PRESOL | B | Offshore Tax Transactions in Compliance Assurance Process

FBO DAILY ISSUE OF JULY 20, 2012 FBO #3891
SOLICITATION NOTICE

B -- Offshore Tax Transactions in Compliance Assurance Process

Notice Date: 7/18/2012
Notice Type: Combined Synopsis/Solicitation
NAICS: 541990 — All Other Professional, Scientific, and Technical Services
Contracting Office: Department of the Treasury, Internal Revenue Service (IRS), National Office Procurement (OS:A:P), 6009 Oxon Hill Road, Suite 500, Oxon Hill, Maryland, 20745
ZIP Code: 20745
Solicitation Number: TIRNO-12-Q-00168
Archive Date: 8/3/2012
Point of Contact: Tracy Holland, Phone: 202-283-1356
E-Mail Address: tracy.holland@irs.gov
(tracy.holland@irs.gov)
Small Business Set-Aside: Total Small Business
Description: This advertisement is a combined solicitation/synopsis this notice constitutes the only solicitation, no written solicitation will be issued. The Internal Revenue Service (IRS) intends to award a contract for the second phase of an ongoing study regarding evidence to support compliance inferences drawn about income shifting using Compliance Assurance Process (CAP) firms as a benchmark. The evidence shall compare results in treaty countries and non treaty countries for CAPs and non-CAPs with a focus of specific tax positions, such as those related to income shifting. Five (5) tax positions will be analyzed to include the use of: 1.) Net operating losses (NOL's); 2.) Foreign tax credits (FTC); 3.) Transfer pricing; 4.) Mergers and acquisitions; 5.) Financial instruments; Special attention shall be given to the measurement and valuation of intangible assets, especially as this related to transfer pricing positions. The research will merge and extend the conceptual and empirical results from income shifting study and combine these results with evidence from the study book and tax attributes in compliant (CAP) firms. Merging the results of the income shifting study with those of the CAP attributes study should advance understanding about the determinants of compliant offshore income shifting as these relate to the five tax positions identifies above in both treaty and non-treaty countries. The objective of the research is to apply the analytical framework for income shifting based on knowledge of book and tax attributes observed in two sets of corporate taxpayers: CAP firms and non-CAP firms. CAP firms to provide the benchmark for compliance. The application of the framework will compare and contrast details about the tax positions enumerated above for treaty and non-treaty countries and relate these details to specific boo and tax attributes. A similarly sized group of non-CAP firms will be identified with a separate sample design that IRS Research will develop and provide in order to demonstrate the framework. Description of Task : Task 1: Empirical Techniques to Align the Income Shifting and CAP Studies; A set of two subtasks are required to prepare the data needed from the two studies in order to draw compliance inferences for income shifting. A.) Entity Definition. The identification of related entities for corporate taxpayers is one of the fundamental building blocks for the process and involves describing the capitalization of the various majority and minority (corporate subsidiary) positions, partnerships, disregarded entities and sundry transparents that comprise the business venture. This analysis will focus on comparisons of CAP and non-CAP taxpayers in treaty and non-treaty countries. Evidence about the five tax positions will be included in the analysis of the entities and enterprise. Accounting Rules. Conceptual and empirical accounting rules are needed to resolve data exceptions and to perfect aberrant computational expressions that may arise in computing rates of return and tax rates in the income shifting context. This will include conventions for the use of book and tax measures in the framework, including measures from both the balance sheet and the income statement. The suggested accounting rules and their computational effects in the income shifting framework will be applied and summarized in treaty and nontreaty countries. Task 2 : Specification of the Analytical Framework for the Inferential Analysis of Income Shifting in CAP Firms Three subtasks comprise the requirements of the task to specify the analytical framework. These task address the use of quantifying risk measurement and risk attributes, the specifications of the inferential framework and a demonstration of the results. •A. Quantifying compliance attributes from the book and tax data that are correlated with the five tax positions. •B. Defining risk measures based on these attributes to serve as proxy measures for the probability and severity (or magnitude) of compliance. •C. Applying an inferential framework provided by the Office of Research to include a set of analytical expressions that ascribe the expected compliance or noncompliance of income shifted in an offshore jurisdiction for the two set of corporations (CAP and non-CAP) along with measures of sanctions related to IRS compliance and enforcement actions. •D. A demonstration of the inferential framework will be provided to compare the unrecognized tax benefits (UTB) for an entity in a jurisdiction for CAP and non CAP firms in treat and non-treaty countries to include: •1. a summarization of measures of the probability and severity (or magnitude) of compliance to reflect the certainty of the results in the aggregate; •2. a comparative ranking of CAP to non CAP firms in treaty and non-treaty countries; •3. descriptions of pertinent accounting measures/techniques in the framework and, the consequences for drawing inferences about the taxpayers. C.3.2 Description of Deliverables: The Deliverables listed below shall be required in accordance with Section F.4.0 of this statement of work. C.3.2.1 Task 1 : Empirical Techniques to Align the Income Shifting and CAP Studies •a) Documentation of the parts of the two models that are aligned and the data sources used in the alignment, including copies of the data with definitions of variables and measures, sources of the data, along with copies of the computer programming software used to estimate the model. •b) A report explaining the entity definitions and the accounting rules as they are applied to the data aligned as described in C.3.2.1.a •c) A briefing and demonstration of the model and research results for senior IRS management and staff. C.3.2.2 Task 2 : Specification of the Analytical Framework for the Inferential Analysis of Income Shifting in CAP Firms •a) Documentation of the model and data sources used in the analysis including copies of the data with definitions of variables and measures, sources of the data, along with copies of the computer programming software used in the framework and the demonstration. This will include specialized software documentation/instructions that may be part of the framework. •b) A report explaining the inference framework, a review of pertinent academic literature, and including a descriptive narrative and statistical analysis of the measures and variables used in the framework. The report should also include a detailed explanation of the logical process, quantitative constructs, accounting measures/techniques and economic models used to draw the inferences. •c) A briefing and demonstration of framework and research results for senior IRS management and staff. The Contractor will conduct a minimum of three project meetings with IRS personnel during the progress of work. The meeting should be scheduled at the beginning, midpoint, and completion of the contract. C.4.0 TRAVEL All travel by contractor personnel to IRS locations for meetings shall be the responsibility of the Contractor without any additional charge to the IRS. C.5.0 REPORTS The Contractor shall provide monthly status reports by the 15th of each month for program monitoring purpose. This report shall contain costs expended and dollars remaining for each individual sub-task. Impact statements, where and when appropriate, shall be produced by the Contractor. In addition, if the Government is expected to provide information, a decision, or assistance, the Contractor shall include this information in the monthly report. These reports shall contain the following items: •1) The header shall contain the name of the task; •2) Contract number; •3) The month ending date reporting for: •4) The COTR's name, telephone number; •5) The task managers name and telephone number; •6) Notes for the monthly period (general information, as well as decisions made, information requested, and information received); •7) SOW tasks fully completed; •8) SOW tasks in progress - status information for each deliverable/task in progress and a complete explanation of why any deliverable is not on time; and •9) COTR/Contractor issues and concerns. C.6.0 GOVERNMENT FURNISHED DATA The Government shall furnish all the tax data and other required information to the Contractor for the completion of this contract. Contract will provide access to book data for corporate financial statements from Compustat or other sources. Government data furnished by the IRS shall include the tax data for the second phase of the study. This includes the use of masked taxpayer data from the Compliance Data Warehouse (CDW) for some of the data sources, such as the BRTF, ERIS and AIMS data. Use of the tax data will depend on the final specifications taken by the contractor for the model in phase II of the study. C.6.1 GOVERNMENT FURNISHED EQUIPMENT At the request of the Contractor, the Government will furnish available ADP equipment, desks, phones, etc. to perform this contract. This equipment will include, but not be limited to: access to workstations, servers, and telecommunications hardware. Any essential equipment not available from the government shall be the responsibility of the Contractor. At the request of the Government, the Contractor shall immediately return any Government provided equipment, specialized or off-the-shelf software, and all other materials that were provided by the Government for the Contractor to use to complete this contract. C.7.0 ACCESS TO GOVERNMENT PROPERTY AND FACILITIES C.7.1 IDENTIFICATION BADGES The applicable Contractor employee shall not begin working under this contract until all security forms have been properly completed and submitted. All Contractor employees shall be required to wear identification badges when working in Government facilities. The Contractor shall strive to utilize personnel with an acceptable IRS MBI already in place. C.8.0 MINIMUM BACKGROUND INVESTIGATIONS The Contractor's personnel assigned to this task will be subjected to a Minimum Background Investigations (MBI's) as stated in IRM 1.23.2 (Feb 1, 2003). The COTR will provide to the Contractor all forms needed for investigative purposes and all forms are to be filled out by the Contractor's employees prior to work being initiated this task. The Contractor shall provide personnel capable of obtaining a Minimum Background Investigation (MBI) security clearance as required by the IRS. The Contractor shall cooperate fully with the IRS in providing the information necessary for the IRS to conduct these security checks. The Contractor shall replace any employee who fails the security background check. The Contractor's personnel shall be required to obtain identification badges in order to perform work on the contract resulting from this SOW. SECTION E: INSPECTION AND ACCEPTANCE E.1.0 INSPECTION Inspection shall be at the place of performance and delivery as stated herein. E.2.0 GENERAL ACCEPTANCE CRITERIA The specific criteria for each Deliverable are detailed in Section E.3.0 below. In addition, the general quality measures as set forth below will be applied to each Deliverable received from the Contractor under this statement of work. Any perceived conflict between quality measures referenced in Section C of the statement of work and the quality measures listed below should be immediately reported to the Contracting Officer. •1) Accuracy - Deliverables shall be accurate in presentation, technical content, and adherence to accepted elements of style. •2) Clarity - Deliverables shall be clear and concise; technical terms shall be used, as appropriate. All diagrams shall be easy to understand and be relevant to the supporting narrative. •3) Specification Validity - All Deliverables shall satisfy the requirements of the Government as specified herein. •4) File Editing - All text and diagrammatic files shall be editable by the Government. •5) Format - Deliverables shall be submitted in hard copy (where applicable) and in media defined in the Statement of Work. The deliverable format may change from Task to Task. Hardcopy formats shall follow Treasury/IRS Directives and shall be consistent with other similar efforts. •6) Timeliness - Deliverables shall be submitted on or before the due date specified in the Deliverables Section of this Statement of Work or submitted in accordance with a later scheduled date determined by the Contracting Officer. For each deliverable, the Government will review the documentation to determine the conformance to the requirements outlined in Section C.3. Within five business days, the Government will accept or reject in writing the documentation. In the event of rejection, the Contractor shall have three business days to correct and resubmit. E.3.0 SPECIFIC DELIVERABLE ACCEPTANCE CRITERIA Task No. and Specific Deliverable Acceptance Criteria 1. C.3.2.1. Empirical Techniques to Align the Income Shifting and CAP Studies To be accepted by the IRS, the report and documentation shall satisfy the following criteria: 1) Comply with its requirement in C.3.1 and C.3.2, and 2) Contains a methodology description, a recommendation on tax compliance issues for testing, and a list of potential data transformations and qualitative attributes to be considered for estimating the corporate tax gap. 2 C.3.2.2 Specification of the Analytical Framework for the Inferential Analysis of Income Shifting in CAP Firms To be accepted by the IRS, the deliverables for this task shall satisfy the following criteria: 1) Comply with its requirement in C.3.1 and C.3.2, 2) Complete description of the tax measures used as proxies for the financial attributes from the book data used in task 1, 3) Documentation for creating the combined datastreams used for the framework. Instructions for running the computer software and running the framework demonstration including documentation of the entities and super-jurisdictions used in the database for the framework. F.2.0 SHIP TO: Unless otherwise noted below, all Deliverables locally within the Washington, DC Metropolitan area. SECTION F: DELIVERIES OR PERFORMANCE F.1.0 PLACE OF PERFORMANCE All work shall be performed at Contractor's own facility except those government locations specifically identified in Section C.4 in conjunction with one or more sub-tasks. to the COTR with a copy to the Government Task Manager at the following addresses: NHQ Office of Research 77 K Street NE Room 301 Washington DC 20002 no later than 4:30pm local time on the date specified in section F.4.0 of this contract. F.3.0 DELIVERABLES The Contractor shall refer to Section C.3.2 of the statement of work for Deliverables that shall be required for each Task. Also refer to Section C.5.0 for specific reports required. All deliverables will be reviewed in accordance with E.2.0 General Acceptance Criteria and E.3.0 Specific Deliverable Acceptance Criteria. F.4.0 DELIVERY SCHEDULE The required Deliverables as set forth herein shall be delivered according to the schedule below: Note: Where electronic (CDROM) and paper media are requested for any deliverable, the completion dates apply to the delivery of both types of media. Deliverable No. Deliverable Description Software to Be Utilized (Where Applicable) Media Copies Estimated Start & Completion Dates 1 C.3.2.1 Empirical Techniques to Align the Income Shifting and CAP Studies Microsoft Office 2003 Word (report), Excel (database), Contractors choice for model Paper or CDROM 2 2 1 to 130 work days after contract award 2 C.3.2.2 Specification of the Analytical Framework for the Inferential Analysis of Income Shifting in CAP Firms Microsoft Office 2003 Word (report), Excel (database), and Contractors choice for model Paper and CDROM 2 2 131 to 260 work days after contract award For Section F.4.0, your proposal shall include a schedule by Task and shall include the planned start and completion dates, and responsible organization (either Contractor or Government) for each activity as well as the due date for the Deliverable. F.5.0 PERIOD OF PERFORMANCE The period of performance for this contract shall be 12 months from date of contract award. In the event completion of this contract falls on a non-business day such as a weekend or holiday, the contract completion date shall proceed to the next business day. SECTION H: SPECIAL CONTRACT REQUIREMENTS H.1.0 KEY PERSONNEL The following identifies those key personnel that are deemed necessary for the successful completion of contractual requirements: Name Position Estimated Hours Required TBD Program/Technical Manager 100 TBD Accounting/OR Analyst 200 GOVERNMENT POINTS OF CONTACT: To be identified at time of contact award H.2.0 SECURITY REQUIREMENTS The applicable Contractor shall not begin working on this requirement until all security forms have been properly completed and submitted. All Contractor employees assigned to this requirement shall be subjected to Minimum Background Investigation (MBI), in accordance with IRM1.23.2 (Feb 2003). Perspective Contractor staff will be required to complete security paperwork prior to access to any IRS facility. Any perspective employees, who fail the security background check, shall be replaced by the Contractor. The Contractor's personnel shall be required to obtain an identification badge in order to perform work on the contract award. PROVISIONS: FAR 52.219-6 Notice of Total Small Business Set-Aside; FAR 52.212.3, Offeror Representations and Certifications; FAR 52.212-4 Contract Terms and Conditions-Commercial Items, FAR 52.212-5, Contract Terms and Conditions Required to Implement Statues and Executive Orders-Commercial Items; FAR 52.222-26 equal Opportunity; FAR 52.232-33 Payment of Electronic Funds Transfer-Central Contractor Registration (CCR). Offerors may read these clauses in full text by accessing: http://.arnet.gov or contacting the contract specialist. Award of this contract shall be in accordance with Simplified Acquisition procedures, FAR Part 13, based on best value to the Government. All responsible small business sources shall submit a quote via e-mail no later than 5 calendar days from the posted date of this announcement. All proposals shall include a schedule by Task and shall included the planned start and completion dates, responsible organization (either Contractor or Government) for each activity to include the due date for deliverables. Proposals must include price per task, tree references from similar assignments, to include: Name of company, dates services were performed, contact information, payment terms, delivery time, a contact person to include name, telephone number, business size, DUN's number. All Treasury contractors are required to be actively registered in Central Contractor Registration database prior to receipt of award. DISCLOSURE OF INFORMATION 1. IRSAP 1052.224-9000(c) DISCLOSURE OF INFORMATION-SAFEGUARDS (JAN l998) In performance of this contract, the Contractor agrees to comply with and assume responsibility for compliance by his/her employees with the following requirements: (1) All work shall be performed under the supervision of the Contractor or the Contractor's responsible employees. (2) Any return or return information made available in any format shall be used only for the purpose of carrying out the provisions of this contract. Information contained in such material shall be treated as confidential and shall not be divulged or made known in any manner to any person except as may be necessary in the performance of the contract. Inspection by or disclosure to anyone other than an officer or employee of the Contractor shall require prior written approval of the Internal Revenue Service. Requests to make such inspections or disclosures should be addressed to the IRS Contracting Officer. (3) All returns and return information will be accounted for upon receipt and properly stored before, during, and after processing. In addition, all related output shall be given the same level of protection as required for the source material. (4) The Contractor certifies that the data processed during the performance of this contract shall be completely purged from all data storage components of his/her computer facility and the Contractor will retain no output at the time the IRS work is completed. If immediate purging of all data storage components is not possible, the Contractor certifies that any IRS data remaining in any storage component will be safeguarded to prevent unauthorized inspection or disclosure. (5) Any spoilage or any intermediate hard copy printout which may result during the processing of IRS data shall be given to the IRS Contracting Officer or his/her designee. When this is not possible, the Contractor will be responsible for the destruction of the spoilage or any intermediate hard copy printouts and shall provide the IRS Contracting Officer or his/her designee with a statement containing the date of destruction, description of material destroyed, and the method used. (6) No work involving information furnished under this contract will be subcontracted without the specific approval of the IRS Contracting Officer. (7) All computer systems processing, storing and transmitting tax data must meet or exceed computer access protection controls -(C2). To meet C2 requirements, the operating security features of the system must have the following minimum requirements: a security policy, accountability, assurance and documentation. All security features must be available (object reuse, audit trails, identification\ authentication, and discretionary access control) and activated to protect against unauthorized use of and access to tax information. (8) Should a person (Contractor or Subcontractor) or one of his/her employees make any unauthorized inspection(s) or disclosure(s) of confidential tax information, the terms of the Default clause (FAR 52.249-6 or 52.249-8, as applicable), incorporated herein by reference, may be invoked, and the person (Contractor or Subcontractor) will be considered to be in breach of this contract. [End of Clause] 2. IRSAP 1052.224-9000(d) DISCLOSURE OF "OFFICIAL USE ONLY" INFORMATION SAFEGUARDS (DEC l988) Any Treasury Department Information made available or to which access is provided, and which is marked or should be marked "Official Use Only", shall be used only for the purpose of carrying out the provisions of this contract and shall not be divulged or made known in any manner to any person except as may be necessary in the performance of the contract. Disclosure to anyone other than an officer or employee of the Contractor or Subcontractor at any tier shall require prior written approval of the IRS. Requests to make such disclosure should be addressed to the IRS Contracting Officer. [End of Clause] 3. IRSAP 1052.224-9001(a) DISCLOSURE OF INFORMATION--CRIMINAL/CIVIL SANCTIONS (JAN 1998) (1) Each officer or employee of any person (Contractor or Subcontractor) at any tier to whom returns or return information is or may be disclosed shall be notified in writing by the person (Contractor or subcontractor) that returns or return information disclosed to such officer or employee can be used only for a purpose and to the extent authorized herein, and that further disclosure of any such returns or return information for a purpose or to an extent unauthorized herein constitutes a felony punishable upon conviction by a fine of as much as $5,000 or imprisonment for as long as five years, or both, together with the costs of prosecution. Such person (Contractor or subcontractor) shall also notify each such officer and employee that any such unauthorized future disclosure of returns or return information may also result in an award of civil damages against the officer or employee in an amount not less than $1,000 with respect to each instance of unauthorized disclosure plus in the case of willful disclosure or a disclosure which is the result of gross negligence, punitive damages, plus the cost of the action. These penalties are prescribed by IRC Sections 7213 and 7431 and set forth at 26 CFR 301.6103(n). (2) Each officer or employee of any person (Contractor or subcontractor) to whom returns or return information is or may be disclosed shall be notified in writing by such person that any return or return information made available in any format shall be used only for the purpose of carrying out the provisions of this contract and that inspection of any such returns or return information for a purpose or to an extent not authorized herein constitutes a criminal misdemeanor punishable upon conviction by a fine of as much as $1,000.00 or imprisonment for as long as 1 year, or both, together with the costs of prosecution. Such person (Contractor or subcontractor) shall also notify each such officer and employee that any such unauthorized inspection of returns or return information may also result in an award of civil damages against the officer or employee in an amount equal to the sum of the greater of $1,000.00 for each act of unauthorized inspection with respect to which such defendant is found liable or the sum of the actual damages sustained by the plaintiff as a result of such unauthorized inspection plus in the case of a willful inspection or an inspection which is the result of gross negligence, punitive damages, plus the costs of the action. The penalties are prescribed by IRC Sections 7213A and 7431. (3) Additionally, it is incumbent upon the Contractor to inform its officers and employees of the penalties for improper disclosure imposed by the Privacy Act of 1974, 5 U.S.C. 552a. Specifically, 5 U.S.C. 552a(I)(1), which is made applicable to Contractors by 5 U.S.C. 552a(m)(1), provides that any officer or employee of a Contractor, who by virtue of his/her employment or official position, has possession of or access to agency records which contain individually identifiable information, the disclosure of which is prohibited by the Privacy Act or regulations established hereunder, and who knowing that disclosure of the specific material is so prohibited, willfully discloses the material in any manner to any person or agency not entitled to receive it, shall be guilty of a misdemeanor and fined not more than $5,000. [End of Clause]
Web Link: FBO.gov Permalink
(https://www.fbo.gov/spg/TREAS/IRS/NOPAP/TIRNO-12-Q-00168/listing.html)
Place of Performance: Address: 77 K Street NE, Washington, District of Columbia, 20002, United States; Zip Code: 20002
Record: SN02807758-W 20120720/120719000303-21589f71234d6c3ed1c1f6468d9a3240 (fbodaily.com)
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B -- Offshore Tax Transactions in Compliance Assurance Process