48 CFR §29.401-3

1. (a)Except as provided in paragraph (b) of this section, insert the clause at 52.229-3, Federal, State, and Local Taxes, in solicitations and contracts if—
   1. (1)The contract is to be performed wholly or partly in the United States or its outlying areas;
   2. (2)A fixed-price contract is contemplated; and
   3. (3)The contract is expected to exceed the simplified acquisition threshold.
2. (b)In a noncompetitive contract that meets all the conditions in paragraph (a) of this section, the contracting officer may insert the clause at 52.229-4, Federal, State, and Local Taxes (State and Local Adjustments), instead of the clause at 52.229-3, if the price would otherwise include an inappropriate contingency for potential postaward change(s) in State or local taxes.