Builders and Contractors Exchange
Weekly Bulletin: 18 july 2008
FAR Tax Rule
All Contractors who submit offers for Federal Government Contracts should be aware of new Federal Acquisition Regulations that became effective on May 22, 2008. The new regulation revises portions of FAR Part 9 pertaining to the responsibility of government contractors and revises the contract clauses containing certifications made by the offerors. The new regulation expands the certification requirements and requires offerors to disclose if they have violated any federal criminal tax laws, and whether they have any unpaid federal tax liability in excess of $3,000.00.
The regulation was originally proposed in March 2007 because of Congressional concern that Government contractors were failing to pay their taxes.
The regulation also expands the causes for possible contractor suspension to include violations of federal criminal tax laws and having delinquent federal taxes in excess of $3,000.00.
The FAR has long had a certification clause (FAR 52.209-5) in every contract where the contract value is expected to exceed the simplified acquisition threshold. That clause has required that the offeror certify that he has not been convicted of a number of offenses including tax evasion. That clause has been revised and has been greatly broadened to include reporting any violation of Federal criminal tax laws in addition to tax evasion. The revised clause requires that prospective contractors certify whether they have a tax related indictment, charge, conviction, or civil judgment.
Additionally, the new clause also requires certification of the existence of any federal tax delinquency in excess of $3,000.
Additionally, the parallel representations and certifications clause for commercial items (FAR 52.212-3) has also been modified in the same manner.
If the contractor reports the existence of any tax related offense or delinquency, the contracting officer is required to request additional information and it is then up to the offeror to demonstrate that it is still a responsible contractor, notwithstanding the tax issues.
Prior to proceeding with the award, the contracting officer is required to notify the agency official responsible for initiating debarment or suspension actions of the tax issues revealed in the certification process.
For contractors with existing tax issues it is imperative that they seek legal advice prior to completing the certification clauses in the solicitation.
Vandeventer Black is prepared to assist you to ensure that you properly answer the certification clauses in your solicitation. Please contact Bill Dozier at 757-446-8686 for any assistance.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.