IRS Proposal Would Exempt Certain Foreign Procurement Purchases

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April 20 — The IRS issued proposed rules on the imposition of and exemption from tax on certain foreign procurement, and on the U.S. government's obligation to withhold, deposit and report amounts to the IRS.

However, the payments must not exceed the threshold of Federal Acquisition Regulation rules for acquisitions and contracting, the Internal Revenue Service said in the proposed rules (REG-103281-11; RIN 1545-BK06).

“The IRS and the Treasury Department recognize that withholding under Section 5000C on contracts in certain circumstances may be administratively burdensome, and in some cases, more costly than the tax actually collected,” the IRS said.