Part 29
Taxes
FAR Part 29 ensures contractors and contracting officers properly address federal, state, local, and foreign tax obligations and exemptions in government contracts.
Overview
FAR Part 29 addresses the treatment of taxes in federal government contracting, providing guidance on the application, exemption, and resolution of tax issues at the federal, state, and local levels. It outlines the responsibilities of contracting officers and contractors regarding tax matters, including the handling of federal excise taxes, state and local taxes, and taxes on foreign contracts. The part also prescribes specific contract clauses to ensure compliance and proper allocation of tax liabilities. The structure includes general provisions, detailed rules for federal excise taxes, state and local taxes, and requirements for including appropriate tax-related clauses in contracts.
Key Rules
- General Tax Guidance
- Provides procedures for resolving tax problems and defines key tax-related terms.
- Federal Excise Taxes
- Details when federal excise taxes apply, exemptions, and special rules for foreign contract payments.
- State and Local Taxes
- Explains the application of state and local taxes to the government, contractors, and subcontractors, and outlines exemptions and special considerations.
- Contract Clauses
- Specifies required clauses for domestic and foreign contracts, including those for leased equipment, construction in specific states, and foreign procurements.
Responsibilities
- Contracting Officers: Must determine tax applicability, ensure proper contract clauses are included, and resolve tax issues as they arise.
- Contractors: Must comply with tax-related contract terms, claim exemptions where applicable, and provide necessary documentation.
- Agencies: Oversee compliance with tax regulations and maintain awareness of changes in tax law affecting contracts.
Practical Implications
- FAR Part 29 exists to clarify tax obligations and exemptions in federal contracting, reducing the risk of improper tax payments or disputes.
- It impacts daily contracting by requiring careful review of tax clauses and proactive management of tax issues.
- Common pitfalls include failing to claim exemptions, misunderstanding tax applicability, or omitting required contract clauses.