B-8790, JUNE 18, 1940, 19 COMP. GEN. 1002

B-8790, JUNE 18, 1940, 19 COMP. GEN. 1002

STATE GASOLINE TAX - FEDERAL LIABILITY WHERE NECESSITY REQUIRES THE PURCHASE OF GASOLINE IN THE OPEN MARKET IN NORTH DAKOTA AND THE VENDOR REFUSES TO SELL AT A PRICE EXCLUSIVE OF THE STATE TAX, PAYMENT MAY BE MADE AT THE VENDOR'S PRICE IF HE FURNISHES AN APPROPRIATE CERTIFICATE SHOWING THE AMOUNT OF THE TAX SO PAID ON THE PURCHASE, SUCH CERTIFICATES TO BE PROMPTLY TRANSMITTED TO THIS OFFICE FOR USE IN OBTAINING REIMBURSEMENT FROM THE STATE FOR THE AMOUNT OF THE TAX. 19 COMP. GEN. 822; ID. 909, AMPLIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JUNE 18, 1940:

THERE HAS BEEN RECEIVED YOUR LETTER OF JUNE 8, 1940, AS FOLLOWS:

REFERENCE IS MADE TO DECISIONS OF YOUR OFFICE OF MARCH 26, 1940, B 8790, AND MAY 7, 1940, B-8790, WITH REGARD TO THE EFFECT, ON GOVERNMENT PURCHASES OF GASOLINE IN THE STATE OF NORTH DAKOTA, OF THE NORTH DAKOTA TAX ON MOTOR VEHICLE FUEL.

THE BUREAU OF ENTOMOLOGY AND PLANT QUARANTINE OF THIS DEPARTMENT IS NOW ENGAGED IN GRASSHOPPER CONTROL WORK IN NORTH DAKOTA, AND IT IS EXCEEDINGLY IMPORTANT THAT IT OBTAIN SUBSTANTIAL SUPPLIES OF GRASSHOPPER BAIT AND BAIT MATERIAL BY TRUCK, WITHOUT DELAY, SINCE ANY SUCH DELAY MAY HAVE SERIOUS EFFECTS ON THE SUCCESS OF THE GRASSHOPPER CONTROL WORK FOR THIS SEASON. IT HAS BEEN FOUND THAT VENDORS OF GASOLINE AT SERVICE STATIONS WILL NOT, BECAUSE OF INSTRUCTIONS FROM THEIR COMPANIES OR SUPPLIERS, SELL GASOLINE TO FIELD AGENTS ON A CREDIT BASIS, APPARENTLY ON THE THEORY THAT IT IS NOT GUARANTEED THAT THE DEPARTMENT WILL PAY THE FULL PRICE FOR THE GASOLINE, INCLUDING A SUFFICIENT AMOUNT TO COVER THE NORTH DAKOTA STATE TAX. IT IS NOT PRACTICAL FOR THESE DRIVERS OF THE BUREAU OF ENTOMOLOGY AND PLANT QUARANTINE TO PAY CASH FOR GASOLINE AND CLAIM REIMBURSEMENT, BECAUSE OF THE FACT THAT SUCH TRUCK DRIVERS ARE, FOR THE MOST PART, TEMPORARY EMPLOYEES AT LOW SALARIES, AND THE VEHICLES REQUIRE SUBSTANTIAL QUANTITIES OF GASOLINE.

THE BUREAU HAS ENDEAVORED, THROUGH TELEGRAPHIC CORRESPONDENCE WITH THE STANDARD OIL COMPANY, TO OBTAIN CLEARANCE FOR SUCH CREDIT SALES AT SERVICE STATIONS, BUT THAT COMPANY HAS REFUSED TO AUTHORIZE SUCH SALES ON THE GROUND THAT THE DECISION OF MARCH 26, 1940, B-8790, AS SUPPLEMENTED BY THE DECISION OF MAY 7, 1940, DOES NOT MAKE IT POSSIBLE FOR THE DEPARTMENT TO ASSURE THE COMPANY OF FULL PAYMENT ON SERVICE STATION DELIVERIES, AS DISTINGUISHED FROM DELIVERIES UNDER CONTRACT FULLY PROVIDING FOR SUCH CONTINGENCY. THE STANDARD OIL COMPANY HAS FURNISHED THIS DEPARTMENT WITH A COPY OF ITS LETTER OF MAY 21, 1940, ADDRESSED TO YOUR OFFICE, IN WHICH IT ASKS, AMONG OTHERS, THE QUESTION HERE PRESENTED.

IT HAS BEEN THE VIEW OF THIS DEPARTMENT THAT, IN ACCORDANCE WITH GENERAL REGULATIONS NO. 86--- REVISED, AND UNDER SUCH DECISIONS OF YOUR OFFICE AS A-49009, JULY 1, 1939, AND B-2929, MAY 9, 1939, THE DEPARTMENT IS AUTHORIZED, EITHER UNDER DULY NEGOTIATED CONTRACTS OR IN CONNECTION WITH OPEN-MARKET PURCHASES, TO OBTAIN SUPPLIES AT A PRICE IN WHICH IS INCLUDED AN IMPROPER STATE TAX, WHEN VENDORS WILL NOT SELL EXCLUSIVE OF SUCH TAX, AND THAT THE GOVERNMENT WILL THEN PROCEED, THROUGH THE METHOD PRESCRIBED IN GENERAL REGULATIONS NO. 86--- REVISED TO DEMAND REFUND OF SUCH TAX FROM THE STATE. IT IS NOT UNDERSTOOD THAT YOUR DECISION OF MARCH 26, 1940, B- 8790, WAS INTENDED TO MEAN THAT THE GOVERNMENT IS UNABLE TO MAKE PURCHASES IN SITUATIONS WHERE VENDORS WILL NOT CONSENT TO DEDUCTION OF THE STATE TAX INVOLVED; IT IS ALSO NOT CONSIDERED THAT THE PRINCIPLE STATED IN THE DECISION OF MAY 7, 1940, SUPRA, IS RESTRICTED TO PURCHASES MADE UNDER CONTRACTS PREVIOUSLY MADE.

IN VIEW OF THE EXIGENCIES OF THE SITUATION CONFRONTING THIS DEPARTMENT, IT WOULD BE APPRECIATED IF YOU WOULD ADVISE SPECIFICALLY WHETHER THE DEPARTMENT MAY PROPERLY PAY VENDORS FOR GASOLINE PURCHASED IN NORTH DAKOTA, ON AN OPEN-MARKET BASIS, AN AMOUNT INCLUSIVE OF THE NORTH DAKOTA STATE TAX ON GASOLINE, SUBJECT TO THE RIGHT OF DEMAND FOR REFUND ON THE STATE.

WHILE, AS STATED IN MY DECISION OF MARCH 26, 1940, 19 COMP. GEN. 822, TO THE POSTMASTER GENERAL, THIS OFFICE DOES NOT RECOGNIZE ANY LIABILITY ON THE PART OF THE UNITED STATES FOR THE PAYMENT OF THE AMOUNT OF THE TAX PRESCRIBED BY THE TERMS OF NORTH DAKOTA LAWS, 1929, C. 166, AS AMENDED, ON MOTOR-VEHICLE FUEL PURCHASED IN SAID STATE BY OR FOR THE USE OF THE FEDERAL GOVERNMENT, MY LATER DECISION OF MAY 7, 1940, 19 COMP. GEN. 909, TO HIM, HELD THAT WHEN, IN RESPONSE TO AN INVITATION FOR BIDS FOR THE FURNISHING OF GASOLINE REQUIRED TO BE PURCHASED IN NORTH DAKOTA, NO BID EXCLUSIVE OF THE TAX IS RECEIVED AND THE AWARDING OF A CONTRACT UPON THE BASIS OF THE BID OR BIDS AS SUBMITTED IS NECESSARY, PAYMENT IS AUTHORIZED TO BE MADE TO THE CONTRACTOR FOR THE AMOUNT OF THE PRICE INCLUDING THE TAX, IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, UPON THE EXECUTION AND DELIVERY OF AN APPROPRIATE CERTIFICATE WITH RESPECT TO EACH PURCHASE MADE UNDER THE CONTRACT. LIKEWISE, WHEN THE FEDERAL GOVERNMENT IS COMPELLED TO PURCHASE GASOLINE IN THE OPEN MARKET IN NORTH DAKOTA AND PAYMENT IS REQUIRED BY THE VENDOR OF A PRICE WHICH INCLUDES THE AMOUNT OF THE TAX, THE SITUATION PRESENTED IS NO DIFFERENT FROM THAT ARISING WHEN THE UNITED STATES IS UNABLE THROUGH COMPETITIVE BIDDING TO OBTAIN A QUOTATION OF A PRICE WHICH IS IN FACT EXCLUSIVE OF THE AMOUNT OF THE TAX.

CONSEQUENTLY, IN RESPONSE TO YOUR SPECIFIC INQUIRY, YOU ARE ADVISED THAT IN A CASE WHERE NECESSITY REQUIRES THAT YOUR DEPARTMENT PURCHASE GASOLINE IN THE OPEN MARKET IN NORTH DAKOTA AND THE VENDOR REFUSES TO SELL EXCEPT UPON THE BASIS THAT THE UNITED STATES WILL PAY A CHARGE FOR THE AMOUNT OF THE TAX PRESCRIBED BY THE ABOVE-MENTIONED TAXING STATUTE OF THAT STATE, IN ADDITION TO THE PRICE AS OTHERWISE FIXED, THE PURCHASE MAY BE CONSUMMATED UPON THAT BASIS AND PAYMENT MADE ACCORDINGLY, PROVIDED THE VENDOR SHALL FURNISH AN APPROPRIATE CERTIFICATE SHOWING THE AMOUNT OF THE TAX SO PAID ON THE PURCHASE. SUCH CERTIFICATES SHOULD BE PROMPTLY TRANSMITTED TO THIS OFFICE IN ACCORDANCE WITH THE PROVISIONS OF GENERAL REGULATIONS NO. 86--- REVISED, IN ORDER THAT THE NECESSARY STEPS MAY BE TAKEN HERE TO OBTAIN REIMBURSEMENT FROM THE STATE OF NORTH DAKOTA FOR THE AMOUNT OF THE TAX.