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(a)
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(1) If a contract requires one (1) party to reimburse another party for the federal excise tax imposed by 26 U.S.C. § 4081 or 26 U.S.C. § 4091, whether as a separate item or as part of the contract price, the reimbursing party at its option and notwithstanding contrary terms of the contract shall not be required to make the reimbursement more than one (1) business day before the day on which the reimbursed party must remit the taxes to the Internal Revenue Service.
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(2) Exercise of the option provided by subdivision (a)(1) of this section shall not relieve the reimbursing party of its obligation to make the reimbursement as required by the contract but shall affect only the timing of that reimbursement.
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(b)
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(1) Written notice of the reimbursing party’s intent to exercise the option provided in subsection (a) of this section shall be given to the reimbursed party.
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(2) The notice shall state the effective date of the exercise of the option which shall be no earlier than thirty (30) days after the notice of intent is received by the reimbursed party or the beginning of the reimbursed party’s next federal tax quarter, whichever is later.
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(c)
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(1) If a reimbursing party exercises the option provided in subsection (a) of this section, the reimbursed party may demand security for the payment of the taxes in proportion to the amount the taxes represent compared to the security demanded on the contract as a whole.
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(2) The reimbursed party may also require reimbursement to be made by electronic transfer of funds but may not change the other payment terms of the contract without a valid business reason.
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(d)
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(1) This section shall apply to all contracts that are:
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(A) Continuing contracts with no fixed expiration date and in effect on August 12, 2005; or
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(B) Entered into or renewed after August 12, 2005.
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(2) All contracts in effect on August 12, 2005, that contain a fixed expiration date shall be governed by the law as it existed prior to August 12, 2005.
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