Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 565.0178


565.0178 Sales and Construction Contracts. Part of the Federal Acquisition Regulation (FAR) title clause 52.245.5 pertains to the time of passage of title to the government and is interpreted to apply to items sold to the government. In accordance with its provisions, with respect to the purchases of items other than fixtures and materials, title passes to the government upon the vendor's delivery to the contractor if the item is a direct item of cost for which the contractor is entitled to be reimbursed. Title to all other property passes at the time the property is committed to contract performance or reimbursement by government, whichever occurs first. Therefore, if the contractor makes any functional use of the property prior to passage of title to the government, the contractor must pay use tax measured by its purchase price of the property. Its subsequent sale of such property to the government will be exempt. 4/19/91; 4/13/93.