The Internal Revenue Service (IRS) has released Notice 1036, providing guidance on tax withholding from employees’ paychecks under the new tax reform legislation.
The IRS is instructing employers to implement the new withholding tables by February 15, 2018.
The text of the IRS notice is available here: https://www.irs.gov/pub/
They say that two things in life are guaranteed – death and taxes – and status as a federal contractor may not exempt one from the latter, according to a recent Armed Services Board of Contract Appeals (ASBCA) decision.
In Presentation Products, Inc. dba Spinitar, ASBCA No. 61066 (2017), the ASBCA held the contractor was liable to pay a state tax, and the government had no duty to reimburse the contractor. The problem arose from the fact that the contractor did not incorporate state tax costs into its proposed price, despite being required to pay the taxes under the terms of the contract and applicable state law.
Under the terms of the firm fixed-price contract, Presentation Products Inc. (doing business as Spinitar) was to provide the Army with installation of a video conferencing system in Fort Shafter Flats, Hawaii. The solicitation included FAR 52.212-4 (Instructions to Offerors–Commercial Items), which provides, in paragraph (k): “Taxes. The contract price includes all applicable Federal, State, and local taxes and duties.”
Hawaii places a general excise tax (or GET) on businesses rather than a sales tax on customers, which is not automatically waived when the customer is the federal government. The GET is an excise tax imposed on the gross revenues of businesses “derived from the privilege of doing business in Hawaii.” Under Hawaii’s GET, businesses are not required to collect GET from their customers, but may pass it on to customers upon agreement by the customer.
Keep reading this article at: http://smallgovcon.com/claims-and-appeals/asbca-says-contractor-wasnt-exempt-from-state-tax/
Despite past admonitions, the Internal Revenue Service still has a ways to go in preventing the award of agency contracts to firms that owe back taxes, an agency watchdog has found.
“The IRS tax check process was not effective in identifying tax-delinquent contractors,” wrote the Treasury Inspector General for Tax Administration in a report dated July 20, 2016 but released last week. The IG called for “significant improvements” to the process.
In a sampling of 73 awards among 336 contracts of $250,000 or more from September 2012 through August 2014, auditors found that 21, or 29 percent, “did not have evidence that the contracting officer performed the required tax check on the winning bidders.” What’s more, contracting officers handling all 73 contracts documented no tax checks on competing bidders.
Keep reading this article at: http://www.govexec.com/oversight/2016/08/irs-falls-short-tracking-tax-delinquent-contractors/130723
The Internal Revenue Service in recent years has awarded contracts to at least 20 companies with delinquent taxes totaling $5.2 million, according to a new watchdog report.
The Treasury Inspector General for Tax Administration found IRS procurement officials often fail to verify if agency contractors have paid federal corporate and payroll taxes. And, even when officials discover the tax delinquencies, a loophole in federal acquisition law prevents the IRS from terminating the contract, the report said.
“Although IRS contractors are not considered employees, they are conducting business and doing work on behalf of the agency whose mission is to ensure taxpayers meet their tax responsibilities,” Inspector General J. Russell George wrote. “As a result, we believe IRS contractors should be held to the same ethical standards as IRS employees and paid preparers concerning their compliance with the nation’s tax laws.”
The IG reviewed 135 current IRS contactors with awards of at least $250,000 issued between October 2006 and December 2008, and determined that 20 of the firms owed federal taxes. Six of the companies had delinquent tax liabilities totaling $943,000 when they first won the contracts. As of March 2009, the amount the six companies owed had increased to $4.9 million.
In 13 cases, an IRS contracting official conducted a tax check, as required by federal acquisition law. But the reviews shed relatively little light on the significance of the tax liabilities, failing to distinguish the type of taxes owed, the age of the debt, or if the contractors had established a plan to repay the funds.
IRS procurement officials failed to conduct a tax check for the seven other firms. But, it’s unclear whether the checks would have prevented the businesses from winning the awards. Federal guidelines bar the IRS from using tax-indebtedness to exclude a company from obtaining a contract. Regulations permit the agency to verify a bidder’s tax record only at the time of the initial award to determine if the debt could jeopardize the performance of the contract.
Federal acquisition guidelines also do not require the IRS to conduct a tax check when contracts are being considered for renewal, allowing companies to continue receiving federal payments without having to answer for their debt, the IG said. The IRS renewed the contracts of 17 of the 20 companies with delinquencies.
IRS employees, meanwhile, face disciplinary action, including termination, if they fail to file accurate and timely income taxes.
“If the IRS continues to conduct business with contractors that do not comply with the nation’s tax laws, an adverse message will be sent to the American taxpayers as to the fairness of the tax administration system,” George wrote. The problems TIGTA identified are not new in federal contracting. In February 2004, the Government Accountability Office reported that about 27,000 Defense Department contractors owed nearly $3 billion in federal taxes. In June 2005, an audit of 33,000 civilian agency contractors identified $3.3 billion in delinquent federal taxes. And, in March 2006, GAO found that 3,800 General Services Administration contractors owed $1.4 billion in federal taxes.
A 2009 bill that former Rep. Brad Ellsworth, D-Ind., sponsored would have prevented any company with “a seriously delinquent tax debt” from winning a government contract or grant. The legislation cleared the House, but not the Senate.
In January 2010, President Obama issued a governmentwide memorandum directing the IRS commissioner to review the certifications that firms bidding on federal contracts submit to demonstrate they are up-to-date on their taxes. The memo also required the Office of Management and Budget director to issue recommendations on ensuring tax delinquent contractors are not awarded new contracts, and to develop plans to make contractor tax certifications available in a governmentwide procurement database. Those plans have not yet been announced.
The IG recommended the IRS ensure that all required tax checks are conducted before contracts are awarded and that senior agency executives meet and review Obama’s 2010 memorandum. The IRS concurred with those recommendations but disagreed with another IG suggestion that would require an annual tax check on all IRS contractors.
David Grant, chief of agencywide shared services at the IRS, wrote in his response that there is no justification in federal law or regulation for annual tax verifications. “A tax check is cursory,” Grant wrote. “Unverified that is not actionable as the contractor has had no due process in regard to the tax check information and the tax liability has not been finally determined.”
— by Robert Brodsky – GovExec.com – January 10, 2011
U.S. Senator Johnny Isakson has announced that he will host a free statewide Small Business Summit on Tuesday, August 17, 2010.
This workshop will be held at Macon State University, Conference Center, 100 College State Drive, Macon, Ga., from 9:30 a.m. until 1:30 p.m.
Advance registration is required, and registration details appear below.
The forum is an opportunity for small business people to hear from professionals on best practices, federal and state tax responsibilities, information on contracting with the federal government, using social media to enhance your business, and growing a business through exports.
The summit will also feature a panel discussion on credit available to business owners in the current economic climate. Presenting organizations will include the Small Business Development Network as well as over 40 state and federal agencies that work specifically with small businesses.
Warner Robins Procurement Counselor Larry Selman will be representing the Georgia Tech Procurement Assistance Center at this event.
“I am honored to be able to offer this excellent opportunity to small business people from across Georgia,” said Sen. Isakson. “As someone who ran a small business for more than 30 years, including in difficult economic times, I know how helpful it can be to get good advice from professionals. Whether you are considering opening a small business or have run your own company for many years, this summit has something to offer you, particularly in the current economic climate. I encourage anyone interested in meeting with professionals in the field to participate.”
All persons who are interested in attending must make a reservation online at rsvp@isakson.senate.gov, or by contacting Isakson’s office at (770) 661-0999. All persons who wish to attend must do so by the registration deadline on August 9, 2010.
Maximizing the Web’s convenience, accuracy and speed, IRS.gov, IRS’s web site, now assists millions of individual taxpayers, tax professionals, and small business owners to better understand and meet their tax responsibilities.
Updated Virtual Small Business Tax Workshop
The IRS’s Virtual Small Business Tax Workshop is an interactive resource to help small business owners learn about their federal tax rights and responsibilities. This dynamic educational product, available online, consists of nine stand-alone lessons that can be selected and viewed in any sequence. A bookmark feature makes it possible to leave and return to a specific point within the lesson. Users also have access to a list of useful online references that enhance the learning experience by allowing them to view references and the video lessons simultaneously.
The Virtual Small Business Tax Workshop is the first of a series of video products designed exclusively for small business taxpayers. A new companion series called, “Your Guide to an IRS Audit” is in development with plans for a summer 2010 launch.
IRS.gov now features audio and video
IRS is augmenting its curriculum of online learning and educational products for the small business community by developing new live broadcasting, phone forums and webinars, and offering audio and video presentations.
Testing social media
The IRS is testing social media. You can see the IRS YouTube video site at YouTube – irsvideos’s Channel and an iTunes podcast to help taxpayers take full advantage of the 2009 tax provisions in the American Recovery and Reinvestment Act.
The IRS YouTube channel debuted with seven Recovery videos in English and American Sign Language and eight in Spanish plus other languages.
People without an iTunes account can hear those same podcasts, in English and Spanish, on IRS.gov’s Multimedia Center. People can also visit the audio site at iTunes to listen to IRS podcasts about ARRA tax credits.
To get the most timely IRS news and information about products and services for small businesses and the self-employed, subscribe to e-News on IRS.gov at http://www.irs.gov/businesses/small/article/0,,id=154825,00.html, click “Subscribe Now” at the bottom of the page and enter your e-mail address.
by Matthew Weigelt-Jan. 20, 2010-President Barack Obama today took some basic steps to hammer government contractors that are delinquent in paying their taxes.
In a memo the president signed this morning, Obama directed the Office of Management and Budget, the Treasury Department and other federal agencies to find ways to block companies that have not paid taxes from receiving new government contracts. He expects recommendations on how the government can do that in three months.
One way to do that is better data-sharing. The president wants a plan to make contractors’ certifications on their taxes available in a governmentwide database, similar to the data exchanges already being done with other information on companies.
“All across this country, there are people who meet their obligations each and every day,” Obama said in a speech today before signing the memo. “And yet, somehow, it’s become standard practice in Washington to give contracts to companies that don’t pay their taxes.”
The president is also directing the IRS to conduct a review of the overall accuracy of companies’ claims about tax delinquency.
“We need to be sure that when a company says it’s paying taxes, that company is in fact paying taxes,” he said.
A regulatory change to the Federal Acquisition Regulation in 2008 requires contractors to certify whether they had delinquent taxes, had failed to pay taxes or had received notice of a tax lien against them. In addition, an agency could suspend or debar the company from government work if a contractor told the government it had had problems with taxes during the previous three years.
In his speech, Obama asked Congress to approve legislation to allow data sharing between the IRS and contracting officials at agencies.
“So the steps I’m directing today and the steps I’m calling on Congress to take are just basic common-sense steps,” Obama said. “They’re not going to eliminate all the waste or all the abuse in government contracting in one fell swoop.”
