Tuesday, April 9, 2013

If You're Going After a Government Contract, You'd Better Pay Your Back Taxes First

The Department of Defense just posted a new regulation that prevents any of its contracting officers from using Fiscal Year 2013 funds to award contracts to any corporation that owes Federal taxes. Specifically, the prohibition applies to firms that;

Has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, where the awarding agency is aware of the unpaid tax liability, unless the agency has considered suspension or debarment of the corporation and made a determination that this further action is not necessary to protect the interests of the Government.

This is almost identical to a January 2013 directive that applied to the use of continuing resolution funding that we reported on here. That one applied to funds made available by the 2013 Continuing Appropriations Resolution (Public Law 112-175) whereas this one applies to funds made available by the Consolidated and Further Continuing Appropriations Act (Public Law 113-6).

Here's where Government contractors and prospective Government contractors must be careful. It's unlikely that a contracting officer will know one way or another whether offerors owes back taxes. Therefore, DoD will require that any corporation pursuing contracts make an affirmative representation to the effect that it does not owe back taxes. Contracting officers will be including a provision in all solicitations that will require offerors to represent that they do or do not owe back taxes and this "representation" must be included in the proposal package.

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