I've ask a few individuals, but no one is able to tell me much. Is this allowable? What would I provide? I have not been able to find much information on this topic.
This response is based on the information provided. We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.
Generally, contractors are not exempt from state and local taxes. The FAR states any request for exemption is to be referred to the agency head for review with legal input before the contracting officer makes a determination.
"FAR 29.303 Application of State and local taxes to Government contractors and subcontractors.
(a) Prime contractors and subcontractors shall not normally be designated as agents of the Government for the purpose of claiming immunity from State or local sales or use taxes. Before any activity contends that a contractor is an agent of the Government, the matter shall be referred to the agency head for review. The referral shall include all pertinent data on which the contention is based, together with a thorough analysis of all relevant legal precedents.
(b) When purchases are not made by the Government itself, but by a prime contractor or by a subcontractor under a prime contract, the right to an exemption of the transaction from a sales or use tax may not rest on the Government’s immunity from direct taxation by States and localities. It may rest instead on provisions of the particular State or local law involved, or, in some cases, the transaction may not in fact be expressly exempt from the tax. The Government’s interest shall be protected by using the procedures in 29.101.
(c) Frequently, property (including property acquired under the progress payments clause of fixed-price contracts or the Government property clause of cost-reimbursement contracts) owned by the Government is in the possession of a contractor or subcontractor. Situations may arise in which States or localities assert the right to tax Government property directly or to tax the contractor’s or subcontractor’s possession of, interest in, or use of that property. In such cases, the contracting officer shall seek review and advice from the agency-designated counsel on the appropriate course of action."