Although the current 2.2 percent interest rate on Series I savings bonds is appealing, purchasing the bonds has grown more difficult. Paper Series I and EE savings bondsthose handy envelope stuffer giftscan no longer be purchased in banks or credit unions; instead, you must purchase electronic bonds through TreasuryDirect, the Treasury Department’s Web-based system. Our correspondent discovered the procedure of purchasing a savings bond for her little nephew to be cumbersome. Here’s some assistance:
Is it true that the United States Postal Service sells savings bonds?
On July 1, 1935, the Postal Savings Bond program was phased down and replaced by US Savings Bonds. Uncashed money orders, in addition to unredeemed Postal Savings Certificates and Postal Savings Bonds, are another source of unclaimed funds at the post office.
What is the value of a $50 savings bond?
A $50 EE bond, for example, costs $50. EE bonds are available in any denomination up to the penny for $25 or more. A $50.23 bond, for example, could be purchased.
How can I purchase a baby savings bond?
TreasuryDirect.gov makes it simple to purchase savings bonds online. They can be engraved with your name or the name of the child for whom they are being purchased. Prepare to submit the child’s entire name and Social Security number if the savings bond is to be given as a gift. The recipient must also have a TreasuryDirect account of their own. If you don’t have one, you can keep the gift in your account until you can set one up for them. Gift bonds are available in denominations ranging from $25 to $10,000.
What is the procedure for purchasing US Savings Bonds?
Paper savings bonds are no longer marketed by financial institutions as of January 1, 2012. Treasury’s goal of increasing the number of electronic transactions with citizens and businesses is being furthered by this measure.
SeriesEE savings bonds are low-risk savings instruments that yield interest until 30 years have passed or you cash them in, whichever comes first. EE bonds can only be purchased in electronic form through TreasuryDirect. Paper EE bonds are no longer available. You can buy, manage, and redeem EE bonds straight from your web browser if you have a TreasuryDirect account.
Bonds
A bond is a written instrument executed for the Postal Service’s benefit.
as a guarantee of payment for the Supplier’s obligations, and as security for the Supplier’s responsibilities
bonded misfortune Bonds are a type of financial instrument (other than bonds required for construction contracts)
and only get performance assurances when absolutely necessary
safeguard the Postal Service’s interests The purchase strategy must include:
and clarify any bonding or performance guarantee requirements.
An offeror or supplier named in the instrument is the one who executes a bond.
The principal is joined by a second party known as the surety. The certainty is
a person or company who is legally responsible for another’s debt, default, or failure
to fulfill a contract obligation Additional Bond Security is required under clause 7-2.
must be included in all transactions that involve a bond.
Patent Infringement Bonds
Patent infringement bonds are issued as a guarantee of a Supplier’s performance.
under the terms of a patent clause Under some circumstances, a patent infringement bond may be necessary.
If a performance bond is not provided, the contract must include a patent indemnity clause.
acquired. The penalty amount must be the bare minimum required to protect the environment.
The United States Postal Service is interested. Patent Infringement Bond Clause 7-1
If the Supplier is to be considered, requirements must be mentioned in the contract.
a patent infringement bond must be submitted
Fidelity Bonds
A fidelity bond is used to ensure that an employee will perform their duties faithfully.
His or her responsibilities to his or her employer and the employer’s clientele The bond is employed in the
Employee thefts and embezzlements are covered. In the case of a fidelity bond,
a sum sufficient to safeguard the Postal Service’s interests
Any contract that requires Supplier staff to handle postal mail is necessary.
Funds for service. When you need a fidelity bond, 7-3 Provision: Fidelity Bond
The request for bids (RFP) must include requirements, including the
The quantity must be assessed on a regular basis to guarantee that the Postal Service’s operations are running smoothly.
Interests are effectively safeguarded.
Performance Bonds
A performance bond is a guarantee that the Supplier will fulfill his or her obligations.
as part of a deal Only if the Contracting Officer deems it necessary may performance bonds be required.
Officer determines that performance bonding is necessary to protect the company’s interests.
Service of the Postal Administration. Performance bonds are used in a variety of contexts.
include:
A contract specifies whether or not Postal Service property will be used.
contract performance funds
A supplier has sold or merged with another company and sold all of its assets.
The Postal Service, on the other hand, need assurances about the new firm’s ability to deliver.
capability
The product or service will not be delivered for the first time until at least
a minimum of 12 months after contract award, and significant progress
Payments are being considered.
The performance bond’s penalty amount must be the bare minimum.
preserve the interests of the Postal Service The amount designated as a penalty amount is referred to as a punitive amount.
in a relationship (expressed in terms of dollars or a percentage of the contract price)
as the maximum amount of money for which the surety is liable If it is established,
that performance bonding is critical to the Postal Service’s interests,
Performance Bond (Provision 7-1) Requirements should be written within the contract.
Requests for Proposals (RFPs) for non-construction contracts. If the fine is less than 100% of the fine,
The contract price must be adjusted, and the provision must be changed accordingly.
Only non-essential contracts may be covered by annual performance bonds.
Contracts for construction The penalty for such a bond cannot exceed the value of the bond.
than the total amount of the bond’s secured contracts
Payment Bonds
A payment bond ensures that all labor and material suppliers are paid.
as part of a deal Only if the Contracting Parties agree, payment bonds may be imposed.
Officer concludes that payment bonding is necessary for the protection of the client’s interests.
Service of the Postal Administration. Payment bonds are required in the following situations:
A contract is for materials or services that are specific to the USPS.
that can only be received from a source other than the manufacturer
of the goods and services;
A supplier has sold or merged with another company and sold all of its assets.
The Postal Service, on the other hand, need assurances about the new firm’s ability to deliver.
responsibility;
Supplies that require a high level of production expense are not scheduled.
there will be no initial delivery for several months after the contract is awarded, and there will be no
Payments in advance may be considered; or
It is critical that supplies or services are delivered without interruption.
the Postal Service’s functions will continue to operate.
The payment bond’s penalty amount must be the bare minimum.
preserve the interests of the Postal Service If it’s found that payment bonding is necessary,
Provision 7-2:Payment is critical to the Postal Service’s interests.
Non-construction RFPs should include bonding requirements.
contracts.
Only non-essential contracts may be covered by annual payment bonds.
Contracts for construction The bond’s penalty amount must be sufficient.
to pay for the bonded components of the contracts that have been awarded
Performance and Payment Bonds for Construction
Contracts
Performance and payment are required by the Miller Act (40 USC 2701-270f).
For any building, alteration, or repair, bonds or alternative payment protection are required.
Any public structure or public work worth more than $25,000 must be repaired. For
Contracts worth more than $25,000 but less than $100,000 are considered building contracts.
The Contracting Officer must choose a payment bond or one or more of the following options.
following payment safeguards, considering the addition of an
One of the options considered was an irrevocable letter of credit:
- An irrevocable letter of credit is a formal pledge made by a financial institution.
to pay all or part of a stipulated amount to a federally insured financial institution
the amount of money that the Postal Service is requesting till the
the letter’s expiration date The letter of credit is irrevocable.
or it can be conditioned
Deposit certificates – the Supplier makes a deposit of deposit certificates.
a federally insured financial institution’s deposit with the
Contracting Officer, in a form that can be executed by the
Officer in charge of contracts.
The primary Supplier initiates a three-part escrow agreement.
escrow account at a federally insured financial institution, as well as
executes a three-part escrow agreement with the financial institution
as escrow agent, and all of the labor and material providers
material. The terms of the escrow agreement must be established.
payment in accordance with the contract, as well as the resolution of disputes among
parties. The Postal Service pays the Supplier’s invoices.
The agreement is held in an escrow account, and the escrow agent distributes it.
Alternatively, if necessary, it initiates the dispute resolution procedures.
- Bonds or notes issued by the United States with a maturity date of less than one year.
more than five (5) years from the date of the contract, plus an additional five (5) years from the date of the contract, plus an additional five (5) years from the date
In the case of default, the agreement authorizes collection or sale.
(The bonds or notes must have a par value that is at least equal to the face value.)
certified check, cashier’s check, or money order for the bond’s penal amount); or certified check, cashier’s check, or money order for the bond’s penal
bank draft, postal money order, or currency (deposit must be in a bank that accepts currency)
at least equivalent to the surety bond’s punitive amount, and payable
exclusively on the United States Postal Service’s instructions).
More details on building contract bonds can be found in
Design and Construction Purchasing Practices (Handbook P-2).
Deposit of Assets Instead of Surety Bonds
Instead of a bond (other than a payment bond for a construction contract),
Certain types of assets may be deposited with the Postal Service by the Supplier.
rather than posting a bond
- Bonds or notes issued by the United States with a maturity date of less than 5 years
years from the contract’s start date, plus an agreement
In the case of default (the par value), allowing collection or sale
The punishment sum must be at least equivalent to the value of the bonds or notes.
of the contract)
- A certified check, cashier’s check, bank draft, or postal money order are all examples of acceptable payment methods.
or money (the deposit must be at least as large as the penalty)
the surety bond’s value, payable entirely to the order of the surety
The USPS (United States Postal Service) is the postal service of the United States of America.
Instead of issuing a surety bond, the Supplier promises assets.
The bond form must be filled out by the supplier as the principle, and the bond form must be signed.
Describe the assets that have been promised. The Contracting Officer must make a cash deposit.
with instructions to deposit cheques and drafts with the information service center
Keep the cash for the Supplier’s advantage. A running tally of everything
The senior contracting authority at the site must keep all deposited goods.
Office of Purchasing
For any acquisition that necessitates the provision of a bond (other than cash),
Provision 7-4:Deposit of Assets (bonds for building contracts)
The RFP’s requirements. 7-3:Deposit of Assets Rather Than Surety
Every contract involving a bond for which assets must include bonds.
Deposits may be made in place of bonds.
Execution of Bonds
Bond formats, as well as instructions and processes, can be found online.
found in the appropriate handbook When there isn’t a set format for a report,
a proper bond (for example, when a patent infringement or fidelity bond is required),
A commercial bond form or a suitable format can be utilized.
Legal Counsel assisted in the preparation of this document.
Any bond must be kept in the RFP as an original signed copy.
contract document Persons working in a representative capacity sign bonds.
must be accompanied by proof that the agent is legally permitted to act in that capacity.
capacity. A notarized power of attorney or a properly prepared will can be used as proof.
The corporate secretary attests to the corporate certificate or resolution.
When a partnership is a principal, all members of the firm must be listed.
be stated in the bond, after the firm’s trade name (if any) and the issue date
“A partnership made up of” is a term that can be used to describe a group of When a corporation is a principle, it is a legal entity.
The state in which the company was formed must be specified.
Performance or payment bonds must be used unless an annual bond is accepted.
after the contract’s expiration date
Consent of Surety
A surety’s consent to continue its bond is an acknowledgement by the surety.
to be applied to the contract in its modified form When the cost of a contract amendment rises
A consent of the contract price, the Supplier, and the surety must be signed.
submit it to the Contracting Officer with a surety to enhance the penalty amount.
When the consent of more than one surety is necessary, each surety must sign.
the shape
When a party other than the bonding company obtains a higher bond amount.
The original surety is required to sign a consent of surety. Novation
A consent of surety must be signed as part of any deal.
Acceptable Sureties
Individual sureties are not accepted by the Postal Service. Bonds must be maintained.
backed up by appropriate corporate sureties or assets that are accepted as collateral
security for the obligation of the Supplier Any bond surety given by a corporation
The Postal Service must be listed on the Treasury Department’s list.
Circular 570 of the Department of Defense. The bond can’t be more than the amount of the deposit.
The surety in that list has an underwriting limit.
Irrevocable letter of credit (ILC)
An irrevocable letter of credit (ILC) is a written pledge made by a federally recognized financial institution.
a financial institution that is insured to pay all or part of a specified sum of money on a specified date
Until the letter’s expiration date, the Postal Service will make a demand. The letter is a
It is impossible to cancel or condition a letter of credit.
Any offeror or supplier who is required to provide a bond has the option of also providing a guarantee.
bond backed by an ILC in the amount of the penalty sum to be paid
secured. Each relationship necessitates its own ILC. The ILC must be maintained.
irrevocable, unconditional, and only valid for 90 days after final payment or until
performance bonds only, at the end of any warranty period, and be issued
by a federally insured financial institution that is acceptable. ILCs worth more than $5 million
must be certified by a second eligible financial institution that has a letter of authorization
In the previous year, you did at least $25 million in credit business.
The Contracting Officer will utilize a sight draft to draw on the ILC and submit it.
to the originating financial institution or the confirming financial institution with the ILC
a business (if any). If the provider fails to provide an appropriate ILC or other documentation,
appropriate substitution at least 30 days before the ILC’s expiration date,
The Contracting Officer must use the ILC right away. If, at the end of the period,
when ILCs are used to underpin payment bonds during the performance of a contract,
There are claims pending against the payment bond, as well as the Contracting Authority.
Officer will use the ILC to reimburse expenses before the ILC expires.
these assertions
A federally insured financial institution must issue or confirm the ILC.
Institutions with an investment grade rating or higher. The supplier is responsible for providing the
Contracting Officer a credit rating that denotes the financial institution’s ability to repay its debts
the appropriate rating(s) at the time the ILC was issued If the Contracting Parties
Officer discovers that a financial institution’s ratings have gone below the minimum requirements.
The Contracting Officer will give the supplier 30 days to meet the required level.
will draw on the ILC using a sight sketch or will substitute an appropriate ILC.
When a contract’s performance time is extended, the Contracting Officer must approve the extension.
will necessitate the Supplier providing an ILC with an adequately extended warranty.
maturity that meets the 90-day expiration conditions after finalization
payment; or, in the case of performance bonds, until the warranty period expires.
only.
Contract Management
a copy of all contract modification, termination, and other correspondence
Each surety must be presented with documentation of renewal or nonperformance.
Delivery has been requested. Additional details about the contract’s performance and
On demand, payment must be made to sureties.
The Contracting Officer may require a payment bond if one has been submitted.
provide the name and address of the guarantor or sureties to those who have asked for it.
labor or materials for use in a project, or have been asked to do so.
completing the deal Additional information may be provided by the Contracting Officer.
general information about topics such as the work’s development, the
Payments made, as well as the expected completion %.
Failure to Perform
The Contracting Officer shall send each surety a letter if there is a failure to perform.
a copy of any anticipated termination notice, and a demand for fair compensation
assurances, liquidated or other damages assessments, or other formalities
notification of failure to fulfill under the contract, together with a warning that the surety will be held liable
may be held accountable for the Postal Service’s losses.
If a Supplier’s failure to perform causes a claim against a surety, the surety is responsible for the claim.
The Contracting Officer shall provide written notice to the surety of the amount of and
justifications for the claim If the surety refuses to pay or does not reply, the surety becomes liable.
The Contracting Officer must seek procedural help from the Legal Counsel assigned to him.
Counsel. Only payment from an ILC (or equivalent) shall be authorized by the Contracting Officer.
Upon a judicial determination of the rights, any other cash equivalent security)
a signed notarized certification by the Supplier stating the payment has been made
is owing to you, or a written agreement between you and the other party about the amount
owing and due
Surety Takeover Agreements
Because the surety is liable for damages caused by a Supplier’s failure,
In the event of a default, the surety has specific rights and interests in the project’s completion.
contract job, as well as the application of any payments that have not yet been disbursed. Before
When terminating a contract due to default, the Contracting Officer must take into account any other factors.
The surety makes a proposal for the work’s completion. It is necessary to have an assurance.
Unless the Contracting Officer has cause to believe otherwise, you are permitted to complete the work.
feel that the surety’s nominated people or firms will finish the job
are incompetent and unqualified
Because there may be conflicting needs for the defaulting Supplier’s services,
unpaid earnings (including unpaid progress and reserved percentages)
payments), the surety may condition its completion promise on the payment.
signing a takeover agreement that establishes the surety’s entitlement to payment
from the earnings that haven’t been paid If so, and with the Vice President’s approval,
The Contracting Officer and the President, Supply Management (VP, SM) may enter.
after the effective date of the contract, enter into a written agreement with the surety.
Termination of a contract The Contracting Officer should think about incorporating it in the contract.
defaulting Supplier as a party to the contract in order to avoid any disputes
The residual rights of the Supplier are a source of contention.
The contract must state that the surety would perform the work in a timely manner.
All contract terms and conditions will be followed, and the Postal Service will pay the fees.
a guaranty for the remainder of the contract amount that has not been paid at the time of termination, but not more
than the surety’s costs and expenses, if the following requirements are met:
Any unpaid earnings, including retained earnings, of the defaulting Supplier.
% and payments made in installments for completed job
prior to termination, are liable for Postal Service obligations
except to the degree that the outstanding revenues are owed to the Supplier
obligated to pay the actual costs and fees to the fulfilling surety
Expenses incurred in the completion of the work, excluding the
payments and duties of the surety under the payment bond
in the context of the contract
The Postal Service’s rights may not be waived or released under the agreement.
entitlement to liquidated damages in the event of a delay in the execution of the project
work that isn’t covered by the contract.
If the contract funds are being used to fund a project,
The surety may not be paid from outstanding earnings owed to the institution.
Unless the assignee agrees in writing to the payment.
- The surety may be compensated for releasing its obligations under the terms of the agreement.
the delinquent Supplier’s payment bond only if:
-The Postal Service, the United States Postal Service, and the United States Postal Service have reached an agreement.
Supplier who has defaulted, as well as the surety;
-A decision is made by the Postal Service Board of Contract Appeals.
final calculation of the sum owed; or
Contract Completion
The Contracting Officer notifies the Supplier when all contract obligations have been met.
Any surety must be given a Certificate of Completion. The terms of the certificate
The surety may not be released from any obligation under a payment bond. When
Instead of providing a surety on a payment, the Supplier has placed assets.
If the Contracting Officer fails to honor the bond, the assets must be returned to the Contracting Officer, along with any interest that has accrued.
Unless notification of termination is received within 90 days of the contract’s ultimate conclusion,
During the 90-day period, a claim is received. If a claim is filed, the assets are frozen.
may only be released if the claimant agrees or if a judge orders it.
a competent court of justice
Any assets submitted to secure any other bond may be repaid, along with any interest that has accumulated.
Upon final completion and receipt of the Supplier’s release, interest will be paid.
The Contracting Officer shall provide a Certificate of Substantial Completion upon request.
Completion of a construction supplier’s sureties if the project is substantially completed
finished (usable for the purpose intended). If the Contracting Officer isn’t available,
If you’re not sure if the project is nearly finished, seek the counsel of an expert.
It is necessary to retain assigned legal counsel.
Insurance
Only when absolutely essential, suppliers may be asked to carry insurance.
the Postal Service’s best interests Situations in which it is appropriate
The following are examples of insurance:
It is preferable to make use of the insurance’s capabilities and services.
industry (for example, claim services and safety protection);
In the context of a contract, insurance is either required or desired.
performance (e.g., in the transportation of precious postal mail)
property used for service); or
When property or other contract terms are mixed together, it creates a problem.
insurance that is reasonably essential for the parties’ protection
interests.
The insurance held by the Postal Service is usually unimportant to them.
Unless there are exceptional conditions, such as the following:
The Supplier, or a subset of the Supplier’s operations, is
mostly engaged in work for the Postal Service
The Postal Service undertakes to bear the risks that the Supplier bears.
obtains commercial insurance on a regular basis
These sorts and amounts are important in situations like the ones outlined above.
It’s possible that you’ll need liability insurance:
Workers’ Compensation and Employers’ Liability Insurance
Workers’ compensation and occupational illness laws must be followed.
Employers’ liability insurance is needed by law, and it must be bought when
available. In jurisdictions where occupational disease is not covered by workers’ compensation,
Under the law, the supplier is required to carry occupational disease insurance.
The insurance policy’s employers’ responsibility provision.
General Liability Insurance
The Supplier must have minimum limits of bodily injury liability insurance.
on a comprehensive form, of $100,000 per person and $500,000 per accident
in terms of policy Higher requirements may be required by the Contracting Officer at his or her discretion.
Insurance coverage limits Insurance should be changed to clause 7-4.
reflect the increased insurance coverage levels The Supplier is required to carry
liability insurance for property damage in an amount established by the insurer
When the nature of the contract operations requires it, or when the contracting officer believes it is necessary.
when those operations are inextricably linked to the Supplier’s business operations
operations.
Automobile Liability Insurance
The Supplier must have comprehensive motor liability insurance.
a type of insurance coverage that covers personal harm and property damage.
All autos utilized in contract performance are covered by this policy.
For bodily injury, there are minimum limits of $100,000 per individual and $500,000 per accident.
Insurance coverage of $100,000 per accident for bodily injury and $100,000 per accident for property damage is required. The
Higher levels of liability may be required by the Contracting Officer at his or her discretion.
coverage of insurance Clause 7-4:Insurance should be updated to reflect the current situation.
insurance coverage at a higher level
Self-Insurance
It is possible to obtain a qualified self-insurance package that covers any type of liability.
When it is determined that it is in the best interests of the people, it is approved in place of any sort of insurance.
the United States Postal Service However, in a state where workers’ compensation is available,
Although it does not totally address employers’ liability to employees, it is a good start.
Workers’ compensation self-insurance may be allowed only if:
In addition, the Supplier has an approved program of
self-insurance for any liability that is not covered by the employer’s insurance; or
The provider has demonstrated that the total cost to the Postal Service is
Self-insurance service for workers’ compensation and
The total cost of commercial liability insurance for employers will not exceed the total cost of commercial liability insurance for employees.
The cost of commercial insurance to cover both types of hazards.
Errors and Omissions Insurance
Professional service providers who provide the following categories of services must comply with the following requirements:
carry malpractice (errors and omissions) insurance:
These professionals should have at least $200,000 in insurance coverage.
unless the Contracting Officer deems that a higher limit is required.
safeguard the Postal Service’s interests The Contracting Officer has the authority to waive certain requirements.
the demand, in whole or in part, for errors and omissions insurance
Legal Counsel’s approval is required.
Other professional services Suppliers may be required by the Contracting Officer to
carry errors and omissions insurance when it is in the Postal Service’s best interests
Service.
Insurance Policies
When insurance is required, it can be obtained from a variety of sources.
insurance plans or the Supplier’s own insurance policies. When it’s already there
If policies are employed, they must be changed in order for the Postal Service to lose money.
Clause 7-4:When a Supplier is required, insurance must be included.
to be covered by insurance Errors and omissions must be included in clause 7-5.
It is necessary to have mistakes and omissions insurance.
Notice of Cancellation or Change
When insurance (other than errors and omissions insurance offered on an individual basis) is purchased,
The insurance policy must be written on an occurrence basis if the contract requires it.
contain a statement that a cancellation or major change will be made
Policy that has a negative impact on the Postal Service’s interests will not be implemented.
be in force for at least 30 days following written notice of cancellation or
The Contracting Officer is handed change.
Taxes
Contract tax issues are primarily legal in nature and can be rather complex. Specific
Tax issues must be settled by referring to the contract’s provisions.
as well as applicable tax laws and regulations As a result, when tax issues occur,
Contracting Officers must seek advice from the Legal Counsel assigned to them.
The Senior Legal Counsel ensures that the Postal Service is treated consistently.
Before proceeding, review with counsel, contract protests, and policies.
dealing with any taxing authority to achieve the following goals:
Typically, suppliers are in charge of resolving tax applicability issues.
Independent of the Postal Service’s engagement, interaction with authorities.
When the Postal Service’s constitutional exemption from state or municipal law is invoked,
Although taxation is a concern, suppliers should be discouraged from doing so.
communicating with revenue officials on their own, and having a lawyer assigned to them
If the contract is one of the following, you should get legal advice:
Federal Excise Taxes
Federal excise taxes are imposed on the sale or use of specific goods and services.
Miscellaneous, Subtitle D of the Internal Revenue Code of 1954
Title 26 U.S.C. 4041 et seq., and its implementing rules, Title 26 U.S.C. 4041 et seq.
The Code of Government Regulations (CFR) 40-299 covers a variety of federal regulations.
standards for excise taxes Questions about federal excise taxes should be directed to the
Legal Counsel was contacted. The following are the most prevalent excise taxes:
Excise taxes levied by manufacturers on various motor vehicles
Tires and inner tubes, fuel, lubricating oils, coal, and other articles
Manufacturers, producers, and retailers sell firearms, shells, and cartridges.
importers, etc.
Diesel is subject to a special fuels excise tax imposed at the retail level.
gasoline, as well as specific motor fuels
General Exemptions from Federal Excise Taxes
When there are no federal manufacturers’ or special fuels excise taxes,
The materials can be used for any of the following:
Export or shipment to a US possession or Puerto Rico.
The shipment or export must take place within 6 months of the date of purchase.
The Postal Service receives the title. If the exception is granted,
The phrase “for export or transportation to a possession” must be included, according to the claim.
appear on the contract or purchase order, as well as the
The contracting officer must provide proof of export to the seller.
transport to a possession (see 26 CFR 48.4041-12).
Re-manufacture or re-sale for re-manufacture (this is an option).
However, this exemption does not apply to tires or inner tubes.) (see
4221 of the United States Code).
Request for Proposals (RFP)
Contracting Officers must request price bids that are tax-free.
when it is established that the USPS is exempt from federal excise taxes
and the tax break is worth at least $100 Proposals must be solicited on a regular basis.
When there is no exemption or the exemption is insufficient, a tax-inclusive basis is used.
less than $100
State and Local Taxes
Taxes levied by the states and the District of Columbia are referred to as state and local taxes.
Columbia, Puerto Rico, and other US possessions, or their political entities
subdivisions.
Despite the fact that the Postal Service is a federal government agency,
is immune from state and local taxes placed directly on it under the law,
The applicability of specific taxes is a legal concern that frequently necessitates the consultation of an attorney.
Legal Counsel’s guidance and help In a postal system, the applicability of a tax
The nature of the tax and whether it is legal may influence the transaction.
The Postal Service bears the brunt of the incidence, rather than the financial load.
purchaser. In numerous cases, the Postal Service fails to deliver.
It may take advantage of statutory exemptions since it is constitutionally exempt.
a law enacted by a state or local government
In most cases, prime suppliers and subcontractors are not listed as
agents of the United States Postal Service for the purpose of obtaining state exemption
as well as local taxes When appropriate, such designation must be made.
only after consultation with assigned legal counsel, as specified in the RFP.
Exemption from Tax
When a state or municipality asserts its authority to tax Postal Service property,
directly or indirectly, to tax a Supplier’s possession, use, or interest in Postal Services
When it comes to service property, the Contracting Officer must seek assistance from the appointed experts.
Advice from a lawyer on the best course of action.
Clause 4-1:General Terms and Conditions, paragraph k, or if the
Clause 7-6: Federal, State, and Local Taxes; Clause 7-7: Federal, State, and Local Taxes; Clause 7-8: Federal, State, and Local Taxes; Clause 7-9: Federal, State, and
Clause 7-8:Federal, State, and Local Taxes (Short Form), or Federal, State, and Local Taxes
It is the Supplier’s responsibility to pay state and local taxes (Noncompetitive Contract).
to establish the amount to which state and local taxes apply to it
proposal. No representations should be made by the Contracting Officer.
regarding the application of any state or local tax, as well as the Postal Service
should not be involved in any disagreement between the Supplier and the Customer.
as well as a taxation authority in terms of tax applicability
In the case of fixed-price contracts, the Postal Service must, as an exception,
Upon the Supplier’s request, provide evidence to support the Supplier’s claim.
If there is a reasonable basis for the exemption, it will be exempt from any specified tax.
exists. The Contracting Officer may provide such evidence if required.
Contracts with cost-reimbursement clauses Evidence may also be provided in response to a request.
if the Supplier requests payment under other contracts that do not include a tax provision (a)
certifies that the contract price does not include tax or, if the transaction is taxable, certifies that the transaction is taxable.
When property is given an exemption, (b) agrees to a reduction in the value of the property
the cost of the deal
Copies of other documents (purchase orders, shipping documents, etc.)
papers or bills) that name the Postal Service as the sender
buyer.
A state or local form stating that the goods or services are available.
for the Postal Service’s or the federal government’s exclusive use
government.
Documents demonstrating that shipments are interstate or international.
international trade
Matters Requiring Special Consideration
The resolution of tax concerns that require particular treatment must be done in a timely manner.
During the RFP preparation process, I collaborated with Legal Counsel. The
The following are some examples of state and local tax difficulties that may necessitate additional attention.
treatment under contract:
When there is a legitimate doubt about the applicability or
a tax’s allocability, or when a tax’s applicability is in doubt
In the event of a lawsuit, the contract may:
-State if the contract price includes or excludes the cost of the goods.
tax, and it’s subject to change if the issue isn’t resolved.
of the tax issue; or
-Require the Supplier to take specific steps in the following areas:
payment, nonpayment, refund, complaint, or any other type of treatment
because of the tax
- When the applicability of state and local taxes is contingent on the outcome of a case,
Delivery location and terms, as well as the impact of taxes on the contract
There will be a significant pricing difference, as well as alternative delivery locations.
Contract conditions should be weighed against the tax implications.
When obtaining leased equipment under an agreement
The Supplier’s property may be forfeited under an indefinite-delivery contract.
subject to a number of state and local property, use, or other restrictions
taxes. Because these taxes differ so much from one state to the next,
Use Clause 7-9, State and Local Taxes, depending on the jurisdiction.
(Equipment Rental for Indefinite Delivery), to relieve the Supplier of
In this circumstance, there is some doubt concerning the tax implications.
Paper bonds
Your bank or credit union should be able to cash in your paper savings bonds. If you’re going to a financial institution where you’re not a member or customer, check to see if they’ll cash your bond before you go.
Confirm what documents you’ll need to bring with you by contacting the bank. Here’s what you should bring with you in general.
It’s important to remember that bonds can’t be cashed by just anyone. Savings bonds can only be cashed by the bond owner or co-owner, which includes “survivors,” or those identified on the bond who received ownership after the original owner died. You are not the registered owner (a savings bond is nontransferable) and cannot cash in the bond if you purchased it through an auction site like eBay.
If the child is too young to sign the payment request and the child lives with the parent or the parent has legal custody of the child the parent may cash in the child’s savings bond.
Anyone else who wants to cash in a bond must show proof of legal authority to do so.
You’ll sign each bond and receive the cash value at the bank. The bank will either hand you a 1099 tax form or mail it to you before the end of the tax year after you’ve cashed in your bond.
Paper bonds can also be redeemed through the mail. To cash in by mail, obtain an FS Form 1522 from the US Department of Treasury, have your signature certified, then mail the form to the address shown on the form.
Electronic bonds
By connecting into your TreasuryDirect account and setting up a direct payment to your bank or savings account, you can cash in your electronic bonds. Within two business days, the cash amount may be credited to your bank account.
What is the value of a $100 savings bond dated 1999?
A $100 series I bond issued in July 1999, for example, was worth $201.52 at the time of publishing, 12 years later.
What is the cost of a $100 savings bond?
Last month, I gave a talk on the significance of basic financial planning skills to a group of high school students. I hoped to spark a discussion about saving for big expenses like a college degree or a car. However, the students were pleasantly enthusiastic about learning about EE savings bonds, which are gifts given to children by grandparents and other relatives to honor special occasions including as birthdays, first communions, and Bar Mitzvahs.
One pupil claimed to have over $2,000 in savings bonds. His grandparents would gift him a $50 EE savings bond on significant occasions, he recalled. They promised him it would be worth $100 in eight years, and that it would double in value every eight years after that.
Savings bonds, on the other hand, that double in value every seven or eight years have gone the way of encyclopedia salespeople, eight-track recordings, and rotary phones. According to the US Treasury website, EE bonds sold between May 1, 2014 and October 31, 2014 will receive 0.50 percent interest. The fact that interest rates are so low is not unexpected; what is shocking is that individuals are still buying these assets based on outdated knowledge.
Banks and other financial institutions, as well as the US Treasury’s TreasuryDirect website, sell EE savings bonds. The bonds, which are currently issued electronically, are sold for half their face value; for example, a $100 bond costs $50. When a bond reaches its face value, it is determined by the interest rate at the time of purchase.
This rate is calculated by comparing it to the 10-year Treasury Note rate, which is currently about 2.2 percent.
Years ago, you could use a simple mathematical method called the Rule of 72 to figure out when your bond would reach face value.
You can calculate the number of years it will take for anything to double in value by simply dividing an interest rate by 72. So, let’s give it a shot. 72 years multiplied by 0.5 percent equals 144 years. Ouch!!
Fortunately, the Treasury has promised to double your EE savings bond investment in no more than 20 years. It’s actually a balloon payment. So, if you cash out your EE bond on the 350th day of its 19th year, you’ll only get the interest gained on your original investment. To get the face value, you must wait the entire 20 years. You’ve effectively obtained a 3.5 percent yearly return on your initial investment at that time.
So, let’s go over everything again. If Grandma wants to buy an EE savings bond for a grandchild to cash in to help pay for college, she should do so at the same time she’s urging her children to start working on their grandchildren. I jest, but I believe it is critical to acknowledge that the world has changed, and that savings bonds no longer provide the same solutions that many people remember from the past.
But let’s return to the child who spoke up in class regarding savings bonds. What happened to the bonds his grandparents had bought over the years? Many of those bonds might be yielding interest rates of 5% to 8%. It simply depends on when they were bought. The Treasury has a savings bond wizard that can help you figure out how much your old paper bonds are worth. It’s worth a shot. You could be surprised (or disappointed) by the value of the bonds you have lying around.
Who owns the funds?
First, you must decide whether to keep the cash in your name or in the name of your grandchild.
Your savings could jeopardize your grandchild’s financial aid application. This is especially true if the funds are held in the name of your grandchild.
The Free Application for Federal Student Aid (FAFSA) uses a formula to determine how much financial aid a student should receive.
When calculating a student’s ability to pay for college, this system strongly penalizes them for money stored in their name.
Access to the funds
Next, if you put the money in your grandchild’s name, they may be able to access it before you wish them to.
They may also use the money in ways other than those for which you intended.
A child can normally access any funds in their name until they become 18, or 21, depending on the state. That also implies they’re free to do anything they want with them.
If you keep the money in your name and simply identify your grandchild as a beneficiary, you may maintain control over how it is spent.
You won’t have to deal with an 18-year-old wasting thousands of dollars customizing an old car this way.