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The article analyzes the likely ramifications of the U.S. Renegotiation Act of 1951 on the profits of business enterprises in the country. It is reported that, if the act becomes law then the net profits, before taxes, of business enterprises on any government contracts or subcontracts are likely to be 10% or less. It is reported that, the act also has a provision of setting up of an independent renegotiation board of five members.

The article comments on corporate taxation in the United States as of July 3, 2006. Buffalo Supply earns something shy of 4% pretax on the $46 million a year in hospital supplies it sells, mostly to the Departments of Veterans Affairs and Defense. But beginning in 2011 the government will withhold 3% of its payments to Buffalo, as an advance against income taxes that Buffalo's owner might owe on the company's profits. Buffalo isn't a tax delinquent deserving special heavy-handed treatment. The 3% withholding will apply to all for-profit suppliers to federal, state and larger local governments. A Republican-controlled House-Senate conference committee stuck the withholding tax provision into the bill passed in May to extend lower tax rates on capital gains and dividends. Congress is adopting a series of "revenue raisers" like Buffalo's that it can package as "loophole" closers or enforcement measures. It's a nod to the budget deficit and is also intended to help pay for the extension of existing tax goodies.

Discusses ways for which government contractors can avoid tax audits. Complying with regulations; Adequacy of internal controls; System for cost estimating and proposal preparation; Reliability of the job cost system; Revenue recognition under long-term contracts; Provisions for billings and receivables.

The article discusses the rules of the U.S. Internal Revenue Code Section 199 on domestic production activities deduction (DPAD) for government contractors. The section allows a deduction for such activities equal to 9% of the lesser income of the taxpayer or taxable income determined by other rules. It offers definition of qualified production activities and production property. It also cites the six exceptions to a rule that excludes gross receipts from embedded services as domestic production gross receipts.

This article discusses a tax-lobbying effort in which U.S. government contractors are said to urge lawmakers to rescind part of a 2006 law that will impose withholding tax on their government work. Contractors were particularly concerned about the cost implications of the said law. They claim it will place small companies at a competitive disadvantage. Senator Charles E. Grassley is reportedly consulting with the Joint Committee on Taxation on whether the withholding provision is still needed.

The article discusses the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) which require federal and state governments to deduct and withhold 3% of payments made to contractors and vendors. TIPRA was the U.S. government's response to curtail delinquent taxes from government contractors which, according to the Government Accountability Office (GAO), have accumulated significant personal assets. The nature of the tax law has unjustly targeted not only those who owe the government taxes but those who are of good tax standing. Several legislative proposals aimed at repealing TIPRA has been developed including the proposed Federal Acquisition Regulation Case 2006-001 and the Contractor Tax Enforcement Act.

The article reports that a new Government Accountability Office (GAO) report has made an issue of tax haven contractors. The GAO has noted those companies (who win federal contracts) who outsource and are able to reduce their taxable income by shifting it to tax haven operations. The article discusses legislation in the US Senate, an amendment to the JOBS Act (part of the larger FSC/ETI bill), that might eliminate this tax shelter. The US House version of the bill did not contain this amendment.

The article focuses on the economic aspects of retainages in case of contracts which do not fall in the category of long-term contracts. It discusses the issues related to retainages of contractual service arrangements made with the U.S. government in terms of recognizing them in a particular year for tax purposes. It informs that the amount of the retainage is not includible in income until the project has been completed or the condition for payment of retainage is fulfilled.

The article discusses the factors to consider by government contractors to avail the permanent tax savings under the extraterritorial income exclusion rule or the interest-charge domestic international sales corporation rule. The rules look at where goods and services are consumed. Transactions subsidized by the U.S. or an instrumentality of the U.S. is an example of a situation in which exports are not eligible for tax benefits. It highlights opportunities offered by the rules to government contractors.

The article focuses on the availability of the foreign earned income exclusion, foreign tax credits and combat pay exclusion for government contractors in the U.S. According to the Status of Forces Agreements, tax residency in a foreign country is prohibited. The Agency for International Development (USAID) offers subsidized funds, expertise and humanitarian relief to recipient nations. Federal employees and USAID employees are ineligible for the foreign earned income exclusion.

The article reports on the passage of the Taxpayer Assistance and Simplification Act of 2008, a law that promises to make tax preparation easier in the U.S. in April 2008. It states that the law repeals the Private Debt Collection Program of the U.S. Internal Revenue Service (IRS). It offers an overview of the provisions of the law, which includes stopping federal contractors from using foreign subsidiaries to evade Social Security and other employment taxes.