Department of the Treasury Acquisition Regulations; Tax Check Requirements, 15502-15503 [2018-07458]

Agencies

• DEPARTMENT OF THE TREASURY

[Federal Register Volume 83, Number 70 (Wednesday, April 11, 2018)]
[Rules and Regulations]
[Pages 15502-15503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07458]


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DEPARTMENT OF THE TREASURY

48 CFR Parts 1009 and 1052


Department of the Treasury Acquisition Regulations; Tax Check 
Requirements

AGENCY: Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This rule finalizes without change an interim rule that 
amended the Department of the Treasury Acquisition Regulation (DTAR) by 
adding a subpart titled ``Responsible Prospective Contractor'' and a 
paragraph concerning Representation and certifications regarding 
responsibility matters, for the purpose of directing IRS contracting 
officers to the newly added DTAR subpart titled ``Tax Check 
Requirement,'' which prescribes the policies and procedures for 
performing a tax check on the apparent successful offeror in order to 
determine eligibility to receive an award.

DATES: Effective date: May 11, 2018.

FOR FURTHER INFORMATION CONTACT: Thomas O'Linn, Procurement Analyst, 
Office of the Procurement Executive, at (202) 622-2092.

SUPPLEMENTARY INFORMATION: 

I. Background

    The DTAR, which supplements the Federal Acquisition Regulation 
(FAR), is codified at 48 CFR Chapter 10.
    It is in the interest of the United States Government to only award 
contracts to entities that are responsible and law abiding. This is 
codified in FAR 9.104 by requiring contracting officers to perform a 
responsibility determination prior to each contract award by using the 
standards at FAR 9.104-1, as well as consider information submitted by 
the contractor and information they research or acquire from other 
sources. The IRS administers the Internal Revenue Code as enacted by 
Congress. Since fiscal year 2012, language in the annual consolidated 
Appropriations Act has prohibited the Federal Government under various 
conditions from using appropriated funds to enter into a contract with 
a prospective contractor unless the prospective contractor certifies in 
writing that it has not been notified of any unpaid Federal tax 
assessment. Most recently, Sections 744 and 745 of Division E of the 
Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 
113-235) prohibits the Federal Government from entering into a contract 
with any corporation where the awarding agency is aware of an unpaid 
Federal tax liability.
    For purposes of tax administration, the IRS has access to taxpayer 
return information that is not otherwise available to other Federal 
Agencies pursuant to 26 U.S.C. 6103(h)(1). The Department of the 
Treasury has determined that an IRS contractor's compliance with the 
tax laws is a tax administration matter. Additionally, 26 U.S.C. 
6103(c) authorizes the IRS to disclose a taxpayer's return information 
to such person(s) as the taxpayer may designate in a consent to such 
disclosure. In many cases, however, the official signing a contract 
proposal on behalf of an offeror will not be an official to whom the 
IRS is authorized to disclose the offeror's tax information. Thus, in 
order to ensure that IRS is authorized to discuss the offeror's own tax 
information with an authorized official of the offeror, a consent to 
disclosure is required. This consent to disclosure must be in the form 
of a separate written document pertaining solely to the authorized 
disclosure and must be signed and dated by an authorized person as 
required and defined in 26 U.S.C. 6103(c) and 26 CFR 301.6103(c)-
1(e)(4).

II. Interim Rule

    On November 16, 2017 (82 FR 53426), the Department issued an 
interim rule to amend the DTAR to establish policies and procedures 
that facilitate successful, timely, and economical execution of IRS 
contractual actions in compliance with the FAR and various 
appropriation restrictions. Specifically, the interim rule established 
an express requirement for IRS contracting officers to use taxpayer 
return information that is available only to IRS to perform a tax check 
on the apparent successful offeror for purposes of determining 
eligibility to enter into a contract with the IRS. The IRS has 
established an internal Procedure, Guidance and Information (PGI) that 
further supplements the DTAR requirement for IRS contracting officers 
to use when conducting a tax check. To ensure compliance with 26 U.S.C. 
6103(h)(1) and to safeguard taxpayer return information, the PGI 
restricts the number of personnel within the IRS Office of Procurement 
who have access to tax compliance information. The PGI also limits the 
amount of information provided to the contracting officer regarding a 
delinquent Federal tax liability. Upon notification by the contracting 
officer that the offeror has a delinquent Federal tax liability, the 
offeror may provide the contracting officer with documentation that 
demonstrates the offeror's tax status as paid-in-full or that an 
approved payment agreement has been reached, at which time the 
contracting officer will coordinate with the appropriate office within 
IRS to validate the offeror's tax status (see FAR 9.104-5(a)(1), (b)(1) 
and (e)).
    The offeror may want to take steps to confirm it does not have a 
delinquent Federal tax liability prior to submission of its response to 
the solicitation. If the offeror recently settled a delinquent Federal 
tax liability, the offeror may want to take steps to obtain information 
in order to demonstrate the offeror's responsibility to the contracting 
officer, if such information is requested (see FAR 9.104-5(a)(1) and 
(b)(1)).
    The interim rule supplemented paragraph (b) of FAR 9.104-5, 
Representation and certifications regarding responsibility matters, for 
the purpose of directing IRS contracting officers to the newly added 
DTAR subpart 1009.70, which prescribes the policies and procedures for 
performing a tax check on the apparent successful offeror to determine 
eligibility to receive an award.
    The interim rule added DTAR subparts 1009.1, Responsible 
Prospective Contractors, and 1009.70, Tax Check Requirements. This 
latter subpart prescribes the policies and procedures IRS contracting 
officers will use for performing a tax check on the apparent successful 
offeror to determine eligibility to receive an award. Definitions of 
terms ``authorized representative(s) of the offeror,''

[[Page 15503]]

``delinquent Federal tax liability,'' and ``tax check'' are included 
within this subpart. The definition of ``authorized representative(s) 
of the offeror'' is the person(s) identified to the IRS contracting 
officer by the offeror as authorized to represent the offeror in 
disclosure matters pertaining to the offer. The definition of 
``delinquent Federal tax liability'' is derived from language within 
the FAR concerning Federal tax delinquency and unpaid Federal tax 
assessment (see FAR 9.104-5). The definition of ``tax check'' is an IRS 
process that accesses and uses taxpayer return information, that is 
available only to IRS, to support the Government's determination of an 
offeror's eligibility to receive an award, including but not limited to 
implementation of the statutory prohibition of making an award to 
corporations that have an unpaid Federal tax liability (see FAR 9.104-
5(b)).
    The interim rule added a provision to be inserted in all IRS 
solicitations regardless of dollar value, including those for 
commercial items. The provision will notify offerors that the IRS will 
conduct a tax check because the Department of the Treasury has 
determined that an IRS contractor's compliance with the tax laws is a 
tax administration matter, and that taxpayer return information is 
needed for determining an offeror's eligibility to receive an award, 
including but not limited to implementation of the statutory 
prohibition of making an award to corporations that have a unpaid 
Federal tax liability (see FAR 9.104-5(b)). The provision also contains 
a consent to disclosure to be signed and dated by a person authorized 
to act on behalf of the offeror as defined in 26 CFR 301.6103(c)-
1(e)(4). The consent to disclosure authorizes the officers and 
employees of the Department of the Treasury, including the IRS, to 
disclose the results of the tax check to the person(s) authorized by 
the offeror via the signed consent to disclosure.
    Under the interim rule, this provision applies to all IRS 
solicitations regardless of the dollar value, including commercial 
items (including Commercially Available Off-the-Shelf items). This 
determination is consistent with the FAR requirements regarding the 
inclusion of the provisions 52.209-5, 52.209-11 and 52.212-3 as well as 
various appropriation restrictions.

III. Summary of Public Comments and This Final Rule

    The comment period for the interim rule closed on January 16, 2018. 
Treasury received twenty-seven comments and twenty-six of those were 
outside of the scope of the regulation. The one comment within the 
scope supported the rule. The commenter noted that the rule will 
improve the contracting system by making the award process fairer and 
more efficient. Accordingly, the interim rule is adopted in this final 
rule without change.

IV. Regulatory Procedures

Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. chapter 6) generally 
requires agencies to conduct an initial regulatory flexibility analysis 
and a final regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements, unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities.
    It is hereby certified that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
In this final rule, the Department is adopting an interim rule without 
change. The interim rule amended the DTAR to establish an internal 
process that strengthens IRS' compliance with appropriation act 
restrictions and the FAR prohibition of entering into a contract with 
contractors having a delinquent Federal tax liability (see FAR subpart 
9.1) and should not have significant economic impacts on small entities 
other than the potential for not receiving award if the small entity 
has a delinquent Federal tax liability. This rule does not impose any 
new reporting, recordkeeping or other compliance requirements. The rule 
does not duplicate, overlap, or conflict with other Federal rules.

List of Subjects in 48 CFR Parts 1009 and 1052

    Government procurement.

    For reasons set forth in the preamble, the interim rule published 
on November 16, 2017 (FR Doc. 2017-24911) is adopted as final without 
change.

    Dated: March 6, 2018.
Iris B. Cooper,
Senior Procurement Executive.
[FR Doc. 2018-07458 Filed 4-10-18; 8:45 am]
 BILLING CODE 4810-25-P