Why Part 29 Matters

Tax treatment can materially affect contract pricing. Contractors must correctly determine which taxes apply and which are exempt for government contracts. Incorrect tax treatment may result in overcharging the government or underpricing proposals. State and local tax exemptions vary significantly by jurisdiction, and contractors performing in multiple states must navigate varying exemption rules. Cost-reimbursement contractors face particular scrutiny on tax allocability.

Key Topics in Part 29

FAR Part 29 addresses several critical areas of the federal acquisition process. Understanding these topics is essential for both contracting officers and contractors working within this regulatory framework.

• Federal excise tax exemptions
• State and local tax considerations (Subpart 29.3)
• Tax exemption certificates and procedures
• Foreign government tax provisions
• Tax clauses for various contract types (Subpart 29.4)
• Contractor vs. government tax obligations

How FAR Part 29 Applies

The Federal Acquisition Regulation is organized into 53 parts, each covering a distinct area of the procurement process. Part 29 (Taxes) is part of this framework and works in conjunction with other FAR parts to create a comprehensive regulatory structure. Contracting officers must comply with all applicable parts when executing procurement actions, and contractors must understand the requirements that flow from these regulations into their contracts.

The requirements in Part 29 may be implemented through specific contract clauses prescribed in FAR Part 52. When a clause references Part 29, the substantive requirements originate here, while Part 52 provides the actual clause language incorporated into contracts and solicitations.

Subparts

FAR Part 29 is divided into 4 subparts, each addressing a specific aspect of taxes.

• 29.1 — General
• 29.2 — Federal Excise Taxes
• 29.3 — State and Local Taxes
• 29.4 — Contract Clauses

Reading FAR Part 29

The full text of FAR Part 29 is available on the Electronic Code of Federal Regulations (eCFR). The eCFR provides the most current version of the regulation, including any recent amendments published through Federal Acquisition Circulars (FACs). For historical versions, use the eCFR's point-in-time search feature.

• What does FAR Part 29 cover?

  FAR Part 29 covers taxes within the federal acquisition process. FAR Part 29 addresses taxes in government contracting, covering federal, state, and local tax exemptions for government contracts, tax-related contract clauses, and procedures for obtaining tax exemptions. Subpart 29.1 covers general tax policies, while Subpart 29.3 and Subpart 29.4 address state and local taxes and contract clauses. The government generally is exempt from federal excise taxes and many state and local taxes.

• Who must comply with FAR Part 29?

  FAR Part 29 applies to all executive branch agencies conducting acquisitions, unless a specific exemption exists. Contractors must comply with the requirements that are incorporated into their contracts through prescribed clauses from FAR Part 52. Agency-specific supplements (DFARS, GSAM, etc.) may add additional requirements beyond the base FAR.

• Where can I read the full text of FAR Part 29?

  The full text is available on the Electronic Code of Federal Regulations (eCFR). You can also access it through acquisition.gov, which is maintained by the General Services Administration. Both sources reflect the most current version of the regulation.

• How does FAR Part 29 relate to contract clauses?

  FAR Part 29 establishes the substantive policies and procedures. The actual clause language that gets incorporated into contracts is found in FAR Part 52. Each clause in Part 52 includes a "prescription" that references the relevant policy part, creating a direct link between the requirement and its implementation in the contract.