A-68693, FEBRUARY 11, 1936, 15 COMP. GEN. 694

A-68693: Feb 11, 1936

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IS NOT REQUIRED IN CONNECTION WITH PURCHASES FROM RETAILERS. AS FOLLOWS: THE FOLLOWING CERTIFIED AND APPROVED VOUCHERS HAVE BEEN PRESENTED TO ME FOR PAYMENT. 6.96 THERE IS CONSIDERABLE CONFUSION AND MISUNDERSTANDING AS TO WHETHER OR NOT THERE IS INCLUDED IN THE PRICES STATED ANY FEDERAL EXCISE TAX IMPOSED BY THE REVENUE ACT OF 1932. ALL OF THE DEALERS HAVE BEEN CONSULTED AND EACH STATES THAT THEY ARE NOT PAYING ANY FEDERAL EXCISE TAX ON THE PURCHASES COVERED BY THE VOUCHERS LISTED ABOVE. IT WILL BE NOTED THAT IN SOME INSTANCES. THE DEALERS HAVE SIGNED A CERTIFICATE TO THE EFFECT THAT THERE IS NO FEDERAL EXCISE TAX INCLUDED IN THE PRICES STATED ON THE INVOICES. THEY HAVE UNOFFICIALLY INFORMED THIS OFFICE THAT THEY ARE SIGNING THE CERTIFICATES BECAUSE THEY THEMSELVES ARE NOT PAYING THE TAX.

A-68693, FEBRUARY 11, 1936, 15 COMP. GEN. 694

CONTRACTS - PRICE ADJUSTMENT - TAX-EXEMPT ARTICLES - REVENUE ACT OF 1935 DEDUCTION FROM THE CONTRACT PRICE OF THE AMOUNT OF TAX IMPOSED ON ARTICLES INVOLVED UNDER THE REVENUE ACT OF 1932 MADE TAX EXEMPT EFFECTIVE OCTOBER 1, 1935, BY THE REVENUE ACT OF 1935 IF SOLD FOR THE EXCLUSIVE USE OF THE UNITED STATES, ETC., IS NOT REQUIRED IN CONNECTION WITH PURCHASES FROM RETAILERS, IT NOT APPEARING THAT THE PRICES CHARGED INCLUDED SAID TAX A-67600, JANUARY 7, 1936, 15 COMP. GEN. 588, AND A 69751, FEBRUARY 3, 1936, ID. 686.

COMPTROLLER GENERAL MCCARL TO MILTON L. DENNIS, SPECIAL DISBURSING OFFICER, FEBRUARY 11, 1936:

CONSIDERATION HAS BEEN GIVEN THE MATTERS PRESENTED IN YOUR LETTER OF DECEMBER 6, 1935, AS FOLLOWS:

THE FOLLOWING CERTIFIED AND APPROVED VOUCHERS HAVE BEEN PRESENTED TO ME FOR PAYMENT, ON WHICH I REQUEST YOUR ADVICE AS NOTED BELOW:

TABLE

NAME: AMOUNT

WATKINS MOTOR COMPANY ------------------------------------ $ 7.50

LONE STAR MOTOR COMPANY ---------------------------------- 2.02

TRI-STATE MOTOR COMPANY ---------------------------------- 27.48

WATKINS MOTOR COMPANY ------------------------------------ 8.85

WATKINS MOTOR COMPANY ------------------------------------ 7.35

LONE STAR MOTOR COMPANY ---------------------------------- 4.62

WESTERN BATTERY AND MAGNETO COMPANY ---------------------- 8.84

TRI-STATE MOTOR COMPANY ---------------------------------- 19.13

CASNER MOTOR COMPANY ------------------------------------- 2.55

INTERNATIONAL HARVESTER COMPANY OF AMERICA --------------- 3.67

CASNER MOTOR COMPANY ------------------------------------- 7.98

WALTER POFAHL -------------------------------------------- 6.96

THERE IS CONSIDERABLE CONFUSION AND MISUNDERSTANDING AS TO WHETHER OR NOT THERE IS INCLUDED IN THE PRICES STATED ANY FEDERAL EXCISE TAX IMPOSED BY THE REVENUE ACT OF 1932, AS AMENDED. IN AN EFFORT TO CLARIFY THE CONFUSION, ALL OF THE DEALERS HAVE BEEN CONSULTED AND EACH STATES THAT THEY ARE NOT PAYING ANY FEDERAL EXCISE TAX ON THE PURCHASES COVERED BY THE VOUCHERS LISTED ABOVE, BUT THAT THEY DO NOT KNOW WHETHER THE TAX HAS BEEN INCLUDED IN THE LISTED PRICES AS SHOWN ON THE VOUCHERS AND INVOICES.

IT WILL BE NOTED THAT IN SOME INSTANCES, THE DEALERS HAVE SIGNED A CERTIFICATE TO THE EFFECT THAT THERE IS NO FEDERAL EXCISE TAX INCLUDED IN THE PRICES STATED ON THE INVOICES, BUT THEY HAVE UNOFFICIALLY INFORMED THIS OFFICE THAT THEY ARE SIGNING THE CERTIFICATES BECAUSE THEY THEMSELVES ARE NOT PAYING THE TAX. IN THIS CONNECTION, AM I AUTHORIZED TO MAKE PAYMENT IN VIEW OF THE CONDITIONS NOTED?

IN OTHER INSTANCES YOU WILL NOTE THAT CERTIFIED INVOICES DO NOT MAKE REFERENCE TO THE EXCISE TAX AND THE ADMINISTRATIVE OFFICE HAS DEDUCTED 2 PERCENT FEDERAL EXCISE TAX, THEREFORE, THE AMOUNT OF THE VOUCHER IS LESS THAN THE CERTIFIED INVOICE. RELATIVE TO THIS, THE DEALERS HAVE BEEN NOTIFIED AND HAVE REQUESTED THAT AN OFFICIAL DECISION BE RENDERED. YOUR DECISION IS, THEREFORE, REQUESTED AS TO WHETHER I AM AUTHORIZED TO PAY THE VOUCHERS AT THE REDUCED PRICES, OR IS THERE SOME MODE OF PROCEDURE OUTLINED BY YOUR OFFICE COVERING SUCH CASES?

YOU WILL ALSO NOTE THAT THERE ARE VOUCHERS IN FAVOR OF THE CASNER MOTOR COMPANY AND WALTER POFAHL, AND SIGNED BY THEM, ON WHICH THE FEDERAL EXCISE TAX HAS BEEN DEDUCTED. AT THE TIME OF SIGNING THESE VOUCHERS, THE DEALERS OBJECTED TO THE DEDUCTION, AS THEY STATED THAT THEY WERE NOT PAYING ANY EXCISE TAX AND THAT SO FAR AS THEY KNEW, NONE WAS INCLUDED IN THE PRICE. HOWEVER, THEY STATED THAT THEY WOULD SIGN THE VOUCHERS SO THAT THE QUESTION COULD BE PRESENTED TO YOUR OFFICE FOR GUIDANCE IN THE FUTURE. THEREFORE, IS THE ADMINISTRATIVE ACTION IN DEDUCTING THE TAX PROPER WHEN THERE IS DOUBT AS TO WHETHER THE TAX IS INCLUDED IN THE PRICES STATED, AND FURTHERMORE, AM I AUTHORIZED IN SUCH CASES TO MAKE PAYMENT ON VOUCHERS SUCH AS THESE?

THE QUESTION ALSO ARISES AS TO WHETHER OR NOT AN EXEMPTION CERTIFICATE SHOULD BE ISSUED TO THE DEALERS COVERING THE EXCISE TAX, AND IF SO, IN WHAT FORM SHOULD THE CERTIFICATE BE ISSUED?

IF THE ADMINISTRATIVE OFFICE IS REQUIRED TO DEDUCT THE EXCISE TAX, SHOULD THE 2 PERCENT EXCISE TAX, IMPOSED BY THE REVENUE ACT OF 1932, AS AMENDED, BE COMPUTED ON THE LISTED PRICES OR ON THE NET PRICE TO THE GOVERNMENT AFTER DEDUCTION OF LIST AND TIME DISCOUNTS?

YOUR EARLY ADVICE IN REGARD TO THE ABOVE WILL BE VERY MUCH APPRECIATED, AS MOST OF THE DEALERS HAVE OFFERED A DISCOUNT FOR PAYMENT WITHIN A CERTAIN NUMBER OF DAYS. HOWEVER, THE DEALERS HAVE AGREED TO ALLOW THE DISCOUNT, PROVIDED PAYMENT IS MADE WITHIN A REASONABLE TIME ON THE INVOICES COVERED BY THE ABOVE VOUCHERS. THERE ARE ALSO OTHER INVOICES COMING IN TO THIS OFFICE FOR PAYMENT, ON WHICH IT IS DOUBTFUL WHETHER THE DEALERS WILL AGREE TO OUR WITHHOLDING PAYMENT FOR AN INDEFINITE PERIOD OF TIME, AND AT THE SAME TIME ALLOW THE DISCOUNT STATED FOR PAYMENT WITHIN A CERTAIN NUMBER OF DAYS.

THE QUESTIONS PRESENTED IN YOUR LETTER WITH REFERENCE TO THE MANNER OF INVOICING AND PAYMENT FOR ARTICLES SOLD TO THE FEDERAL GOVERNMENT WHICH ARE SUBJECT TO THE FEDERAL EXCISE TAX UNDER THE INTERNAL REVENUE ACT OF 1932, AS AMENDED BY SECTION 4 OF THE ACT OF JUNE 16, 1933, 48 STAT. 255, AND SECTION 401 OF THE ACT OF AUGUST 30, 1935, 49 STAT. 1025, ARE IDENTICAL, IN PART, WITH THOSE DISCUSSED IN THE DECISION OF THIS OFFICE, A -67600, DATED JANUARY 7, 1936, 15 COMP. GEN. 588, COPY OF WHICH IS INCLOSED FOR YOUR USE. NOTE PARTICULARLY THE PORTIONS OF SAID DECISION READING AS FOLLOWS:

NEITHER THE REVENUE LAW NOR THE REGULATIONS OF THE COMMISSIONER APPEAR TO BE MANDATORY UPON THE SELLER SO FAR AS SALES TO THE UNITED STATES ARE CONCERNED, THAT IS TO SAY, UNDER SAID LAW AND REGULATIONS SUCH SALES MAY BE MADE WITHOUT PAYMENT OF THE TAX THEREON OR THE TAX MAY BE PAID AND REFUND CLAIMED. THE LAW PROVIDES THAT "UNDER REGULATIONS ISSUED BY THE COMMISSIONER" NO TAX SHALL BE IMPOSED. THE REGULATIONS ISSUED BY THE COMMISSIONER PLACE UPON THE MANUFACTURER THE ENTIRE RESPONSIBILITY OF ESTABLISHING THE FACTS ENTITLING HIM TO CREDIT OR REFUND. IT APPEARS THAT BOTH THE LAW AND THE REGULATIONS LEAVE A BIDDER, MANUFACTURER, OR OTHERWISE, FREE TO INCLUDE OR EXCLUDE THE AMOUNT OF THE TAX IN SUBMITTING BIDS TO THE GOVERNMENT, SUBJECT TO THE PROVISION THAT IF THE BID EXCLUDES THE TAX, THE CONTRACTOR MAY COMPLY WITH THE COMMISSIONER'S REGULATIONS AND OBTAIN RELIEF THEREFROM, WHILE IF THE PRICE INCLUDES THE TAX HE, OF COURSE, WOULD NOT BE ENTITLED TO RELIEF. IT WOULD APPEAR FURTHER THAT SO FAR AS THE GOVERNMENT IS CONCERNED, THE NET RESULT IS THE SAME IN EITHER EVENT. THAT IS TO SAY, THE EXCLUSION OF THE TAX IN PRICES BID TO THE GOVERNMENT WOULD RESULT IN CONSERVING APPROPRIATED FUNDS FOR THE DEPARTMENT INVOLVED WHILE TREASURY RECEIPTS WOULD BE DIMINISHED BY THE AMOUNT OF THE TAX, WHEREAS INCLUSION OF THE TAX WOULD INCREASE THE CHARGE UNDER THE APPROPRIATION INVOLVED WITH A CORRESPONDING INCREASE IN TREASURY RECEIPTS.

* * * IT WOULD SEEM, THEREFORE, BOTH IN THE INTERESTS OF THE CONTRACTOR AND THE UNITED STATES THAT IT BE DEFINITELY ESTABLISHED IN EVERY INSTANCE THAT THE TAX HAS OR HAS NOT BEEN INCLUDED IN THE BID PRICE, AS THE CASE MAY BE. HOWEVER, THE ULTIMATE RESULT WILL BE THE SAME IN EITHER EVENT. THE BID PRICE INCLUDED THE TAX THE CONTRACT PRICE SHOULD BE PAID BUT NO REPRESENTATIVE OF A DEPARTMENT OR AGENCY OF THE GOVERNMENT SHOULD MAKE ANY AFFIDAVIT OR STATEMENT WHEREBY A CONTRACTOR MAY OBTAIN RELIEF. IF, ON THE OTHER HAND, IT BE ESTABLISHED THAT THE TAX WAS EXCLUDED IN SUBMISSION OF THE BID, THE CONTRACTOR WOULD BE ENTITLED UPON ESTABLISHMENT OF THAT FACT, TO CLAIM A REFUND FROM THE COMMISSIONER OF INTERNAL REVENUE.

* * * NO ADJUSTMENT IN PRICE BY REASON OF THE INCLUSION OF THE TAX IN CONNECTION WITH DELIVERIES OF MATERIAL ON OR AFTER OCTOBER 1, 1935, ON CONTRACTS BASED ON BIDS OPENED PRIOR TO AUGUST 30, 1935, APPEARS NECESSARY. WHERE A BIDDER IN SUBMITTING A BID CERTIFIED THAT THE PRICES INCLUDED FEDERAL TAX, PAYMENT SHOULD BE MADE AT THE CONTRACT PRICE AND NO POSSIBLE UNDERTAKING TO OBTAIN RELIEF FROM THE TAXES SHOULD BE CONSIDERED.

SEE, ALSO, DECISION OF FEBRUARY 3, 1936, A-69751, 15 COMP. GEN. 686.

ALL OF THE VOUCHERS SUBMITTED APPEAR TO INVOLVE PURCHASE FROM RETAILERS AND NOT FROM MANUFACTURERS OR PRODUCERS--- THE PURCHASES COVERING REPAIR PARTS, EQUIPMENT, ETC., FOR AUTOMOBILES.

TWO OF THE PURCHASES COVERED BY THE VOUCHERS REFERRED TO ARE SHOWN TO HAVE BEEN MADE UNDER CONTRACT IBM-722, AND ONE VOUCHER COVERS A PURCHASE UNDER CONTRACT TPS-7808, BOTH OF WHICH CONTRACTS STIPULATE THAT THE PRICES THEREIN STATED INCLUDE THE FEDERAL EXCISE TAX. THE REMAINING VOUCHERS COVER PURCHASES MADE IN THE OPEN MARKET.

IN VIEW OF THE DECISIONS HEREINBEFORE CITED AND THE TERMS OF THE CONTRACTS INVOLVED AND IT NOT APPEARING THAT ANY OF THE PRICES CHARGED INCLUDED A FEDERAL EXCISE TAX PAID BY THE CONTRACTOR AND FOR WHICH REFUND COULD BE OBTAINED, PAYMENT OF THE CONTRACT PRICES IS AUTHORIZED, IF OTHERWISE CORRECT, AND EXEMPTION CERTIFICATES SHOULD NOT BE ISSUED TO THE VENDORS.