Centrally Billed Account (CBA) Sales Tax Exemption: Forms and Claims

A Centrally Billed Account (CBA) is exempt from state sales tax in every state because the charges are billed directly to the federal government, and states cannot tax the federal government. The exemption is automatic in principle but not in practice: you still have to identify the card correctly, present the right paperwork, and know which taxes are actually covered. What follows is how the sales tax exemption on a centrally billed account works and how to claim it without a fight at the register.

Why a CBA Is Tax-Exempt in the First Place

On a CBA, the issuing bank invoices the agency and the agency pays the bank. The employee who swipes the card has no personal payment obligation. Credit is extended directly to the United States, so a state sales tax on that transaction would fall on the federal treasury.

The Supreme Court settled this in McCulloch v. Maryland (1819), holding that “the States have no power, by taxation or otherwise, to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by Congress.”¹ GSA policy applies that principle directly: CBA expenses “are directly paid by the federal government and should not be charged state taxes.”² That applies in all fifty states.

What the Exemption Actually Covers

State sales tax on goods and services purchased with a CBA is exempt. So is state sales tax on lodging and rental cars paid through a CBA travel account. For group bookings paid through a CBA, state sales tax exemption applies in all states and territories.³⁴

County and local taxes are less predictable. GSA’s state-by-state tax information covers state sales tax and explicitly notes it “does not include other taxes assessed by county or local governments.”⁵ Some localities exempt federal purchases; others don’t. Don’t assume a county hotel occupancy tax will be waived without checking.

Confirming You Have a CBA

Four GSA SmartPay business lines can be centrally billed:

Purchase cards, always CBAs.
Fleet cards, always CBAs.
Integrated cards, typically CBAs.
Travel cards, which can be either a CBA or an Individually Billed Account depending on how the agency set the account up.

⁶

For travel cards, the sixth digit of the account number tells you which one you have. If that digit is 0, 6, 7, 8, or 9, the card is centrally billed. Any other digit means it’s individually billed.⁷

The sixth-digit test only applies to travel cards. Purchase, fleet, and integrated cards don’t carry that identifier because they’re already centrally billed by design. If a merchant asks you to prove a purchase card is a CBA, point them to your tax exemption documentation, not to the account number.⁷

A Note on Individually Billed Accounts

If you’re carrying an IBA travel card, the exemption picture is different. Because the employee is personally liable for payment, the sovereign immunity argument is thinner. Some states extend exemption to IBAs anyway; many don’t. Check your specific state’s rules before assuming an IBA transaction is tax-free.⁷

Documentation to Bring

Standard Form 1094

SF 1094, the United States Tax Exemption Form, is the primary federal document for establishing exemption. Federal Acquisition Regulation 29.302(b) directs contracting officers to take “maximum advantage of all exemptions from State and local taxation” and to provide SF 1094 or equivalent evidence that the government is the purchaser.⁸

The form captures the vendor’s name and address, the purchasing office and agency, a description of the items, quantity and unit price, and the tax amount being excluded. Both the vendor’s representative and the purchaser sign it. SF 1094 is meant as a fallback, used “whenever no other evidence is available.” It can’t be used for employee travel meals or lodging paid out of pocket, mileage reimbursements, or items subject only to federal tax.⁹

State-Specific Forms

Many states issue their own exemption forms that merchants prefer or require. GSA has found these forms change frequently and recommends downloading the current version from the state’s own website before each trip or purchase rather than reusing an older copy.¹⁰ Some state forms require a supervisor’s signature, so build in time for that before you’re at a hotel front desk.³

Bring your government-issued photo ID to match the name on the card, and have any forms filled out before you reach the register.

Claiming the Exemption at the Register

In person, present the CBA card and your completed exemption documentation together. The merchant verifies the account and processes the charge without state sales tax. GSA’s SmartTax tool at smartpay.gsa.gov lists exemption rules and required forms state by state; a quick check before a purchase in an unfamiliar state saves time at checkout.⁵

Large retailers and hotel chains generally have procedures for federal accounts. Smaller merchants may not have seen a government card before and may not know their own state’s exemption rules. Documentation and patience get further than insistence.

Online and Amazon

Online sellers handle exemption differently. Amazon requires federal users to enroll in the Amazon Tax Exemption Program (ATEP) before tax-exempt pricing applies at checkout. Without enrollment, purchases shipped to Arizona, California, Kansas, Kentucky, New York, North Dakota, Pennsylvania, Texas, and Washington will be taxed even on a CBA.¹¹

To enroll, sign in to Amazon, open Your Account, and select the Amazon Tax Exemption Program under Settings. Upload the exemption form for the shipping destination. If tax is charged in error on a CBA order, request a refund by emailing tax-exempt@amazon.com with the 17-digit order number, your email address, exempt status documentation, and the seller’s name.¹¹

When a Merchant Refuses

If a merchant won’t honor the exemption, GSA suggests asking them to contact their state taxation department for clarification. If they still refuse and no alternative vendor is available, pay the tax and plan to recover it later.¹²

Recovery is handled through the state’s revenue department. You’ll typically submit a refund request with the receipt, proof of the CBA account, and your exemption documentation. Filing windows vary widely by state, from as short as six months to as long as four years. Most states don’t charge a processing fee for these requests. Keep the original receipt and a written record of the refusal; your agency’s financial office will need both.

The practical advice from GSA is to sort out tax-exempt status with a vendor before the purchase rather than argue about it at the counter. If a particular merchant is known to resist, use a different one.¹²

1
Justia. McCulloch v. Maryland
2
GSA SmartPay. GSA SmartPay SmartTax Vendor Guide
3
Defense Travel Management Office. Save on Lodging Taxes in Exempt Locations
4
GSA SmartPay. SmartTax Customer Guide
5
GSA SmartPay. Tax Information by State
6
GSA SmartPay. About GSA SmartPay Program Business Lines
7
GSA SmartPay. Recognizing GSA SmartPay Cards/Accounts
8
Acquisition.GOV. FAR 29.302 Application of State and Local Taxes to the Government
9
General Services Administration. United States Tax Exemption Form SF 1094
10
GSA SmartPay. Smart Bulletin No. 010 – Tax Exemption for the Travel Card
11
GSA SmartPay. Smart Bulletin No. 019 – Amazon.com Tax Exemption Procedures
12
GSA SmartPay. Frequently Asked Questions