§ 1-10.303 Responsibility for loss of or damage to Government property. Where Government property may be in the possession of or under the control of the contractor, or in the custody of a transportation company, the contract shall set forth the responsibility of the contractor for loss of or damage to such Government property. § 1-10.304 Insurance against loss of or damage to Government property. In instances where insurance is required or approved to cover loss of or damage to Government property, such insurance may be provided either by specific insurance policies, or by inclusion of such risks in the contractor's existing insurance policies. When appropriate the insurance policies shall make formal disclosure of the Government's interest in the property. § 1-10.305 Procedures to be followed in the event of loss or damage to Government property. Upon the happening of loss of or damage to any Government property, concerning which the contractor is relieved of responsibility by contract provision, the procedure to be followed shall be as prescribed by the agency. (c) Government-furnished property is involved. (d) The work required by the contract is performed within a Government establishment. (e) The Government may desire to assume risks for which the contractor ordinarily obtains commercial insur ance. § 1-10.402 Workmen's compensation in surance overseas. (a) The Defense Base Act, as amended (42 U.S.C. 1651 et seq.), extends the application of the Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. 901 et seq.) to various classes of employees engaged in work outside the United States, including any employee engaged (1) in the performance of a public work contract or (2) in the performance of any contract approved or financed pursuant to the Foreign Assistance Act of 1961 (P.L 87-195) other than (i) contracts approved or financed by the Development Loan Fund except where the Secretary of Labor, acting upon the recommendation of any department or agency of the United States, determines that such contracts should be covered, or (ii) contracts exclusively for the furnishing of materials or sup plies. As used in this paragraph, a "public work" contract includes any contract for a fixed improvement or any project, whether or not fixed, involving construction, alteration, removal, or repair for the public use of the United States or its allies, including projects or operations under service contracts and projects in connection with the national defense or with war activities, dredging, harbor improvements, dams, roadways, and housing, as well as preparatory and ancillary work in connection therewith at the site or on the project. The following clause shall be included in all contracts subject to the Defense Base Act unless applicability of that Act has been waived by the Secretary of Labor as provided in paragraph (b) of this § 1-10.402: WORKMEN'S COMPENSATION INSURANCE The Contractor before commencing performance under this contract shall provide and thereafter maintain such Workmen's Compensation Insurance or security as is required by the Defense Base Act, as amended (42 U.S.C. 1651 et seq.). The Contractor further agrees to insert in all subcontracts hereunder to which the Defense Base Act is applicable, a clause similar to this clause, including this sentence, imposing on all such subcontractors a like requirement to comply with the Defense Base Act. (b) Upon the recommendation of the head of the agency concerned, the Secretary of Labor may waive the applicability of the Defense Base Act with respect to any contract, subcontract, or subordinate contract, work location, or classification of employees. The kinds of insurance referred to in this § 1-10.501, with limits of liability as prescribed by the agency, ordinarily shall be required under cost-reimbursement type prime contracts and cost-reimbursement type subcontracts under cost-reimbursement type prime contracts. However, a program of selfinsurance approved by the agency concerned, as provided in § 1-10.503, may be substituted for any of the kinds of required insurance. §1-10.502 Types of insurance. § 1-10.502-1 Workmen's compensation and employers' liability insurance. Compliance with applicable workmen's compensation and occupational disease statutes will be required, and employers' liability coverage will be obtained where available. In jurisdictions where all occupational diseases are not compensable under applicable law, insurance for occupational diseases will be required under the employers' liability section of the insurance policy; however, such additional insurance will not be required where contract operations are commingled with the contractor's commercial operations so that it would be impracticable to require such coverage. The clause set forth in § 1-10.402 shall be included in all contracts subject to the Defense Base Act unless applicability of that Act has been waived by the Secretary of Labor as provided in § 110.402(b). § 1-10.502-2 General liability insurance. (a) Bodily injury liability insurance will be required on the comprehensive form of policy. (b) Property damage liability insurance will be required only in special circumstances as determined by the agency concerned. Property damage liability insurance may be approved when the nature of the contract operations warrant its purchase or where such operations are not separable from the contractor's commercial operations. § 1-10.502-3 Automobile liability insur ance. Automobile liability insurance will be required on the comprehensive form of policy and will provide for bodily injury and property damage liability covering the operation of all automobiles used in connection with the performance of the contract. § 1-10.502-4 Aircraft public and passenger liability insurance. Where aircraft are used in connection with the performance of the contract, aircraft public and passenger liability insurance ordinarily will be considered required coverage. § 1-10.502-5 Vessel collision liability and protection and indemnity liability in surance. Where vessels are used in connection with the performance of the contract, vessel collision liability and protection and indemnity liability insurance will be required whenever deemed necessary by the agency concerned. § 1-10.503 Self-insurance. Qualified programs of self-insurance covering any kind of risk may be approved where an examination of the program indicates that its application to the cost-reimbursement type contract is in the best interest of the Government. However, in any jurisdiction where workmen's compensation does not completely cover employers' liability to employees, a program of self-insurance for workmen's compensation may be approved only if— (a) The contractor also maintains an approved program of self-insurance for any employers' liability which is not so covered; or (b) The contractor shows that the combined cost to the Government of self-insurance for workmen's compensation and commercial insurance for employers' liability will not exceed the costs of covering both kinds of risks by commercial insurance. § 1-10.504 Government property. [Reserved] Subpart 1-11.5-Tax Exemption Forms 1-11.500 Scope of subpart. 1-11.501 Federal excise tax exemption forms. 1-11.501-1 Certificate of export to a possession or Puerto Rico. 1-11.501-2 Exemption certificate for supplies for vessels of war. 1-11.501-3 Cutting oil certificate. 1-11.502 State and local tax exemption forms. 1-11.502-1 Types of evidence of exemption. 1-11.502-2 When evidence of exemption is to be furnished. AUTHORITY: Sec. 205(c), 63 Stat. 390; 40 U.S.C. 486(c). SOURCE: 29 FR 10254, July 24, 1964, unless otherwise noted. § 1-11.000 Scope of part. (a) This part deals with Federal taxes imposed by the Internal Revenue Code upon certain supplies and services procured by executive agencies; exemptions from such Federal taxes; policy for obtaining exemption from State and local taxes; and contract clauses required or authorized for insertion in contracts. (b) The problems presented in connection with the administration of the tax aspect of a contract or transaction are widely varied. The right to immunity, exemption, refund, credit, or drawback depends upon the nature of the tax, the particular tax law, the party sought to be taxed, the items being procured, and the provisions of the contract. These problems are essentially legal; therefore, when questions arise, contracting officers should request the assistance of legal counsel. Subpart 1-11.1—Federal Excise Taxes SOURCE: 31 FR 6370, Apr. 27, 1966, unless otherwise noted. § 1-11.100 Scope of subpart. This subpart deals with Federal excise taxes involved in the procurement of certain supplies and services. It is for the general information of Government personnel and does not purport to present the full scope of the applicable provisions of law and implementing regulations as they may be amended from time to time. §1-11.101 Retailers excise taxes. §1-11.101-1 Special fuels. (a) Diesel fuel. A tax at the indicated rates is imposed upon any liquid, other than that taxable as gasoline under section 4081 of the Internal Revenue Code (see § 1-11.102-3), which is (i) sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle, for use as a fuel in such vehicle, or (ii) used by any person as a fuel in a diesel-powered highway vehicle unless there was a taxable sale of such liquid pursuant to (i) above, as follows: (1) At 4 cents per gallon, if sold for use or if used as fuel in a dieselpowered highway vehicle (i) Which, at the time of such sale or use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is used on the highway; or (2) At 2 cents per gallon, if sold for use or if used as fuel in a dieselpowered highway vehicle (i) Which, at the time of such sale or use, is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is not used on the highway; and (3) At an additional 2 cents per gallon, if fuel on which a tax of 2 cents was paid pursuant to subparagraph (2) of this paragraph is used as fuel in a diesel-powered highway vehicle (i) Which, at the time of such use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is used on the highway. No tax is imposed on diesel fuel sold for use or used as fuel in a nonhighway vehicle, such as certain military vehicles, construction equipment, and equipment designed for use at mines, factories, railroad stations, and farms. (b) Special motor fuels. A tax at the rates indicated in paragraph (b) (1) through (3) of this section is imposed upon benzol, benzene, naphtha, liquefied petroleum gas, casing-head and natural gasolines, or any other liquid (other than kerosene, gas oil, fuel oil), or a product taxable as diesel fuel under paragraph (a) of this section or as gasoline under section 4081 of the Internal Revenue Code (see § 1-11.1023), which is (i) sold by any person to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane for use as a fuel for the propulsion thereof, or (ii) used by any person as a fuel for the propulsion of a motor vehicle, motorboat, or airplane, unless there was a taxable sale of such liquid pursuant to (i) above, as follows: (1) At 4 cents per gallon, if such liquid is sold for use or is used as a fuel for a highway vehicle (i) Which, at the time of such sale or use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is used on the highway; or (2) At 2 cents per gallon, if such liquid is sold for use or is used as a fuel for the propulsion of a motorboat or airplane, or a motor vehicle (i) Which, at the time of such sale or use, is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is not used on the highway; and (3) At an additional 2 cents per gallon, if a liquid on which a tax of 2 cents was paid pursuant to subparagraph (2) of this paragraph is used as fuel in a highway vehicle (i) Which, at the time of such use, is registered, or required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is used on the highway. (c) Procedures. (1) The sale of diesel fuel to an owner, lessee, or other operator of a diesel-powered highway vehicle, or of special motor fuel to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane is considered as a taxable sale by the Internal Revenue Service only (i) if the liquid is delivered by the seller into the fuel supply tank of the vehicle, motorboat, or airplane, or (ii) where not so delivered, the purchaser indicates in writing to the seller prior to or at the time of the sale that the entire quantity of the liquid covered by the sale is for use by him for a taxable purpose as a fuel in such a vehicle, motorboat, or airplane. If such a written statement is not furnished by the purchaser, he is liable for the tax at the applicable rate on that quantity of the liquid which is used by him as fuel in such a vehicle, motorboat, or airplane, or which is sold by him in a taxable transaction. (2) If it is known in advance of procurement that the entire quantity of any bulk purchase of diesel or special motor fuel is to be used for taxable purposes (as indicated elsewhere in this section), bids may be solicited on a tax inclusive basis and the written statement referred to in paragraph (b)(1) of this section should be furnished to the contractor. (3) All other bulk purchases of diesel and special motor fuels will be on a tax exclusive basis and the agencies will be responsible for making payment of the tax at the applicable rate, directly to Internal Revenue Service. Such payment shall be made quarterly on TD Form 720, "Quarterly Federal Excise Tax Return." A certificate of Export is not required to support a tax-free sale of diesel fuel exported to a foreign country or shipped to a possession of the United States or to Puerto Rico. § 1-11.102 Manufacturers excise taxes. § 1-11.102-1 Motor vehicles. (a) A tax at the rates indicated below is imposed upon the following articles (including parts and accessories sold therewith) sold by a manufacturer, producer, or importer: (1) Chassis and bodies of trucks, buses, truck and bus trailers, and semitrailers, and tractors of the kind chiefly used for highway transportation in combination with a trailer or semitrailer-10 percent; except that this tax does not apply to equipment designed for off-the-road use, such as certain military vehicles (including oxygen or bomb dollies), construction equipment, and equipment designed for use at mines, factories, railroad stations, and farms; (2) Chassis and bodies of automobiles, and of trailers and semitrailers (other than house trailers) suitable for use with passenger automobiles-10 percent prior to June 22, 1965; 7 percent from June 22, 1965 through December 31, 1965; 6 percent from January 1, 1966 through March 15, 1966; 7 percent from March 16, 1966 through March 31, 1968; 2 percent from April 1, 1968 through December 31, 1968; 1 percent after December 31, 1968; and (3) Parts or accessories for trucks and buses-when sold separately from a truck, bus, or other item taxable as indicated in paragraph (a)(1) of this section-8 percent. Parts or accessories are defined to include any article— (i) The primary use of which is to improve, repair, replace, or serve as a component part of a truck or bus; (ii) Designed to be attached to or used in connection with a truck or bus or to add to its utility or ornamentation; or (iii) The primary use of which is in connection with a truck or bus whether or not essential to its operation or use. Spark plugs, storage batteries, leaf springs, coils, timers, and tire chains, which are suitable for use on or in connection with, or as component parts of, a taxable vehicle are treated as parts or accessories whether or not primarily adapted for such use. However, the term "parts or accessories" does not include tires or inner tubes. The tax on parts or accessories does not apply to any article sold for use (or for a single resale for use) as mate |