Defense Federal Acquisition Regulation Supplement: Modification of DFARS Clause “Tax Relief” (DFARS Case 2018-D049), 48512-48513 [2019-19568]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 84, Number 178 (Friday, September 13, 2019)]
[Proposed Rules]
[Pages 48512-48513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19568]



Federal Register / Vol. 84, No. 178 / Friday, September 13, 2019 / 
Proposed Rules

[[Page 48512]]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 229 and 252

[Docket DARS-2019-0036]
RIN 0750-AK13


Defense Federal Acquisition Regulation Supplement: Modification 
of DFARS Clause ``Tax Relief'' (DFARS Case 2018-D049)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to modify the text of an existing DFARS 
clause to include the text of another DFARS clause on the same subject, 
in an effort to streamline contract terms and conditions for 
contractors, pursuant to action taken by the DoD Regulatory Reform Task 
Force.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before November 12, 2019, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2018-D049, using 
any of the following methods:
    [cir] Regulations.gov: https://www.regulations.gov. Search for 
``DFARS Case 2018-D049.'' Select ``Comment Now'' and follow the 
instructions provided to submit a comment. Please include ``DFARS Case 
2018-D049'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2018-D049 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Carrie 
Moore, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to https://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Carrie Moore, telephone 571-372-
6093.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to modify DFARS clause 252.229-7001, Tax Relief, 
to incorporate the information included in DFARS clause 252.229-7000, 
Invoices Exclusive of Taxes or Duties. Combining these clauses will 
result in DFARS clause 252.229-7000 being removed from the DFARS.

II. Discussion and Analysis

    The U.S. Government is eligible for relief from several taxes and 
duties as a result of various treaties and agreements with foreign 
governments. To address this relief, the Federal Acquisition Regulation 
(FAR) prescribes the use of FAR clause 52.229-6, Taxes--Foreign Fixed-
Price Contracts, and FAR 52.229-8, Taxes--Foreign Cost-Reimbursement 
Contracts, in solicitations and contracts expected to exceed the 
simplified acquisition threshold when a fixed-price or cost-
reimbursement contract is contemplated and the contract will be 
performed wholly or in part in a foreign country. These FAR clauses 
provide offerors and contractors with information on the application of 
foreign taxes and duties, as they relate to Federal contracts. 
Specifically, these clauses advise offerors and contractors that 
contract prices shall not include taxes and duties that are not 
applicable to the U.S. Government, as a result of such treaties or 
agreements.
    DFARS clause 252.229-7001 is included in solicitations and 
contracts when a contract will be awarded to a foreign concern and 
contract performance occurs in a foreign country. This clause 
supplements the FAR clauses by requiring offerors to list each of the 
taxes and duties, as well as its accompanying rate or percentage, that 
are excluded from the contract price; and, requiring the contractor to 
include certain price and tax information in each invoice to the 
Government.
    As a result of the FAR clauses and DFARS clause 252.229-7001, 
offerors are aware that such taxes and duties should not be included in 
proposed prices under fixed-price or cost-reimbursement contracts 
performed in a foreign country. The additional information required by 
DFARS clause 252.229-7001 assists contracting officers in verifying 
that all applicable duties and taxes are excluded from proposed prices 
prior to contract award. The information also helps DoD and the 
contractor validate and ensure all taxes and duties, from which relief 
is available under the contract, are excluded from the invoiced prices.
    DFARS clause 252.229-7000 is included in fixed-price solicitations 
and contracts that will be awarded to a foreign concern. The clause 
prohibits the contractor from including taxes or duties, for which 
relief is available, in invoices submitted for payment under the 
contract. Certain duties and taxes are commonly included in the price 
of an item and can be inadvertently overlooked during the invoicing and 
payment process. The clause was implemented to reinforce the 
prohibition on including such taxes or duties when preparing an invoice 
that contains fixed price items.
    A separate DFARS clause 252.229-7000 is no longer necessary. The 
FAR clauses and DFARS clause 252.229-7001 are included in all contracts 
under which the U.S. Government may obtain foreign tax and duty relief. 
The text of DFARS 252.229-7000 and 252.229-7001 can be combined, while 
still conveying the same message and reaching the same community of 
contractors. As a result, this rule modifies DFARS clause 252.229-7001 
to include the text of DFARS clause 252.229-7000 and removes DFARS 
clause 252.229-7000 from the DFARS.
    Modification of this DFARS text supports a recommendation from the 
DoD Regulatory Reform Task Force. On February 24, 2017, the President 
signed Executive Order (E.O.) 13777, ``Enforcing the Regulatory Reform 
Agenda,'' which established a Federal policy ``to alleviate unnecessary 
regulatory burdens'' on the American people. In accordance with E.O. 
13777, DoD established a Regulatory Reform Task Force to review and 
validate DoD regulations, including the DFARS. A public notice of the 
establishment of the DFARS Subgroup to the DoD Regulatory Reform Task 
Force, for the purpose of reviewing DFARS provisions and clauses, was 
published in the Federal Register at 82 FR 35741 on August 1, 2017, and 
requested public input. No public comments were received on these 
clauses. Subsequently, the DoD Task Force reviewed the requirements of 
DFARS clause 252.229-7000 and 252.229-7001 and determined that the 
clauses could be combined.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-The-Shelf Items

    This proposed rule does not create any new provisions or clauses, 
nor does it impose any new requirements on contracts at or below he 
simplified acquisition threshold and for commercial items, including 
commercially available off-the-shelf items.

[[Page 48513]]

IV. Executive Orders 12866 and 13563

    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 20, 1993. This rule is not a major rule as defined at 5 
U.S.C. 804.

V. Executive Order 13771

    This rule is not expected to be subject to E.O. 13771, because this 
rule is not a significant regulatory action under E.O. 12866.

VI. Regulatory Flexibility Act

    DoD does not expect this proposed rule to 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 is not creating any new requirements or changing any 
existing requirements and the rule only impacts foreign contractors. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    This rule proposes to modify DFARS clause 252.229-7001, Tax Relief, 
to incorporate the information included in DFARS clause 252.229-7000, 
Invoices Exclusive of Taxes or Duties. Combining these clauses will 
result in DFARS clause 252.229-7000 being removed from the DFARS, 
pursuant to action taken by the Regulatory Reform Task Force.
    The objective of this proposed rule is to streamline DoD contract 
terms and conditions and contractor responsibilities pertaining to 
foreign taxes and duties. The modification of these DFARS clauses 
supports a recommendation from the DoD Regulatory Reform Task Force 
under Executive Order 13771, ``Enforcing the Regulatory Reform 
Agenda.''
    This rule is combining two existing clauses that address the same 
topic into a single comprehensive clause. These clauses apply to 
solicitations and contracts awarded to a foreign concern for contract 
performance in a foreign country. This rule is not expected to impact 
small business entities, because this rule only applies to foreign 
entities. The Small Business Administration (SBA) identifies a ``small 
business'' as ``a business entity organized for profit, with a place of 
business located in the United States, and which operated primarily 
within the United States or which makes a significant contribution to 
the U.S. economy through the payment of taxes or use of American 
products, materials, or labor'' (13 CFR 121.102(a)). This rule only 
applies to foreign contractors, which do not meet the SBA definition of 
``small business'' entities.
    This proposed rule does not include any new reporting, 
recordkeeping, or other compliance requirements for small businesses.
    This rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no known significant alternative approaches to the 
proposed rule that would meet the proposed objectives.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities. DoD will also consider comments from small entities 
concerning the existing regulations in subparts affected by this rule 
in accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D049) 
in correspondence.

VII. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 229 and 252

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 229 and 252 are proposed to be amended as 
follows:

0
1. The authority citation for 48 CFR parts 229 and 252 continues to 
read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 229--TAXES


229.402-1  [Removed]

0
2. Remove section 229.402-1.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.229-7000  [Removed and Reserved]

0
3. Remove and reserve section 252.229-7000.
0
4. Amend section 252.229-7001 by--
0
a. Removing the clause date ``(SEP 2014)'' and adding ``(DATE)'' in its 
place;
0
b. Revising paragraph (b);
0
c. In Alternate I--
0
i. Removing the clause date of ``(SEP 2014)'' and adding ``(DATE)'' in 
its place; and
0
ii. Revising paragraph (b).
    The revisions read as follows:


252.229-7001  Tax Relief

* * * * *
    (b) Invoices submitted in accordance with the terms and conditions 
of this contract shall be exclusive of all taxes or duties for which 
relief is available. The Contractor's invoice shall list separately the 
gross price, amount of tax deducted, and net price charged.
* * * * *

Alternate I. * * *

* * * * *
    (b) Invoices submitted in accordance with the terms and conditions 
of this contract shall be exclusive of all taxes or duties for which 
relief is available. The Contractor's invoice shall list separately the 
gross price, amount of tax deducted, and net price charged.
* * * * *
[FR Doc. 2019-19568 Filed 9-12-19; 8:45 am]
BILLING CODE 5001-06-P