98-21631. Federal Acquisition Regulation; Taxes Associated With Divested Segments

[Federal Register Volume 63, Number 155 (Wednesday, August 12, 1998)]
[Proposed Rules]
[Pages 43127-43128]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21631]


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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.

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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, [phone], for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Nelson at [phone]. 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. 98-21631 Filed 8-11-98; 8:45 am]
BILLING CODE 6820-EP-P