A Message from Dave (2/3/2011)

Good morning SmartPay bloggers! I’m sipping on my usual morning coffee as I write this entry. I don’t know what I’d do without my morning “caffeine injection!” Yesterday, I began a discussion of HATA and TIPRA. These topics – they are tax issues after all – may seem somewhat dry to many. Others may find it curious that I selected issues that do not, at first, appear to be integral to the GSA SmartPay® program. I understand these issues may not make for great conversion at your next party. (If they do, I’m concerned…..) But especially in the case of TIPRA, there is the potential for significant impact on not only the GSA SmartPay program, but agency payments in general, let alone the contractors providing supplies and services to the government.
Although TIPRA section 511 withholding affects other payment methods aside from charge cards, I submit the impact on cards is greater given how the payment process operates. Unlike other payment processes an agency may use, the government does not pay the merchants (contractors) directly. Who does the agency pay? Payment is made to the bank that issued the charge card, otherwise known as the “issuing bank.” TIPRA 511 is intended to address merchant (contractor) tax compliance. Yet, we don’t pay these merchants directly!
Tax compliance is a very important issue. Efficient government procurement and payment processes, as well as contractor cash flow, are also important. Is there a way to balance these needs? Tune in for the next blog entry to find out!

The GSA SmartPay® program provides charge cards to agencies/departments throughout the U.S. government, as well as tribal governments, through master contracts that are negotiated with major national banks.

SmartPay® Charge Cards are for Official U.S. Government usage only.


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