[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR29.304]



[Page 570-571]

 

            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.



[[Page 571]]



    (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 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]