PART 11 TAXES Subpart 1-Federal Excise Taxes 11.000 Scope of Part. This Part deals with Federal taxes imposed by the Internal Revenue Code upon certain supplies and services procured by NASA, exemptions from such Federal taxes, and policy for obtaining exemptions from State and local taxes. Except as otherwise indicated, references are to the Internal Revenue Code of 1954 (26 U.S.C.). (References to the Internal Revenue Code of 1939 are for convenience in disposing of cases to which the Internal Revenue Code of 1954 is not applicable.) 11.001 Resolution of Tax Problems. (a) The problems presented in connection with the administration of the tax aspects 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 shall request the assistance of counsel. (b) It is essential that uniform and consistent tax policies and procedures be maintained throughout NASA and that NASÅ effectively cooperate with other Government agencies on tax matters of mutual interest. Except as provided in 11.502-3(b), the General Counsel, NASA Headquarters, will represent NASA in all negotiations with Federal, State, or local authorities, for the purpose of determining the applicability. of, or for obtaining exemption from, or refund of, any tax. Where the constitutional immunity of the United States from State or local taxation may reasonably be in issue, contracting officers should discourage contractors having cost-reimbursement type contracts or fixed-price type contracts containing a tax escalation clause from undertaking independent negotiations with taxing authorities pending approval as indicated above. The General Counsel shall keep the Assistant Administrator for Procurement fully informed of the status of any such negotiations. (c) Communications with the Department of Justice for representation or intervention in proceedings concerning taxes shall be made only by the General Counsel. (d) Matters involving foreign taxes requiring the assistance of other executive departments shall be forwarded to the General Counsel for appropriate action. (e) Tax problems which cannot be solved readily by reference to this Part shall be forwarded to the General Counsel through the field installation Office of General Counsel. The forwarding of tax problems to the General Counsel is particularly important where: (i) the amount of tax actually or potentially involved is substantial; (ii) the legal incidence of a tax appears to be upon the United States or its property, a specific exemption pertinent to the transaction appears to exist, or a State or local tax appears to have a direct effect upon a transaction in interstate commerce; (iii) judicial or administrative action against a contractor is threatened; (iv) the imposition, or potential imposition, of a tax is the result of an amendment of a tax law or a change of position by the tax authorities; or (v) the possibility exists of obtaining refunds of taxes previously paid. NASA PROCUREMENT REGULATION 11.001 TAXES (f) Tax problems forwarded to the General Counsel shall be accompanied by the following material, which shall be furnished by the initiating office or by intervening offices: (i) a comprehensive statement of pertinent facts, including documents and correspondence; (ii) a copy of the contract; (iii) a thorough review of the legal issues involved and recommended action to be taken; and (iv) if appropriate, a statement of the problem's effect(s) on procurement policies and procedures, with recommendations. (g) The initiating office shall furnish an information copy of any submission (and the General Counsel shall furnish a copy of his reply) to the Assistant Administrator for Procurement. 11.100 Scope of Subpart. This Subpart deals with Federal 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. 11.101 Retailers Excise Taxes, Special Fuels. 11.101-1 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 11.102-4), which is (1) 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 (2) used by any person as a fuel in a diesel-powered highway vehicle unless there was a taxable sale of such liquid pursuant to (1) above, as follows: (i) at 4 cents per gallon, if sold for use or if used as fuel in a dieselpowered highway vehicle (A) 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 (B) which, if owned by the United States, is used on the highway; or (ii) at 2 cents per gallon, if sold for use or if used as fuel in a dieselpowered highway vehicle (A) 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 (B) which, if owned by the United States, is not used on the highway; and (iii) at an additional 2 cents per gallon, if fuel on which a tax of 2 cents was paid pursuant to (ii) above, is used as fuel in a diesel-powered highway vehicle (A) 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 (B) 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. 11.101-2 Special Motor Fuels. A tax at the rates indicated below is imposed upon benzol, benzene, naphtha, liquefied petroleum gas, casing head 11.100 CFR TITLE 41 CHAPTER 18 FEDERAL EXCISE TAXES and natural gasoline or any other liquid (other than kerosene, gas oil, fuel oil, or a product taxable as diesel fuel under or as gasoline under Section 4081 of the Internal Revenue Code), which is (1) 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 (2) 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 (1) above, as follows: (i) at 4 cents per gallon, if such liquid is sold for use or is used as a fuel for a highway vehicle (A) 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 (B) which, if owned by the United States, is used on the highway; or (ii) 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 (A) 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 (B) which, if owned by the United States, is not used on the highway; and (iii) at an additional 2 cents per gallon, if a liquid on which a tax of 2 cents was paid pursuant to (ii) above, is used as fuel in a highway vehicle(A) 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 (B) which, if owned by the United States is used on the highway. 11.101-3 Procedures. (1) General. 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, motor boat, 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, motor boat, 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, motor boat 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, motor boat or airplane, or which is sold by him in a taxable transaction. (2) Diesel Fuel. Diesel fuel shall be procured at a price exclusive of the tax on diesel fuel unless the contract under which such fuel is to be furnished requires the contractor to deliver it into the fuel supply tank of a diesel-powered highway vehicle. Any NASA installation using diesel fuel in a diesel-powered highway vehicle, where the fuel had not been delivered by the contractor into the fuel supply tank of the vehicle and had therefore been procured tax free, shall be responsible for making payment of the tax, at the applicable rate, directly to the 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. NASA PROCUREMENT REGULATION 11.101-3 |