A-50965, OCTOBER 28, 1933, 13 COMP. GEN. 118

A-50965: Oct 28, 1933

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TAXES - GASOLINE - NATIONAL GUARD PURCHASES OF GASOLINE FOR USE BY THE NATIONAL GUARD ARE NOT SUBJECT TO EITHER THE FEDERAL OR STATE TAX. 1933: THERE HAVE BEEN BROUGHT TO THE ATTENTION OF THIS OFFICE CONTRACTS COVERING PURCHASES OF GASOLINE BY NATIONAL GUARD UNITS AS FOLLOWS: W 22 MB -243. CONTAIN THE FOLLOWING PROVISION: PRICES BID HEREIN INCLUDE ANY FEDERAL TAX HERETOFORE IMPOSED BY THE CONGRESS WHICH IS APPLICABLE TO THE MATERIAL ON THIS BID. OR OTHER TAXES OR CHARGES ARE IMPOSED OR CHANGED BY THE CONGRESS AFTER THE DATE SET FOR THE OPENING OF THIS BID AND MADE APPLICABLE DIRECTLY UPON THE PRODUCTION. ARE PAID BY THE CONTRACTOR ON THE ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR. THEN THE PRICES NAMED IN THIS BID WILL BE INCREASED OR DECREASED ACCORDINGLY.

A-50965, OCTOBER 28, 1933, 13 COMP. GEN. 118

TAXES - GASOLINE - NATIONAL GUARD PURCHASES OF GASOLINE FOR USE BY THE NATIONAL GUARD ARE NOT SUBJECT TO EITHER THE FEDERAL OR STATE TAX.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, OCTOBER 28, 1933:

THERE HAVE BEEN BROUGHT TO THE ATTENTION OF THIS OFFICE CONTRACTS COVERING PURCHASES OF GASOLINE BY NATIONAL GUARD UNITS AS FOLLOWS: W 22 MB -243, COLONIAL BEACON OIL CO.; W 22 MB-263, STANDARD OIL CO. OF NEW YORK; AND W 38 MB-185, WHITE STAR REFINING CO. THE FIRST TWO CONTRACTS, EXECUTED JUNE 20, 1933, CONTAIN THE FOLLOWING PROVISION:

PRICES BID HEREIN INCLUDE ANY FEDERAL TAX HERETOFORE IMPOSED BY THE CONGRESS WHICH IS APPLICABLE TO THE MATERIAL ON THIS BID. IF ANY SALES TAX, PROCESSING TAX, ADJUSTMENT CHARGE, OR OTHER TAXES OR CHARGES ARE IMPOSED OR CHANGED BY THE CONGRESS AFTER THE DATE SET FOR THE OPENING OF THIS BID AND MADE APPLICABLE DIRECTLY UPON THE PRODUCTION, MANUFACTURE, OR SALE OF THE SUPPLIES COVERED BY THIS BID, AND ARE PAID BY THE CONTRACTOR ON THE ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR, THEN THE PRICES NAMED IN THIS BID WILL BE INCREASED OR DECREASED ACCORDINGLY, AND ANY AMOUNT DUE THE CONTRACTOR AS A RESULT OF SUCH CHANGE WILL BE CHARGED TO THE GOVERNMENT AND ENTERED ON VOUCHERS (OR INVOICES) AS SEPARATE ITEMS.

THE THIRD CONTRACT, EXECUTED AUGUST 16, 1933, CONTAINED THIS PROVISION:

IT IS UNDERSTOOD THAT THE PRICES SET FORTH IN THIS BID INCLUDE, AS A PART OF THE PURCHASE PRICE TO BE PAID FOR THE SUPPLIES, ALL SALES TAX DUTIES, IMPOSTS, REVENUES, EXCISE, OR OTHER TAXES APPLICABLE TO THE SUPPLIES COVERED BY THIS BID UNDER ANY FEDERAL LAW IN FORCE UPON THE DATE THIS BID IS OPENED. IF ANY CHANGE IN THE AMOUNT OF SUCH TAXES IS MADE BY CONGRESS, OR IF ANY NEW TAXES ARE MADE APPLICABLE TO SUCH SUPPLIES BY CONGRESS AFTER THE DATE OF OPENING OF THIS BID, THE PRICES NAMED IN THIS BID WILL BE INCREASED OR DECREASED ACCORDINGLY.

GASOLINE, OIL, ETC., FURNISHED ON THIS INVITATION FOR BIDS WILL NOT BE SUBJECT TO TAXES PRESCRIBED BY PUBLIC ACT. NO. 154, 72ND CONGRESS, AS SAME IS FOR USE BY NATIONAL GUARD, STATE OF MICHIGAN, AND BIDS INCLUDED IN PRICE, U.S. GOVERNMENT EXEMPT. THAT GASOLINE FOR NATIONAL GUARD USE WILL NOT BE SUBJECT TO THE FEDERAL TAX IS BASED UPON OPINIONS OF SEPTEMBER 14, 1932, FROM THE SECRETARY OF THE TREASURY, AND FEBRUARY 8, 1933, FROM THE COMMISSIONER OF INTERNAL REVENUE, COPIES OF WHICH HAVE BEEN FURNISHED THIS OFFICE, AND WHICH WERE APPARENTLY BASED UPON THE THEORY THAT NATIONAL GUARD ORGANIZATIONS ARE STATE INSTITUTIONS AND THAT THE FEDERAL FUNDS, AFTER ALLOTMENT TO THE STATE, BECOME FOR THAT PURPOSE STATE FUNDS. AS THE COMMISSIONER OF INTERNAL REVENUE HAS PRIMARY JURISDICTION TO DETERMINE WHEN FEDERAL TAXES ON GASOLINE ARE APPLICABLE, HIS OPINION IN THAT MATTER WILL BE ACCEPTED BY THIS OFFICE.

WITH RESPECT TO THE STATE TAXES UPON GASOLINE, AS THE PURCHASE PRICE OF THE GASOLINE IS TO BE PAID FROM FUNDS APPROPRIATED BY THE CONGRESS FOR AN ACTIVITY WHICH IS GOVERNED LARGELY BY FEDERAL STATUTES AND BY REGULATIONS ISSUED BY THE SECRETARY OF WAR, THE SUBJECTING OF SUCH PURCHASES TO STATE TAXATION WOULD CONSTITUTE AN INTERFERENCE WITH AN AGENCY OF THE FEDERAL GOVERNMENT AND, ACCORDINGLY, CONTRACTS FOR GASOLINE FOR THE USE OF NATIONAL GUARD UNITS SHOULD CONTAIN A STIPULATION THAT THE PRICE DOES NOT INCLUDE ANY STATE OR FEDERAL TAX. SEE 4 COMP. GEN. 1010.

WITH REFERENCE TO PAYMENTS UNDER THE FIRST TWO CONTRACTS, EVIDENCE SHOULD BE FURNISHED SHOWING WHETHER THE BID PRICE INCLUDES ANY FEDERAL TAX AND, IF SO, THE AMOUNT THEREOF WILL BE FOR DEDUCTING FROM THE STATED CONTRACT PRICE AND THE CONTRACTOR SHOULD BE INFORMED OF THE RULINGS BY THE SECRETARY OF THE TREASURY AND THE COMMISSIONER OF INTERNAL REVENUE.