Tax Status of Native American Village Corporation

GAO was asked whether tax exemption from state and local sales and property taxes provided to federal and state agencies should pass through to a provider of services offered by the agencies. The provider stated that it did not receive any monetary or land distributions under the Alaska Native Claims Settlement Act (ANCSA), but was instead formed by grants from the Bureau of Indian Affairs and other federal agencies. Even if this is the case, federal law does not prohibit the imposition of city sales and property taxes upon it. Since GAO does not have the authority to question an interpretation of state or local law, GAO declined to review the determination by the City of Nome that the provider did not qualify for the exemptions from taxation provided by state law and local ordinance. Federal funds which are granted to a grantee become the property of the grantee and are no longer considered federal funds. Thus, the provider, in disbursing grant funds, was not an agent of the federal government and was not exempt from paying local and state taxes on the grounds of federal immunity. Since the provider does not act as a purchasing agency for the federal government, a local ordinance which provides exemption for government contractors acting as purchasing agents did not apply.