SUBPART 232.71—LEVIES ON CONTRACT PAYMENTS

(Revised July 29, 2024)

 

 

 232.7100 Scope of subpart.
 232.7101 Policy and procedures.
 232.7102 Contract clause.


232.7100  Scope of subpart.

This subpart prescribes policies and procedures concerning the effect of levies pursuant to 26 U.S.C. 6331(h) on contract payments.  The Internal Revenue Service (IRS) is authorized to levy up to 100 percent of all payments made under a DoD contract, up to the amount of the tax debt.

 

232.7101  Policy and procedures.

 

      (a)  The contracting officer shall require the contractor to—

 

            (1)  Promptly notify the contracting officer when a levy may result in an inability to perform the contract; and

 

            (2)  Advise the contracting officer whether the inability to perform may adversely affect national security. 

 

      (b)  The contracting officer shall promptly notify the Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP), when the contractor’s inability to perform will adversely affect national security or will result in significant additional costs to the Government.  Follow the procedures at PGI 232.7101(b) (DFARS/PGI view) for reviewing the contractor’s rationale and submitting the required notification.

 

      (c)  The Principal Director, DPCAP, will promptly evaluate the contractor’s rationale and will notify the IRS, the contracting officer, and the payment office, as appropriate, in accordance with the procedures at PGI 232.7101(c) (DFARS/PGI view). 

 

      (d)  The contracting officer shall then notify the contractor in accordance with paragraph (c) of the clause at 252.232-7010 and in accordance with the procedures at PGI 232.7101(d) (DFARS/PGI view).

 

232.7102  Contract clause.

Use the clause at 252.232-7010, Levies on Contract Payments, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services.