[Federal Register Volume 67, Number 107 (Tuesday, June 4, 2002)]
[Proposed Rules]
[Pages 38552-38553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13867]



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Part II





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Parts 29 and 52



Federal Acquisition Regulation; Federal, State, and Local Taxes; 
Proposed Rule

  Federal Register / Vol. 67 , No. 107 / Tuesday, June 4, 2002 / 
Proposed Rules  

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 29 and 52

[FAR Case 2000-016]
RIN 9000-AJ39


Federal Acquisition Regulation; Federal, State, and Local Taxes

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 (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to clarify the prescriptions for 
use of clauses relating to Federal, State, and local taxes. In 
addition, the rule deletes the clause regarding taxes-contracts 
performed in U.S. possessions or Puerto Rico, and updates and moves the 
definitions of ``local taxes''.

DATES: Interested parties should submit comments in writing on or 
before August 5, 2002 to be considered in the formulation of a final 
rule.

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVP), 1800 F Street, NW., Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to: [email protected].
    Please submit comments only and cite FAR case 2000-016 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Jeremy Olson, at (202) 501-3221. Please cite FAR 
case 2000-016.

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule amends the FAR to clarify the prescriptions at 
FAR 29.401 for use of FAR clauses 52.229-3, Federal, State, and Local 
Taxes; 52.229-4, Federal, State, and Local Taxes (Noncompetitive 
Contract); and 52.229-5, Taxes-Contracts Performed in U.S. Possessions 
or Puerto Rico. The contracting officer is directed to insert the 
clause at 52.229-3, Federal, State, and Local Taxes, in fixed-price 
contracts exceeding the simplified acquisition threshold. However, for 
noncompetitive fixed-price contracts the contracting officer may 
instead insert the clause 52.229-4, Federal, State, and Local Taxes 
(State and Local Adjustments) if the contracting officer determines 
that the contract price would otherwise include an inappropriate amount 
in anticipation of potential postaward change in state or local taxes. 
In addition, the rule renames the clause at 52.229-4, deletes the 
clause at 52.229-5, moves the definition of ``local taxes'' from the 
clause at FAR 52.229-5 to the clauses at 52.229-3 and 52.229-4, and 
updates the definition by adding U.S. territories and the Commonwealth 
of the Northern Mariana Islands, which are no longer considered 
possessions of the United States.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Councils do not expect this proposed rule 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 the amendments clarify the intent of current policies and 
clauses. An Initial Regulatory Flexibility Analysis has, therefore, not 
been performed. We invite comments from small businesses and other 
interested parties. The Councils will consider comments from small 
entities concerning the affected FAR Parts 29 and 52 in accordance with 
5 U.S.C. 610. Interested parties must submit such comments separately 
and should cite 5 U.S.C. 601, et seq. (FAR case 2000-016), in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose information collection requirements 
that require the approval of the Office of Management and Budget under 
44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 29 and 52

    Government procurement.

    Dated: May 28, 2002.
Al Matera,
Director, Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 29 and 
52 as set forth below:
    1. The authority citation for 48 CFR parts 29 and 52 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).

PART 29--TAXES

    2. In section 29.305, revise paragraph (b)(1) to read as follows:


29.305  State and local tax exemptions.

* * * * *
    (b)  * * *
    (1) Under a contract containing the clause at 52.229-3, Federal, 
State, and Local Taxes, or at 52.229-4 Federal, State, and Local Taxes 
(State and Local Adjustments), in accordance with the terms of those 
clauses.
* * * * *
    3. Revise the heading and text of section 29.401-3 to read as 
follows:


29.401-3  Federal, State, and local taxes.

    (a) Except as provided in paragraph (b) of this section, insert the 
clause at 52.229-3, Federal, State, and Local Taxes, in solicitations 
and contracts if-
    (1) The contract is to be performed wholly or partly within the 
United States, its possessions or territories, Puerto Rico, or the 
Northern Mariana Islands;
    (2) A fixed-price contract is contemplated; and
    (3) The contract is expected to exceed the simplified acquisition 
threshold.
    (b) In a noncompetitive contract that meets all the conditions in 
paragraph (a) of this section, the contracting officer may insert the 
clause at 52.229-4, Federal, State, and Local Taxes (State and Local 
Adjustments), instead of the clause at 52.229-3, if the price would 
otherwise include an inappropriate amount in anticipation of potential 
postaward change(s) in State or local taxes.


29.401-4 and 29.401-5   [Removed]


29.401-6  [Redesignated as 29.401-4]

    4. Remove sections 29.401-4 and 29.401-5, and redesignate section 
29.401-6 as 29.401-4.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    5. Amend section 52.229-3 as follows:
    a. Revise the date of the clause;
    b. Remove the paragraph designation (a) and add a new paragraph 
(a); and

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    c. In the newly designated paragraph (a) amend the definitions 
``Contract date'', ``All applicable Federal, State, and local taxes and 
duties'', ``After-imposed Federal tax'', and ``After-relieved Federal 
tax'' by removing ``, as used in this clause,'' and placing these 
definitions in alphabetical order; and adding, in alphabetical order, 
the definition ``Local taxes''.
    The revised and added text read as follows:


52.229-3  Federal, State, and Local Taxes.

* * * * *
Federal, State, and Local Taxes (Date)
    (a) As used in this clause--
* * * * *
    Local taxes includes taxes imposed by a possession or territory of 
the United States, Puerto Rico, or the Northern Mariana Islands, if the 
contract is performed wholly or partly in any of those areas.
* * * * *
    6. Amend section 52.229-4 as follows:
    a. Revise the section and clause headings, and the introductory 
paragraph;
    b. Remove the designation for paragraph (a) and add a newly 
designated paragraph (a);
    c. In the newly designated paragraph (a) amend the definitions 
``Contract date'', ``All applicable Federal, State, and local taxes and 
duties'', ``After-imposed Federal tax'', and ``After-relieved Federal 
tax'' by removing ``as used in this clause,'' and placing the 
definitions in alphabetical order; and adding, in alphabetical order, 
the definition ``Local taxes''.
    The revised and added text read as follows:


52.229-4  Federal, State, and Local Taxes (State and Local 
Adjustments).

    As prescribed in 29.401-3, insert the following clause:
Federal, State, and Local Taxes (State and Local Adjustments) (Date)
    (a) As used in this clause--
* * * * *
    Local taxes includes taxes imposed by a possession or territory of 
the United States, Puerto Rico, or the Northern Mariana Islands, if the 
contract is performed wholly or partly in any of those areas.
* * * * *


52.229-5  [Removed and reserved]

    7. Remove and reserve section 52.229-5.
    8. Amend section 52.229-10 by removing from the introductory text 
``29.401-6(b)'' and adding ``29.401-4(b)'' in its place; by revising 
the date of the clause; and by removing from paragraph (h) ``29.401-
6(b)(1)'' and adding ``29.401-4(b)(1)'' in its place.


52.229-10  State of New Mexico Gross Receipts and Compensating Tax.

* * * * *
State of New Mexico Gross Receipts and Compensating Tax (Date)
* * * * *

[FR Doc. 02-13867 Filed 6-3-02; 8:45 am]
BILLING CODE 6820-EP-P