Sales factor - Sales of tangible personal property to United States government in this state

Gross receipts from sales of tangible personal property to the United States government are in this state if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state. For the purposes of this section, only sales for which the United States government makes direct payment to the seller pursuant to the terms of a contract constitute sales to the United States government. Thus, as a general rule, sales by a subcontractor to a prime contractor, the party to the contract with the United States government, do not constitute sales to the United State government. Example 1: A taxpayer contracts with general services administration to deliver X number of trucks which were paid for by the United States government. The sale is a sale to the United States government. Example 2: The taxpayer as a subcontractor, to a prime contractor with the national aeronautics and space administration, contracts to build a component of a rocket for one million dollars. A sale by the subcontractor to the prime contractor is not a sale to the United States government.