SpendQueryBeta

FAR and DFARS › FAR Part 29: Taxes › Subpart 29.1

FAR 29.101 Resolving tax problems.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section tells contracting officers how to handle tax problems that come up during a contract. It says tax questions are legal in nature and should be resolved by looking at the contract terms and tax laws, so officers should get help from the agency's legal counsel. It also says officers must consult legal counsel before negotiating with taxing authorities in certain situations.

Applies to: Contracting officers and other authorized personnel handling contract tax issues

What it requires

  • Request assistance from the agency-designated legal counsel when tax questions arise.
  • Consult the agency-designated counsel before negotiating with any taxing authority to determine if a tax is valid or applicable, or to obtain exemption from or refund of a tax.
  • Discourage contractors from negotiating independently with taxing authorities when constitutional immunity from state or local taxation may reasonably be at issue and the contract is cost-reimbursement or fixed-price with a tax escalation clause.
  • Before purchasing goods or services from a foreign source, consult the agency-designated counsel for information on foreign tax treaties and agreements and foreign-tax-relief programs, and to resolve other tax questions affecting the prospective contract.

Key terms: contract tax problems · agency-designated legal counsel · taxing authority · constitutional immunity · cost-reimbursement contract

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Contract tax problems are essentially legal in nature and vary widely. Specific tax questions must be resolved by reference to the applicable contract terms and to the pertinent tax laws and regulations. Therefore, when tax questions arise, contracting officers should request assistance from the agency-designated legal counsel.

(b) To keep treatment within an agency consistent, contracting officers or other authorized personnel shall consult the agency-designated counsel before negotiating with any taxing authority for the purpose of (1) determining whether or not a tax is valid or applicable or (2) obtaining exemption from, or refund of, a tax.

(c) When the constitutional immunity of the Government from State or local taxation may reasonably be at issue, contractors should be discouraged from negotiating independently with taxing authorities if the contract involved is either (1) a cost-reimbursement contract or (2) a fixed-price contract containing a tax escalation clause.

(d) Before purchasing goods or services from a foreign source, the contracting officer should consult the agency-designated counsel (1) for information on foreign tax treaties and agreements in force and on the implementation of any foreign-tax-relief programs and (2) to resolve any other tax questions affecting the prospective contract.

Sections that refer to it

  • 29.303 Application of State and local taxes to Government contractors and subcontractors.

← 29.001 Definitions. · 29.201 General. →

Rule changes for FAR Part 29

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 29.101 Resolving tax problems · SpendQuery