal Revenue Service Code will be automatically reflected in the 
cost principle.

B. Regulatory Flexibility Act

    The proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because most 
contracts awarded to small entities are awarded on a competitive, 
fixed-price basis and the cost principles do not apply. An analysis of 
data available for fiscal years 1989 through 1991 reveals that, in the 
Department of Defense, the number of contract actions awarded to small 
businesses which required the submission of cost or pricing data 
averaged less than 1 percent of the total number of small business 
actions during the three-year period. An Initial Regulatory Flexibility 
Analysis has, therefore, not been performed. Comments from small 
entities concerning the affected FAR subpart will be considered in 
accordance with section 610 of the Act. Such comments must be submitted 
separately and should cite 5 U.S.C. 601, et seq. (FAR case 92-604), in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose recordkeeping or information 
collection requirements, or collections of information from offerors, 
contractors, or members of the public which require the approval of the 
Office of Management and Budget under 44 U.S.C. 3501, et seq. 

List of Subjects in 48 CFR Part 31

    Government procurement.

    Dated: March 28, 1994.
Albert A. Vicchiolla,
Director, Office of Federal Acquisition Policy.

    Therefore, it is proposed that 48 CFR part 31 be amended as set 
forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

    2. Section 31.205-41 is amended by revising paragraph (b)(6) to 
read as follows:


31.205-41  Taxes.

* * * * *
    (b) * * *
    (6) Any excise tax in subtitle D, chapter 43 of the Internal 
Revenue Code of 1986, as amended. That chapter includes excise taxes 
imposed in connection with qualified pension plans, welfare plans, 
deferred compensation plans, or other similar types of plans.
* * * * *
[FR Doc. 94-8146 Filed 4-5-94; 8:45 am]
BILLING CODE 6820-34-M