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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: June 4, 2002

SUBJECT: Federal Acquisition Regulation (FAR); Federal, State, and Local Taxes

SOURCE: Federal Register, June 4, 2002, Vol. 67, No. 107, page 38551

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

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 29.401, Domestic Contracts, be amended to clarify the prescriptions for use of FAR 52.229-3, Federal, State, and Local Taxes, and FAR 52.229-4, Federal, State, and Local Taxes (Noncompetitive Contract). In addition, FAR 52.229-5, Taxes -- Contracts Performed in U.S. Possessions or Puerto Rico, would be removed.

DATES: Comments on the proposed rule must be submitted no later than August 5, 2002.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2001-021@gsa.gov. Cite FAR case 2001-016 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson, 202-501-3221.

SUPPLEMENTAL INFORMATION: This proposed rule would amend the prescriptions in FAR 29.401 for FAR 52.229-3, Federal, State, and Local Taxes, and FAR 52.229-4, Federal, State, and Local Taxes (Noncompetitive Contract), by combining FAR 29.401-3, Competitive Contracts, and FAR 29.401-4, Noncompetitive Contracts, into a new FAR 29.401-3, Federal, State, and Local Taxes, deleting FAR 29.401-5, Contracts Performed in U.S. Possessions or Puerto Rico, and redesignating FAR 29.401-6, New Mexico Gross Receipts and Compensating Tax, as FAR 29.401-4.

The new FAR 29.401-3 would direct the contracting officer to insert FAR 52.229-3, Federal, State, and Local Taxes, in fixed-price contracts exceeding the simplified acquisition threshold that are to be performed wholly or in part in the U.S., its possessions, or Puerto Rico. However, where FAR 52.229-4, Federal, State, and Local Taxes (Noncompetitive Contract), is currently required to be included in noncompetitive fixed-price contracts exceeding the simplified acquisition threshold that are to be performed wholly or in part in the U.S., its possessions, or Puerto Rico "when satisfied that the contract price does not include contingencies for state and local taxes, and that, unless the clause is used, the contract price will include such contingencies," FAR 52.229-4 (which would be retitled "Federal, State, and Local Taxes (State and Local Adjustments) may be inserted "if the price would otherwise include an inappropriate amount in anticipation of potential postaward change(s) in state or local taxes."

In addition, the definition for "local taxes" would be relocated from FAR 52.229-5 (which is proposed for deletion) to FAR 52.229-3 and FAR 52.229-4, and the definition would be revised by adding U.S. territories and the Commonwealth of the Northern Mariana Islands, because they are no longer considered possessions of the United States.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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