B-10017, MAY 11, 1940, 19 COMP. GEN. 921

B-10017: May 11, 1940

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TAXES - STATE - FEDERAL LIABILITY THE UNITED STATES IS NOT LIABLE FOR PAYMENT OF ANY TAX IMPOSED BY A STATE DIRECTLY ON THE SALE OR USE OF SUPPLIES OR EQUIPMENT PURCHASED BY OR FOR THE USE OF THE FEDERAL GOVERNMENT. IF BIDS CANNOT BE OBTAINED EXCLUSIVE OF STATE TAXES WHICH ARE NOT PROPERLY CHARGEABLE TO THE GOVERNMENT. - REVISED) FOR EACH PURCHASE UPON WHICH SUCH A TAX CHARGE IS MADE. 1940: I HAVE YOUR LETTER OF MAY 3. WHICH WERE OPENED APRIL 9. IN RESPONSE THERETO ONE BID ONLY WAS RECEIVED. THE BID WAS ACCOMPANIED BY LETTER DATED APRIL 4. ARE PAID BY THE CONTRACTOR ON THE SALE OR DELIVERY OF ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR. THE AMOUNT OF SUCH TAXES OR OTHER CHARGES IS TO BE ADDED TO THE PRICE NAMED IN THIS BID. * * *" IN ADDITION TO THE EXCERPTS QUOTED ABOVE.

B-10017, MAY 11, 1940, 19 COMP. GEN. 921

TAXES - STATE - FEDERAL LIABILITY THE UNITED STATES IS NOT LIABLE FOR PAYMENT OF ANY TAX IMPOSED BY A STATE DIRECTLY ON THE SALE OR USE OF SUPPLIES OR EQUIPMENT PURCHASED BY OR FOR THE USE OF THE FEDERAL GOVERNMENT, BUT IF BIDS CANNOT BE OBTAINED EXCLUSIVE OF STATE TAXES WHICH ARE NOT PROPERLY CHARGEABLE TO THE GOVERNMENT, CONTRACT MAY BE AWARDED AT A PRICE WHICH INCLUDES THE TAX, PROVIDING THE BIDDER AGREES TO FURNISH A TAX EXEMPTION CERTIFICATE ( FORM 1094--- REVISED) FOR EACH PURCHASE UPON WHICH SUCH A TAX CHARGE IS MADE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, MAY 11, 1940:

I HAVE YOUR LETTER OF MAY 3, 1940, AS FOLLOWS:

UNDER DATE OF MARCH 30, 1940, THE PROCUREMENT DIVISION ISSUED SUPPLEMENTAL SPECIFICATIONS AND PROPOSALS FOR COMPUTING MACHINES UNDER CLASS 54 OF THE GENERAL SCHEDULE OF SUPPLIES FOR THE PERIOD APRIL 20 TO JULY 31, 1940, WHICH WERE OPENED APRIL 9, 1940, AND IN RESPONSE THERETO ONE BID ONLY WAS RECEIVED, HAVING BEEN SUBMITTED BY THE FELT AND TARRANT MANUFACTURING COMPANY, 1735 NORTH PAULINA STREET, CHICAGO, ILLINOIS.

THE BID WAS ACCOMPANIED BY LETTER DATED APRIL 4, 1940, IN PERTINENT PART AS FOLLOWS:

"* * * PRICE LIST "A" INCLUDES DELIVERY TO ANY POINT IN THE CONTINENTAL UNITED STATES, EXCEPT ILLINOIS; PRICE LIST "B" APPLIES TO DELIVERIES MADE WITHIN THE STATE OF ILLINOIS AND INCLUDES THE ILLINOIS RETAILERS' OCCUPATIONAL TAX.

"IF ANY SALES TAX, OCCUPATIONAL TAX, OR OTHER TAXES OR CHARGES, IMPOSED BY ANY STATE DIRECTLY UPON THE SALE OR DELIVERY TO THE UNITED STATES GOVERNMENT OF SUPPLIES COVERED BY THIS BID, ARE PAID BY THE CONTRACTOR ON THE SALE OR DELIVERY OF ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR, THE AMOUNT OF SUCH TAXES OR OTHER CHARGES IS TO BE ADDED TO THE PRICE NAMED IN THIS BID. * * *"

IN ADDITION TO THE EXCERPTS QUOTED ABOVE, PRICE LIST "A" ALSO PROVIDES THAT " STATE SALES OR USE TAXES, IF ANY, ARE EXTRA.'

IN TELEGRAM OF APRIL 15, 1940, CONFIRMED BY LETTER OF THE SAME DATE, THE FELT AND TARRANT MANUFACTURING COMPANY ADVISED AS FOLLOWS:

"DELETE PARAGRAPH THREE OUR TRANSMITTAL LETTER APRIL 4 AND SUBSTITUTE THEREFOR "SALES OR USE TAXES IMPOSED BY STATES UPON SALES COVERED BY THIS BID AND REQUIRED TO BE COLLECTED BY THE CONTRACTOR ARE EXTRA.'"

IN VIEW OF YOUR DECISION OF JULY 1, 1939, 19 C.G. 1, INVOLVING THE CALIFORNIA STATE TAX, AND OTHER SIMILAR DECISIONS, THE PROCUREMENT DIVISION IS IN DOUBT AS TO WHETHER THE BID OF THE FELT AND TARRANT MANUFACTURING COMPANY WITH THE CONDITIONS, SUPRA, CONTAINED THEREIN, MAY BE ACCEPTED.

THERE IS ENCLOSED HEREWITH THE BID OF THE FELT AND TARRANT MANUFACTURING COMPANY, TOGETHER WITH THE PERTINENT PAPERS, AND IT IS REQUESTED THAT YOU ADVISE WHETHER OR NOT THE SAID BID, AS CONDITIONED, IS PROPER FOR ACCEPTANCE. IF YOUR DECISION IS TO THE EFFECT THAT THE BID AS CONDITIONED IS NOT PROPER FOR ACCEPTANCE, IT WOULD BE APPRECIATED IF YOU WOULD ADVISE WHAT PROVISION, IF ANY, WOULD BE ACCEPTABLE TO THE GENERAL ACCOUNTING OFFICE WITH RESPECT TO SAID TAXES.

YOUR PROMPT REPLY WITH A RETURN OF THE PAPERS IS REQUESTED.

THIS OFFICE DOES NOT RECOGNIZE ANY LIABILITY ON THE PART OF THE UNITED STATES FOR THE PAYMENT OF THE AMOUNT OF ANY TAX IMPOSED BY A STATE DIRECTLY ON THE SALE OR USE OF SUPPLIES OR EQUIPMENT PURCHASED BY OR FOR THE USE OF THE FEDERAL GOVERNMENT. 18 COMP. GEN. 832; 19 ID. 1; 19 ID. 822. HOWEVER, THE OBVIOUS FACT MAY NOT BE OVERLOOKED THAT A DEALER IN SUCH SUPPLIES OR EQUIPMENT CANNOT BE COMPELLED TO SELL THE SAME TO THE UNITED STATES EXCEPT UPON SUCH TERMS AND CONDITIONS AS HE MAY SEE FIT TO PRESCRIBE. CONSEQUENTLY, WHEN, IN RESPONSE TO AN INVITATION, NO BID EXCLUSIVE OF THE TAX IS RECEIVED AND THE AWARDING OF A CONTRACT IS NECESSARY, IT APPEARS THAT THE INTERESTS OF THE UNITED STATES WOULD BE ADEQUATELY PROTECTED BY FOLLOWING THE PROCEDURE STATED IN GENERAL REGULATIONS NO. 86--- REVISED OF THIS OFFICE, IN CASES WHERE THE BID PRICE INCLUDES A STATE TAX NOT PROPERLY CHARGEABLE TO THE GOVERNMENT, THE SAME AS IN THE CASE OF PURCHASES MADE IN THE OPEN MARKET.

THEREFORE, SINCE IT HAS DEVELOPED IN THE SOLICITATION OF BIDS IN THE INSTANT MATTER THAT YOUR DEPARTMENT IS UNABLE TO OBTAIN A QUOTATION OF A PRICE WHICH IS IN FACT EXCLUSIVE OF STATE SALES OR USE TAXES, YOU ARE ADVISED THAT THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO THE CONSIDERATION OF THE ONLY BID SUBMITTED AND THE AWARDING OF A CONTRACT TO THE FELT AND TARRANT MFG. CO., PROVIDING THE BIDDER WILL AGREE TO EXECUTE AND DELIVER A TAX EXEMPTION CERTIFICATE ( FORM 1094--- REVISED) FOR EACH PURCHASE MADE UNDER THE CONTRACT UPON WHICH A CHARGE IS MADE ON ACCOUNT OF A STATE SALES OR USE TAX.