52.229-2 North Carolina State and Local Sales and Use Tax
Source: FAR 52.229-2 on acquisition.gov
Contractors performing construction or vessel repair in North Carolina must track, certify, and report all state and local sales and use taxes paid on materials, meeting strict documentation and deadline requirements.
Overview
FAR 52.229-2 requires contractors performing construction (or vessel repair, per Alternate I) in North Carolina to address state and local sales and use taxes on materials incorporated into the work. For fixed-price contracts, the contract price is deemed to include these taxes; for cost-reimbursement contracts, such taxes are allowable costs. Contractors must submit certified statements detailing the cost of materials and the taxes paid, broken down by vendor and by state/local tax, and must also collect similar statements from subcontractors. These statements are due within 60 days after contract completion (if before October 1) or by November 30 each year for contracts extending past October 1, covering the prior 12 months. The clause prescribes a specific certification format and requires contractors to provide any additional information needed for state refund claims. Alternate I modifies the definition of "materials" for vessel repair contracts.
Key Rules
- Inclusion of Taxes in Contract Price
- Fixed-price contracts include North Carolina sales and use taxes in the contract price; cost-reimbursement contracts treat them as allowable costs.
- Certified Statement Requirement
- Contractors must submit detailed, certified statements of taxes paid on materials, including vendor information and invoice details, and must obtain similar statements from subcontractors.
- Submission Deadlines
- Statements are due within 60 days after contract completion (if before October 1) or by November 30 annually for ongoing contracts.
- Recordkeeping and Additional Information
- Contractors must provide any further information required by the North Carolina Commissioner of Revenue for tax refund substantiation.
- Alternate I for Vessel Repair
- For vessel repair contracts, the definition of "materials" is tailored to vessel-specific work.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause, collect and review certified statements, and request additional information as needed.
- Contractors: Accurately track, certify, and report North Carolina sales and use taxes paid on materials; collect and submit subcontractor statements; comply with deadlines and recordkeeping.
- Agencies: Oversee compliance and facilitate any required state tax refund processes.
Practical Implications
- This clause ensures transparency and compliance with North Carolina tax law for federal construction and vessel repair contracts. Contractors must maintain detailed records and timely reporting, or risk noncompliance. Common pitfalls include missing deadlines, incomplete documentation, or failing to separate state and local taxes.
As prescribed in 29.401-2 , insert the following clause in solicitations and contracts for construction to be performed in North Carolina:
North Carolina State and Local Sales and Use Tax (Apr 1984)
(a) "Materials," as used in this clause, means building materials, supplies, fixtures, and equipment that become a part of or are annexed to any building or structure erected, altered, or repaired under this contract.
(b) If this is a fixed-price contract, the contract price includes North Carolina State and local sales and use taxes to be paid on materials, notwithstanding any other provision of this contract. If this is a cost-reimbursement contract, any North Carolina State and local sales and use taxes paid by the Contractor on materials shall constitute an allowable cost under this contract.
(c) At the time specified in paragraph (d) of this section, the Contractor shall furnish the Contracting Officer certified statements setting forth the cost of the materials purchased from each vendor and the amount of North Carolina State and local sales and use taxes paid. In the event the Contractor makes several purchases from the same vendor, the certified statement shall indicate the invoice numbers, the inclusive dates of the invoices, the total amount of the invoices, and the North Carolina State and local sales and use taxes paid. The statement shall also include the cost of any tangible personal property withdrawn from the Contractor’s warehouse stock and the amount of North Carolina State and local sales or use tax paid on this property by the Contractor. Any local sales or use taxes included in the Contractor’s statements must be shown separately from the State sales or use taxes. The Contractor shall furnish any additional information the Commissioner of Revenue of the State of North Carolina may require to substantiate a refund claim for sales or use taxes. The Contractor shall also obtain and furnish to the Contracting Officer similar certified statements by its subcontractors.
(d) If this contract is completed before the next October 1, the certified statements to be furnished pursuant to paragraph (c) of this clause shall be submitted within 60 days after completion. If this contract is not completed before the next October 1, the certified statements shall be submitted on or before November 30 of eachyear and shall cover taxes paid during the 12-month period that ended the preceding September 30.
(e) The certified statements to be furnished pursuant to paragraph (c) of this clause shall be in the following form:
I hereby certify that during the period ______ to _____ [insert dates], ____ [insert name of Contractor or subcontractor] paid North Carolina State and local sales and use taxes aggregating $______ (State) and $______ (local), with respect to building materials, supplies, fixtures, and equipment that have become a part of or annexed to a building or structure erected, altered, or repaired by _________ [insert name of Contractor or subcontractor] for the United States of America, and that the vendors from whom the property was purchased, the dates and numbers of the invoices covering the purchases, the total amount of the invoices of each vendor, the North Carolina State and local sales and use taxes paid on the property (shown separately), and the cost of property withdrawn from warehouse stock and North Carolina State and local sales or use taxes paid on this property are as set forth in the attachments.
(End of clause)
Alternate I (Apr 1984). If the requirement is for vessel repair to be performed in North Carolina, substitute the following paragraph (a) for paragraph (a) of the basic clause:
(a) "Materials," as used in this clause, means materials, supplies, fixtures, and equipment that become a part of or are annexed to any vessel altered or repaired under this contract.