29.201 General
Source: FAR 29.201 on acquisition.gov
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.
(a) Federal excise taxes are levied on the sale or use of particular supplies or services. Subtitle D of the Internal Revenue Code of 1954, Miscellaneous Excise Taxes, http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section4041&num=0&edition=prelim" target="_blank">26 U.S.C.4041, etseq., and its implementing regulations, 26 CFR parts 40 through 299, cover miscellaneous federal excise tax requirements. Questions arising in this area should be directed to the agency-designated counsel. The most common excise taxes are-
(1) Manufacturers’ excise taxes imposed on certain motor-vehicle articles, tires and inner tubes, gasoline, lubricating oils, coal, fishing equipment, firearms, shells, and cartridges sold by manufacturers, producers, or importers; and
(2) Special-fuels excise taxes imposed at the retail level on diesel fuel and special motor fuels.
(b) Sometimes the law exempts the Federal Government from these taxes. Contracting officers should solicit prices on a tax-exclusive basis when it is known that the Government is exempt from these taxes, and on a tax-inclusive basis when no exemption exists.
(c) Executive agencies shall take maximum advantage of available Federal excise tax exemptions.