[Federal Register Volume 68, Number 52 (Tuesday, March 18, 2003)]
[Rules and Regulations]
[Pages 13204-13205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6374]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 29 and 52

[FAC 2001-13; FAR Case 2000-016; Item III]
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: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending 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 at FAR 52.229-5, 
Taxes--Contracts Performed in U.S. Possessions or Puerto Rico, and 
updates and moves the definition of ``local taxes.''

DATES: Effective Date: April 17, 2003.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Mr. Ralph De Stefano, Procurement Analyst, at (202) 
501-1758. Please cite FAC 2001-13, FAR case 2000-016.

SUPPLEMENTARY INFORMATION:

A. Background

    This final 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 (State and Local 
Adjustments). In addition, the rule deletes the clause at 52.229-5, 
Taxes--Contracts Performed in U.S. Possessions or Puerto Rico, and 
moves the definition of ``local taxes'' from the clause at 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.
    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 67 FR 38552, June 4, 2002. Two sources

[[Page 13205]]

submitted comments in response to the proposed rule. The first 
respondent recommended adding the word ``contingency'' in 29.401-3(b) 
for clarity. The Councils adopted the intent of the respondent's 
recommendation for paragraph (b) for clarity and consistency with the 
clause language at 52.229-4(c). Another commenter recommended that the 
FAR be further amended to address payment of property tax on equipment 
rented or leased by the Government. That comment was outside the scope 
of the case and no action was taken.
    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 Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 rule merely 
clarifies existing language.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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: March 12, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.

    Therefore, DoD, GSA, and NASA amend 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 contingency for 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. Revise paragraph (a) introductory text; and
    c. In 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 add, 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 (April 2003)

    (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.
* * * * *
(End of clause)


    6. Amend section 52.229-4 as follows:
    (a) Revise the section and clause headings; and the introductory 
paragraph;
    (b) Revise paragraph (a) introductory text;
    (c) In paragraph (a), place the definitions ``Contract date'', 
``All applicable Federal, State, and local taxes and duties'', ``After-
imposed tax'', ``After-relieved tax'', and ``Excepted tax'' in 
alphabetical order and amend by removing ``, as used in this clause;'' 
and add, 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) (April 
2003)

    (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 as follows: a. Amend the introductory 
text by removing ``29.401-6(b)'' and adding ``29.401-4(b)'' in its 
place; b. Revise the date of the clause; and c. Amend paragraph (h) by 
removing ``29.401-6(b)(1)'' and adding ``29.401-4(b)(1)'' in its place.
    The revised text reads as follows:


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

* * * * *

State of New Mexico Gross Receipts and Compensating Tax (April 2003)

* * * * *
[FR Doc. 03-6374 Filed 3-17-03; 8:45 am]
BILLING CODE 6820-EP-P