FAR 4.903—Reporting contract information to the IRS.
Plain-English Summary
FAR 4.903 explains when federal executive agencies must report contract information to the IRS and how that reporting is done. It implements the tax-reporting requirement in 26 U.S.C. 6050M and the related IRS regulations, and it applies to certain contract actions and modifications that meet specific dollar thresholds and effective dates. The section identifies two reporting categories: modifications to contracts awarded before January 1, 1989 that increase the contract amount by $50,000 or more and are entered into on or after April 1, 1990, and certain contracts and modifications entered into on or after January 1, 1989 that exceed $25,000. It also specifies exactly what information must be reported: the contractor’s name, address, and TIN; the common parent’s name and TIN if applicable; the date of the contract action; the amount obligated; and the estimated completion date. In practice, this means contracting offices must capture accurate taxpayer and contract data at the time of award or modification and ensure it is transmitted through the Federal Procurement Data System (FPDS) in accordance with subpart 4.6 and agency instructions. The rule exists to support IRS information reporting and tax compliance, so accuracy, timeliness, and correct identification of reportable actions are critical.
Key Rules
IRS reporting is mandatory
Federal executive agencies must report certain contract information to the IRS under 26 U.S.C. 6050M and the implementing IRS regulations. FAR 4.903 is the procurement-side rule that tells agencies which contract actions are reportable and what data must be sent.
Older contracts have a special threshold
A modification to a contract awarded before January 1, 1989 is reportable if it increases the contract amount by $50,000 or more and the modification is entered into on or after April 1, 1990. This is a specific legacy rule tied to older contracts.
Post-1988 actions over $25,000 are covered
The reporting requirement also applies to certain contracts and modifications entered into on or after January 1, 1989 when the contract action exceeds $25,000. Contracting personnel must evaluate both the date and the dollar amount to determine whether reporting is required.
Specific data elements must be reported
The report must include the contractor’s name, address, and TIN; the common parent’s name and TIN if there is one; the date of the contract action; the amount obligated on the action; and the estimated contract completion date. Missing or incorrect taxpayer identification data can undermine the report.
FPDS is the transmission channel
The required information must be transmitted to the IRS through the Federal Procurement Data System, using subpart 4.6 and agency implementing instructions. This makes FPDS data quality and timely entry essential to compliance.
Responsibilities
Contracting Officer
Identify whether a contract award or modification is reportable under the applicable date and dollar thresholds, ensure the required contractor and contract data are collected, and make sure the information is entered or transmitted through FPDS in accordance with agency procedures.
Agency
Maintain procedures and internal controls for identifying reportable contract actions, collecting accurate taxpayer and contract information, and transmitting the data to the IRS through FPDS. The agency must also align its processes with the IRS regulations and subpart 4.6 instructions.
Contractor
Provide accurate legal name, address, TIN, and common parent information if applicable, and keep that information current so the agency can complete required IRS reporting correctly.
FPDS/Data Entry Personnel
Record the required contract action data accurately and timely in FPDS so the agency can satisfy the IRS reporting obligation through the prescribed system.
Practical Implications
Contracting offices need a reliable way to flag reportable actions at award and modification time, especially for older contracts and threshold-based actions.
TIN and common parent data must be correct; errors here can create IRS reporting problems even when the contract action itself is properly identified.
The reporting obligation is tied to the contract action date and amount obligated, so small changes in modification timing or value can determine whether reporting is required.
Because reporting is done through FPDS, data quality in procurement systems directly affects tax-reporting compliance.
A common pitfall is assuming only new awards are reportable; certain modifications, including legacy-contract increases, are also covered.
Official Regulatory Text
(a) 26 U.S.C. 6050M , as implemented in 26 CFR, requires heads of Federal executive agencies to report certain information to the IRS. (b) (1) The required information applies to contract modifications- (i) Increasing the amount of a contract awarded before January 1,1989, by $50,000 or more; and (ii) Entered into on or after April 1,1990. (2) The reporting requirement also applies to certain contracts and modifications thereto in excess of $25,000 entered into on or after January 1,1989. (c) The information to report is- (1) Name, address, and TIN of the contractor; (2) Name and TIN of the common parent (if any); (3) Date of the contract action; (4) Amount obligated on the contract action; and (5) Estimated contract completion date. (d) Transmit the information to the IRS through the Federal Procurement Data System (see subpart 4.6 and implementing instructions).