Acquisition regulations: Taxpayer identification numbers and commercial and government entity codes,

[Federal Register: January 15, 1999 (Volume 64, Number 10)]

[Proposed Rules]

[Page 2617-2620]

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

[DOCID:fr15ja99-39]

DEPARTMENT OF DEFENSE

48 CFR Parts 204, 212, 213, 252, and 253

[DFARS Case 98-D027]

Defense Federal Acquisition Regulation Supplement; Taxpayer Identification Numbers and Commercial and Government Entity Codes

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

SUMMARY: The Director of Defense Procurement is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to add procedures for reporting payment information to the Internal Revenue Service (IRS); to revise the procedures for obtaining Taxpayer Identification Numbers (TINs) and Commercial and Government Entity (CAGE) codes when contractors are required to register in the Central Contractor Registration (CCR) database; and to make editorial changes.

DATES: Comments on the proposed rule should be submitted in writing to the address identified below on or before March 16, 1999, to be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments on the proposed rule to: Defense Acquisition Regulation Council, Attn: Ms. Sandra G. Haberlin, PDUSD (A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telefax number (703) 602-0350. E- mail comments submitted over the Internet should be addressed to: dfars@acq.osd.mil. Please cite DFARS Case 98-D027 in all correspondence related to this issue. E-mail correspondence should cite DFARS Case 98- D027 in the subject line.

FOR FURTHER INFORMATION CONTACT: Ms. Sandra G. Haberlin, (703) 602- 0131.

SUPPLEMENTARY INFORMATION:

1. Background

   This proposed rule adds procedures for reporting payment information to the IRS; revises the procedures for obtaining TIN and CAGE codes when contractors are required to register in the CCR database; and makes a number of editorial changes.

   1. Reporting payment information to the IRS. This DFARS rule supplements the FAR interim rule (Case No. 97-003) published as Item I of FAC 97-09 on October 30, 1998 (63 FR 58586).

      1. The FAR rule renumbered and retitled FAR 4.903, Payment information, as FAR 4.904, Reporting payment information to the IRS; and deleted the list, previously located at FAR 4.903(b), of the types of payments that are exempt from reporting payment information to the IRS on Form 1099. The list was deleted as being unnecessary to include in the FAR because the payment office is responsible for submitting Form 1099 reports to the IRS.

      2. This rule adds a new section at DFARS 204.904, Reporting payment information to the IRS. This section contains a list that is similar to the one previously found in the FAR, but the DFARS list has been updated to comply with the Taxpayer Relief Act of 1997 (Pub. L. 105- 32). Section 1022 of the Act amends 26 U.S.C. 6041A to add payments under certain classified contracts to the list of exceptions, and to remove payments for services provided by corporations from the list. DFARS 204.904 also adds a requirement for the contracting officer to provide a statement to the payment office if the contractor is providing services subject to Form 1099 reporting to the IRS. This statement is not required if the contracting officer concludes that one of the exceptions listed at DFARS 204.904(1) applies. this procedure was added to the DFARS to facilitate issuance of Form 1099 reports by the payment office.

   2. Procedures for obtaining TINs and CAGE code numbers when CCR applies. The FAR rule also modified the process for obtaining TINs, by permitting agencies to prescribe their own unique procedures for obtaining TINs from contractors and for providing the TINs to the payment office. DoD uses the CCR database for these purposes. DFARS 252.204-7004, Required Central Contractor Registration, requires most contractors doing business with DoD to register in the CCR database prior to award of a contract, basic agreement, basic ordering agreement, or blanket purchase agreement. As part of the registration process, contractors must provide their TINs and DoD-unique CAGE code numbers. DoD payment offices have access to this information through the CCR database. This DFARS rule clarifies that the contracting officer shall not use the solicitation provisions at FAR 52.204-3, Taxpayer Identification, and DFARS 252.204-7001, Commercial and Government

      [[Page 2618]]

      Entity (CAGE) Code Reporting; or paragraph (b) of the provision at FAR 52.212-3, Offeror Representations and Certifications--Commercial Items, when the contractor is required to register in the CCR database, since the information requested in these provisions is duplicative of the information that the contractor is required to provide during the CCR process.

   3. Editorial changes. This DFARS rule makes a number of editorial changes, including updating CAGE code information in Subpart 204.72, Contractor Identification, and clarifying certain requirements in Subpart 204.73, Central Contractor Registration.

2. Regulatory Flexibility Act

   The proposed rule is not expected 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. FAR and DFARS requirements already exist for contractors to furnish TINs and CAGE codes, and to register in the CCR database. This rule simply clarifies that, if the contractor is required to register in the CCR database, the contractor is not required to provide a TIN in accordance with FAR 52.204-3 or paragraph (b) of FAR 52.212-3, or a CAGE code in accordance with DFARS 252.204-7001. An initial regulatory flexibility analysis has, therefore, not been performed. Comments are invited from small businesses and other interested parties. Comments from small entities concerning the affected DFARS subparts also will be considered in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite 5 U.S.C. 601, et seq. (DFARS Case 98-D027), in correspondence.

3. Paperwork Reduction Act

   The Paperwork Reduction Act (44 U.S.C. 3501, et seq.) applies because the rule contains information collection requirements. The proposed rule decreases the collection requirements currently approved under Office of Management and Budget Control Number 0704-0225, since the rule limits the use of the solicitation provision at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, to contractors that are not required to register in the CCR database. Therefore, the proposed rule reduces the number of respondents by 89,545, and the number of burden hours by 22,386.

   List of Subjects in 48 CFR Parts 204, 212, 213, 252, and 253

   Government procurement. Michele P. Peterson, Executive Editor, Defense Acquisition Regulations Council.

   Therefore, 48 CFR Parts 204, 212, 213, 252, and 253 are proposed to be amended as follows:

   1. The authority citation for 48 CFR Parts 204, 212, 213, 252, and 253 continues to read as follows:

      Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

      PART 204--ADMINISTRATION MATTERS

   2. Section 204.203 is added to read as follows:

      204.203 Taxpayer identification information.

      (1) The procedures at FAR 4.203(a) and (b) do not apply to contracts that include the clause at 252.204-7004, Required Central Contractor Registration.

      (2) For DoD basic ordering agreements and indefinite-delivery contracts that require the contractor to register in the Central Contractor Registration (CCR) database (see Subpart 204.73)--

      (i) The contracting officer issuing the agreement or contract need not provide a copy of the completed solicitation provision at FAR 52.204-3 or 52.212-3(b) to DoD contracting officers placing orders under the agreement or contract; and

      (ii) A DoD contracting officer placing an order under the agreement or contract need not provide the TIN of type of organization information to the payment office.

      (3) For non-DoD basic ordering agreements and indefinite-delivery contracts, a DoD contracting officer placing an order under the agreement or contract need not provide the TIN or type of organization information to the payment office if the contractor must register in the CFR database before placement of the order (see Subpart 204.73).

      204.602-70 [Removed]

   3. Section 204.602-709 is removed.

   4. Section 204.603 is added to read as follows:

      204.603 Solicitation provisions.

      (1) Use the provision at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, in solicitations when--

      (i) The prospective contractor will not be required to register in the Central Contractor Registration database; and

      (ii) The Commercial and Government Entity codes for the prospective offerors are not available to the contracting office.

      (2) Use the provision at FAR 52.204-6, Data Universal Numbering System (DUNS) Number, in solicitations that--

      (i) Have an estimated value exceeding $25,000; or

      (ii) Have an estimated value of $25,000 or less and include the provision at 252.204-7004, Required Central Contractor Registration.

   5. The heading of Subpart 204.9 is revised to read as follows:

      Subpart 204.9--Taxpayer Identification Number Information

   6. Sections 204.904 and 204.905 are added to read as follows:

      204.904 Reporting payment information to the IRS.

      (1) 26 U.S.C. 6041 and 6041A and 26 CFR 1.6041 require Government payors to report to the IRS, on IRS Form 1099, payments of an annual cumulative value of $600 or more provided to a contractor, except payments for--

      (i) Supplies, unless the supplies are incidental to the furnishing of services;

      (ii) Telegram, telephone, freight, storage, or similar charges;

      (iii) Income that must be reported on an IRS Form W-2 (e.g., payments to employees or payments under contracts for personal services);

      (iv) Any contract with a Federal agency;

      (v) Any contract with a State, the District of Columbia, or a possession of the United States, or a political subdivision, agency, or instrumentality of any of the foregoing;

      (vi) Any contract with an organization exempt from taxation by 26 U.S.C. 501(a). Such organizations may include charitable, social welfare, labor, agricultural, veterans', and political organizations; business leagues; social clubs; fraternal societies; and employees' associations. Contracting officers may obtain additional information to assist in determining an organization's tax-exempt status via the Internet at http://www.irs.ustreas.gov/prod/bus__info/eo/eo-types.html;

      (vii) Any contract with a foreign government or political subdivision of a foreign government;

      (viii) Any contract with an international organization listed at 22 U.S.C. 288;

      (ix) Any classified contract under 26 U.S.C. 6050M. As used in this section only, a contract is classified if--

      (A) the existence of the contract or the contract subject matter is designated as classified (i.e., requires a specific degree

      [[Page 2619]]

      of protection against unauthorized disclosure for reasons of national security); or

      (B) The head of the agency determines that filing IRS Form 1099 would interfere with the effective conduct of a confidential law enforcement or foreign intelligence activity; or

      (x) Such other services as the IRS may specify in regulations.

      (2) Unless an exception in paragraph (1) of this section applies, the contracting officer shall provide, as the last page of the copy of the contract sent to the payment office--

      (i) A statement that the contractor is providing services subject to Form 1099 payment information reporting to the IRS, as required by 26 U.S.C. 6041 and 6041A; and

      (ii) The contractor's TIN and type of organization, if the contractor is not required to register in the Central Contractor Registration database (see Subpart 204.73) prior to award.

      204.905 Solicitation provision.

      Do not use the provision at FAR 52.204-3, Taxpayer Identification, in solicitations that include the provision at 252.204-7004, Required Central Contractor Registration.

   7. Sections 204.7201, 204.7202, and 204.7202-1 are revised to read as follows:

      204.7201 Definitions.

      (a) Commercial and Government Entity (CAGE) code means-

      (1) A code assigned by the Defense Logistics Information Service (DLIS) to identify a commercial or Government entity; or

      (2) A code assigned by a member of the North Atlantic Treaty Organization (NATO) that is recorded and maintained by DLIS in the CAGE master file.

      (b) Contractor identification code means a code required by the contracting office for the purpose of identifying the offeror. The three types of contractor identification codes are CAGE codes, Data Universal Numbering System (DUNS) numbers, and Taxpayer Identification Numbers.

      204.7202 General.

      204.7202-1 CAGE codes.

      (a) DLIS assigns or records and maintains CAGE codes to identify commercial and Government activities. Use of CAGE codes is prescribed by 253.204-70(b)(5)(ii)(C); DoD 4000.25-5-M, Military Standard Contract Administration Procedures (MILSCAP); and DoD 4130.2-M, Federal Catalog System Policy Manual.

      (b)(1) If a prospective contractor is required to register in the CCR database (see Subpart 204.73) and does not have a CAGE code, DLIS will assign a CAGE code when the prospective contractor submits its request for registration in the CCR database.

      (2) If a prospective contractor is not required to register in the CCR database, the CAGE code is not already available in the contracting office, and the prospective contractor does not respond to the provision at 252.204-7001, Commercial and Government Entity (CAGE) Code Reporting, use the following procedures:

      (i) To identify the prospective contractor's CAGE code, use--

      (A) The monthly H-series CD ROM that contains the H-4/H-8 CAGE master file issued by DLIS. (Their address is: DLIS-VS, Federal Center, 74 Washington Avenue North, Battle Creek, MI 49017-3084. Their telephone numbers are: DSN 932-4726, toll free 1-888-352-9333, or commercial (616) 961-4726;

      (B) The on-line access to the CAGE file through the Defense Logistics Information System;

      (C) The on-line access to the Defense Logistics Agency CAGE file through the DLA Network or dial-up capability; or

      (D) The Internet to access the CAGE Lookup Server at http:// www.dlis.dla.mil/cage__welcome.htm.

      (ii) If no CAGE code is identified using the procedures in paragraph (b)(2)(i) of this subsection, ask DLIS to assign a CAGE code. Submit a DD Form 2051, Request for Assignment of a CAGE Code, (or electronic equivalent) to the address in paragraph (b)(2)(i)(A) of this subsection, ATTN: DLIS-SBB. The contracting office completes Section A of the DD Form 2051, and the contractor completes Section B. The contracting office must verify Section B before submitting the form.

      (c) Direct questions on obtaining computer tapes, electronic updates, or code assignments to DLIS (DLIS-SBB) at DSN 932-4358, or commercial (616) 961-4358.

   8. Sections 204.7203 and 204.7204 are revised to read as follows:

      204.7203 Responsibilities of contracting officers.

      (a) Assist the offeror in obtaining the required CAGE code(s).

      (b) Do not deny a prospective offeror a solicitation or bid set because the offeror does not have a contractor identification code.

      (c) If a prospective contractor is not required to register in the CCR database, and a CAGE code has not been identified, request the assignment of the CAGE code by following the procedures at 204.7202- 1(b)(2)(ii). CAGE codes may be requested at the time the offeror is sent a solicitation package or added to the mailing list to ensure that a code is assigned in sufficient time to process the DD Form 350, Individual Contracting Action Report, without delay.

      204.7204 Maintenance of the CAGE file.

      (a) Changes, except name changes, may be submitted in writing--

      (1) By the entity identified by the code, using company letterhead;

      (2) By the contracting office; or

      (3) By the contract administration office (also see FAR Subpart 42.12, Novation and Change-of-Name Agreements);

      (4) Using the DD Form 2051, facsimile or electronic equivalent, to:

      Defense Logistics Information Service, DLIS-SBB, Federal Center, 74 Washington Avenue North, Battle Creek, MI 49017-3084, Telephone Numbers: DSN 932-4358, Commercial (616) 961-4358, Facsimile: (616) 961-4528, 4388, 4485, Internet: http//www.dlis.dla.mil/ form2051.htm

      (b) The change-of-name agreement shall be submitted to DLIS-SBB by the contracting officer responsible for execution of the agreement (see FAR Subpart 42.12). In the event there are no current contracts in force, each contracting and contract administration office receiving notification of changes from the commercial entity shall forward a copy of the change notice annotated with the CAGE code to DLIS-SBB unless the change notice indicates that DLIS-SBB has already been notified.

      (c) Additional guidance for maintaining CAGE codes is in Volume 7 of DoD 4100.39-M, Federal Logistics Information System (FLIS) Procedures Manual.

   9. Section 204.7302 is amended by revising paragraphs (a) and (c) to read as follows:

      204.7302 Policy.

      * * * * *

      (a) Purchases paid for with a Governmentwide commercial purchase card. * * * * *

      (c) Classified contracts or purchases (see FAR 4.401) when registration in the CCR database, or use of CCR data, could compromise the safeguarding of classified information or national security. * * * * *

   10. Section 204.7303 is amended by revising paragraph (a)(1) and paragraph (b) introductory text to read as follows:

       [[Page 2620]]

       204.7303 Procedures.

       (a)(1) Except as provided in 204.7302, the contracting officer shall require each offeror to provide a DUNS number (see 204.603(2)) or, if applicable, a DUNS+4 number, with its verbal or written offer, regardless of the dollar amount of the offer. * * * * *

       (b) If the contracting officer determines that a prospective contractor is not registered in the CCR database and an exception to the registration requirements for the award does not apply (see 204.7302), the contracting officer shall-- * * * * *

       PART 212--ACQUISITION OF COMMERCIAL ITEMS

   11. Section 212.301 is amended by adding paragraph (b)(2) to read as follows:

       212.301 Solicitation provisions and contract clauses for the acquisition of commercial items.

       (b)(2) Paragraph (b) of the provision at FAR 52.212-3 does not apply when the solicitation includes the clause at 252.204-7004, Required Central Contractor Registration. * * * * *

       PART 213--SIMPLIFIED ACQUISITION PROCEDURES

   12. Section 213.106-3 is added to read as follows:

       213.106-3 Award and documentation.

       (e) The procedures at FAR 13.106-3(e) do not apply when the contract includes the clause at 252.204-7004, Required Central Contractor Registration.

       PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

   13. Section 252.204-7001 is amended by revising the introductory text, the provision date, paragraph (b) introductory text, and paragraph (b)(2) to read as follows:

       252.204-7001 Commercial and Government Entity (CAGE) code reporting.

       As prescribed in 204.603(1), use the following provision:

       Commercial and Government Entity (CAGE) Code Reporting (XXX 19XX)

       * * * * *

       (b) If the Offeror does not have a CAGE code, it may ask the Contracting Officer to request one from the Defense Logistics Information Service (DLIS). The Contracting Officer will-- * * * * *

       (2) Complete section a and forward the form to DLIS; and * * * * *

       PART 253--FORMS

   14. Section 253.204-70 is amended by revising paragraph (b)(5)(ii)(F)(3) to read as follows:

       253.204-70 DD Form 350, Individual Contracting Action Report.

       * * * * *

       (b) * * *

       (5) * * *

       (ii) * * *

       (F) * * *

       (3) An agency or instrumentality of the Federal Government. * * * * *

       [FR Doc. 99-847Filed1-14-99; 8:45 am]

       BILLING CODE 5000-04-M