Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-12 - SALES AND USE TAX DIVISION › Subject 560-12-2 - SUBSTANTIVE RULES AND REGULATIONS › Rule 560-12-2-.106 - United States Government Defense Contractors

Current through Rules and Regulations filed through June 27, 2024
(1) Purpose. The purpose of this Rule is to
				provide guidance regarding the direct consumable supplies and overhead
				materials exempt from Georgia sales and use tax in accordance with O.C.G.A.
				§
									48-8-3(58).
(2) Definitions. For the purposes of
				qualifying for the exemption provided for by O.C.G.A. §
									48-8-3(58), and as used in this Rule, the following definitions and explanation of terms
				shall apply:
(a) "Appropriate title passing
				clauses" means those title passing clauses whereby title to overhead materials
				or direct consumable supplies purchased for use in fulfilling a government
				contract passes to the United States Department of Defense or the National
				Aeronautics and Space Administration before the government contractor uses the
				property.
(b) "Direct consumable
				supplies" means supplies, tools, or equipment used or consumed in the
				performance of a government contract which are specifically identified to the
				government contract and the actual cost of which is charged as a direct item of
				cost to the specific contract. Direct consumable supplies include, but are not
				limited to, property used to repair items of capital equipment when a portion
				of the contractor's use is properly allocable to government contracts,
				notwithstanding the fact that title to the property being repaired remains with
				the government contractor. The term "direct consumable supplies" does not
				include tangible personal property that is incorporated into real
				property.
(c) "Government contract"
				means a contract directly between the United States Department of Defense or
				the National Aeronautics and Space Administration and a government contractor,
				for the purpose of national defense, to sell services or tangible personal
				property which contain the appropriate title passing clauses for overhead
				materials and direct consumable supplies. The term "government contract" does
				not include any contract providing for the construction, improvement,
				maintenance, or repair of or to real property, or to the purchase of tangible
				personal property for use in fulfilling such contracts.
(d) "Government contractor" means any person
				who enters into a government contract, for the purpose of national defense,
				directly with the United States Department of Defense or the National
				Aeronautics and Space Administration to sell services or tangible personal
				property. This can include a manufacturer, modifier, assembler or repairer of
				tangible personal property, or seller of services. The term "government
				contractor" also includes a subcontractor who enters into a contract directly
				with a government contractor as defined in the first sentence of this paragraph
				and who incorporates the appropriate title passing clauses. The term
				"government contractor" does not include any person who enters into a contract
				to construct, improve, maintain, or make repairs on or to real property, or
				make purchases of tangible personal property for use in fulfilling such
				contracts.
(e) "Overhead materials"
				means any tangible personal property used or consumed in the performance of a
				contract between the United States Department of Defense or the National
				Aeronautics and Space Administration and a government contractor, the cost of
				which is charged to an expense account and allocated to various United States
				government contracts based upon generally accepted accounting principles, and
				consistent with government contract accounting standards. The term "overhead
				materials" does not include tangible personal property which is incorporated
				into real property.