00-13157. General Services Administration Acquisition Regulation: Tax Adjustment

AGENCY:

Office of Acquisition Policy, GSA.

ACTION:

Proposed rule.

SUMMARY:

The General Services Administration (GSA) proposes to amend the General Services Administration Acquisition Regulation (GSAR) by adding a new clause Tax Adjustment, and by revising the section GSAR contract clauses.

DATES:

Comments should be submitted on or before July 24, 2000 to be considered in the formulation of a final rule.

ADDRESSES:

Interested parties should submit written comments to: General Services Administration, Office of Acquisition Policy, GSA Acquisition Policy Division (MVP), 1800 F Street, NW, Room 4027, Washington, DC 20405.

FOR FURTHER INFORMATION CONTACT:

Cecelia L. Davis, GSA Acquisition Policy Division, [phone].

SUPPLEMENTARY INFORMATION:

 

A. Background

GSA proposes to amend the GSAR by revising Parts 552 and 570 to prescribe and to incorporate a new clause 552.270-30, Tax Adjustment. The clause will be incorporated in acquisitions of leasehold interest in real property when GSA determined that a tax adjustment is necessary.

B. Executive Order 12866

This regulatory action was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993, and is not a major rule under 5 U.S.C. 804.

C. Regulatory Flexibility Act

GSA 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 simply provides a mechanism for adjusting rent to account for changes in real estate taxes.

D. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to the GSAR do not impose recordkeeping or information collection requirements, or otherwise collect information from offerors, contractors, or members of the public that require approval of the Office of Management and Budget under 44 U.S.C. 3501 et seq.

List of Subject in 48 CFR Part 552 and 570

• Government procurement

Accordingly, GSA proposes to amend 48 CFR Part 552 and 570 as follows:

1. The authority citation for 48 CFR Parts 552 and 570 continues to read as follows:

Authority: 40 U.S.C. 486(c).

PART 552—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

2. Section 552.270-30 is added to read as follows:

552.270-30

Tax Adjustment

As prescribed in 570.603, inset the following clause:

Tax Adjustment (Date)

(a) Definitions. “Base year taxes,” as used in this clause, mean the real estate taxes for the first twelve (12) month period coincident with full assessment, or an amount negotiated by the parties that reflect an agreed on base for a fully assessed value of the property.

“Full assessment,” as used in this clause, means that the taxing jurisdiction has considered all contemplated improvements to the assessed property in the valuation of the same. Partial assessments for newly constructed projects or for projects or for projects under construction, conversion, or renovation will not be used for establishing the Government's base year for taxes.

“Real estate taxes,” as used in this clause, mean only those taxes assessed against the building or the land on which the building is located, without regard to benefit to the property, for the purpose of funding general government services. Real estate taxes shall not include general or special assessments, business improvement district assessments, or any other present or future taxes or governmental charges imposed on Lessor or assessed against the building or the land upon which the building is located.

(b) Adjustment for changes in real estate taxes. This lease provides for adjustments due to changes in real estate taxes on land and buildings occupied by the Government under this lease. Adjustments shall apply to each tax year during the lease term after the base tax year. Under the procedures established in this clause, the Government shall either:

(1) Make a single annual lump sum payment to the Lessor for its share of any increase in real estate taxes during the lease term over the amount established as the base year taxes.

(2) Receive an annual rental credit or lump sum payment from the Lessor for its share of any decreases in real estate taxes during the lease term below the amount established as the base year taxes.

(c) Notices regarding real estate taxes. The Lessor shall furnish the Contracting Officer with copies of each of the following within ten (10) calendar days of receipt:

(1) Any notice which may affect the valuation of land and buildings covered by this lease for real estate tax purposes.

(2) Any notice of a tax credit or tax refund related to land and buildings covered by this lease.

(3) Each tax bill related to land and building covered by this lease.

(d) Increases in real estate taxes. The following procedures apply for any tax year in which the real estate taxes increase over the base year taxes.

(1) Invoice. The Lessor shall submit a proper invoice (as described in the Prompt Payment clause of this lease, GSAR 552.232-75) for the tax adjustment. The invoice must include the calculation of the adjustment for the tax year. The Lessor must also provide a copy of all paid tax receipts for the tax year with the invoice. If the taxing authority does not give tax receipts, the Lessor must provide other similar evidence of payment acceptable to the Contract Officer. The Lessor must submit the invoice together with tax receipts or other evidence of payment no later than sixty (60) days after the date that the final tax payment for the year is due from the Lessor to the taxing authority.

(2) Payment. Upon receipt of a proper invoice and evidence of payment, the Government shall make payment no later than thirty (30) days after receipt of the invoice or thirty (30) days after the anniversary date of the lease, whichever is later. If the lease terminates before the end of a tax year, payment for the tax increase due will be prorated based on the number of days the Government occupied the space.

(3) Waiver of right to adjustment. If the Lessor fails to submit a proper invoice and tax receipts or other evidence of payment within sixty (60) days after the date that the final tax payment for the year is due, then the Lessor waives its right to receive payment for the increased taxes under this clause.

(e) Decreases in real estate taxes. The following procedures apply for any tax year in which the real estate taxes decrease from the base year taxes or during which the Lessor receives a refund or tax deduction for real estate taxes.

(1) The Government shall be entitled to and shall receive a pro rata credit for the reduction in taxes, regardless of whether the Government has not yet made the tax payment for that year.

(2) During the lease term, the Government shall apply any credit as a deduction from the rent.

(3) For any credit due after the expiration or earlier termination of the lease, at the Contracting Officer's direction, the Lessor shall either make a lump sum payment to the Government or provide a rental credit under a succeeding lease. This includes, but is not limited to, credits resulting from a tax decrease pursuant to a tax credit due the Lessor, a reduction in the tax assessment, or a tax appeal proceeding for a year or a portion of the lease. If directed to remit a lump sum payment, the Lessor must make payment to the Government within fifteen (15) days of the Contracting Officer's direction. If the credit due the Government is not paid by the due date, interest shall accrue on the late payment at the rate established by the Secretary of the Treasury under Section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) in effect on the day after the due date. The Government shall have the right to pursue the outstanding balance of any tax credit using all collection methods available to the United States to collect debts. Such collection rights survive the expiration of this lease.

(f) Calculating tax share. The Government shall pay its share of tax increases or receive its share of any tax decrease based on the ratio of the rentable square feet occupied by the Government to the total rentable square feet in the building or complex (percentage of occupancy). For this lease, the Government's percentage of occupancy as of the effective date of the lease is _%. This percentage shall take into account additions or reductions of the amount of space as may be contemplated in this lease or amendments hereto. The block and lot/parcel or other identification numbers for the property, building(s) and parking areas(s) occupied under this lease are __.

(g) Appeals to tax assessments. The Government may direct the Lessor upon reasonable notice to initiate a tax appeal or the Government may decide to contest a tax assessment on behalf of both the Government and the Lessor or for the Government alone. The Lessor shall furnish to the Government information necessary for appeal of the tax assessment in accordance with the filing requirements on its own behalf or on behalf of both the Government and the Lessor, the Lessor shall cooperate and use all reasonable efforts including, but not limited to, affirming the accuracy of the documents, executing documents required for any legal proceeding, and taking such other actions as may be required. If the Lessor initiates an appeal on behalf of the Government, the Government and the Lessor will enter into an agreement to establish a method for sharing expenses and tax savings.

(End of Clause)

PART 570—ACQUIRING LEASEHOLD INTERESTS IN REAL PROPERTY

3. Section 570.603 is amended by adding a new prescription at the end of the section to read as follows:

570.603

GSAR contract clauses.

* * * * *

552.270-30

Tax Adjustment. Insert this clause in solicitations and contracts if you determine that a tax adjustment is necessary.

Dated: May 17, 2000.

Sue McIver,

Acting Deputy Associated Administrator for Acquisition Policy.