52.229-10 State of New Mexico Gross Receipts and Compensating Tax
Source: FAR 52.229-10 on acquisition.gov
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.
As prescribed in 29.401-4(b), insert the following clause:
State of New Mexico Gross Receipts and Compensating Tax (Apr 2003)
(a) Within thirty (30) days after award of this contract, the Contractor shall advise the State of New Mexico of this contract by registering with the State of New Mexico, Taxation and Revenue Department, Revenue Division, pursuant to the Tax Administration Act of the State of New Mexico and shall identify the contract number.
(b) The Contractor shall pay the New Mexico gross receipts taxes, pursuant to the Gross Receipts and Compensating Tax Act of New Mexico, assessed against the contract fee and costs paid for performance of this contract, or of any part or portion thereof, within the State of New Mexico. The allowability of any gross receipts taxes or local option taxes lawfully paid to the State of New Mexico by the Contractor or its subcontractors will be determined in accordance with the Allowable Cost and Payment clause of this contract except as provided in paragraph (d) of this clause.
(c) The Contractor shall submit applications for Nontaxable Transaction Certificates, FormCSR-3 C, to the:
State of New Mexico Taxation and Revenue Dept. Revenue Division PO Box 630 Santa Fe, New Mexico 87509
When the Type 15 Nontaxable Transaction Certificate is issued by the Revenue Division, the Contractor shall use these certificates strictly in accordance with this contract, and the agreement between the (*________________) and the New Mexico Taxation and Revenue Department.
(d) The Contractor shall provide Type 15 Nontaxable Transaction Certificates to each vendor in New Mexico selling tangible personal property to the Contractor for use in the performance of this contract. Failure to provide a Type 15 Nontaxable Transaction Certificate to vendors will result in the vendor’s liability for the gross receipt taxes and those taxes, which are then passed on to the Contractor, shall not be reimbursable as an allowable cost by the Government.
(e) The Contractor shall pay the New Mexico compensating user tax for any tangible personal property which is purchased pursuant to a Nontaxable Transaction Certificate if such property is not used for Federal purposes.
(f) Out-of-state purchase of tangible personal property by the Contractor which would be otherwise subject to compensation tax shall be governed by the principles of this clause. Accordingly, compensating tax shall be due from the contractor only if such property is not used for Federal purposes.
(g) The (*_______________) may receive information regarding the Contractor from the Revenue Division of the New Mexico Taxation and Revenue Department and, at the discretion of the (*_________________), may participate in any matters or proceedings pertaining to this clause or the abovementioned Agreement. This shall not preclude the Contractor from having its own representative nor does it obligate the (*______________) to represent its Contractor.
(h) The Contractor agrees to insert the substance of this clause, including this paragraph (h), in each subcontract which meets the criteria in 29.401-4(b)(1) through (3) of the Federal Acquisition Regulation, 48 CFR Part 29.
(i) Paragraphs (a) through (h) of this clause shall be null and void should the Agreement referred to in paragraph (c) of this clause be terminated; provided, however, that such termination shall not nullify obligations already incurred prior to the date of termination.
[*Insert appropriate agency name in blanks.]
(End of clause)