[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR29.304]

[Page 552-553]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 29_TAXES--Table of Contents
 
                   Subpart 29.3_State and Local Taxes
 
Sec.  29.304  Matters requiring special consideration.

    The imposition of State and local taxes may result in special 
contract considerations including the following:
    (a) With coordination of the agency-designated counsel, a contract 
may (1) state that the contract price includes or excludes a specified 
tax or (2) require that the contractor take certain actions with regard 
to payment, nonpayment, refund, protest, or other treatment of a 
specified tax. Such special treatment may be appropriate when there is 
doubt as to the applicability or allocability of the tax, or when the 
applicability of the tax is being litigated.
    (b) The applicability of State and local taxes to purchases by the 
Federal Government may depend on the place and terms of delivery. When 
the contract price will be substantial, alternative places and terms of 
delivery should be considered in light of possible tax consequences.
    (c) Indefinite-delivery contracts for equipment rental may require 
the contractor to furnish equipment in any of the States. Since leased 
equipment remains the contractor's property, States and local 
governments impose a wide variety of property, use, or other taxes on 
equipment leased to the Government. The amount of these taxes can vary 
considerably from jurisdiction to jurisdiction. See 29.401-1 for the 
prescription of the contract clause to be included in contracts when 
delivery points are not known at time of contracting.
    (d) The North Carolina State and local sales and use tax.
    (1) The North Carolina Sales and Use Tax Act authorizes counties and 
incorporated cities and towns to obtain each year from the Commissioner 
of Revenue of the State of North Carolina a refund of sales and use 
taxes indirectly paid on building materials, supplies, fixtures, and 
equipment that become a part of or are annexed to any building or 
structure erected, altered, or repaired for such counties and 
incorporated cities and towns in North Carolina. In United States v. 
Clayton, 250 F. Supp. 827 (1965), it was held that the United States is 
entitled to the benefit of the refund, but must follow the refund 
procedure of the Act and the regulations to recover what it is due.
    (2) The Act provides that, to receive the refund, claimants must 
file, within 6 months after the claimant's fiscal year closes, a written 
request substantiated by such records, receipts, and information as the 
Commissioner of Revenue may require. No refund will be made on an 
application not filed within

[[Page 553]]

the time allowed and in such manner as the Commissioner may require. The 
requirements of the Commissioner are set forth in regulations that 
provide that, to substantiate a refund claim for sales or use taxes paid 
on purchases of building materials, supplies, fixtures, or equipment by 
a contractor, the Government must secure from the contractor certified 
statements setting forth the cost of the property purchased from each 
vendor and the amount of sales or use taxes paid. In the event the 
contractor makes several purchases from the same vendor, the certified 
statement must indicate the invoice numbers, the inclusive dates of the 
invoices, the total amount of the invoices, and the sales and use taxes 
paid. The statement must also include the cost of any tangible personal 
property withdrawn from the contractor's warehouse stock and the amount 
of sales or use tax paid by the contractor. Similar certified statements 
by subcontractors must be obtained by the general contractor and 
furnished to the claimant. Any local sales or use taxes included in the 
contractor's statement must be shown separately from the State sales or 
use taxes.
    (3) The clause prescribed at 29.401-2 requires contractors to submit 
to contracting officers by November 30 of each year a certified 
statement disclosing North Carolina State and local sales and use taxes 
paid during the 12-month period that ended the preceding September 30. 
The contracting officer shall ensure that contractors comply with this 
requirement and shall obtain the annual refund to which the Government 
may be entitled. The application for refund must be filed each year 
before March 31 and in the manner and form required by the Commissioner 
of Revenue. Copies of the form may be obtained from the State of North 
Carolina, Department of Revenue, P.O. Box 25000, Raleigh, NC 27640.

[48 FR 42293, Sept. 19, 1983, as amended at 62 FR 40237, July 25, 1997]