B-121782, APR 18, 1955

B-121782: Apr 18, 1955

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UNITED STATES FOREST SERVICE: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 6. A COPY OF WHICH WAS TRANSMITTED WITH YOUR LETTER. WAS EXTENSIVELY REVISED. ONE OF SEVERAL PROVISIONS REPEALED WAS SECTION 73-1308. SECTION 73-1303 WAS AMENDED TO READ. THERE IS HEREBY LEVIED AND SHALL BE COLLECTED BY THE TAX COMMISSION *** ANNUAL PRIVILEGE TAXES MEASURED BY THE AMOUNT OR VOLUME OF BUSINESS DONE BY THE PERSONS ON ACCOUNT OF THEIR BUSINESS ACTIVITIES AND IN THE AMOUNTS TO BE DETERMINED BY THE APPLICATION OF RATES AGAINST VALUES. YOUR ATTENTION IS INVITED TO DECISION OF TODAY. A COPY OF WHICH IS ENCLOSED. HOLDING IN A SIMILAR CASE THAT THE LEGAL INCIDENCE OF THE TAX IN QUESTION IS ON THE VENDOR.

B-121782, APR 18, 1955

PRECIS-UNAVAILABLE

L. W. DARBY, UNITED STATES FOREST SERVICE:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 6, 1954, FORWARDING TWO VOUCHERS, WITH SUPPORTING INVOICES, AND REQUESTING ADVANCE DECISION AS TO WHETHER YOU MAY PROPERLY CERTIFY EITHER OR BOTH OF THE VOUCHERS FOR PAYMENT. ONE OF THE VOUCHERS, IN FAVOR OF BABBITT BROTHERS TRADING COMPANY, FLAGSTAFF, ARIZONA, IN THE AMOUNT OF $2.75, INCLUDES AN ITEM OF FIVE CENTS DESIGNATED "STATE SALES TAX" ON THE INVOICE COVERING AN OPEN MARKET PURCHASE OF SUPPLIES IN ARIZONA. THE OTHER VOUCHER COVERS A RECLAIM BY STANDARD OIL COMPANY OF CALIFORNIA OF "SALES TAX" ITEMS TOTALLING $1.89 ADMINISTRATIVELY DELETED FROM PREVIOUS BILLINGS FOR DELIVERIES OF FUEL OIL AND KEROSENE WITHIN THE STATE OF ARIZONA UNDER CONTRACT NO. GS-09S-1217, DATED JUNE 23, 1954.

BY A 1954 ACT OF THE ARIZONA LEGISLATURE, A COPY OF WHICH WAS TRANSMITTED WITH YOUR LETTER, THE ARIZONA EXCISE REVENUE ACT OF 1935, SECTIONS 73-1301 TO 73-1334, ARIZONA CODE OF 1939, WAS EXTENSIVELY REVISED. ONE OF SEVERAL PROVISIONS REPEALED WAS SECTION 73-1308, WHICH HAD EXEMPTED SALES MADE TO THE UNITED STATES GOVERNMENT FROM THE TAX IMPOSED BY THE EXCISE REVENUE ACT. SECTION 73-1303 WAS AMENDED TO READ, IN PERTINENT PART, AS FOLLOWS:

"FROM AND AFTER THE EFFECTIVE DATE OF THIS ACT, THERE IS HEREBY LEVIED AND SHALL BE COLLECTED BY THE TAX COMMISSION *** ANNUAL PRIVILEGE TAXES MEASURED BY THE AMOUNT OR VOLUME OF BUSINESS DONE BY THE PERSONS ON ACCOUNT OF THEIR BUSINESS ACTIVITIES AND IN THE AMOUNTS TO BE DETERMINED BY THE APPLICATION OF RATES AGAINST VALUES, GROSS PROCEEDS OF SALES, OR GROSS INCOME, AS THE CASE MAY BE, IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:

"(B) AT AN AMOUNT EQUAL TO ONE PER CENT OF THE GROSS PROCEEDS OF SALES OR GROSS INCOME FROM THE BUSINESS UPON EVERY PERSON ENGAGING OR CONTINUING WITHIN THIS STATE IN THE FOLLOWING BUSINESSES:

"1. *** PRODUCING FOR SALE, PROFIT, OR COMMERCIAL USE ANY OIL ***

"(C) AT AN AMOUNT EQUAL TO TWO PER CENT OF THE GROSS PROCEEDS OF SALES OR GROSS INCOME FROM THE BUSINESS UPON EVERY PERSON ENGAGING OR CONTINUING WITHIN THIS STATE IN THE FOLLOWING BUSINESSES:

"1. SELLING ANY TANGIBLE PERSONAL PROPERTY WHATSOEVER AT RETAIL ***."

WITH REGARD TO THE VOUCHER COVERING THE OPEN MARKET PURCHASE OF SUPPLIES, YOUR ATTENTION IS INVITED TO DECISION OF TODAY, B-122839, A COPY OF WHICH IS ENCLOSED, HOLDING IN A SIMILAR CASE THAT THE LEGAL INCIDENCE OF THE TAX IN QUESTION IS ON THE VENDOR, BUT THAT, IN THE EVENT IT IS DETERMINED THAT THE VENDOR REGULARLY SELLS TO THE GENERAL PUBLIC AT A SPECIFIED PRICE PLUS A TWO PERCENT CHARGE FOR "TAX," PAYMENT OF THE "TAX" CHARGE WOULD BE PROPER. ACCORDINGLY, THE VOUCHER IN FAVOR OF BABBITT BROTHERS TRADING COMPANY MAY BE CERTIFIED FOR PAYMENT IF THE INDICATED DETERMINATION IS MADE AND THE VOUCHER IS OTHERWISE CORRECT.

WITH REGARD TO THE VOUCHER IN FAVOR OF STANDARD OIL COMPANY OF CALIFORNIA, THE QUESTION ARISES AS TO WHETHER PAYMENT OF THE AMOUNT CLAIMED AS "TAX" MAY BE MADE UNDER PARAGRAPH 19 OF GSA FORM 281(C), MADE A PART OF CONTRACT NO. GS-098-1217, WHICH PROVIDES THAT IF, AFTER THE CONTRACT DATE, THE STATE GOVERNMENT IMPOSES OR INCREASES ANY APPLICABLE DIRECT TAX WHICH THE CONTRACTOR IS OBLIGED TO BEAR, THE CONTRACT PRICE SHALL BE CORRESPONDINGLY INCREASED. A "DIRECT TAX" IS DEFINED AS INCLUDING, AMONG OTHER THINGS, ANY TAX MEASURED BY SALES OR RECEIPTS FROM SALES. "CONTRACT DATE" IS DEFINED AS THE DATE SET FOR OPENING OF BIDS (IN THIS CASE, JUNE 7, 1954) WHERE THE CONTRACT IS AWARDED AS A RESULT OF FORMAL ADVERTISING.

THE TAX IN QUESTION IS MEASURED BY RECEIPTS FROM SALES AND, THE LEGAL INCIDENCE OF THE TAX BEING ON THE VENDOR, IT IS A "DIRECT TAX" WITHIN THE MEANING OF PARAGRAPH 19 OF GSA FORM 281(C). THE QUESTION THEN REMAINS WHETHER THE TAX MAY BE REGARDED AS HAVING BEEN IMPOSED AFTER THE CONTRACT DATE. PRIOR TO ITS REVISION IN 1954, THE ARIZONA EXCISE REVENUE ACT OF 1935 HAD IMPOSED A TAX WHICH WAS APPLICABLE TO SALES OF THIS CONTRACTOR BUT, AS STATED ABOVE, SALES TO THE UNITED STATES GOVERNMENT WERE EXCEPTED BY SECTION 73-1308 OF THE ARIZONA CODE. THEREFORE, THE DATE ON WHICH THE REPEAL OF THAT SECTION BECAME EFFECTIVE IS THE DATE ON WHICH THE TAX WAS IMPOSED ON THE PROCEEDS OF THE SALE IN QUESTION. THE ACT OF THE ARIZONA LEGISLATURE WHICH REPEALED SECTION 73-1308 WAS APPROVED BY THE GOVERNOR ON APRIL 9, 1954; HOWEVER, IT APPEARS THAT UNDER THE REFERENDUM PROVISIONS OF THE ARIZONA CONSTITUTION THE ACT, AS AN ORDINARY MEASURE, DID NOT BECOME "OPERATIVE" UNTIL JULY 9, 1954. ARTICLE 4, PART 1, SECTION 1(3), ARIZONA CONSTITUTION. THE COURTS OF ARIZONA APPEAR TO HAVE REGARDED THE TERM "OPERATIVE" AS SYNONOMOUS WITH "EFFECTIVE," AND IN CONSOLIDATED MOTORS V. SKOUSEN, 109 P.2D 41, 45, THE SUPREME COURT OF ARIZONA HELD THAT THE DATE OF "PASSAGE" OF AN ACT WAS THE DATE IT BECAME OPERATIVE UNDER THE REFERENDUM PROVISION AND NOT THE DATE OF APPROVAL BY THE GOVERNOR, ADDING "ONE MAY NOT ACT WITH SAFETY UNDER THE PROVISIONS OF ANY ACT UNTIL HE KNOWS THAT IT HAS BECOME EFFECTIVE, ESPECIALLY IF THERE IS A QUESTION AS TO WHETHER THAT EVENT WILL EVER OCCUR."

IN THE CASE OF COLEMAN V. SUPERIOR COURT IN AND FOR CALAVERAS COUNTY ET AL., 26 P. (2D) 672, INVOLVING THE REFERENDUM PROVISIONS OF THE CONSTITUTION OF THE STATE OF CALIFORNIA, WHICH IS SIMILAR TO THE PROVISIONS IN THE ARIZONA STATE CONSTITUTION, THE COURT STATED AT PAGE 674:

"WHILE WE READILY CONCEDE THAT ALL PERSONS ARE CHARGEABLE WITH KNOWLEDGE OF THE LAW, WE DO NOT PERCEIVE JUST HOW THEY CAN BE HELD CHARGEABLE WITH THE EXISTENCE OF AN ACT WHICH DOES NOT RISE TO THE DIGNITY OF LAW UNTIL A CERTAIN DATE. THE REFERENDUM PROVISIONS OF THE CONSTITUTION WHICH PREVENT AN ACT OF THE LEGISLATURE FROM RISING TO THE DIGNITY OF LAW, ARE DISTINGUISHABLE, WE THINK, FROM ACTS OF THE LEGISLATURE WHICH BECOME A LAW IMMEDIATELY UPON PASSAGE AND APPROVAL BY THE GOVERNOR, BUT WHICH CONTAINED PROVISIONS POSTPONING THE EFFECTIVE DATE THEREOF. IN THE FORMER CASE ONE CANNOT BE HELD CHARGEABLE WITH NOTICE OF THAT WHICH MAY NEVER BECOME A LAW, AND IN THE LATTER CASE, ALL PERSONS ARE HELD TO BE CHARGEABLE WITH THAT WHICH HAS BECOME A LAW, IRRESPECTIVE OF THE DATE DESIGNATED THEREIN WHEN IT SHALL BECOME EFFECTIVE."

IN THE LIGHT OF THE FOREGOING, THE TAX IN QUESTION MAY BE REGARDED AS HAVING BEEN IMPOSED AFTER THE CONTRACT DATE AND, UNDER PARAGRAPH 19 OF GSA FORM 281(C), A CORRESPONDING INCREASE IN THE CONTRACT PRICE IS AUTHORIZED. ACCORDINGLY, THE VOUCHER IN FAVOR OF STANDARD OIL COMPANY OF CALIFORNIA MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.

BOTH VOUCHERS ARE RETURNED HEREWITH.