DAR Council Corner

Levy on Payments to Contractors. Defense Federal Acquisition Supplement (DFARS) Case 2004-D033, Levy on Payments to Contractors, implements Section 887 of the American Jobs Creation Act of 2004. Section 887 provides for up to a 100-percent levy against contract payments for taxes owed by contractors. The Debt Collection Improvement Act of 1996 authorized a centralized program for the offset of federal payments, including contract payments to collect delinquent nontax debts owed to the federal government.

To implement this authority, the Department of the Treasury (DOT) created the Treasury Offset Program (TOP). The Taxpayer Relief Act of 1997 authorized the Internal Revenue Service (IRS) to continuously levy up to 15 percent of certain federal payments, including contract payments. To implement this authority, the Federal Payment Levy Program (FPLP) was created. The FPLP is an automated process that uses the TOP system to match delinquent tax debts with federal payments. When a match occurs, the payment is levied and applied to the tax debt. DOD and the IRS plan to implement an enhanced automated system to assess the levies.

What this means to contractors who owe back taxes to the U.S. government is that the Defense Finance and Accounting Service will coordinate with the 1RS and levy up to 100 percent of contract payments. These payments will be made to the DOT. Prior to this law, only levies up to 15 percent could be imposed.

Look for the interim rule in the Federal Register implementing this levy in DFARS Part 231 - Contract Financing Subpart 232.71 - Levies on Contract Payments. The interim rule will allow procedures for a contractor to request temporary adjustment to the levy process through the contracting officer with approval by the Director, Defense Procurement and Acquisition Policy.

Requiring Activity Responsibilities for Proper use of NonDOD Contracts Seminar. Keep an eye out for the Requiring Activity Responsibilities for Proper Use of Non-DOD Contracts seminar to be presented by the Office of the secretary of Defense at multiple locations. This 4-hour seminar will increase the awareness of all DOD users of non-DOD contracts on how to properly execute acquisitions to meet DOD missions. The target audience is program managers, financial managers, requirement officials, item managers and budget/financial officers. Contracting officials and legal personnel may also attend. The seminar will cover DOD policy and guidance, requiring activity responsibilities, available acquisition training tools and General Services Administration and other non-DOD purchasing vehicles. Continuous learning points may be earned.

General seminar information is available at http://www.acq. osd.mil/dpap/index.htm under Proper Use of Non-DOD Contracts. Seminar point of contact is Michael Canales, Michael.Canales@osd.mil or (703) 695-8571.

This information is provided by Army DAR Policy Member Barbara Binney, (703) 604-7113.