A-43517, AUGUST 17, 1932, 12 COMP. GEN. 253

A-43517: Aug 17, 1932

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TAXES - FEDERAL - GASOLINE AN IMPORTER OR PRODUCER OF GASOLINE IS NOT EXEMPT FROM THE FEDERAL TAX OF 1 CENT PER GALLON UPON SALES TO FEDERAL AGENCIES. SUCH AGENCIES ARE NOT. IN WHICH CASE NO ADDITION TO THE CONTRACT PRICE IS AUTHORIZED. 1932: REFERENCE IS HAD TO YOUR LETTER OF JULY 15. YOUR INQUIRY WAS REFERRED TO THE COMMISSIONER OF INTERNAL REVENUE AND YOUR ATTENTION IS INVITED TO THE FOLLOWING QUOTATION FROM HIS REPLY OF AUGUST 10. 1932: RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF JULY 27. IN WHICH INFORMATION IS REQUESTED CONCERNING THE TAXABILITY UNDER THE REVENUE ACT OF 1932 OF GASOLINE PURCHASED BY FEDERAL AGENCIES. THE TAX ON SALES OF GASOLINE IS UPON THE IMPORTER OR THE PRODUCER.

A-43517, AUGUST 17, 1932, 12 COMP. GEN. 253

TAXES - FEDERAL - GASOLINE AN IMPORTER OR PRODUCER OF GASOLINE IS NOT EXEMPT FROM THE FEDERAL TAX OF 1 CENT PER GALLON UPON SALES TO FEDERAL AGENCIES, AND SUCH AGENCIES ARE NOT, THEREFORE, EXCUSED FROM THE PAYMENT OF SUCH TAX IN THE FORM OF AN ADDITION TO THE PURCHASE PRICE OF THE GASOLINE, UNLESS PURCHASED UNDER A CONTRACT FIXING THE PRICE TO BE PAID, IN WHICH CASE NO ADDITION TO THE CONTRACT PRICE IS AUTHORIZED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, AUGUST 17, 1932:

REFERENCE IS HAD TO YOUR LETTER OF JULY 15, 1932, REQUESTING TO BE INFORMED WHETHER IN PURCHASING GASOLINE FROM RETAILERS THERE MUST BE PAID IN ADDITION TO THE PRICE REPRESENTING 1 CENT PER GALLON FEDERAL TAX AND ALSO A CHARGE OF ONE-TENTH CENT PER GALLON MADE BY SOME DEALERS FOR COLLECTING THE TAX.

YOUR INQUIRY WAS REFERRED TO THE COMMISSIONER OF INTERNAL REVENUE AND YOUR ATTENTION IS INVITED TO THE FOLLOWING QUOTATION FROM HIS REPLY OF AUGUST 10, 1932:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF JULY 27, 1932, INCLOSING A COPY OF A COMMUNICATION DATED JULY 15, 1932, FROM MR. C. F. MARVIN, ACTING SECRETARY OF AGRICULTURE, IN WHICH INFORMATION IS REQUESTED CONCERNING THE TAXABILITY UNDER THE REVENUE ACT OF 1932 OF GASOLINE PURCHASED BY FEDERAL AGENCIES.

SECTION 617 OF THE REVENUE ACT OF 1932 IMPOSES A TAX OF 1 CENT A GALLON ON GASOLINE SOLD BY THE IMPORTER THEREOF, OR BY A PRODUCER OF GASOLINE. THE TAX ON SALES OF GASOLINE IS UPON THE IMPORTER OR THE PRODUCER. REGULATIONS 44, COVERING THE MANUFACTURERS' EXCISE TAXES IMPOSED ON CERTAIN ARTICLES PROVIDE THAT SALES TO THE GOVERNMENT OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, OR A TERRITORY OR POSSESSION OF THE UNITED STATES ARE NOT EXEMPT FROM TAX.

A PRODUCER OR IMPORTER SELLING GASOLINE TO A DEPARTMENT OR BUREAU OF THE FEDERAL GOVERNMENT MUST, THEREFORE, PAY A TAX OF 1 CENT A GALLON ON SUCH SALES AS IMPOSED BY SECTION 617 OF THE REVENUE ACT OF 1932. THE PRODUCER OR IMPORTER IN MOST CASES PASSES THE TAX ON TO THE PURCHASER EITHER BY INCREASED PRICES OR AS A SPECIFIC TAX ITEM, BUT THIS IS A MATTER BETWEEN THE PARTIES CONCERNED, OVER WHICH THE BUREAU OF INTERNAL REVENUE HAS NO JURISDICTION.

IN THIS CONNECTION YOUR ATTENTION IS CALLED TO SECTION 1123 OF THE REVENUE ACT OF 1926, WHICH IS AS FOLLOWS:

"WHOEVER IN CONNECTION WITH THE SALE OR LEASE, OR OFFER FOR SALE OR LEASE, OF ANY ARTICLE, OR FOR THE PURPOSE OF MAKING SUCH SALE OR LEASE, MAKES ANY STATEMENT, WRITTEN OR ORAL, (1) INTENDED OR CALCULATED TO LEAD ANY PERSON TO BELIEVE THAT ANY PART OF THE PRICE AT WHICH SUCH ARTICLE IS SOLD OR LEASED, OR OFFERED FOR SALE OR LEASE, CONSISTS OF A TAX IMPOSED UNDER THE AUTHORITY OF THE UNITED STATES, OR (2) ASCRIBING A PARTICULAR PART OF SUCH PRICE TO A TAX IMPOSED UNDER THE AUTHORITY OF THE UNITED STATES, KNOWING THAT SUCH STATEMENT IS FALSE OR THAT THE TAX IS NOT SO GREAT AS THE PORTION OF SUCH PRICE ASCRIBED TO SUCH TAX, SHALL BE GUILTY OF A MISDEMEANOR AND UPON CONVICTION THEREOF SHALL BE PUNISHED BY A FINE OF NOT MORE THAN $1,000 OR BY IMPRISONMENT NOT EXCEEDING ONE YEAR, OR BOTH.'

NO TAX IS IMPOSED ON SALES OF GASOLINE BY DEALERS OR DISTRIBUTORS, BUT IF THE PRODUCER HAS PASSED THE TAX ON TO THE DEALER, THE DEALER IS NOT PROHIBITED FROM INCREASING HIS SALES PRICE TO COVER THE TAX OR FROM PASSING THE TAX ON AS A SPECIFIC ITEM TO THE CONSUMER.

WHERE AN ITEM IS BILLED TO THE CONSUMER AS A FEDERAL TAX, IT MUST IN FACT REPRESENT ONLY AN AMOUNT EQUIVALENT TO THAT WHICH HAS ACTUALLY BEEN PAID TO THE FEDERAL GOVERNMENT AS A TAX.

IN ADDITION THERETO IT MAY BE STATED THAT WHERE PURCHASES OF GASOLINE ARE MADE UNDER A CONTRACT, THE CONTRACTOR IS NOT ENTITLED TO BE PAID ANY AMOUNT IN ADDITION TO THE PRICE PROVIDED FOR IN THE CONTRACT REGARDLESS OF WHETHER THE PRICE SO FIXED DID OR DID NOT INCLUDE ANY AMOUNT TO COVER THE TAX OR COST OF COLLECTION. HOWEVER, WHERE IT IS NECESSARY TO PURCHASE GASOLINE IN SMALL QUANTITIES FROM RETAILERS WITHOUT A PREVIOUS CONTRACT, THE GOVERNMENT MUST PAY THE PRICE DEMANDED, NOTWITHSTANDING THAT IT MAY HAVE BEEN INCREASED A SUFFICIENT AMOUNT TO PASS ON TO THE CONSUMER THE FEDERAL TAX AND/OR THE COST OF COLLECTING THE SAME.