Federal Acquisition Regulation (FAR): Taxes associated with divested segments; withdrawn,

[Federal Register: August 12, 1998 (Volume 63, Number 155)]

[Proposed Rules]

[Page 43127-43128]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr12au98-22]

DEPARTMENT OF DEFENSE

General Services Administration

National Aeronautics and Space Administration

48 CFR Part 31

[FAR Case 97-010]

RIN 9000-AH71

Federal Acquisition Regulation; Taxes Associated With Divested Segments

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

ACTION: Withdrawal of proposed rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have decided to withdraw the proposed rule published in the Federal Register at 62 FR 49903, September 23, 1997 (FAR Case 97-010, Taxes Associated with Divested Segments).

When a contractor discontinues operations through the sale or other transfer of ownership of a segment, the contractor may be assessed state and local taxes on the gain resulting from that sale or transfer. Since the Government does not share in the gain resulting from the segment sale or transfer, the Government should not share in any tax increases resulting from the segment sale or transfer. The rule proposed revisions to Federal Acquisition Regulation 31.205-41, Taxes, to add increased taxes resulting from a contractor's sale or other transfer of ownership of a segment to the list of unallowable costs.

The respondents expressed concern that the rule would place a significant administrative burden on contractors by requiring them to compute state and local taxes twice: once to determine the actual taxes and again to assess the taxes that would have been paid had the segment not been sold. The DoD, GSA, and NASA have decided to withdraw

[[Page 43128]]

the proposed rule, pending further study of how best to implement this policy without creating an undue administrative burden for both the contractor and the Government.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS Building, Washington, DC 20405, (202) 501-4755, for information pertaining to status or publication schedules. For clarification of content, contact Ms. Linda Nelson at (202) 501-1900. Please cite FAR case 97-010, withdrawal.

List of Subjects in 48 CFR Part 31

Government procurement.

Dated: August 7, 1998. Edward C. Loeb, Director, Federal Acquisition Policy Division.

[FR Doc. 98-21631Filed8-11-98; 8:45 am]

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