Notice to 52.229-11+52.229-12+W-14.pdf

The sole purpose of this NOTICE is to make industry aware of the inclusion of Federal Acquisition Regulation (FAR) provision 52.229-11 and clause 52.229-12 in the solicitation AND the requirement to submit IRS Form W-14 with the offer. This provision and clause concern the imposition of a 2% Federal excise tax withholding on any resultant contract award or payment request.

This NOTICE has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before executing IRS Form W-14.

NOTICE regarding FAR provision 52.229-11, FAR clause 52.229-12, IRS Form W-14

FAR Subpart 29.204 Federal excise tax on specific foreign contract payments states:

(a) Title 26 U.S.C. 5000C requires acquiring agencies to collect a Federal excise tax via withholding on applicable contract payments. If applicable, agencies will merely withhold the tax for the Internal Revenue Service (IRS).

(b) In accordance with FAR provision 52.229-11, exemptions from this excise tax must be claimed by an offeror when it submits an IRS Form W-14 with the offer. If not submitted with the offer exemptions will not be applied to any resulting contract and the Government will withhold a full 2% on each payment. Any exemption claimed and self-certified is subject to audit by the IRS. Any disputes concerning this tax are to be adjudicated by the IRS because the Section 5000C tax is a tax matter not a contract issue.

(c) In accordance with FAR clause 52.229-12, all contractors that are subject to this excise tax will complete IRS Form W-14 and submit the form . If an IRS Form W-14 is not completed & submitted with a payment request, the agency must withhold 2% for that payment request. Further information about IRS Form W-14 is available at https://www.irs.gov/forms-pubs/about-form-w-14

FAR Subpart 29.2 - Federal Excise Taxes https://www.irs.gov/government-entities/excise-tax-on-specified-federal-foreign-procurement-payments

IRS Form W-14 shall be used with an OFFER to establish:

(i) You are a “foreign contracting party” and

(ii) To claim “exemptions” from the Section 5000C excise tax.

*CAUTION*

*Exemptions must be claimed by an offeror when it submits an IRS Form W-14 with an offer; if not submitted with the offer, exemptions will not be applied to the contract and the Government will withhold a full 2% on each payment request.

*A failure to submit IRS Form W-14 will result in an automatic withholding of 2% from the payment request.

Purpose of IRS Form W-14

A “foreign contracting party” must claim an exemption by indicating in section II and III of IRS Form W-14 the applicability of (1) an international agreement* and/or (2) an international procurement agreement**

*International Agreement - The following Qualified Income Tax Treaties cover all nationals of the treaty country and exempts such nationals from this excise tax (i.e., Austria, Bangladesh, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Iceland, Italy, Jamaica, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Portugal, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Turkey, United Kingdom, Venezuela (see Instructions for Form W-14 APPENDIX A and APPENDIX B (see https://www.irs.gov/instructions/iw14). *Note: the list of countries covered is subject to change at any time. Consult the list regularly for any changes.

**International Procurement Agreement – The World Trade Organization Government Procurement Agreement (WTO-GPA) is a free trade agreement to which the United States is a party. There are 15 Parties to the WTO-GPA: Armenia, Canada, the European Union (and its 27 Member States -- Austria, Belgium, Bulgaria, , Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, and the United Kingdom), Hong Kong China, Iceland, Israel, Japan, the Republic of Korea, Liechtenstein, the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, Taiwan (Chinese Taipei), and the United States (see https://ustr.gov/trade-agreements/wto-multilateral-affairs/wto-issues/government-procurement-agreement). *Note: the list of countries covered is subject to change at any time. Consult the list regularly for any changes.

How Can a Contractor Claim an Exemption?

https://www.irs.gov/instructions/iw14

LINE 1. Enter the name of the foreign contracting party.

LINE 3. Enter the permanent resident address of the foreign contracting party.

LINE 4. Enter the mailing address of the foreign contracting party only if it is different from the address in line 3.

LINE 5. Enter the foreign contracting party's U.S. taxpayer identification number (TIN), if applicable. If the foreign contracting party is an entity, enter its U.S. employer identification number (EIN), if applicable. If the foreign contracting party is an entity and does not have an EIN, apply for one on Form SS-4, Application for U.S. Employer Identification Number, if the foreign contracting party is required to obtain a U.S. TIN.

LINE 2. If the foreign contracting party is a corporation, enter its country of incorporation. If the foreign contracting party is another type of entity, enter the country under whose laws the foreign contracting party is created, organized, or governed. Do not abbreviate the name of the country.

LINE 6. Enter the contract # OR reference #, if known.

LINE 7. Enter the name and address of the acquiring agency.

How to Fill Out IRS Form W-14

Complete Part II by checking the box on Line 8 if you are claiming relief from the tax pursuant to an international agreement with the United States. NOTE:

Germany has a qualified income tax treaty with the United States and exempt all such nationals from the tax.

How to Fill Out IRS Form W-14

Complete Part III to indicate that the country where the goods are manufactured or produced or services provided are party to an international procurement agreement with the United States.

Do NOT check Line 9 unless you are identifying exempt and non-exempt amounts (i.e.

partial or no exemption being claimed.

Line 10 enter the total contract price or estimated total contract price.

Line 11 enter nonexempt amount, etc (if appliable).

Line 12 enter contract ration (line 11 divided by line 10) (if applicable).

Complete Part IV (13) to provide an explanation for the exemption claimed in Part

II.

Sample language (if deemed applicable by contractor):

Germany is party to a qualified income tax treaty with the United States which exempts all German nationals from the tax (see Instructions for IRS Form W-14 Appendix A and B at https://www.irs.gov/instructions/iw14).

We are a business organized in Germany and exempt pursuant to the nondiscrimination clause in Article 23 of the treaty.

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Complete Part IV (14) to provide an explanation for the exemption claimed in Part III.

Part III – International Procurement Agreement (e.g., IPA - Austria, Belgium, Germany etc)

Complete Part IV (15) if you checked Line 9 to provide an explanation for each item identifying specific exempt and nonexempt amounts. *Do not execute unless there is only a partial or no exemption being claimed.

Complete Part V Certificate - Authorized representative signature certifying the contents of IRS Form W-

Sample language (if deemed applicable by contractor):

Germany is party to a World Trade Organization Government Procurement Agreement (WTO-GPA) with the United States. (see https://ustr.gov/trade-agreements/wto-multilateral-affairs/wto-issues/ government-procurement-agreement). We are exempt because we are a business organized in Germany, the country where the goods are manufactured or produced or where the services will be provided and the German/US WTO-GPA includes government procurement .

Sample language (if deemed applicable by contractor):

Explain the method relied upon to allocate the total contract price between exempt and non-exempt amounts. Go to https://www.irs.gov/instructions/iw14 for instructions.

How to Fill Out IRS Form W-14