A-94125, APRIL 22, 1938, 17 COMP. GEN. 863

A-94125: Apr 22, 1938

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IS MERELY A PERSONAL TAX ON THE PRIVILEGE OF DOING BUSINESS WITHIN THE STATE MEASURED BY THE GROSS RECEIPTS FROM SALES FOR DELIVERY WITHIN THE STATE. THERE IS NO OBJECTION TO THE CONSIDERATION OF A BID STIPULATING THAT DELIVERIES WITHIN THE STATE "WILL BE SUBJECT TO THE ADDITION OF 3 PERCENT RETAILER'S OCCUPATIONAL TAX TO THE PRICES SHOWN.'. AS FOLLOWS: THERE IS ENCLOSED COPY OF BID OF VALENTINE LABORATORIES. ATTENTION IS INVITED TO THE NOTATION ON PAGE 4 OF THE BID AS FOLLOWS: "ALL ITEMS FOR DELIVERY TO THE U.S. GOVERNMENT WITHIN THE STATE OF ILLINOIS WILL BE SUBJECT TO THE ADDITION OF 3 PERCENT RETAILER'S OCCUPATIONAL TAX TO THE PRICES SHOWN.'. THERE IS ENCLOSED ALSO COPY OF "REVISED RULE 40" ISSUED BY THE DEPARTMENT OF FINANCE.

A-94125, APRIL 22, 1938, 17 COMP. GEN. 863

TAXES - STATE - RETAILER'S - INCLUSION IN BID PRICE THE RETAILER'S OCCUPATIONAL TAX OF THE STATE OF ILLINOIS NOT IMPOSING A TAX ON THE UNITED STATES OR OTHER PURCHASERS, NOT AUTHORIZING OR REQUIRING RETAILERS TO INCREASE THE COST OF TANGIBLE PERSONAL PROPERTY SOLD TO THE UNITED STATES OR OTHER PURCHASERS, IS MERELY A PERSONAL TAX ON THE PRIVILEGE OF DOING BUSINESS WITHIN THE STATE MEASURED BY THE GROSS RECEIPTS FROM SALES FOR DELIVERY WITHIN THE STATE, AND THERE IS NO OBJECTION TO THE CONSIDERATION OF A BID STIPULATING THAT DELIVERIES WITHIN THE STATE "WILL BE SUBJECT TO THE ADDITION OF 3 PERCENT RETAILER'S OCCUPATIONAL TAX TO THE PRICES SHOWN.'

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, APRIL 22, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 8, 1938, AS FOLLOWS:

THERE IS ENCLOSED COPY OF BID OF VALENTINE LABORATORIES, INC., CHICAGO, ILLINOIS, DATED MARCH 29, 1938, TO SUPPLY THE VETERANS' ADMINISTRATION CERTAIN DRUGS, AND ATTENTION IS INVITED TO THE NOTATION ON PAGE 4 OF THE BID AS FOLLOWS:

"ALL ITEMS FOR DELIVERY TO THE U.S. GOVERNMENT WITHIN THE STATE OF ILLINOIS WILL BE SUBJECT TO THE ADDITION OF 3 PERCENT RETAILER'S OCCUPATIONAL TAX TO THE PRICES SHOWN.'

THERE IS ENCLOSED ALSO COPY OF "REVISED RULE 40" ISSUED BY THE DEPARTMENT OF FINANCE, STATE OF ILLINOIS RELATIVE TO SALES TO OR BY THE UNITED STATES GOVERNMENT.

PLEASE ADVISE AT THE EARLIEST POSSIBLE DATE WHETHER THE 3 PERCENT RETAILER'S OCCUPATIONAL TAX MAY BE ADDED TO THE PRICES QUOTED BY VALENTINE LABORATORIES, INC., FOR SUPPLYING THOSE ITEMS TO BE DELIVERED IN THE STATE OF ILLINOIS AND THE BID CONSIDERED ACCORDINGLY.

KINDLY RETURN THE ENCLOSURES WITH YOUR REPLY.

IT IS UNDERSTOOD THAT THERE IS NOTHING IN THE RETAILER'S OCCUPATIONAL TAX OF THE STATE OF ILLINOIS THAT IMPOSES A TAX ON THE UNITED STATES OR OTHER PURCHASERS OR DOES IT AUTHORIZE OR REQUIRE RETAILERS TO INCREASE THE COST OF TANGIBLE PERSONAL PROPERTY SOLD TO THE UNITED STATES OR OTHER PURCHASERS. (SEE REVISED RULE 40, JANUARY 27, 1938, STATE OF ILLINOIS, DEPARTMENT OF FINANCE.) IT IS NOT A TAX ON THE SALES BUT A PERSONAL TAX ON THE PRIVILEGE OF DOING BUSINESS WITHIN THE STATE MEASURED BY THE GROSS RECEIPTS FROM SALES FOR DELIVERY WITHIN THE STATE.

THE FACT THAT PERSONS ENGAGED IN THE BUSINESS OF SELLING TANGIBLE PERSONAL PROPERTY AT RETAIL ARE REQUIRED BY THE STATE OF ILLINOIS TO PAY A TAX WITH RESPECT TO RECEIPTS FROM SUCH BUSINESS, INCLUDING RECEIPTS FROM SALES TO THE UNITED STATES GOVERNMENT FOR DELIVERY WITHIN THE STATE, AND THAT, BY REASON THEREOF, THE DEALER MAY, AS IN THIS INSTANCE, QUOTE A HIGHER PRICE TO THE GOVERNMENT FOR DELIVERIES WITHIN THE STATE THAN FOR DELIVERIES TO POINTS NOT WITHIN THE STATE DOES NOT PRECLUDE ACCEPTANCE OF THE BID AT SUCH HIGHER PRICE IT IS SHOULD BE THE LOWEST BID RECEIVED AND OTHERWISE ACCEPTABLE. SEE FIDELITY AND DEPOSIT CO. V. PENNSYLVANIA, 240 U.S. 319.

NOTWITHSTANDING THE STATE TAX ON THE BIDDER'S GROSS RECEIPTS FROM SALES FOR DELIVERY WITHIN THE STATE, THIS BIDDER COULD HAVE ELECTED TO QUOTE TO THE GOVERNMENT THE SAME PRICES FOR DELIVERIES WITHIN THE STATE AS FOR DELIVERIES TO POINTS NOT WITHIN THE STATE BUT IT COULD NOT BE REQUIRED TO DO SO; AND SINCE IT ELECTED TO QUOTE FOR DELIVERIES WITHIN THE STATE PRICES 3 PERCENT HIGHER THAN THE PRICES FOR DELIVERIES NOT WITHIN THE STATE, ITS BID IS FOR CONSIDERATION ON THAT BASIS AND THE AMOUNT OF THE INCREASE IS NOT TO BE REGARDED AS THE AMOUNT OF A "TAX IMPOSED UPON THE PURCHASE OR SALE" WITHIN THE PURVIEW OF PARAGRAPH 3 OF THE GENERAL CONDITIONS ATTACHED TO THE BID.

THE QUESTION PRESENTED IS ANSWERED ACCORDINGLY.