B-162060, MAY 27, 1968

B-162060, MAY 27, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED MAY 8, 1968, ADDRESSED TO THIS OFFICE, FROM YOUR DEPUTY GENERAL COUNSEL CONCERNING OUR DECISION B 162060, FEBRUARY 12, 1968, ADDRESSED TO MR. HAROLD P. DANZ, AN AUTHORIZED CERTIFYING OFFICER OF THE DEPARTMENT OF THE INTERIOR.

THAT DECISION DEALT WITH VOUCHERS IN FAVOR OF MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC; IN THE AMOUNT OF $793.86 FOR REIMBURSEMENT FOR CALIFORNIA SALES AND USE TAXES, PLUS $104.17 REPRESENTING INTEREST, ASSESSED AGAINST THE CONTRACTOR FOR THE LEASE OF TANGIBLE PERSONAL PROPERTY TO THE NATIONAL PARK SERVICE FOR THE PERIOD SEPTEMBER 1963 THROUGH DECEMBER 1965 UNDER CONTRACTS NOS. AF 30/635/-34430 AND AF 34/601/ -23068.

IN OUR DECISION OF FEBRUARY 12, 1968, WE STATED:

"UNDER EITHER OF THESE PROVISIONS (PARAGRAPHS IN THE CONTRACTS IN QUESTION ENTITLED -DUTIES AND/OR TAXES LEVIED BY STATE AND LOCAL GOVERNMENTS AND FOREIGN COUNTRIES-) IT WOULD APPEAR THAT THE GOVERNMENT WOULD BE LIABLE TO REIMBURSE THE CONTRACTOR FOR CALIFORNIA SALES AND USE TAXES PROPERLY IMPOSED ON LEASES OF TANGIBLE PERSONAL PROPERTY LET PURSUANT TO THESE CONTRACTS. HOWEVER, WE ARE INFORMED THAT THE GENERAL SERVICES ADMINISTRATION HAS RAISED QUESTIONS AS TO THE VALIDITY OF THE TAXES AND IS NOW IN THE PROCESS OF FORMULATING A POLICY DECISION AS TO HOW TO PROCEED IN THIS MATTER. THE DEPARTMENT OF THE AIR FORCE ADVISES US THAT THEY DO NOT WISH TO UNDERMINE THE GSA POSITION WITH REGARD TO PAYMENT OF THE CALIFORNIA SALES AND USE TAX ASSESSED UNDER FEDERAL SUPPLY CONTRACTS. ACCORDINGLY, THE DEPARTMENT OF THE AIR FORCE ADVISES THAT THEY WOULD HAVE NO OBJECTION TO A DECISION TO THE EFFECT THAT THE AIR FORCE WITHHOLD PAYMENT UNDER THE TWO CONTRACTS HERE IN QUESTION UNTIL SUCH TIME AS THE GSA POSITION IS FINALLY DETERMINED, EITHER ADMINISTRATIVELY OR JUDICIALLY.'

WE, ACCORDINGLY, ADVISED THE CERTIFYING OFFICER OF THE NATIONAL PARK SERVICE NOT TO CERTIFY FOR PAYMENT THE MOTOROLA VOUCHERS.

IN HIS LETTER OF MAY 8, 1968, YOUR DEPUTY GENERAL COUNSEL STATED:

"WE HAVE DISCUSSED THIS MATTER FURTHER WITH THE OFFICE OF THE GENERAL COUNSEL OF GSA AND HAVE BEEN INFORMED BY THAT AGENCY THAT IT NOW HAS NO OBJECTION TO REIMBURSEMENT OF MOTOROLA FOR THE TAXES REFERRED TO ABOVE, TOGETHER WITH SUCH INTEREST, IF ANY, AS IS PROPERLY ALLOWABLE.'

WE ALSO ARE ADVISED THAT GSA ISSUED A NOTICE UNDER DATE OF APRIL 1, 1968, ADVISING AGENCIES WHICH HAD RENTED PERSONAL PROPERTY UNDER FEDERAL SUPPLY SCHEDULE CONTRACTS THAT PAYMENT IS NOW IN ORDER FOR ANY CALIFORNIA SALES AND USE TAXES LEVIED UPON SUCH RENTALS SUBSEQUENT TO AUGUST 1, 1965.

IN THE CIRCUMSTANCES WE HAVE NO OBJECTION TO PAYMENT TO THE MOTOROLA COMPANY OF SUCH CALIFORNIA TAXES PAID BY IT ON RENTALS UNDER THE CONTRACTS OF YOUR DEPARTMENT.

WE ARE FORWARDING COPIES OF THIS LETTER TO THE CERTIFYING OFFICER OF THE NATIONAL PARK SERVICE AND TO GSA FOR THEIR INFORMATION.