Texas Comptroller of Public Accounts STAR System
Date: September 3, 2009
To: Audit Personnel
From: David Rock
VIA: Otis Fields
Subject: Verification Procedures for Government Contracts for CORPORATION Sales
for Resale Exemption and Refund
The following information is required on each contract when a sale for resale
exemption or refund of sales tax is requested based on the CORPORTION cases
involving contracts with the Federal government:
1. A copy of the front sheet of each contract which includes the contract
number and identifies the US Government as the customer.
2. A copy of Section I of the contract that identifies the qualifying FAR
clauses that pass title to the Federal Government. The copy should include the
assigned contract number.
3. A copy of Section H of the contract that identifies any modifications to the
property transfer clauses listed in Section I. The copy should include the
assigned contract number.
Limited exceptions to the above requirements will be allowed where proprietary
government contracts are involved. Any exceptions submitted for sales for
resale exemption or refund must comply with the following instructions.
1. If the contract number, in its entirety, is considered confidential an
abbreviated portion of the contract number and an edited front sheet will be
acceptable provided it has been verified by the Defense Contract Audit Agency
and certified by the Contracting Officer. The internal job number utilized by
the contractor and the government for tracking charges related to the contract
will also need to be verified as correct and certified by the Contracting
2. A copy of Section H and Section I containing the abbreviated contract number
will still be required. Information considered proprietary by the government
may be edited out as long as the sections have been verified by the Defense
Contract Audit Agency and certified by the Contracting Officer as not being
related to the property transfer clauses in question.
3. Missing or destroyed contracts will not be allowed as qualifying contracts
under any circumstances.
4. For on going and future contracts considered proprietary by the government
on which the contractor would like to reduce their sales tax burden based on
the circumstances described in the CORPORATION cases, it is recommended that
the information required in items 1 and 2 of this section be generated and
maintained on an annual basis. This information will be necessary to
substantiate any reduction to sales taxes that would normally be paid or
accrued on current and future purchases.
5. The State of Texas will not be responsible for any costs incurred relating
to the verification and certification necessary to qualify contracts considered
proprietary by the Federal Government.
If you have any questions, need any additional information, or have a situation
that does not clearly follow these guidelines please contact the Area Manager
of Technical Support in Audit Headquarters.
As STAR is the Comptroller's research system for Texas tax policy issues,
only tax-specific audit policy memos (AP Memo) are included here. AP memos
not on STAR can be found on Window on State Government on the
Audit Memos web page.
ACCESSION NUMBER: 200909427L
DOCUMENT TYPE: L
TAX TYPE: SALES