A-43992, SEPTEMBER 2, 1932, 12 COMP. GEN. 324

A-43992: Sep 2, 1932

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IT IS NOT MATERIAL WHETHER THE MANUFACTURERS' EXCISE TAXES IMPOSED BY SAID ACT ON AUTOMOBILE PARTS SHOULD BE INCLUDED IN THE GROSS AMOUNT TO BE PAID THEREFOR OR WHETHER THEY MAY BE STATED AS A SEPARATE ITEM AND INCLUDED IN THE NET AMOUNTS TO BE PAID THE CONTRACTOR. IN NO CASE IS THE AMOUNT OF THE TAX TO BE PAID IN ADDITION TO THE BID PRICE UNLESS THE BID SPECIFICALLY SO PROVIDED. UPON WHICH SAID MANUFACTURERS' EXCISE TAXES ARE IMPOSED. THE TAXES CHARGED SHOULD BE CONSIDERED FOR COMPARATIVE PURPOSES IN ORDER TO ASCERTAIN WHICH OF THE SUBMITTED BIDS IS THE LOWEST. WHICH TAX IN ONE FORM OR ANOTHER IS ULTIMATELY BORNE BY THE CONSUMER. THIS TITLE IS APPARENTLY APPLICABLE TO THE DISTRICT OF COLUMBIA.

A-43992, SEPTEMBER 2, 1932, 12 COMP. GEN. 324

TAXES - MANUFACTURERS' EXCISE THE MANUFACTURERS' EXCISE TAXES IMPOSED BY TITLE IV OF THE REVENUE ACT OF 1932, 47 STAT. 169, UPON THE ARTICLES THEREIN STIPULATED BECAME EFFECTIVE ON JUNE 21, 1932, AND SUCH ACT DOES NOT EXEMPT FROM ITS PROVISIONS THE SALES OF SAID ARTICLES OF SUPPLIES TO THE DISTRICT OF COLUMBIA. IT IS NOT MATERIAL WHETHER THE MANUFACTURERS' EXCISE TAXES IMPOSED BY SAID ACT ON AUTOMOBILE PARTS SHOULD BE INCLUDED IN THE GROSS AMOUNT TO BE PAID THEREFOR OR WHETHER THEY MAY BE STATED AS A SEPARATE ITEM AND INCLUDED IN THE NET AMOUNTS TO BE PAID THE CONTRACTOR, BUT IN NO CASE IS THE AMOUNT OF THE TAX TO BE PAID IN ADDITION TO THE BID PRICE UNLESS THE BID SPECIFICALLY SO PROVIDED. IN MAKING AN AWARD TO THE LOWEST BIDDER FOR SUPPLIES, UPON WHICH SAID MANUFACTURERS' EXCISE TAXES ARE IMPOSED, THE TAXES CHARGED SHOULD BE CONSIDERED FOR COMPARATIVE PURPOSES IN ORDER TO ASCERTAIN WHICH OF THE SUBMITTED BIDS IS THE LOWEST.

COMPTROLLER GENERAL MCCARL TO THE PRESIDENT OF THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA, SEPTEMBER 2, 1932:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 11, 1932, AS FOLLOWS:

TITLE IV OF THE REVENUE ACT OF 1932, APPROVED JUNE 6, 1932, IMPOSES A TAX ON ARTICLES SOLD BY THE MANUFACTURER, PRODUCER, AND IMPORTER, WHICH TAX IN ONE FORM OR ANOTHER IS ULTIMATELY BORNE BY THE CONSUMER. THIS TITLE IS APPARENTLY APPLICABLE TO THE DISTRICT OF COLUMBIA, WITH THE EXCEPTION OF SECTIONS 610 AND 616 (C), WHICH EXPRESSLY EXEMPT THE UNITED STATES AND THE DISTRICT OF COLUMBIA.

UNDER DATE OF JULY 28, 1932, IN THE PREAUDIT AND APPROVAL OF VOUCHERS SUBMITTED TO YOU BY THE DEPARTMENT OF AGRICULTURE AND THE ARCHITECT OF THE CAPITOL INVOLVING THE MATTER OF EXCISE TAX ON PURCHASES MADE BY THE UNITED STATES, IT WAS HELD:

"UNDER TITLE IV, SECTION 629, SAID TITLE BECAME EFFECTIVE ON THE 15TH DAY AFTER THE DATE OF THE ENACTMENT OF THE STATUTE, EXCEPT AS TO CERTAIN SECTIONS, AND THE STATUTE WAS APPROVED ON JUNE 6, 1932. IN OTHER WORDS, THE EXCISE TAX ON SOAP, AUTOMOBILES, AND AUTOMOBILE PARTS UNDER TITLE IV BECAME EFFECTIVE ON JUNE 21, 1932, WHICH WAS AFTER THE DATE OF THE CONTRACT FOR THE DELIVERY OF THE STUDEBAKER AUTOMOBILE, AND THE SOAP, AND CONSEQUENTLY THERE MUST BE ELIMINATED THE TAXES OF $41.31 AND $3, RESPECTIVELY, CLAIMED THEREON.'

FROM THE FOREGOING IT APPEARS THAT THE TAX ON SOAP, AUTOMOBILES, AND AUTOMOBILE PARTS MAY PROPERLY BE IMPOSED UPON THE UNITED STATES ON AND AFTER THE EFFECTIVE DATE OF THIS ACT. IT IS PRESUMED THAT THE SAME REASONING SHOULD APPLY TO THE DISTRICT OF COLUMBIA.

TWO SPECIFIC CASES ARE SUBMITTED FOR YOUR CONSIDERATION. FOR AUTOMOBILE PARTS FURNISHED THE DISTRICT OF COLUMBIA SUBSEQUENT TO JUNE 21, 1932, THE CONTRACTOR HAS BILLED THE DISTRICT AS FOLLOWS:

CHART

ONE BREAK DISC AND CAM------------------------ $8.80

LESS 15 PERCENT------------------------------- 1.32

7.48

FEDERAL TAX----------------------------------- .11

TOTAL----------------------------------- 7.59

IF THE DISTRICT OF COLUMBIA IS HELD TO BE SUBJECT TO THE EXCISE TAX, THE QUESTION IS WHETHER THE TAX SHOULD BE INCLUDED IN THE GROSS AMOUNT TO BE PAID OR WHETHER IT MAY BE STATED AS A SEPARATE ITEM AND INCLUDED IN THE NET AMOUNTS TO BE PAID THE CONTRACTOR IN THIS AND SIMILAR PURCHASES. IS APPARENT THAT EXCEPT IN THOSE CASES IN WHICH THE CONTRACTOR ALLOWS DISCOUNT AND NET AMOUNT TO BE PAID WOULD BE THE SAME AND THAT NOTHING WOULD BE ACCOMPLISHED BY REQUIRING THE CONTRACTOR TO ABSORB THE TAX IN THE LIST PRICE. THERE ARE MANY CASES OF THIS TYPE ARISING AS THE RESULT OF OPEN COMPETITION AND PURCHASES MADE THROUGH CONTRACTS WITH THE GENERAL SUPPLY COMMITTEE.

A CONTRACTOR BILLING THE DISTRICT FREQUENTLY INCLUDES THE TAX IN THE LIST PRICE WHICH DOES NOT CORRESPOND WITH THE PRICE INDICATED IN THE SUPPLY SCHEDULE, AND TO AN EQUAL EXTENT THE DISTRICT IS BILLED BY ADDING TO THE LIST PRICE THE AMOUNT OF THE TAX AS A SEPARATE ITEM. WILL EITHER OF THESE METHODS OF STATING THE ACCOUNTS BE SATISFACTORY TO YOUR OFFICE, AND IN EVALUATING BIDS IS IT PROPER TO CONSIDER THE ELEMENT OF TAX ADDED AS A SEPARATE ITEM?

BIDS WERE RECEIVED UNDER DATE OF JULY 11, 1932, FOR FURNISHING TWO GOLD AND TWO SILVER MEDALS OF AWARD TO CERTAIN MEMBERS OF THE POLICE AND FIRE DEPARTMENTS IN ACCORDANCE WITH AUTHORITY CONTAINED IN THE DISTRICT OF COLUMBIA 1933 APPROPRIATION ACT. ONE BID WAS RECEIVED FOR FURNISHING TWO GOLD MEDALS AT $75.00 EACH, PLUS GOVERNMENT TAX, $7.50 EACH, TOTAL $165.00; TWO SILVER MEDALS AT $10.00 EACH, INCLUDING TAX.

ASSUMING THAT COMPETITION AS REQUIRED BY SECTION 3709, REVISED STATUTES, HAS BEEN COMPLIED WITH, WOULD THERE BE ANY OBJECTION TO ACCEPTING THE BID IN THIS FORM?

ANOTHER BID RECEIVED UNDER DATE OF JULY 15, 1932, FOR FURNISHING RADIO TUBES FOR USE OF THE POLICE DEPARTMENT QUOTED A PRICE ON EACH ITEM WITH A NOTE AT THE BOTTOM OF THE BID AS FOLLOWS: ,ADDITIONAL 5 PERCENT WILL BE ADDED TO INVOICE FOR FEDERAL EXCISE TAX AS AN ADDITIONAL ITEM.'

ASSUMING THAT THIS BID MEETS THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, MAY THERE BE ADDED TO THE LIST PRICE THE TAX IMPOSED BY SECTION 607 OF TITLE IV OF THE ACT SUPRA?

YOUR EARLY CONSIDERATION AND ADVICE IN THESE MATTERS WILL BE APPRECIATED.

YOUR SUBMISSION RELATES TO THE PROVISIONS OF TITLE IV OF THE REVENUE ACT OF 1932, 47 STAT. 169, WHICH COVERS THE MANUFACTURERS' EXCISE TAXES IMPOSED THEREUNDER.

UNDER SECTION 629 OF THE ACT, TITLE IV THEREOF BECAME EFFECTIVE ON THE FIFTEENTH DAY AFTER THE DATE OF ENACTMENT OF THE ACT, EXCEPTING AS TO SECTION 628 WHICH RELATES TO THE RULES AND REGULATIONS FOR THE ENFORCEMENT OF SAID ACT. AS THE ACT WAS APPROVED ON JUNE 6, 1932, THE EXCISE TAXES IMPOSED BY SAID TITLE IV UPON THE ARTICLES THEREIN STIPULATED BECAME EFFECTIVE ON JUNE 21, 1932.

WITH REFERENCE TO SECTION 625 (A) OF THE ACT, IN DECISION OF JULY 28, 1932, IN A-43275, IT WAS STATED:

WHILE THIS SECTION APPLIES TO CONTRACTS MADE PRIOR TO MAY 1, 1932, IT IS OF IMPORTANCE IN THIS CONNECTION AS INDICATING THAT IN THE INCIDENCE OF TAXATION, TAXES ARE USUALLY PASSED ON TO THE CONSUMER OR PURCHASER AT RETAIL, AND IT WAS EXPRESSLY HELD IN 25 COMP. DEC. 782 THAT PAYMENT OF A SALES TAX IMPOSED BY THE LAW THEN IN EFFECT WAS AUTHORIZED ON CERTAIN OPEN -MARKET PURCHASES AND OF COURSE IS PAYABLE UNDER CONTRACTS STIPULATING TO THAT EFFECT. SEE ALSO GARFORD MOTOR TRUCK CO. V. UNITED STATES, 57 CT.CLS. 404.

* * * THE TAX IMPOSED BY THE ACT OF JUNE 6, 1932, ON THE ITEMS IN QUESTION IS NOT GENERALLY ON THE RETAIL DEALER, BUT IS UPON THE ARTICLES SOLD BY THE MANUFACTURER, PRODUCER, OR IMPORTER, WHICH MAY, OF COURSE, BE PASSED ON AT LEAST IN PART TO THE CONSUMER. * * *

WITH REFERENCE TO YOUR INQUIRY WHETHER THE DISTRICT OF COLUMBIA IS SUBJECT TO THE PAYMENT OF SAID MANUFACTURERS' EXCISE TAXES ON SUPPLIES PURCHASED, YOU ARE ADVISED THAT SUCH ACT DOES NOT EXEMPT FROM THE PROVISIONS THEREOF SALES TO THE DISTRICT OF COLUMBIA.

RELATIVE TO YOUR INQUIRY WHETHER THE MANUFACTURERS' EXCISE TAXES IMPOSED BY SAID ACT ON AUTOMOBILE PARTS SHOULD BE INCLUDED IN THE GROSS AMOUNT TO BE PAID THEREFOR OR WHETHER IT MAY BE STATED AS A SEPARATE ITEM AND INCLUDED IN THE NET AMOUNTS TO BE PAID THE CONTRACTOR, PLEASE BE ADVISED THAT IT IS NOT MATERIAL WHICH OF THE TWO PROCEDURES IS FOLLOWED BUT IN NO CASE IS THE AMOUNT OF THE TAX TO BE PAID IN ADDITION TO THE BID PRICE UNLESS THE BID SPECIFICALLY SO PROVIDED. THIS ANSWER IS APPLICABLE ALSO TO YOUR INQUIRY WHETHER EITHER OF SAID TWO METHODS USED BY CONTRACTORS IN BILLING ARTICLES PURCHASED WOULD BE SATISFACTORY TO THIS OFFICE.

RELATIVE TO YOUR INQUIRY WHETHER IN EVALUATING BIDS FOR SUPPLIES IT IS PROPER TO CONSIDER THE ELEMENT OF TAX ADDED AS A SEPARATE ITEM, YOU ARE ADVISED THAT IN MAKING AN AWARD TO THE LOWEST BIDDER FOR SUPPLIES UPON WHICH SAID EXCISE TAXES ARE IMPOSED THE TAXES CHARGED SHOULD BE CONSIDERED; THAT IS, IN ORDER TO ASCERTAIN WHICH OF THE SUBMITTED BIDS IS THE LOWEST IT IS NECESSARY THAT THE AMOUNT OF EXCISE TAXES TO BE PAID ON THE ARTICLES, IF SAME HAS NOT BEEN ABSORBED IN THE PRICES SUBMITTED, BE ADDED THERETO FOR COMPARATIVE PURPOSES.

RELATIVE TO YOU INQUIRY WHETHER OBJECTION SHOULD BE MADE TO THE FORM OF A BID YOU RECEIVED JULY 11, 1932, FOR FURNISHING TWO GOLD AND TWO SILVER MEDALS OF AWARD TO MEMBERS OF THE POLICE AND FIRE DEPARTMENTS OF THE DISTRICT OF COLUMBIA BECAUSE THE BID SPECIFIED THAT TWO GOLD MEDALS WOULD BE FURNISHED AT $75 EACH, PLUS GOVERNMENT TAX OF $7.50 EACH, A TOTAL OF $165, AND THAT TWO SILVER MEDALS WOULD BE FURNISHED FOR $10 EACH, INCLUDING TAX, YOU ARE ADVISED THAT SUCH BID IS NOT OBJECTIONABLE, IT APPEARING TO BE PLAINLY STATED THAT THE TWO GOLD MEDALS WOULD BE FURNISHED FOR $165 AND THAT THE TWO SILVER MEDALS WOULD BE FURNISHED FOR $20.

RELATIVE TO YOUR INQUIRY CONCERNING A BID RECEIVED JULY 15, 1932, FOR FURNISHING CERTAIN RADIO TUBES FOR USE OF THE POLICE DEPARTMENT IN WHICH WAS QUOTED A PRICE ON EACH ITEM, WITH A NOTE AT THE BOTTOM OF THE BID AS FOLLOWS: "ADDITIONAL 5 PERCENT WILL BE ADDED TO INVOICE FOR FEDERAL EXCISE TAX AS AN ADDITIONAL ITEM," YOU ARE ADVISED THAT THE ADDED NOTE AT THE BOTTOM OF THE BID CLEARLY INDICATES THAT THE BIDDER INTENDED ITS BID TO BE SPECIFIED PRICES QUOTED FOR THE RADIO TUBES PLUS THE 5 PERCENT EXCISE TAX THEREON, PROVIDED BY SECTION 607 OF THE SAID REVENUE ACT OF 1932. THEREFORE, IN CONSIDERING THE BIDS SUBMITTED FOR AN AWARD TO THE LOWEST BIDDER FOR THE REQUIRED RADIO TUBES, IT IS NECESSARY THAT THE SUBMITTED BID PRICES BE INCREASED FOR COMPARATIVE PURPOSES BY 5 PERCENT TO COVER THE FEDERAL TAX THEREON.