Sales Tax Issues Affecting Purchases and Sales by U.S. Government Contractors

The federal government is the largest purchaser of products and services in the United States. Given the size and scope of the government contracting market, government contractors should be familiar with sales and use tax issues surrounding their purchases. This article provides an overview of the sales and use tax issues that apply to government contractors’ purchases and a framework for understanding them. That framework is especially important, given the lack of specific sales and use tax guidance provided by the states regarding purchases by contractors under federal government contracts.