[Federal Register: May 25, 2000 (Volume 65, Number 102)]
[Proposed Rules]               
[Page 33799-33801]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



48 CFR Parts 552 and 570

[APD 2800.12B, Case No. GSAR 5-422]
RIN 3090-AH03

General Services Administration Acquisition Regulation: Tax 

AGENCY: Office of Acquisition Policy, GSA.

ACTION: Proposed rule.


SUMMARY: The General Services Administration (GSA) proposes to amend 
the General Services Administration Acquisition Regulation (GSAR) by 
adding a new clause Tax Adjustment, and by revising the section GSAR 
contract clauses.

DATES: Comments should be submitted on or before July 24, 2000 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, Office of Acquisition Policy, GSA 
Acquisition Policy Division (MVP), 1800 F Street, NW, Room 4027, 
Washington, DC 20405.

Policy Division, (202) 219-0202.


A. Background

    GSA proposes to amend the GSAR by revising Parts 552 and 570 to 
prescribe and to incorporate a new clause 552.270-30, Tax Adjustment. 
The clause will be incorporated in acquisitions of leasehold interest 
in real property when GSA determined that a tax adjustment is 

B. Executive Order 12866

    This regulatory action was not subject to Office of Management and 
Budget review under Executive Order 12866, dated September 30, 1993, 
and is not a major rule under 5 U.S.C. 804.

C. Regulatory Flexibility Act

    GSA does not expect this proposed rule to have a significant 
economic impact on a substantial number of small

[[Page 33800]]

entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 
601, et seq., because the rule simply provides a mechanism for 
adjusting rent to account for changes in real estate taxes.

D. Paperwork Reduction Act

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

List of Subject in 48 CFR Part 552 and 570

    Government procurement.

    Accordingly, GSA proposes to amend 48 CFR Part 552 and 570 as 
    1. The authority citation for 48 CFR Parts 552 and 570 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c).


    2. Section 552.270-30 is added to read as follows:

552.270-30  Tax Adjustment

    As prescribed in 570.603, inset the following clause:

Tax Adjustment (Date)

    (a) Definitions. ``Base year taxes,'' as used in this clause, 
mean the real estate taxes for the first twelve (12) month period 
coincident with full assessment, or an amount negotiated by the 
parties that reflect an agreed on base for a fully assessed value of 
the property.
    ``Full assessment,'' as used in this clause, means that the 
taxing jurisdiction has considered all contemplated improvements to 
the assessed property in the valuation of the same. Partial 
assessments for newly constructed projects or for projects or for 
projects under construction, conversion, or renovation will not be 
used for establishing the Government's base year for taxes.
    ``Real estate taxes,'' as used in this clause, mean only those 
taxes assessed against the building or the land on which the 
building is located, without regard to benefit to the property, for 
the purpose of funding general government services. Real estate 
taxes shall not include general or special assessments, business 
improvement district assessments, or any other present or future 
taxes or governmental charges imposed on Lessor or assessed against 
the building or the land upon which the building is located.
    (b) Adjustment for changes in real estate taxes. This lease 
provides for adjustments due to changes in real estate taxes on land 
and buildings occupied by the Government under this lease. 
Adjustments shall apply to each tax year during the lease term after 
the base tax year. Under the procedures established in this clause, 
the Government shall either:
    (1) Make a single annual lump sum payment to the Lessor for its 
share of any increase in real estate taxes during the lease term 
over the amount established as the base year taxes.
    (2) Receive an annual rental credit or lump sum payment from the 
Lessor for its share of any decreases in real estate taxes during 
the lease term below the amount established as the base year taxes.
    (c) Notices regarding real estate taxes. The Lessor shall 
furnish the Contracting Officer with copies of each of the following 
within ten (10) calendar days of receipt:
    (1) Any notice which may affect the valuation of land and 
buildings covered by this lease for real estate tax purposes.
    (2) Any notice of a tax credit or tax refund related to land and 
buildings covered by this lease.
    (3) Each tax bill related to land and building covered by this 
    (d) Increases in real estate taxes. The following procedures 
apply for any tax year in which the real estate taxes increase over 
the base year taxes.
    (1) Invoice. The Lessor shall submit a proper invoice (as 
described in the Prompt Payment clause of this lease, GSAR 552.232-
75) for the tax adjustment. The invoice must include the calculation 
of the adjustment for the tax year. The Lessor must also provide a 
copy of all paid tax receipts for the tax year with the invoice. If 
the taxing authority does not give tax receipts, the Lessor must 
provide other similar evidence of payment acceptable to the Contract 
Officer. The Lessor must submit the invoice together with tax 
receipts or other evidence of payment no later than sixty (60) days 
after the date that the final tax payment for the year is due from 
the Lessor to the taxing authority.
    (2) Payment. Upon receipt of a proper invoice and evidence of 
payment, the Government shall make payment no later than thirty (30) 
days after receipt of the invoice or thirty (30) days after the 
anniversary date of the lease, whichever is later. If the lease 
terminates before the end of a tax year, payment for the tax 
increase due will be prorated based on the number of days the 
Government occupied the space.
    (3) Waiver of right to adjustment. If the Lessor fails to submit 
a proper invoice and tax receipts or other evidence of payment 
within sixty (60) days after the date that the final tax payment for 
the year is due, then the Lessor waives its right to receive payment 
for the increased taxes under this clause.
    (e) Decreases in real estate taxes. The following procedures 
apply for any tax year in which the real estate taxes decrease from 
the base year taxes or during which the Lessor receives a refund or 
tax deduction for real estate taxes.
    (1) The Government shall be entitled to and shall receive a pro 
rata credit for the reduction in taxes, regardless of whether the 
Government has not yet made the tax payment for that year.
    (2) During the lease term, the Government shall apply any credit 
as a deduction from the rent.
    (3) For any credit due after the expiration or earlier 
termination of the lease, at the Contracting Officer's direction, 
the Lessor shall either make a lump sum payment to the Government or 
provide a rental credit under a succeeding lease. This includes, but 
is not limited to, credits resulting from a tax decrease pursuant to 
a tax credit due the Lessor, a reduction in the tax assessment, or a 
tax appeal proceeding for a year or a portion of the lease. If 
directed to remit a lump sum payment, the Lessor must make payment 
to the Government within fifteen (15) days of the Contracting 
Officer's direction. If the credit due the Government is not paid by 
the due date, interest shall accrue on the late payment at the rate 
established by the Secretary of the Treasury under Section 12 of the 
Contract Disputes Act of 1978 (41 U.S.C. 611) in effect on the day 
after the due date. The Government shall have the right to pursue 
the outstanding balance of any tax credit using all collection 
methods available to the United States to collect debts. Such 
collection rights survive the expiration of this lease.
    (f) Calculating tax share. The Government shall pay its share of 
tax increases or receive its share of any tax decrease based on the 
ratio of the rentable square feet occupied by the Government to the 
total rentable square feet in the building or complex (percentage of 
occupancy). For this lease, the Government's percentage of occupancy 
as of the effective date of the lease is __%. This percentage shall 
take into account additions or reductions of the amount of space as 
may be contemplated in this lease or amendments hereto. The block 
and lot/parcel or other identification numbers for the property, 
building(s) and parking areas(s) occupied under this lease are ____.
    (g) Appeals to tax assessments. The Government may direct the 
Lessor upon reasonable notice to initiate a tax appeal or the 
Government may decide to contest a tax assessment on behalf of both 
the Government and the Lessor or for the Government alone. The 
Lessor shall furnish to the Government information necessary for 
appeal of the tax assessment in accordance with the filing 
requirements on its own behalf or on behalf of both the Government 
and the Lessor, the Lessor shall cooperate and use all reasonable 
efforts including, but not limited to, affirming the accuracy of the 
documents, executing documents required for any legal proceeding, 
and taking such other actions as may be required. If the Lessor 
initiates an appeal on behalf of the Government, the Government and 
the Lessor will enter into an agreement to establish a method for 
sharing expenses and tax savings.

(End of Clause)


    3. Section 570.603 is amended by adding a new prescription at the 
end of the section to read as follows:

570.603  GSAR contract clauses.

* * * * *

[[Page 33801]]

552.270-30  Tax Adjustment. Insert this clause in solicitations and 
contracts if you determine that a tax adjustment is necessary.

    Dated: May 17, 2000.
Sue McIver,
Acting Deputy Associated Administrator for Acquisition Policy.
[FR Doc. 00-13157 Filed 5-24-00; 8:45 am]