Section 2131.205-41 - Taxes(a) FAR 31.205-41, as modified in paragraphs (b) through (e), is applicable to contracts in the FEGLI Program.(b) As long as 5 U.S.C. 8714(c) or other Federal law prohibits the imposition of taxes, fees, or other monetary payments on FEGLI Program premiums by any State, the District of Columbia, the Commonwealth of Puerto Rico, or any other political subdivision or governmental authority of those entities, payment of such preempted tax is an unallowable expense under FAR 31.205-41(b)(3).(c) Paragraph (b)(1) of FAR 31.205-41 is not applicable to the FEGLI Program.(d) Notwithstanding any other provision in FAR 31.205-41, the portion of the contractor's income or excess profits taxes allocated to the FEGLI Program, except those allocated to the risk charge or the service charge, are allowable costs under the FEGLI Program, including any income or excess profit taxes that arise from the operation of this paragraph. Income or excess profits taxes allocated to the risk charge or the service charge are not allowable costs.(e) Notwithstanding any other provision in FAR 31.205-41, an amount equal to the "DAC Tax" is an allowable tax expense under FAR 31.205-41. "DAC Tax" means an amount equal to:(1) the amount of the contractor's Federal, state, and local income tax allocated to payments under the FEGLI Program, less(2) the amount of the contractor's Federal, state, and local income tax allocated to payments under the FEGLI Program computed without regard to the operation of 26 U.S.C. 848 , which requires that certain policy acquisition expenses be capitalized over a 60- or 120-month period, plus(3) the amount of the increase, if any, in the contractor's Federal, state, and local income tax that results from the operation of this section 2131.205-41(e) .