The California Court of Appeals which found in favor of Aerospace. (Aerospace Corp v. CA BOE) ruled that certain supplies and overhead materials are exempt for contractors that provide federal government contracts. These contracts contained special clauses that pass title only to direct purchases on goods and services charged directly to specific contracts to the U.S. Government which made them exempt sales to the US Government.
Unique and broad exemption
This unique and broad exemption opens the door for significant tax recovery savings, but many questions and work needs to be done to document refund dollars. Our expert staff can help you work through the myriad of issues and challenges.
Do your company and contracts qualify?
What about companies who also perform commercial work or had government contracts lacking the proper title clauses?
How was the exempt portion calculated?
Should the companies buy everything without tax and report the non-qualifying costs later or pay tax on everything and take credit on their tax returns?
How do you work with your vendors?
Should you provide exemption certificates?
How to calculate exempt percentages with qualified and non-qualified contracts?
How do you deal with audits?
Depending on the specific government agency involved, the title clauses have slightly different nomenclature. And then there are the companies who use different allocation methods (head count, square footage, etc) for different cost centers so different qualifying percentages must be computed and applied to different sets of purchases. Let us come in and provide you with our expert guidance.