B-128346, AUG. 8, 1956

B-128346: Aug 8, 1956

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POST OFFICE DEPARTMENT: REFERENCE IS MADE TO YOUR LETTER OF JUNE 20. ACCOMPANYING THE INVOICE ARE COPIES OF CIRCULAR LETTERS FROM THE STANDARD OIL COMPANY AND THE DEPARTMENT OF REVENUE OF THE STATE OF KENTUCKY RELATIVE TO RECENT LEGISLATION CONCERNING THE GASOLINE TAX. 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 THE DETERMINATION OF WHETHER THE INCIDENCE OF THE TAX IS ON THE VENDOR OR THE VENDEE. WHERE THE INCIDENCE OF THE TAX IS ON THE VENDOR. 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 PURCHASE FREE FROM STATE TAXES AND TO RECOVER ANY AMOUNTS TO SUCH TAXES WHICH MAY BE PAID BY IT.

B-128346, AUG. 8, 1956

TO MR. JOHN W. HALL, AUTHORIZED CERTIFYING OFFICER, POST OFFICE DEPARTMENT:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 20, 1956, TRANSMITTING A CERTIFIED INVOICE IN THE AMOUNT OF $21.40, INCLUDING THE STATE GASOLINE TAX, FROM THE RABE BROS. MOTOR COMPANY, VERSAILLES, KENTUCKY, FOR GASOLINE AND OIL FURNISHED THE POST OFFICE AT THAT PLACE DURING THE MONTH OF MAY 1956. ACCOMPANYING THE INVOICE ARE COPIES OF CIRCULAR LETTERS FROM THE STANDARD OIL COMPANY AND THE DEPARTMENT OF REVENUE OF THE STATE OF KENTUCKY RELATIVE TO RECENT LEGISLATION CONCERNING THE GASOLINE TAX. YOU REQUEST A DECISION AS TO THE PROPRIETY OF THE PAYMENT OF THE INVOICE, IN VIEW OF THE FACT THAT THE POST OFFICE DEPARTMENT HAS HITHERTO BEEN EXEMPT FROM PAYMENT OF THE KENTUCKY STATE GASOLINE TAX.

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 THE DETERMINATION OF WHETHER THE INCIDENCE OF THE TAX IS ON THE VENDOR OR THE VENDEE. WHERE THE INCIDENCE OF THE TAX IS ON THE VENDOR, THE UNITED STATES HAS NO RIGHT--- APART FROM STATE 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 PURCHASE FREE FROM STATE TAXES AND TO RECOVER ANY AMOUNTS TO SUCH TAXES WHICH MAY BE PAID BY IT. SEE 33 COMP. GEN. 453. ALSO, WHERE THERE IS IN EXISTENCE A VALID AND BINDING CONTRACT COVERING THE FURNISHING OF SUPPLIES OR SERVICES AT FIXED UNIT PRICES--- WHICH CONTRACT CONTAINS NO PROVISION FOR THE ADJUSTMENT OF SUCH UNIT PRICES IN THE EVENT OF THE IMPOSITION ON THE CONTRACTOR OF STATE TAXES APPLICABLE THERETO--- THERE EXISTS NO AUTHORITY FOR THE PAYMENT OF THE AMOUNT OF ANY TAXES OVER AND ABOVE THE UNIT PRICE STIPULATED IN THE CONTRACT. SEE 31 COMP. GEN. 1.

SECTION 138.220, BALDWIN'S KENTUCKY REVISED STATUTES ANNOTATED, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"AN EXCISE TAX OF SEVEN (7 CENTS) CENTS PER GALLON SHALL BE PAID ON ALL GASOLINE RECEIVED IN THIS STATE. * * * THE TAX HEREIN IMPOSED SHALL BE PAID BY THE DEALER IN THE MANNER * * * SPECIFIED IN KRS 138.230 TO 138.340.'

THERE APPEARS TO BE NO PROVISION OF KENTUCKY LAW PURPORTING TO REQUIRE THE DEALER TO ADD TO THE AMOUNT OF THE GASOLINE TAX TO THE PRICES OF GASOLINE CHARGED TO PURCHASES FOR THE PURPOSE OF COLLECTING THE TAX. THUS, IT IS OBVIOUS THAT UNDER THE LAWS OF KENTUCKY THE INCIDENCE OF THE GASOLINE TAX IS ON THE VENDOR. HENCE, THE UNITED STATES HAS NO RIGHT--- APART FROM STATE STATUTE--- TO PURCHASE GASOLINE IN KENTUCKY ON A TAX FREE BASIS.

PRIOR TO MARCH 27, 1956, UNDER SECTIONS 138.240 AND 138.270 OF THE ABOVE REFERRED-TO STATUTES, GASOLINE DEALERS IN KENTUCKY WERE NOT REQUIRED TO PAY A TAX ON GASOLINE RECEIVED BY THEM WHICH THEY SOLD TO THE UNITED STATES GOVERNMENT OR ANY OF ITS AGENCIES. HOUSE BILL NO. 4, 2D SPECIAL SESSION OF THE 1956 KENTUCKY GENERAL ASSEMBLY, APPROVED AND EFFECTIVE MARCH 27, 1956, AMENDED SECTION 138.240 SO THAT UNDER THAT SECTION, WHEN CONSIDERED TOGETHER WITH SECTION 138.270, GASOLINE DEALERS ARE REQUIRED TO PAY A TAX ON GASOLINE SOLD TO THE UNITED STATES IN SINGLE DELIVERS OF LESS THAN 2,000 GALLONS EACH. THUS, IT APPEARS THAT UNDER THE KENTUCKY STATUTES NOW IN FORCE THE UNITED STATES IS ENTITLED TO AN EXEMPTION FROM THE GASOLINE TAX ONLY WHERE SINGLE DELIVERIES CONSIST OF NOT LESS THAN 2,000 GALLONS OF GASOLINE.

THE INVOICE IN THE INSTANT CASE INVOLVES ONLY 60 GALLONS OF GASOLINE, WHICH AMOUNT WAS DELIVERED DURING THE COURSE OF A MONTH. ACCORDINGLY, THE INVOICE PROPERLY MAY BE CERTIFIED FOR PAYMENT IN THE FULL AMOUNT, PROVIDED THE CONTRACT UNDER WHICH THE GASOLINE WAS FURNISHED CONTAINS A CLAUSE AUTHORIZING AN ADJUSTMENT IN THE CONTRACT PRICE IN THE EVENT THE STATE IMPOSES ON THE CONTRACTOR ANY DIRECT TAX AFTER THE DATE OF THE CONTRACT.