52.229-10
State of New Mexico Gross Receipts and Compensating Tax
Contractors performing federal work in New Mexico must register, pay applicable state taxes, manage tax certificates, and ensure compliance flows down to subcontractors to avoid unallowable costs.
Overview
FAR 52.229-10 requires contractors performing work in the State of New Mexico to comply with state tax laws, specifically the Gross Receipts and Compensating Tax Act. Contractors must register their contract with the New Mexico Taxation and Revenue Department within 30 days of award, pay applicable gross receipts taxes, and properly manage Nontaxable Transaction Certificates (NTTCs) for purchases. The clause also outlines procedures for handling taxes on in-state and out-of-state purchases, and mandates flow-down of these requirements to applicable subcontractors. The regulation ensures that federal contracts performed in New Mexico adhere to state tax obligations while clarifying which taxes are allowable costs under federal contracts.
Key Rules
- Contract Registration
- Contractors must register the contract with the New Mexico Taxation and Revenue Department within 30 days of award.
- Tax Payment
- Contractors are responsible for paying gross receipts taxes on contract fees and costs, with allowability determined by the Allowable Cost and Payment clause.
- Nontaxable Transaction Certificates (NTTCs)
- Contractors must apply for and use Type 15 NTTCs for qualifying purchases and provide them to vendors to avoid unnecessary tax liability.
- Compensating User Tax
- Contractors must pay compensating user tax if property purchased with an NTTC is not used for federal purposes.
- Out-of-State Purchases
- Compensating tax applies to out-of-state purchases not used for federal purposes.
- Subcontractor Flow-Down
- The clause must be included in all applicable subcontracts.
- Termination of Agreement
- The clause becomes void if the referenced agreement is terminated, except for obligations already incurred.
Responsibilities
- Contracting Officers: Ensure inclusion of this clause in contracts and subcontracts as required.
- Contractors: Register contracts, pay applicable taxes, manage NTTCs, and flow down requirements to subcontractors.
- Agencies: May receive tax information and participate in proceedings related to the clause.
Practical Implications
- This clause ensures compliance with New Mexico tax laws for federal contracts performed in the state.
- Contractors must be diligent in tax registration, payment, and documentation to avoid unallowable costs.
- Failure to provide NTTCs to vendors can result in unreimbursable tax liabilities.
- Proper flow-down to subcontractors is critical for full compliance.