81_FR_32735 81 FR 32635 - Small Business Size Standards

81 FR 32635 - Small Business Size Standards

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 81, Issue 100 (May 24, 2016)

Page Range32635-32636
FR Document2016-12260

The Small Business Administration (SBA) hereby gives notice of its intended application and interpretation of the interaffiliate transactions exclusion from annual receipts set forth in its Small Business Size Regulations. Effective at the issuance of this notice, SBA will apply the exclusion to properly documented transactions between a concern and its domestic or foreign affiliates, regardless of the type of relationship that resulted in the finding of affiliation.

Federal Register, Volume 81 Issue 100 (Tuesday, May 24, 2016) 
[Federal Register Volume 81, Number 100 (Tuesday, May 24, 2016)]
[Rules and Regulations]
[Pages 32635-32636]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-12260]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

[Docket No. SBA-2016-0004]


Small Business Size Standards

AGENCY: U.S. Small Business Administration.

ACTION: Statement of General Policy, SBA Size Policy Statement No. 3.

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SUMMARY: The Small Business Administration (SBA) hereby gives notice of 
its intended application and interpretation of the interaffiliate 
transactions exclusion from annual receipts set forth in its Small 
Business Size Regulations. Effective at the issuance of this notice, 
SBA will apply the exclusion to properly documented transactions 
between a concern and its domestic or foreign affiliates, regardless of 
the type of relationship that resulted in the finding of affiliation.

DATES: 
    Effective Date: This Policy Statement is effective May 24, 2016.
    Comment Date: Comments must be received on or before July 25, 2016.

ADDRESSES: You may submit comments, identified by Docket No. SBA-2016-
0004 by any of the following methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery/Courier: Brenda Fernandez, U.S. 
Small Business Administration, Office of Government Contracting, 409 
3rd Street SW., 8th Floor, Washington, DC 20416.
    SBA will post all comments on http://www.Regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.Regulations.gov, please submit the 
information to Brenda Fernandez, U.S. Small Business Administration, 
Office of Government Contracting, 409 3rd Street SW., 8th Floor, 
Washington, DC 20416, and highlight the information that you consider 
to be CBI and explain why you believe this information should be held 
confidential. SBA will review the information and make a final 
determination of whether the information will be published or not.

FOR FURTHER INFORMATION CONTACT: Brenda Fernandez, U.S. Small Business 
Administration, Office of Government Contracting, 409 3rd Street SW., 
8th Floor, Washington, DC 20416; (202) 205-7337; 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    Under 13 CFR 121.104(d), the average annual receipts size of a 
business concern with affiliates is calculated by adding the average 
annual receipts of the business concern with the average annual 
receipts of each affiliate. However, in adding the receipts of a 
concern with its affiliate, SBA excludes ``proceeds from transactions 
between a concern and its domestic or foreign

[[Page 32636]]

affiliates,'' under 13 CFR 121.104(a). These transactions are commonly 
referred to as interaffiliate transactions. The intent of this 
exclusion is to avoid counting the same receipts twice when determining 
the size of a particular concern. This Statement of Policy explains how 
SBA will apply the exclusion.
    Recent SBA size determinations and decisions of the Office of 
Hearings and Appeals have limited the exclusion by applying it only to 
transactions between affiliates that are eligible to file a 
consolidated tax return. This interpretation has been supported by 
reference to a parenthetical that was included with section 121.104(a) 
from 1996 to 2004, providing that the exclusion would apply to 
interaffiliate amounts ``(if also excluded from gross or total income 
on a consolidated return filed with the IRS). . . .'' 13 CFR 
121.104(a)(1) (1996); 61 FR 3280 (Jan. 31, 1996). While this 
parenthetical was in place, SBA excluded only those interaffiliate 
transactions that were also excluded from consolidated tax returns 
filed by a concern and its affiliate. This policy necessarily required 
that the transaction occur between two firms that filed consolidated 
returns.
    SBA deleted the parenthetical in 2004. In the preamble to the final 
rule issued May 21, 2004, SBA stated that it was deleting the 
parenthetical because ``[w]hether a consolidated return is filed should 
have no bearing on whether properly documented interaffiliate 
transactions are excluded from annual receipts.'' 69 FR 29192, 29196 
(May 21, 2004). Thus, since May 2004, the regulation has provided for 
an exclusion from receipts for ``proceeds from transactions between a 
concern and its domestic or foreign affiliates.'' 13 CFR 121.104(a). 
The regulation does not include a limitation on the types of affiliates 
for which interaffiliate transactions can be excluded, and in no way 
ties the exclusion to a concern's ability to file a consolidated tax 
return with the identified affiliate.
    SBA believes that the current regulatory language is clear on its 
face. It specifically excludes all proceeds from transactions between a 
concern and its affiliates, without limitation. Moreover, the 
regulatory history supports the position that the exclusion for 
interaffiliate transactions is available regardless of the manner of 
affiliation between a concern and its affiliate. SBA recognized that 
excluding interaffiliate transactions only when they are identified on 
a consolidated tax return often perpetuated the double-counting of 
receipts. By saying that ``[w]hether a consolidated return is filed 
should have no bearing on whether properly documented interaffiliate 
transactions are excluded from annual receipts,'' SBA did not mean to 
imply that a concern and its affiliate must be able to file a 
consolidated tax return in order to receive the exclusion from double-
counting interaffiliate transactions. Conversely, SBA was attempting to 
make clear that it did not support the practice of double-counting 
receipts between affiliates generally.
    Because the regulatory text does not contain a restriction, a 
regulatory change is not necessary. SBA will consider comments 
submitted regarding this policy.

Statement of Policy

    SBA will not restrict the exclusion for interaffiliate transactions 
to transactions between a concern and a firm with which it could file a 
consolidated tax return. The exclusion for interaffiliate transactions 
may be applied to interaffiliate transactions between a concern and a 
firm with which it is affiliated under the principles in 13 CFR 
121.103. Where SBA is conducting a size determination, SBA requires 
that exclusions claimed under section 121.104(a) be specifically 
identified by the concern whose size is at issue and be properly 
documented. This policy is effective immediately.

    Dated: May 18, 2016.
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016-12260 Filed 5-23-16; 8:45 am]
BILLING CODE 8025-01-P

Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Rules and Regulations 32635 amendments, the new CMP maximum is PART 622—RULES OF PRACTICE AND ACTION:Statement of General Policy, $989. PROCEDURE SBA Size Policy Statement No. 3. 3. New Penalty Amounts for Flood ■ 1. The authority citation for part 622 SUMMARY: The Small Business Insurance Violations Under § 622.61(b) continues to read as follows: Administration (SBA) hereby gives Authority: Secs. 5.9, 5.10, 5.17, 5.25–5.37 notice of its intended application and The existing maximum CMP for a interpretation of the interaffiliate of the Farm Credit Act (12 U.S.C. 2243, 2244, pattern or practice of flood insurance transactions exclusion from annual 2252, 2261–2273); 28 U.S.C. 2461 note; and violations pursuant to 42 U.S.C. 42 U.S.C. 4012a(f). receipts set forth in its Small Business 4012a(f)(5) is $2,000. Multiplying ■ 2. Revise § 622.61 to read as follows: Size Regulations. Effective at the $2,000 by the 2012 OMB multiplier, issuance of this notice, SBA will apply 1.02819, yields a total of $2,056.38. § 622.61 Adjustment of civil money the exclusion to properly documented When that number is rounded as penalties by the rate of inflation under the transactions between a concern and its required by section 5(a) of the 1990 Act, Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. domestic or foreign affiliates, regardless as amended, the new maximum of the type of relationship that resulted assessment of the CMP for violating 42 (a) The maximum amount of each in the finding of affiliation. U.S.C. 4012a(f)(5) is $2,056. The CMP in civil money penalty within FCA’s jurisdiction is adjusted in accordance DATES: effect on November 2, 2015 was $2,000. Effective Date: This Policy Statement with the Federal Civil Penalties Increasing the 2015 CMP of $2,000 by is effective May 24, 2016. Inflation Adjustment Act of 1990, as 150 percent yields $5,000. Since the Comment Date: Comments must be amended (28 U.S.C. 2461 note), as new CMP maximum calculated with the received on or before July 25, 2016. follows: OMB multiplier is lower than the 150- (1) Amount of civil money penalty ADDRESSES: You may submit comments, percent maximum increase established imposed under section 5.32 of the Act identified by Docket No. SBA–2016– by the 2015 Act amendments, the new for violation of a final order issued 0004 by any of the following methods: CMP maximum is $2,056. under section 5.25 or 5.26 of the Act: • Federal Rulemaking Portal: http:// The maximum daily amount is $2,188 www.regulations.gov. Follow the IV. Notice and Comment Not Required for violations that occur on or after instructions for submitting comments. by Administrative Procedure Act August 1, 2016. • Mail or Hand Delivery/Courier: The 1990 Act, as amended, gives (2) Amount of civil money penalty for Brenda Fernandez, U.S. Small Business Federal agencies no discretion in the violation of the Act or regulations: The Administration, Office of Government adjustment of CMPs for the rate of maximum daily amount is $989 for each Contracting, 409 3rd Street SW., 8th inflation. Further, these revisions are violation that occurs on or after August Floor, Washington, DC 20416. ministerial, technical, and 1, 2016. SBA will post all comments on http:// noncontroversial. For these reasons, the (b) The maximum civil money penalty www.Regulations.gov. If you wish to FCA finds good cause to determine that amount assessed under 42 U.S.C. submit confidential business 4012a(f) is: $385 for each violation that information (CBI) as defined in the User public notice and an opportunity to occurs on or after January 16, 2009, but Notice at http://www.Regulations.gov, comment are impracticable, before July 1, 2013, with total penalties please submit the information to Brenda unnecessary, and contrary to the public under such statute not to exceed Fernandez, U.S. Small Business interest pursuant to the Administrative Administration, Office of Government $120,000 for any single institution Procedure Act, 5 U.S.C. 553(b)(B), and during any calendar year; $2,000 for Contracting, 409 3rd Street SW., 8th adopts this rule in final form. each violation that occurs on or after Floor, Washington, DC 20416, and V. Regulatory Flexibility Act July 1, 2013, but before August 1, 2016, highlight the information that you with no cap on the total amount of consider to be CBI and explain why you Pursuant to section 605(b) of the penalties that can be assessed against believe this information should be held Regulatory Flexibility Act (5 U.S.C. 601 any single institution during any confidential. SBA will review the et seq.), the FCA hereby certifies that calendar year; and $2,056 for each information and make a final this final rule will not have a significant violation that occurs on or after August determination of whether the economic impact on a substantial 1, 2016, with no cap on the total amount information will be published or not. number of small entities. Each of the of penalties that can be assessed against FOR FURTHER INFORMATION CONTACT: banks in the System, considered any single institution during any Brenda Fernandez, U.S. Small Business together with its affiliated associations, calendar year. Administration, Office of Government has assets and annual income in excess Dated: May 16, 2016. Contracting, 409 3rd Street SW., 8th of the amounts that would qualify them Dale L. Aultman, Floor, Washington, DC 20416; (202) as small entities. Therefore, System Secretary, Farm Credit Administration Board. 205–7337; brenda.fernandez@sba.gov. institutions are not ‘‘small entities’’ as [FR Doc. 2016–11862 Filed 5–23–16; 8:45 am] SUPPLEMENTARY INFORMATION: defined in the Regulatory Flexibility Act. BILLING CODE 6705–01–P Background Under 13 CFR 121.104(d), the average List of Subjects in 12 CFR Part 622 annual receipts size of a business SMALL BUSINESS ADMINISTRATION Administrative practice and concern with affiliates is calculated by mstockstill on DSK3G9T082PROD with RULES procedure, Crime, Investigations, 13 CFR Part 121 adding the average annual receipts of Penalties. the business concern with the average [Docket No. SBA–2016–0004] annual receipts of each affiliate. For the reasons stated in the However, in adding the receipts of a Small Business Size Standards preamble, part 622 of chapter VI, title 12 concern with its affiliate, SBA excludes of the Code of Federal Regulations is AGENCY:U.S. Small Business ‘‘proceeds from transactions between a amended to read as follows: Administration. concern and its domestic or foreign VerDate Sep<11>2014 17:11 May 23, 2016 Jkt 238001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\24MYR1.SGM 24MYR1

32636 Federal Register / Vol. 81, No. 100 / Tuesday, May 24, 2016 / Rules and Regulations affiliates,’’ under 13 CFR 121.104(a). no bearing on whether properly International Airport (EWR) as a Level These transactions are commonly documented interaffiliate transactions 2 schedule-facilitated airport. referred to as interaffiliate transactions. are excluded from annual receipts,’’ DATES: May 24, 2016. The intent of this exclusion is to avoid SBA did not mean to imply that a FOR FURTHER INFORMATION CONTACT: For counting the same receipts twice when concern and its affiliate must be able to technical questions concerning this determining the size of a particular file a consolidated tax return in order to action, contact Susan Pfingstler, System concern. This Statement of Policy receive the exclusion from double- Operations Services, Air Traffic explains how SBA will apply the counting interaffiliate transactions. Organization, Federal Aviation exclusion. Conversely, SBA was attempting to Administration, 600 Independence Recent SBA size determinations and make clear that it did not support the Avenue SW., Washington, DC 20591; decisions of the Office of Hearings and practice of double-counting receipts telephone (202) 267–6462; email Appeals have limited the exclusion by between affiliates generally. susan.pfingstler@faa.gov. applying it only to transactions between Because the regulatory text does not SUPPLEMENTARY INFORMATION: On April affiliates that are eligible to file a contain a restriction, a regulatory consolidated tax return. This 6, 2016, the FAA published the ‘‘Change change is not necessary. SBA will of Newark Liberty International Airport interpretation has been supported by consider comments submitted regarding reference to a parenthetical that was (EWR) Designation’’ document in order this policy. to redesignate Newark Liberty included with section 121.104(a) from 1996 to 2004, providing that the Statement of Policy International Airport as a Level 2 exclusion would apply to interaffiliate schedule-facilitated airport under the SBA will not restrict the exclusion for amounts ‘‘(if also excluded from gross or International Air Transport Association interaffiliate transactions to transactions total income on a consolidated return Worldwide Slot Guidelines effective for between a concern and a firm with filed with the IRS). . . .’’ 13 CFR the winter 2016 scheduling season, which it could file a consolidated tax 121.104(a)(1) (1996); 61 FR 3280 (Jan. which begins on October 30, 2016.1 return. The exclusion for interaffiliate On April 5, 2016, the FAA posted a 31, 1996). While this parenthetical was transactions may be applied to in place, SBA excluded only those copy of a draft of Env Rev Attach A in interaffiliate transactions between a the docket associated with the April 6, interaffiliate transactions that were also concern and a firm with which it is excluded from consolidated tax returns 2016 document. The FAA has corrected affiliated under the principles in 13 CFR this action by posting the final CATEX filed by a concern and its affiliate. This 121.103. Where SBA is conducting a policy necessarily required that the documents (the signed CATEX size determination, SBA requires that declaration and final Attachment A: transaction occur between two firms exclusions claimed under section that filed consolidated returns. Environmental Review of Proposed 121.104(a) be specifically identified by Change of Operating Authorization SBA deleted the parenthetical in the concern whose size is at issue and 2004. In the preamble to the final rule Requirement at Newark Liberty be properly documented. This policy is International Airport) to the docket. issued May 21, 2004, SBA stated that it effective immediately. was deleting the parenthetical because Issued in Washington, DC, on May 18, ‘‘[w]hether a consolidated return is filed Dated: May 18, 2016. 2016. should have no bearing on whether Maria Contreras-Sweet, Lorelei Peter, properly documented interaffiliate Administrator. Assistant Chief Counsel for Regulations. transactions are excluded from annual [FR Doc. 2016–12260 Filed 5–23–16; 8:45 am] [FR Doc. 2016–12252 Filed 5–23–16; 8:45 am] receipts.’’ 69 FR 29192, 29196 (May 21, BILLING CODE 8025–01–P BILLING CODE 4910–13–P 2004). Thus, since May 2004, the regulation has provided for an exclusion from receipts for ‘‘proceeds from DEPARTMENT OF TRANSPORTATION DEPARTMENT OF TRANSPORTATION transactions between a concern and its domestic or foreign affiliates.’’ 13 CFR Federal Aviation Administration Federal Aviation Administration 121.104(a). The regulation does not include a limitation on the types of 14 CFR Part 93 14 CFR Part 93 affiliates for which interaffiliate [Docket No. FAA–2008–0221] [Docket No. FAA–2007–29320] transactions can be excluded, and in no way ties the exclusion to a concern’s Change of Newark Liberty International Operating Limitations at John F. ability to file a consolidated tax return Airport (EWR) Designation; Kennedy International Airport with the identified affiliate. Notification of Availability of Final SBA believes that the current AGENCY: Federal Aviation CATEX Declaration and Supporting regulatory language is clear on its face. Administration (FAA), DOT. Material It specifically excludes all proceeds ACTION: Extension to Order. from transactions between a concern AGENCY: Federal Aviation and its affiliates, without limitation. Administration (FAA), DOT. SUMMARY: This action extends the Order Moreover, the regulatory history Limiting Operations at John F. Kennedy ACTION: Notification of availability. supports the position that the exclusion International Airport (JFK) published on for interaffiliate transactions is available SUMMARY: This action announces the January 18, 2008, and most recently regardless of the manner of affiliation placement in the docket of the final extended March 26, 2014. The Order mstockstill on DSK3G9T082PROD with RULES between a concern and its affiliate. SBA documented categorical exclusion (the remains effective until October 27, 2018. recognized that excluding interaffiliate signed CATEX declaration and final DATES: This action is effective on May transactions only when they are Attachment A: Environmental Review of 24, 2016. identified on a consolidated tax return Proposed Change of Operating ADDRESSES: Requests may be submitted often perpetuated the double-counting Authorization Requirement at Newark by mail to Slot Administration Office, of receipts. By saying that ‘‘[w]hether a Liberty International Airport) for the consolidated return is filed should have redesignation of Newark Liberty 1 81 FR 19861. VerDate Sep<11>2014 17:11 May 23, 2016 Jkt 238001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\24MYR1.SGM 24MYR1


Document Created: 2016-05-24 05:21:02
Document Modified: 2016-05-24 05:21:02
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionStatement of General Policy, SBA Size Policy Statement No. 3.
ContactBrenda Fernandez, U.S. Small Business Administration, Office of Government Contracting, 409 3rd Street SW., 8th Floor, Washington, DC 20416; (202) 205-7337; [email protected]
FR Citation81 FR 32635 
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