A-43308, AUGUST 24, 1932, 12 COMP. GEN. 277

A-43308: Aug 24, 1932

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IT WILL NOT BE NECESSARY TO PAY THE TAX AND SEEK REFUND AS HAS BEEN DONE IN SOME CASES UNDER THE GASOLINE TAX LAWS. AS FOLLOWS: PREAUDIT DIFFERENCE STATEMENTS RECEIVED IN THIS DEPARTMENT FROM YOUR OFFICE ARE EVIDENCE OF THE FACT THAT YOUR ATTENTION HAS ALREADY BEEN DRAWN TO THE STATE OF MISSISSIPPI REVENUE ACT OF 1932. SO MUCH THEREOF AS IS DERIVED FROM SALES TO THE UNITED STATES GOVERNMENT * * *.'. THUS NOT A FEW PURCHASES ARE MADE FROM OUR APPROPRIATIONS OF SUPPLIES OR ARTICLES WITHIN THE TAX MEASURE. IN SOME INSTANCES THE TAX IS SHOWN AS A SEPARATE ITEM ON THE BILL RENDERED. WHETHER OR NOT IT IS SO SHOWN THERE IS ALWAYS THE CHANCE THAT IT IS INCLUDED IN THE PRICE UNLESS THERE IS EXPRESS INDICATION TO THE CONTRARY.

A-43308, AUGUST 24, 1932, 12 COMP. GEN. 277

TAXES - PRIVILEGE - STATE OF MISSISSIPPI AS THE MISSISSIPPI PRIVILEGE TAX STATUTE EXPRESSLY EXEMPTS FROM ITS PROVISIONS THE PROCEEDS DERIVED FROM SALES TO THE UNITED STATES GOVERNMENT, IT WILL NOT BE NECESSARY TO PAY THE TAX AND SEEK REFUND AS HAS BEEN DONE IN SOME CASES UNDER THE GASOLINE TAX LAWS. EXEMPTION CERTIFICATES SIMILAR TO THOSE USED IN CONNECTION WITH THE PURCHASE OF GASOLINE MAY BE USED IF NECESSARY.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, AUGUST 24, 1932:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 7, 1932, AS FOLLOWS:

PREAUDIT DIFFERENCE STATEMENTS RECEIVED IN THIS DEPARTMENT FROM YOUR OFFICE ARE EVIDENCE OF THE FACT THAT YOUR ATTENTION HAS ALREADY BEEN DRAWN TO THE STATE OF MISSISSIPPI REVENUE ACT OF 1932, HOUSE BILL NO. 328, APPROVED APRIL 28, 1932, IMPOSING TAXES UPON THE GROSS INCOMES OF THOSE ENGAGED IN VARIOUS LINES OF BUSINESS WITHIN THE STATE. SECTION 2-K OF THE ACT PROVIDES:

"IN COMPUTING THE AMOUNT OF TAX LEVIED UNDER THIS ACT THERE SHALL BE EXCEPTED FROM THE GROSS INCOME OF THE BUSINESS, OR OF GROSS PROCEEDS OF SALES, AS THE CASE MAY BE, SO MUCH THEREOF AS IS DERIVED FROM SALES TO THE UNITED STATES GOVERNMENT * * *.'

SEVERAL BUREAUS OF THIS DEPARTMENT OPERATE IN THE STATE OF MISSISSIPPI, AND THUS NOT A FEW PURCHASES ARE MADE FROM OUR APPROPRIATIONS OF SUPPLIES OR ARTICLES WITHIN THE TAX MEASURE. IN SOME INSTANCES THE TAX IS SHOWN AS A SEPARATE ITEM ON THE BILL RENDERED. WHETHER OR NOT IT IS SO SHOWN THERE IS ALWAYS THE CHANCE THAT IT IS INCLUDED IN THE PRICE UNLESS THERE IS EXPRESS INDICATION TO THE CONTRARY.

THE SITUATION IS ANALOGOUS TO THAT WITH RESPECT TO THE STATE GASOLINE TAXES. THE GOVERNMENT PURCHASES OF GASOLINE, AS YOU ARE AWARE, ARE EITHER MADE UNDER EXEMPTION CERTIFICATES, OR THE PLAN HAS BEEN ADOPTED WITH YOUR SANCTION OF PAYING THE GROSS ACCOUNT IN THE FIRST PLACE WITH SUBSEQUENT CLAIM ON THE STATE AUTHORITIES FOR REFUND OF THE TAX. TO AVOID THE SENDING TO YOUR OFFICE FOR DIRECT SETTLEMENT OF ALL ACCOUNTS ARISING IN THE STATE OF MISSISSIPPI, A PROCEDURE WHICH WOULD BE UNWELCOME TO THE DEPARTMENT AND, WE ASSUME, TO THE GENERAL ACCOUNTING OFFICE AS WELL, WE SHALL BE GLAD IF YOU WILL AT YOUR EARLY CONVENIENCE ADVISE UPON WHAT TERMS AND CONDITIONS PAYMENTS FOR TAXABLE MATERIALS PURCHASED IN THE STATE OF MISSISSIPPI MAY BE MADE BY THE DISBURSING AGENTS OF THIS DEPARTMENT.

THE MISSISSIPPI STATUTE REFERRED TO IMPOSES A PRIVILEGE TAX ON THE GROSS INCOME OF PRACTICALLY EVERY FORM OF BUSINESS IN THAT STATE, WITH SOME EXCEPTIONS NOTED IN THE STATUTE, BUT SECTION 2-K OF THE ACT PROVIDES:

IN COMPUTING THE AMOUNT OF TAX LEVIED UNDER THIS ACT, THERE SHALL BE EXCEPTED FROM THE GROSS INCOME OF THE BUSINESS, OR GROSS PROCEEDS OF SALES, AS THE CASE MAY BE, SO MUCH THEREOF AS IS DERIVED FROM SALES TO THE UNITED STATES GOVERNMENT OR THE STATE OF MISSISSIPPI, ITS DEPARTMENTS AND INSTITUTIONS, OR FROM BUSINESS WHICH THE STATE OF MISSISSIPPI IS PROHIBITED FROM TAXING UNDER THE CONSTITUTION OF THIS STATE OR THE CONSTITUTION OF THE UNITED STATES.

IN VIEW OF THE SPECIFIC EXEMPTION FROM THE STATE TAX OF THE PROCEEDS DERIVED FROM SALES TO THE UNITED STATES GOVERNMENT, THERE SHOULD BE NO DIFFICULTY IN MAKING PURCHASES FOR GOVERNMENTAL PURPOSES TAX FREE. WOULD NOT APPEAR NECESSARY TO PAY THE TAX AND APPLY FOR A REFUND AS HAS OFTEN BEEN NECESSARY IN THE PURCHASE OF GASOLINE AS SUCH SUPPLIES WOULD BE PURCHASED AND DELIVERED TO A KNOWN FEDERAL OFFICE AND THERE WOULD ARISE NO DIFFICULTY OF IDENTIFICATION AS IN THE CASE OF THE ITINERANT PURCHASE OF GASOLINE BY FEDERAL EMPLOYEES WHILE AWAY FROM THEIR HEADQUARTERS. IT IS UNDERSTOOD, ALSO, THAT THERE WOULD NOT BE INVOLVED HERE, AS IN SOME GASOLINE PURCHASES, ANY PURCHASES FROM A DEALER WHO DID NOT PAY OR ACCOUNT FOR THE TAX BUT HAD PURCHASED THE ARTICLE FROM AN IMPORTER OR PRODUCER WHO HAD PAID THE TAX THEREON.

THE INVOICES SHOULD CONTAIN A CERTIFICATE FROM THE DEALER THAT THE PRICE DOES NOT INCLUDE THE STATE TAX. IF FORMAL EVIDENCE THAT THE PURCHASE IS FOR FEDERAL USE IS REQUIRED, EITHER BY THE STATE OR THE DEALER, IT WOULD APPEAR THAT AN EXEMPTION CERTIFICATE, SIMILAR TO THAT USED IN THE PURCHASE OF GASOLINE, WOULD BE SUFFICIENT. 10 COMP. GEN. 579.