B-111174, SEPTEMBER 30, 1952, 32 COMP. GEN. 155

B-111174: Sep 30, 1952

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1952: REFERENCE IS MADE TO YOUR LETTER OF JULY 30. SINCE THE POSSESSORY INTEREST TAX HERE INVOLVED APPEARS TO BE IN THE NATURE OF A PROPERTY TAX AND HENCE WOULD HAVE BEEN A REIMBURSABLE COST ITEM UNDER THE CONTRACT. WHICH WAS ENCLOSED WITH YOUR LETTER. IS RETURNED HEREWITH. YOU ARE ADVISED THAT PAYMENT THEREOF IS AUTHORIZED.

B-111174, SEPTEMBER 30, 1952, 32 COMP. GEN. 155

CONTRACTS - REIMBURSEMENT OF LITIGATION EXPENSES UNDER A CONTRACT PROVISION OBLIGATING THE GOVERNMENT TO REIMBURSE THE CONTRACTOR FOR THE COST OF PROPERTY TAXES AND REAL PROPERTY ASSESSMENTS, POSSESSORY INTEREST TAX ASSESSED BY A STATE MAY BE REGARDED AS A PROPERTY TAX AND THE COST OF ATTORNEY'S FEES INCURRED BY THE CONTRACTOR IN RESISTING AND ELIMINATING SAID TAX, PURSUANT TO A SUPPLEMENT TO THE CONTRACT PROVIDING FOR REIMBURSEMENT OF THE COST OF ELIMINATING SUCH TAX, MAY BE REIMBURSED TO THE CONTRACTOR.

COMPTROLLER GENERAL WARREN TO SYDNEY LANDAU, DEPARTMENT OF STATE, SEPTEMBER 30, 1952:

REFERENCE IS MADE TO YOUR LETTER OF JULY 30, 1952, REQUESTING A DECISION AS TO THE PROPRIETY OF REIMBURSING THE COLUMBIA BROADCASTING SYSTEM, INCORPORATED, UNDER CONTRACT NO. SCC-881, FOR ATTORNEY'S FEES AMOUNTING TO $816, INCURRED BY THAT CONCERN IN EFFECTING THE ELIMINATION OF AN ALLEGED POSSESSORY INTEREST TAX IN THE TOTAL AMOUNT OF $5,655.02 ASSESSED BY THE STATE OF CALIFORNIA.

UNDER THE PROVISIONS OF THE CONTRACT AND THE VARIOUS SUPPLEMENTS EXTENDING THE PERIOD THEREOF THE GOVERNMENT AGREED TO REIMBURSE THE CONTRACTOR FOR THE COST OF PROPERTY TAXES AND REAL PROPERTY ASSESSMENTS. SINCE THE POSSESSORY INTEREST TAX HERE INVOLVED APPEARS TO BE IN THE NATURE OF A PROPERTY TAX AND HENCE WOULD HAVE BEEN A REIMBURSABLE COST ITEM UNDER THE CONTRACT, THE ELIMINATION THEREOF OBVIOUSLY RESULTED IN A DIRECT BENEFIT TO THE GOVERNMENT BY REDUCING THE COST OF PERFORMING THE CONTRACT. IN VIEW THEREOF, AND SINCE THE REPORTED INCLUSION IN SUPPLEMENT H TO CONTRACT SCC-881 OF THE PROVISION FOR REIMBURSEMENT OF THE COST OF ELIMINATING SUCH TAX OBVIOUSLY REFLECTS AN ADMINISTRATIVE DETERMINATION THAT IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO RESIST SUCH TAX RATHER THAN TO PAY SAME, AND THE COLUMBIA BROADCASTING SYSTEM CLEARLY INCURRED THE LEGAL FEES INVOLVED AT THE REQUEST OF THE GOVERNMENT, IT APPEARS THAT SUCH FEES PROPERLY MAY BE REGARDED AS REIMBURSABLE UNDER THE CONTRACT. SEE 23 COMP. GEN. 439; AND 22 ID. 109.

ACCORDINGLY, THE BILLING SUBMITTED BY THE COLUMBIA BROADCASTING SYSTEM, INCORPORATED, WHICH WAS ENCLOSED WITH YOUR LETTER, IS RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT THEREOF IS AUTHORIZED, IF OTHERWISE CORRECT.