Overview
FAR Subpart 4.9 establishes the policies and procedures for collecting Taxpayer Identification Numbers (TINs) from government contractors. Its primary purposes are to facilitate the collection of delinquent debts owed to the government and to ensure compliance with Internal Revenue Service (IRS) reporting requirements for contract awards and payments.
Key Rules
- Mandatory Disclosure: Under 31 U.S.C. 7701(c), any contractor doing business with the government must provide their TIN to the contracting agency.
- Debt Collection Linkage: The government is legally permitted to use a contractor's TIN to identify, report, and collect any delinquent debts arising from the contractor's relationship with the government.
- IRS Reporting Thresholds: Agencies must report contract information to the IRS for:
- Contracts and modifications exceeding $25,000 entered into on or after January 1, 1989.
- Modifications of $50,000 or more for contracts awarded before January 1, 1989.
- Data Requirements: Reported information must include the contractor’s name, address, TIN, the common parent’s TIN (if applicable), contract amount, and estimated completion date.
- Submission Method: Contract information is generally transmitted to the IRS via the Federal Procurement Data System (FPDS).
Responsibilities
- Contractors: Must provide their TIN and, if applicable, the TIN of their common parent corporate entity. They must also ensure this information is accurate for Form 1099 reporting.
- Contracting Officers (COs):
- Must ensure the TIN is collected during the solicitation or award process.
- Must insert the provision 52.204-3 (Taxpayer Identification) in solicitations that do not use the System for Award Management (SAM) and are not conducted under FAR Part 12 (Commercial Products and Commercial Services).
- Responsible for ensuring contract data is accurately reflected in FPDS for IRS reporting.
- Payment Office: Responsible for submitting reports (such as Form 1099) to the IRS regarding payments made to contractors.
- Agency Heads: Required by statute to ensure their agencies report necessary contract information to the IRS.
Practical Implications
- SAM.gov Integration: In modern practice, most TIN collection is handled automatically through the System for Award Management (SAM). Because FAR 4.905(a) exempts SAM-based solicitations from needing the specific 52.204-3 provision, many COs rarely use the manual provision unless dealing with specific exempt entities or foreign contractors.
- Financial Accountability: For contractors, a failure to provide a TIN or providing an incorrect one can lead to "backup withholding" on payments or delays in contract award.
- Corporate Transparency: The requirement to provide a "Common Parent" TIN prevents companies from using subsidiaries to obfuscate their total tax liability or debt obligations to the federal government.
- Inter-agency Data Sharing: This subpart highlights the intersection of procurement and tax law, showing how the FPDS acts as a bridge between the Department of Defense/Civilian agencies and the Department of the Treasury.