29.302
Application of State and local taxes to the Government
Federal purchases and leases are generally exempt from state and local taxes, but contracting officers must actively secure and document these exemptions when feasible.
Overview
FAR 29.302 addresses the application of state and local taxes to purchases and leases made by the Federal Government. It establishes that, in general, the Federal Government is immune from such taxes, but determining immunity for specific transactions requires legal counsel. The section also directs executive agencies to maximize the use of available tax exemptions when it is economically feasible. Contracting officers may need to provide documentation, such as Standard Form 1094 or other evidence, to prove the Government's tax-exempt status during acquisitions.
Key Rules
- Federal Immunity from State and Local Taxes
- Federal purchases and leases are generally exempt from state and local taxes, but specific cases require legal review.
- Maximizing Tax Exemptions
- Agencies must take full advantage of tax exemptions when it is cost-effective to do so.
- Documentation of Exemption
- Contracting officers should provide appropriate tax exemption forms or evidence to vendors when necessary.
Responsibilities
- Contracting Officers: Consult legal counsel on tax immunity questions, ensure use of tax exemptions, and provide required documentation.
- Contractors: Accept and process government-provided tax exemption documentation.
- Agencies: Oversee compliance and ensure contracting officers are informed about exemption procedures.
Practical Implications
- This section helps reduce acquisition costs by avoiding unnecessary state and local taxes.
- Contracting officers must be proactive in seeking exemptions and providing proof to vendors.
- Failure to properly document exemptions can result in avoidable costs or disputes with vendors.