What sales tax issues are relevant if I’m a government contractor?

Answer

Well you need to be aware of how US government supply contract regulations apply to your business. More specifically you need to understand when transfer of title occurs under the, what are known as the FAR – Federal Acquisition Regulations – clauses. You need to pay attention to the FAR clauses that are in your contract and the type of contract that you have with the US government. The type of contract will dictate the type of FAR clause that you need to have in place. What these FAR clauses do is they permit a taxpayer to transfer title of the property they’re buying to the United States government, as long as it’s prior to use and therefore would be the purchase of that item would be exempt. These are more commonly things that would normally be consumed, such as manufacturing aids and certain consumables that might end up in the manufacturing process. If the proper clauses appear you can purchase those exempt from tax. It could save you a lot of money.

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