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(b) Chapter 53A of the Internal Reve- (2) The weight of the maximum load nue Code imposes a transfer tax and a customarily carried by all units of a tax on the manufacturer of machine vehicle of this type. guns and certain other firearms. Trans (c) The tax is payable by the person fer to, or manufacture for, the United in whose name the vehicle is, or is reStates is specifically exempted.
quired to be, registered under the law (c) Clearly identified orders or con of any State, or if owned by the United tracts of a Military Department, signed States, by the agency or instrumentality by an authorized officer of such Depart of the United States operating such vement, will be accepted in support of the hicle. If a tax has been paid for a parexemption. In the absence of such ticular vehicle, no further liability can orders or contracts, a statement signed be incurred in the same taxable year, by an authorized officer of a Military De even though there is a change of ownerpartment that the firearms, shells, or ship of the vehicle. cartridges were purchased with funds (d) The Secretary of the Treasury, appropriated for the Military Depart however, has authorized an exemption ments will be acceptable.
for vehicles used by the United States f 11.103 Excise taxes on facilities and whether or not they are Government services.
owned. Chapter 33 of the Internal Revenue
Subpart B-Exemptions From Federal Code imposes excise taxes on communications and certain transportation of
Excise Taxes persons by air. In general, the tax is SOURCE: The provisions of this Subpart B based upon the amount paid for the serv appear at 31 F.R. 13335, Oct. 14, 1966, unless ice and is imposed upon the person pay otherwise noted. ing for the service.
§ 11.200 Policy. $ 11.104 Use tax on highway motor ve It is the policy of the Department of hicles.
Defense to take maximum advantage of (a) A tax of $3 a year for each 1,000
all exemptions from Federal excise taxes pounds of taxable gross weight, or frac
available to the United States and its tion thereof, is imposed upon the use of
contractors and to claim all refunds and any highway motor vehicle which, together with semitrailers and trailers
credits which may be available to the customarily used in connection with a
United States and its contractors, exvehicle of this type, has a taxable gross
cept as otherwise provided in this subweight in excess of 26,000 pounds. The part and Subpart A of this part. full tax is due for any vehicle which is
§ 11.201 Retailers excise taxes. used on the public highways of the United States at any time during the month of
No retailers excise tax is imposed: July, irrespective whether the vehicle is (a) On the sale of special fuels for later removed from highway use. If the the exclusive use of any State, any pofirst use of a taxable vehicle occurs after litical subdivision thereof, or the District the end of July, the tax is computed of Columbia, or with respect to the use proportionately from the first day of the thereof by any of the foregoing; month in which the vehicle is first used, (b) On the sale of special fuels for exthrough the end of the following June. port or for shipment to a possession of For example, if a vehicle is placed in use the United States (which for the purduring August, 1112 of the total tax is pose of this exemption includes Puerto payable. No tax applies to vehicles, Rico), and in due course so exported or even though of a highway type, which shippedare never used on the public highways (1) This exemption shall be utilized during the taxable year.
by purchasing on a tax-exclusive basis (b) Taxable gross weight is the sum and furnishing the required proof of exof—
portation or shipment to a possession if: (1) The actual unloaded weight of (i) The purchase is substantial, and the vehicle and any semitrailers and (ii) Exportation or shipment to a trailers customarily used with such a possession is intended to follow not more vehicle, all units fully equipped for sery- than 6 months after title passes to the ice; and
(2) To qualify for the exemption of a taxable article. This exemption does sales for export or for shipment to & not apply to tires or inner tubes.); or possession:
(b) On the sale of any article for ex(i) The supplies must be identified as port, or for shipment to a possession of having been sold by the manufacturer the United States which for the purpose (if the tax is a manufacturers excise tax) of this exemption includes Puerto Rico. or the retailer (if the tax is a retailers This exemption shall be obtained only excise tax) for export or shipment to a when the purchase is substantial and expossession. The words "for export or portation or shipment to a possession is shipment to a possession" incorporated intended to follow not more than 6 into or stamped on a contract or pur months after title passes. For proper chase order art acceptable to the In- utilization of this exemption, see § 11.ternal Revenue Service as evidence that 201(b). the sale is for export or for shipment (c) On the sale of any article for reto a possession. In solicitations and sale to a second purchaser for export. contracts, the terms of which imply that If articles upon which a manufacturers the supplies will be either exported or excise tax has been paid are resold by a shipped to a possession (e.g., delivery to
dealer for export, or for shipment to a a port of embarkation or special packing possession, the manufacturer is entitled requirements for overseas shipment) to a credit or refund of the tax paid. where the purchase is not substantial and If it is economically advantageous to do it is therefore desired to purchase on a so, this credit or refund shall be utilized Federal excise tax-inclusive basis, the by purchase from a dealer on a tax exsolicitations and the contract should clusive basis and execution of the reclearly state that proof of export certifi quired exemption certificate set forth in cates will not be issued.
$ 11.501-1. (i) The supplies must be exported or (d) On sales of supplies for use as fuel shipped to a possession in due course. supplies, ships' stores, sea stores, or legitiProof of export or shipment will be fur mate equipment on vessels of war of the nished to the contractor in the form set United States or of any foreign nation, forth in § 11.501.
including aircraft owned by the United (c) On the sale of special fuels to re States or by any foreign nation and contailers for resale. (Sales by the United stituting a part of the armed forces States, or any agency or instrumentality thereof, and guided missiles and pilotthereof, are not exempt unless specifi less aircraft owned or chartered by the cally made exempt by statute.) ;
United States. This exemption and the (d) On the sale of special motor fuels exemption from the retailers excise tax for use or used in the propulsion of ves on special motor fuels (see $ 11.201(d)) sels of war or military aircraft of the shall be utilized by purchasing on a taxtype enumerated in § 11.202(d);
exclusive basis and furnishing the (e) On the sale of special fuels to a required exemption certificate (see nonprofit educational organization for $ 11.501-2) only if: its exclusive use, or, with respect to the (1) The purchase is substantial, use thereof by a nonprofit educational (2) The contracting officer determines organization.
at the time of the purchase that the supf 11.202 Manufacturers excise taxes.
plies are intended for use in vessels of
war or military aircraft, and No manufacturers excise tax is im (3) The administrative burden of inposed:
suring that the supplies are used for ex(a) On the sale of any article for use empt purposes does not make use of the by the purchaser for further manufac exemption uneconomical. Administrature or for resale to a second purchaser tive difficulties normally will not exist if for use by such second purchaser in fur
the particular supply is suited exclusively ther manufacture (An article shall be
for use in vessels or aircraft. treated as sold for use in further manufacture if sold for use by the purchaser
If supplies upon which a manufacturers as material in the manufacture or pro
excise tax has been paid are sold by a duction of, or as a component part of, dealer for any of the exempt uses enuanother taxable article to be manufac merated above, the manufacturer is entured or produced. In the case of truck titled to a credit or refund of the tax or bus parts and accessories, it is not paid. If it is economically advantageous necessary that the produced article be to do so, this credit or refund shall be
89 66–071–72- 7
utilized by purchase from a dealer on a or by a subcontractor under a prime contax-exclusive basis and execution of the tract, the right to an exemption of the required exemption certificate set forth transaction from a sales or use tax may in § 11.501-2.
not rest on the Government's immunity (e) On the sale of any article for the from direct taxation by States and loexclusive use of a State or local govern calities. It may rest instead on proviment; and
sions of the particular State or local law (f) On the sale of any article to a non involved, or in some cases, the transacprofit educational organization for its tion may not in fact be expressly exempt exclusive use.
from the tax. Similarly, when property $ 11.203 Supplies and services for the
is owned by the Government, but the
property is in the possession of a conexclusive use of the United States.
tractor or subcontractor on tax day, sitBy virtue of action taken by the Secre
uations may arise where States or localtary of the Treasury, pursuant to section ities believe they may have the right to 4293 of the Internal Revenue Code, ex
tax the property directly or to tax the emption is available and shall be ob
contractor's or subcontractor's possession tained, to the extent indicated, from the
of, interest in, or use of that property. Federal excise tax on communication
(c) Whenever there is any doubt as services and facilities furnished directly to the availability of the Government's to the United States (as distinguished immunity or exemption from any State from being furnished to a Government
or local tax, the matter shall be handled contractor) and paid for directly by the
in accordance with § 11.000. Government. Such exemption is obtained
126 F.R. 9640, Oct. 12, 1961, as amended at without any exemption certificate.
29 F.R. 2837, Feb. 29, 1964; 34 F.R. 13846, [36 F.R. 21153, Nov. 4, 1971]
Aug. 29, 1969) Subpart C-State and Local Taxes $ 11.302 N.C. Sales and Use Tax. § 11.300 General,
(a) A provision of the N.C. Sales and
Use Tax Act authorizes counties and inAs used in this part, the term “State
corporated cities and towns in North and local taxes" includes taxes of the
Carolina to obtain each year from the several States, the District of Columbia,
Commissioner of Revenue of the State the possessions of the United States,
of North Carolina a refund of sales and Puerto Rico, and political subdivisions
use taxes indirectly paid on building thereof.
materials, supplies, fixtures, and equip(29 F.R. 2837, Feb. 29, 1964)
ment which become a part of or are § 11.301 Applicability.
annexed to any building or structure
erected, altered, or repaired for such (a) As a general rule, purchases made
counties and incorporated cities and by the Government itself are exempt
towns in North Carolina. In United States from State and local sales and use taxes;
v. Clayton, 250 F. Supp. 827 (1965) apsimilarly, personal and real property is
peals dismissed per curiam 384 U.S. 154, exempt from State and local property
156 (1966), it was held that the United taxes when the property is both owned
States is entitled to the benefit of such and possessed by the Government. These
provision of the N.C. Sales and Use Tax exemptions shall be made use of to the
Act, but that the United States must fullest extent available when Govern
resort to the refund procedure of the Act ment property is located in a state or
and the regulations to recover what it local tax jurisdiction, or when purchases
is due. are made directly by the Government, by
(b) The Act provides that in order to asserting the Government's immunity
receive the refund authorized thereby from taxation of its property by States
claimants must file a written request for and localities, and in case of purchases,
refund within 6 months after the close by executing an approved tax exemption
of the fiscal year of the claimant and certification (see $$ 3.607-4(a) and
must substantiate such request for re11.500(b) of this chapter).
fund by such records, receipts and infor(b) However, when purchases are not mation as the Commissioner of Revenue made by the Government itself, but by may require. The Act further provides a prime contractor of the Government that no refunds shall be made on appli
cations not filed within the time allowed thereby and in such manner as the Commissioner may otherwise require. The requirements of the Commissioner are set forth in regulations which, in pertinent part, provide:
To substantiate a refund claim for sales or use taxes paid on purchases of building materials, supplies, fixtures, and equipment by its contractor, the claimant must secure from such contractor certified statements setting forth the cost of the property purchased from each vendor and the amount of sales and/or use taxes paid thereon. In the event the contractor makes several purchases from such contractor certified statements ment must indicate the invoice numbers, the inclusive dates of the invoices, the total amount of the invoices and the sales and
oices and the sales and use taxes paid thereon. Such statement must also include the cost of any tangible personal property withdrawn from the contractor's warehouse stock and the amount of sales or use tax paid thereon by the contractor. Similar certified statements by his subcontractors must be obtained by the general contractor and furnished to the claimant.
(c) To assure that the United States will be in a position to obtain refunds of North Carolina sales and use taxes to which it is entitled, the clause set forth in paragraph (e) of this section shall be inserted in all construction contracts to be performed in North Carolina, including vessel repair contracts.
(d) The clause set forth in paragraph (e) of this section requires construction contractors, including vessel repair contractors, to submit to contracting officers by August 31 each year certified statements covering N.C. sales and use taxes paid during the 12-month period which ended the preceding June 30. It will be the responsibility of each contracting officer concerned to assure that contrac
tors comply with this requirement and to į obtain the annual refund of N.C. sales
and use taxes to which his activity may
be entitled. The application for refund i must be filed each year before December
31 and in the manner and form required by the Commissioner of Revenue of the State of North Carolina. The first refund application to be filed by contracting officers will cover taxes paid during the 12month period from July 1, 1966, to June 30, 1967. Copies of the form to be used in filing refund claims may be obtained by writing to the State of North Carolina Department of Revenue, Raleigh, N.C. 27602.
(e) Contract clauses: N.C. SALES AND USE TAX (OCTOBER 1966)
(a) As used throughout this clause, the term "materials" means building materials, supplies, fixtures and equipment which 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 type contract as defined in the Armed Services Procurement Regulation, the contract price includes N.C. sales and use taxes to be paid with respect to materials, notwithstanding any other provision of this contract. If this is a cost-reimbursement type contract as defined in such regulation, any N.C. sales and use taxes paid by the Contractor with respect to materials shall constitute an allowable cost under this contract.
(c) At the time specified in paragraph (d) below:
(1) The Contractor shall furnish the Contracting Officer certified statements setting forth the cost of the materials purchased from each vendor and the amount of N.C. sales and use taxes paid thereon. In the event the Contractor makes several purchases from the same vendor, such certified statement shall indicate the invoice numbers, the inclusive dates of the invoices, the total amount of the invoices and the N.C. sales and use taxes paid thereon. Such statement shall also include the cost of any tangible personal property withdrawn from the Contractor's warehouse stock and the amount of N.C. sales or use tax paid thereon by the Contractor. The Contractor shall furnish such additional information as the Commissioner of Revenue of the State of North Carolina may require to substantiate a refund claim for sales or use taxes.
(ii) The Contractor shall obtain and furnish to the Contracting Officer similar certified statements by its subcontractors.
(d) If this contract is completed before the next July 1, the certified statements to be furnished pursuant to paragraph (c) above shall be submitted within 60 days after completion. If this contract is not completed before the next July 1, such certified statements shall be submitted on or before the 31st day of August of each year and shall cover taxes paid during the 12-month period which ended the preceding June 30.
(e) The certified statements to be furnished pursuant to paragraph (c) above shall be in the following form:
I hereby certify that during the period ------------ to ------------ (name of contractor or subcontractor) paid N.C. sales and use taxes aggregating $------ with respect to building materials, supplies, fixtures, and equipment which have become a part of or annexed to a building or structure erected, altered, or repaired by (name of contractor) for the United States of America,
regulation takes effect, after the contract date, and
(1) Results in the Contractor being required to pay or bear the burden of any such Federal excise tax or duty or increase in the rate thereof which would not otherwise have been payable on such transaction or property, the contract price shall be increased by the amount of such tax or duty or rate increase, provided the Contractor warrants in writing that no amount for such newly imposed Federal excise tax or duty or rate increase was included in the contract price as a contingency reserve or otherwise;
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 N.C. sales and use taxes paid thereon, and the cost of property withdrawn from warehouse stock and N.C. sales or use taxes paid thereon are as set forth in the attachments hereto.
NOTE: In ship repair contracts, change paragraph (a) to read as follows:
(a) As used throughout this clause, the term "materials" means materials, supplies, fixtures, and equipment which become a part of or are annexed to any vessel altered or repaired under this contract. [33 F.R. 274, Jan. 9, 1968)
Subpart D-Contract Clauses § 11.401 Fixed-price type contracts.
The clauses prescribed herein are for use in fixed-price type contracts except those to be performed entirely outside the United States, its possessions, and Puerto Rico. (29 F.R. 2837, Feb. 29, 1964) & 11.401-1 Advertised and certain nego
tiated contracts. (a) Use of clause. The clause set forth in paragraph (c) of this section shall be used in:
(1) All formally advertised contracts except construction contracts which do not exceed $10,000;
(2) All competitively negotiated fixedprice contracts in excess of $10,000;
(3) All noncompetitive negotiated fixed-price contracts in excess of $10,000, when use of the clause set forth in § 11.401–2(c) is not required; and
(4) Any negotiated fixed-price contract in excess of $2,500 but not in excess of $10,000, at the discretion of the contracting officer.
(b) Description. The clause provides that the contract price includes all abplicable taxes. It provides for an increase or decrease in the contract price to compensate for changes in applicable Federal excise taxes or duties. It does not provide for any adjustment in the contract price to compensate for changes in State or local taxes.
(c) Contract clause. FEDERAL, STATE, AND LOCAL TAXES (AUG. 1961)
(a) Except as may be otherwise provided in this contract, the contract price included all applicable Federal, State, and local taxes and duties.
(b) Nevertheless, with respect to any Federal excise tax or duty on the transactions or property covered by this contract. 1 a statute, court decision, written ruling, or
(2) Results in the Contractor not being required to pay or bear the burden of, or his obtaining a refund or drawback of, any such Federal excise tax or duty which would otherwise bave been payable on such transactions or property or which was the basis of an increase in the contract price, the contract price shall be decreased by the amount of the relief, refund, or drawback, or that amount shall be paid to the Government, as directed by the contracting Oficer. The contract price shall be similarly decreased if the Contractor, through his fault or negligence or his failure to follow instructions of the Contracting Oficer, is required to pay or bear the burden of, or does not obtain a refund or drawback of, any such Federal excise tax or duty.
(c) No adjustment of less than $100 shall be made in the contract price pursuant to paragraph (b) above.
(d) As used in paragraph (b) above, the term "contract date” means the date set for bid opening, or if this is a negotiated contract, the contract date. As to additional supplies or services procured by modification to this contract, the term “contract date" means the date of such modification.
(e) Unless there does not exist any reason. able basis to sustain an exemption, the Govt ernment upon the request of the Contractor shall, without further liability, furnish evidence appropriate to establish exemption from any Federal, State, or local tax; provided that, evidence appropriate to establish exemption from any Federal excise tax or duty which may give rise to either an increase or decrease in the contract price will be furnished at the discretion of the Government.
(f) The Contractor shall promptly notify the Contracting Oficer of matters which will result in either an increase or decrease in the contract price, and shall take action with respect thereto as directed by the Contracting Oficer. 126 F.R. 9640, Oct. 12, 1961 and 29 F.R. 2837, Feb. 29, 1964, as amended at 33 F.R. 7401, May 18, 1968) § 11.401–2 Noncompetitive negotiated
contracts. (a) Use of clause. The clause set forth in paragraph (c) of this section shall be