26 USC § 5000C Imposition of tax on certain foreign procurement | United States Code | US Law

26 USC § 5000C

Imposition of tax on certain foreign procurement

October 30, 2020

USC

(a) Imposition of tax
There is hereby imposed on any foreign person that receives a specified Federal procurement payment a tax equal to 2 percent of the amount of such specified Federal procurement payment.

(b) Specified Federal procurement payment
For purposes of this section, the term "specified Federal procurement payment" means any payment made pursuant to a contract with the Government of the United States for—

(1) the provision of goods, if such goods are manufactured or produced in any country which is not a party to an international procurement agreement with the United States, or

(2) the provision of services, if such services are provided in any country which is not a party to an international procurement agreement with the United States.

(c) Foreign person
For purposes of this section, the term "foreign person" means any person other than a United States person.

(d) Administrative provisions

(1) Withholding
The amount deducted and withheld under chapter 3 shall be increased by the amount of tax imposed by this section on such payment.

(2) Other administrative provisions
For purposes of subtitle F, any tax imposed by this section shall be treated as a tax imposed by subtitle A.

Effective Date

Pub. L. 111–347, title III, §301(a)(3), Jan. 2, 2011, 124 Stat. 3666, provided that: "The amendments made by this subsection [enacting this section] shall apply to payments received pursuant to contracts entered into on and after the date of the enactment of this Act [Jan. 2, 2011]."

Prohibition on Reimbursement of Fees

Pub. L. 111–347, title III, §301(b), Jan. 2, 2011, 124 Stat. 3666, provided that:

"(1) In general.—The head of each executive agency shall take any and all measures necessary to ensure that no funds are disbursed to any foreign contractor in order to reimburse the tax imposed under section 5000C of the Internal Revenue Code of 1986.

"(2) Annual review.—The Administrator for Federal Procurement Policy shall annually review the contracting activities of each executive agency to monitor compliance with the requirements of paragraph (1).

"(3) Executive agency.—For purposes of this subsection, the term 'executive agency' has the meaning given the term in section 4 of the Office of Federal Procurement Policy Act ([former] 41 U.S.C. 403) [see 41 U.S.C. 133]."

Application

Pub. L. 111–347, title III, §301(c), Jan. 2, 2011, 124 Stat. 3666, provided that: "This section [enacting this section and provisions set out as notes under this section] and the amendments made by this section shall be applied in a manner consistent with United States obligations under international agreements."

Tried the LawStack mobile app?

Join thousands and try LawStack mobile for FREE today.

Carry the law offline, wherever you go.
Download CFR, USC, rules, and state law to your mobile device.