B-126259, FEB. 28, 1956

B-126259: Feb 28, 1956

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THE REGULATION UNDER CONSIDERATION WILL PROVIDE FOR THE ACCEPTANCE OF FORMS 1094 ONLY IN THOSE CASES OF A MINIMUM SALE OF 500 GALLONS. - THERE IS HEREBY LEVIED A PRIVILEGE OR EXCISE TAX OF SIX AND ONE-HALF (6 1/2) CENTS ON EACH GALLON OF MOTOR FUEL AS DEFINED IN THIS ACT SOLD OR USED IN THIS STATE. IT IS CLEAR FROM THE ABOVE-QUOTED SECTION THAT THE UNITED STATES GOVERNMENT AND ITS INSTRUMENTALITIES ARE SPECIFICALLY EXEMPTED BY STATE LAW FROM THE PAYMENT OF THE MOTOR FUEL TAXES LEVIED BY SECTION 75-1106. IT IS OUR VIEW THAT THE PROPOSED REGULATION WOULD BE CONTRARY TO THE SPECIFIC PROVISIONS OF THE STATE LAW WHICH EXEMPTS THE UNITED STATES GOVERNMENT AND ITS INSTRUMENTALITIES FROM THE PAYMENT OF THE MOTOR FUEL TAX.

B-126259, FEB. 28, 1956

TO HONORABLE J. ORVILLE CHENEY, COMMISSIONER OF REVENUES, DEPARTMENT OF REVENUES:

YOUR LETTER OF NOVEMBER 30, 1955, REQUESTS OUR CONSIDERATION OF A PROPOSED REGULATION FOR THE COLLECTION FROM THE UNITED STATES GOVERNMENT OF STATE MOTOR FUEL TAXES.

YOU SAY THE STATE OF ARKANSAS FOR MANY YEARS HAS EXEMPTED THE UNITED STATES GOVERNMENT AND ALL OF ITS INSTRUMENTALITIES FROM PAYMENT OF THE STATE GASOLINE TAX. YOUR POLICY HAS BEEN TO ACCEPT FORMS 1094 ISSUED BY OUR OFFICE TO THE DIFFERENT AGENCIES REGARDLESS OF THE NUMBER OF GALLONS LISTED ON THE FORM. THEREFORE, YOU ACCEPT FORMS 1094 FOR SALES AT SERVICE STATIONS AS WELL AS FOR SALES OF LARGER QUANTITIES MADE FROM TANK TRUCKS. THE REGULATION UNDER CONSIDERATION WILL PROVIDE FOR THE ACCEPTANCE OF FORMS 1094 ONLY IN THOSE CASES OF A MINIMUM SALE OF 500 GALLONS, BY THE OIL COMPANY TO AN AGENCY OF THE UNITED STATES GOVERNMENT, DELIVERED BY TANK TRUCK TO THE AGENCY'S STORAGE TANK ON THE BASIS OF A ONE TIME AND ONE PLACE DELIVERY.

SECTION 75-1106 OF THE ARKANSAS STATUTES 1947, RELATING TO THE PAYMENT OF MOTOR FUEL TAXES, PROVIDES IN PERTINENT PART AS FOLLOWS:

"75-1106. LEVY OF TAX AND EXEMPTIONS.--- THERE IS HEREBY LEVIED A PRIVILEGE OR EXCISE TAX OF SIX AND ONE-HALF (6 1/2) CENTS ON EACH GALLON OF MOTOR FUEL AS DEFINED IN THIS ACT SOLD OR USED IN THIS STATE, OR PURCHASED FOR SALE OR USE IN THIS STATE, TO BE COMPUTED IN THE MANNER HEREINAFTER SET FORTH; PROVIDED, HOWEVER, THAT THE TAX SHALL NOT BE COLLECTED UPON OR WITH RESPECT TO THE FOLLOWING TRANSACTIONS:

"C. THE SALE OF MOTOR FUEL TO THE UNITED STATES OF AMERICA OR ANY OF ITS INSTRUMENTALITIES.'

IT IS CLEAR FROM THE ABOVE-QUOTED SECTION THAT THE UNITED STATES GOVERNMENT AND ITS INSTRUMENTALITIES ARE SPECIFICALLY EXEMPTED BY STATE LAW FROM THE PAYMENT OF THE MOTOR FUEL TAXES LEVIED BY SECTION 75-1106. THEREFORE, IT IS OUR VIEW THAT THE PROPOSED REGULATION WOULD BE CONTRARY TO THE SPECIFIC PROVISIONS OF THE STATE LAW WHICH EXEMPTS THE UNITED STATES GOVERNMENT AND ITS INSTRUMENTALITIES FROM THE PAYMENT OF THE MOTOR FUEL TAX. ACCORDINGLY, IN ORDER TO ACCOMPLISH THE PURPOSE DESIRED BY THE PROPOSED REGULATION, IT WOULD BE NECESSARY THAT THE PROVISION IN SECTION 75-1106 WHICH EXEMPTS "THE SALE OF MOTOR FUEL TO THE UNITED STATES OF AMERICA OR ANY OF ITS INSTRUMENTALITIES" BE MODIFIED TO REFLECT THE CHANGE CONTEMPLATED BY THE PROPOSED REGULATION.

CONCERNING THE PAYMENT OF STATE GASOLINE TAXES GENERALLY, OUR OFFICE HAS HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY FOR GASOLINE PROCURED IN A STATE AT A PRICE INCLUSIVE OF THE GASOLINE TAX IMPOSED BY THAT STATE RESTS UPON A DETERMINATION OF WHETHER THE INCIDENCE OF THE TAX IS ON THE VENDOR OR ON THE VENDEE. WHERE THE INCIDENCE OF THE TAX IS ON THE VENDOR, THE UNITED STATES HAS NO RIGHT--- APART FROM STATES STATUTES OR REGULATIONS PROMULGATED THEREUNDER BY STATE AUTHORITIES--- TO PURCHASE GASOLINE WITHIN THE TERRITORIAL JURISDICTION OF THE STATE ON A TAX FREE BASIS. SEE ALABAMA V. KING AND BOOZER, 314 U.S. 1, AND 24 COMP. GEN. 150. ON THE OTHER HAND, WHERE THE INCIDENCE OF THE TAX IS ON THE VENDEE, THE UNITED STATES IN PURCHASING GASOLINE FOR OFFICIAL USE IS ENTITLED UNDER ITS CONSTITUTIONAL PREROGATIVES TO MAKE PURCHASES FREE FROM STATE TAXES AND TO RECOVER ANY AMOUNTS OF TAXES WHICH MAY HAVE BEEN PAID BY IT. SEE 33 COMP. GEN. 453.

THE ABOVE INFORMATION IS FURNISHED FOR CONSIDERATION IN ANY CHANGES PROPOSED IN THE PRESENT EXEMPTION PROVISIONS OF SECTION 75-1106 OF THE STATE STATUTES.