General
Contracting officers must determine federal excise tax applicability and ensure solicitations and contracts reflect the correct tax treatment, maximizing exemptions when available.
Overview
FAR 29.201 outlines the general principles regarding federal excise taxes as they apply to government contracts. It explains that federal excise taxes are imposed on certain goods and services, referencing the relevant sections of the Internal Revenue Code and associated regulations. The section identifies common excise taxes, such as those on motor vehicles, tires, gasoline, lubricating oils, coal, fishing equipment, and firearms, as well as special-fuels taxes. It also clarifies that the federal government is sometimes exempt from these taxes and instructs contracting officers to solicit prices either tax-exclusive or tax-inclusive depending on whether an exemption applies. Agencies are directed to maximize the use of available tax exemptions to reduce costs.