A-45043, NOVEMBER 5, 1932, 12 COMP. GEN. 436

A-45043: Nov 5, 1932

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IS ONE PRIMARILY FOR THE CONSIDERATION OF THE BUREAU OF INTERNAL REVENUE IN ITS ADMINISTRATION AND ENFORCEMENT OF THE REVENUE LAWS. IN SO FAR AS THE GOVERNMENT IS CONCERNED. THERE IS NO AUTHORITY FOR THE PAYMENT OF THE TAX TO SUCH MANUFACTURERS. FOR DECISION WHETHER PAYMENT IS AUTHORIZED UPON THREE VOUCHERS IN FAVOR OF THE WELCH GRAPE JUICE COMPANY FOR $2.40. THE MATTER FOR DECISION IS PRESENTED IN THE PARAGRAPH NUMBERED 2 OF YOUR LETTER. DEDUCTIONS WERE MADE AS STATED ABOVE. IT BEING THE OPINION OF THIS OFFICER THAT PURCHASE NOTICE NO. 7 REFERRED TO IS THE SAME AS A CONTRACT. SINCE IT IS EXPECTED THAT THE WELCH GRAPE JUICE COMPANY WILL CLAIM PAYMENT FOR FEDERAL TAX IN CONNECTION WITH EACH DELIVERY.

A-45043, NOVEMBER 5, 1932, 12 COMP. GEN. 436

TAXES - EXCISE THE QUESTION WHETHER EXCISE TAXES IMPOSED BY SECTION 615 OF THE REVENUE ACT OF JUNE 6, 1932, 47 STAT. 265, SHOULD BE PAID BY MANUFACTURERS, PRODUCERS, OR IMPORTERS FOR GOODS FURNISHED THE GOVERNMENT, IS ONE PRIMARILY FOR THE CONSIDERATION OF THE BUREAU OF INTERNAL REVENUE IN ITS ADMINISTRATION AND ENFORCEMENT OF THE REVENUE LAWS; BUT IN SO FAR AS THE GOVERNMENT IS CONCERNED, THERE IS NO AUTHORITY FOR THE PAYMENT OF THE TAX TO SUCH MANUFACTURERS, PRODUCERS, OR IMPORTERS UPON SUCH GOODS SO FURNISHED IN THE ABSENCE OF A SPECIFIC AGREEMENT PROVIDING THEREFOR.

COMPTROLLER GENERAL MCCARL TO MAJ. W. D. DABNEY, UNITED STATES ARMY, NOVEMBER 5, 1932:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER OF SEPTEMBER 1, 1932, FORWARDED TO THIS OFFICE BY REFERENCE OF THE CHIEF OF FINANCE, DATED SEPTEMBER 30, 1932, FOR DECISION WHETHER PAYMENT IS AUTHORIZED UPON THREE VOUCHERS IN FAVOR OF THE WELCH GRAPE JUICE COMPANY FOR $2.40, $1.52, AND $1.80, CLAIMING REFUND OF FEDERAL EXCISE TAX DEDUCTED ON VOUCHERS NOS. 6465, 6466, AND 6467, RESPECTIVELY, OF YOUR ACCOUNTS FOR THE MONTH OF AUGUST, 1932.

THE MATTER FOR DECISION IS PRESENTED IN THE PARAGRAPH NUMBERED 2 OF YOUR LETTER, AS FOLLOWS:

2. VOUCHERS LISTED ABOVE COVER PAYMENTS MADE TO THE WELCH GRAPE JUICE COMPANY UNDER CONTRACT W 767 QM 18 (PURCHASE NOTICE NO. 7, OFFICE OF THE QUARTERMASTER GENERAL, DATED FEBRUARY 9, 1932). SINCE THE REVENUE ACT APPROVED JUNE 6, 1932, EFFECTIVE JUNE 21, 1932, EXEMPTS FROM TAX, GOVERNMENT CONTRACTS MADE PRIOR TO MAY 1, 1932, DEDUCTIONS WERE MADE AS STATED ABOVE, IT BEING THE OPINION OF THIS OFFICER THAT PURCHASE NOTICE NO. 7 REFERRED TO IS THE SAME AS A CONTRACT. HOWEVER, SINCE THIS PURCHASE NOTICE CALLS FOR DELIVERIES DURING THE ENTIRE FISCAL YEAR OF 1933 TO A GREAT MANY STATIONS AND, SINCE IT IS EXPECTED THAT THE WELCH GRAPE JUICE COMPANY WILL CLAIM PAYMENT FOR FEDERAL TAX IN CONNECTION WITH EACH DELIVERY, AN ADVANCE DECISION IS REQUESTED BY THE UNDERSIGNED, A DISBURSING OFFICER, AS TO WHETHER OR NOT SUCH FEDERAL TAX SHOULD BE PAID BY THIS OFFICE.

SECTION 615 (A) (2) OF THE REVENUE ACT OF JUNE 6, 1932, 47 STAT. 265, PROVIDES FOR A TAX OF 5 CENTS PER GALLON UPON UNFERMENTED GRAPE JUICE SOLD BY THE MANUFACTURER, PRODUCER, OR IMPORTER, AND BY SECTION 629 OF THE ACT, IT IS PROVIDED THAT THE TITLE IN WHICH SUCH SECTION 615 IS CONTAINED, SHOULD TAKE EFFECT ON THE FIFTEENTH DAY AFTER THE DATE OF THE ACT, JUNE 6, 1932, THE EFFECTIVE DATE OF THE EXCISE TAX, THEREFORE, BEING JUNE 21, 1932.

SECTION 625 (A) OF THE ACT, HOWEVER, PROVIDES THAT:

(A) IF (1) ANY PERSON HAS, PRIOR TO MAY 1, 1932, MADE A BONA FIDE CONTRACT FOR THE SALE, AFTER THE TAX TAKES EFFECT, OF ANY ARTICLE IN RESPECT OF THE SALE OF WHICH A TAX IS IMPOSED UNDER THIS TITLE, OR IN RESPECT OF WHICH A TAX IS IMPOSED UNDER THIS SUBSECTION, AND (2) SUCH CONTRACT DOES NOT PERMIT THE ADDING TO THE AMOUNT TO BE PAID UNDER SUCH CONTRACT, OF THE WHOLE OF SUCH TAX, THEN (UNLESS THE CONTRACT PROHIBITS SUCH ADDITION) THE VENDEE SHALL, IN LIEU OF THE VENDOR, PAY SO MUCH OF THE TAX AS IS NOT SO PERMITTED TO BE ADDED TO THE CONTRACT PRICE. IF A CONTRACT OF THE CHARACTER ABOVE DESCRIBED WAS MADE WITH THE UNITED STATES OR WITH ANY PERSON OTHER THAN A DEALER, NO TAX SHALL BE COLLECTED UNDER THIS TITLE.'

BY SECTION 628 OF THE ACT, IT WAS PROVIDED THAT THE COMMISSIONER OF INTERNAL REVENUE WITH THE APPROVAL OF THE SECRETARY OF THE TREASURY SHOULD PRESCRIBE AND PUBLISH ALL NEEDFUL RULES AND REGULATIONS FOR THE ENFORCEMENT OF THE LAW RELATING TO THE TAXES ON ARTICLES SOLD BY MANUFACTURERS, PRODUCERS, AND IMPORTERS SO THAT THE QUESTIONS (1) WHETHER IN THIS MATTER THERE WAS A CONTRACT MADE BONA FIDE PRIOR TO MAY 1, 1932, WITHIN THE MEANING OF SECTION 625 (A), SUPRA, OR, IF NOT, (2) WHETHER THE MANUFACTURER IN THIS CASE IS LIABLE FOR THE TAX FOR GOODS FURNISHED THE GOVERNMENT, ARE PRIMARILY FOR THE CONSIDERATION OF THE BUREAU OF INTERNAL REVENUE IN ITS ADMINISTRATION AND ENFORCEMENT OF THE LAW.

IN SO FAR AS CONCERNS THE PAYMENT OF THE TAX UPON THE VOUCHERS, AS NOW SUBMITTED FOR CONSIDERATION, IT MAY BE STATED THAT THERE IS NO AUTHORITY OF LAW THEREFOR IRRESPECTIVE OF THE HOLDING OF THE BUREAU OF INTERNAL REVENUE WITH RESPECT TO THE TWO QUESTIONS REFERRED TO IN THE PRECEDING PARAGRAPH. IF IT SHOULD BE HELD THAT THERE WAS IN FACT A CONTRACT UNDER SECTION 625 (A) EXEMPTING THE MANUFACTURER FROM THE PAYMENT OF THE TAX, THEN THERE WOULD APPEAR TO BE NO BASIS FOR THE MANUFACTURER'S CLAIM. THE OTHER HAND, IF IT SHOULD BE HELD THAT THE SALE WAS NOT UNDER A CONTRACT ENTERED INTO PRIOR TO MAY 1, 1932, THEN, SINCE THERE WAS NO AGREEMENT FOR THE GOVERNMENT TO PAY THE TAX OR A PRICE FOR THE GOODS TO INCLUDE THE TAX, THERE WOULD BE NO AUTHORITY FOR THE PAYMENT OF THE AMOUNTS NOW CLAIMED.

ACCORDINGLY, I HAVE TO ADVISE THAT PAYMENT ON THE THREE VOUCHERS SUBMITTED IS NOT AUTHORIZED. THE SAID VOUCHERS WILL BE RETAINED IN THE FILES OF THIS OFFICE.