52.229-4 Federal, State, and Local Taxes

(State and Local Adjustments).

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

Federal, State, and Local Taxes (State and Local Adjustments (Feb 2013)

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

excluded on the contract date but whose exclusion was later revoked or amount of exemption

reduced during the contract period, other than an excepted tax, 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.

After-relieved tax means any amount of Federal, State, or local tax or duty, other than an excepted

tax, 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 effective date of this contract and, for any modification to this contract, the

effective date of the modification.

Excepted tax means social security or other employment taxes, net income and franchise taxes,

excess profits taxes, capital stock taxes, transportation taxes, unemployment compensation taxes,

and property taxes. "Excepted tax" does not include gross income taxes levied on or measured by

sales or receipts from sales, property taxes assessed on completed supplies covered by this contract,

or any tax assessed on the Contractor’s possession of, interest in, or use of property, title to which is

in the Government.

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) Unless otherwise provided in this contract, 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 tax, or of any tax or

duty specifically excluded from the contract price by a term or condition of this contract that the

Contractor is required to pay or bear, including any interest or penalty, if the Contractor states in

writing that the contract price does not include any contingency for such tax and if liability for such

tax, interest, or penalty was not incurred through the Contractor’s fault, negligence, or failure to

follow instructions of the Contracting Officer.

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

shall be entitled to interest received by the Contractor incident to a refund of taxes to the extent that

such interest was earned after the Contractor was paid by the Government for such taxes. The

Government shall be entitled to repayment of any penalty refunded to the Contractor to the extent

that the penalty was paid by the Government.

(e) The contract price shall be decreased by the amount of any Federal, State, or local tax, other

than an excepted tax, that was included in the contract price and 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 Federal,

State, and local taxes and duties 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.

The contract price shall be equitably adjusted to cover the costs of action taken by the Contractor at

the direction of the Contracting Officer, including any interest, penalty, and reasonable attorneys’

fees.

(h) The Government shall furnish evidence appropriate to establish exemption from any Federal,

State, or local tax when-

(1) The Contractor requests such exemption and states in writing that it applies to a tax excluded

from the contract price; and

(2) A reasonable basis exists to sustain the exemption.

(End of clause)

Parent topic: 52.229 [Reserved]