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  • Question

    Is this commercial activity tax an allowable indirect cost for purposes of cost build up in determining company pricing ? Thanks in advance for your response. bh


    Answer

    Federal, State, and Local taxes are generally allowable in accordance with FAR 31.205-41 (a)(1) unless otherwise prohibited in full or part by FAR 31.205-41 (b). The Ohio Commercial Activity Tax applies to companies with over $150,000 in gross receipts including most business types of receipts such as sale of property and performance of services, but not interest, dividends, or capital gains. However, some receipts which are included within the Ohio definition may not be allowable; for example, see FAR 31.205-41 (b) (5). Also, if any taxes that were allowed as contract costs are refunded to the contractor,  the contractor is required to include a credit to the Government (FAR 31.205-41 (d)).  
     
    Also refer to FAR Part 29.401-3 if you believe your company may fall under certain special circumstances or exemptions for federal, state, and local taxes. Since this area can be complex, we suggest you discuss this cost with your Procuring Contracting Officer and Administrative Contracting Officer, as well as your legal staff, before including the cost in any billing, claim, or proposal.


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