52.229-3 Federal, State, and Local Taxes.

As prescribed in 29.401-3 , insert the following clause:

Federal, State, and Local Taxes (Feb 2013)

(a) As used in this clauseAfter-imposed Federal tax means any new or increased Federal excise tax or duty, or tax that was

exempted or excluded on the contract date but whose exemption was later revoked or reduced

during the contract period, on the transactions or property covered by this contract that the

Contractor is required to pay or bear as the result of legislative, judicial, or administrative action

taking effect after the contract date. It does not include social security tax or other employment

taxes.

After-relieved Federal tax means any amount of Federal excise tax or duty, except social security or

other employment taxes, that would otherwise have been payable on the transactions or property

covered by this contract, but which the Contractor is not required to pay or bear, or for which the

Contractor obtains a refund or drawback, as the result of legislative, judicial, or administrative

action taking effect after the contract date.

All applicable Federal, State, and local taxes and duties means all taxes and duties, in effect on the

contract date, that the taxing authority is imposing and collecting on the transactions or property

covered by this contract.

Contract date means the date set for bid opening or, if this is a negotiated contract or a

modification, the effective date of this contract or modification.

Local taxes includes taxes imposed by a possession or territory of the United States, Puerto Rico, or

the Northern Mariana Islands, if the contract is performed wholly or partly in any of those areas.

(b)

(1) The contract price includes all applicable Federal, State, and local taxes and duties, except as

provided in subparagraph (b)(2)(i) of this clause.

(2) Taxes imposed under 26 U.S.C. 5000 C may not be-

(i) Included in the contract price; nor

(ii) Reimbursed.

(c) The contract price shall be increased by the amount of any after-imposed Federal tax, 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.

(d) The contract price shall be decreased by the amount of any after-relieved Federal tax.

(e) The contract price shall be decreased by the amount of any Federal excise tax or duty, except

social security or other employment taxes, that the Contractor is required to pay or bear, or does not

obtain a refund of, through the Contractor’s fault, negligence, or failure to follow instructions of the
Contracting Officer.

(f) No adjustment shall be made in the contract price under this clause unless the amount of the

adjustment exceeds $250.

(g) The Contractor shall promptly notify the Contracting Officer of all matters relating to any

Federal excise tax or duty that reasonably may be expected to result in either an increase or

decrease in the contract price and shall take appropriate action as the Contracting Officer directs.

(h) The Government shall, without liability, furnish evidence appropriate to establish exemption from

any Federal, State, or local tax when the Contractor requests such evidence and a reasonable basis

exists to sustain the exemption.

(End of clause)

Parent topic: 52.229 [Reserved]