B-128720, AUG. 7, 1956

B-128720: Aug 7, 1956

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DEPARTMENT OF AGRICULTURE: REFERENCE IS MADE TO YOUR LETTER OF JULY 11. THE INVOICE IS IN THE AMOUNT OF $13.60. ATTACHED TO THE INVOICE ARE COPIES OF LETTERS DATED APRIL 19. FROM THE SOUTH CAROLINA TAX COMMISSION TO TWO FOREST SERVICE INSTALLATIONS IN SOUTH CAROLINA ADVISING SUCH INSTALLATIONS THAT THE COMMISSION HAD DETERMINED THAT THE STATE SALES TAX "IS A VENDOR TYPE TAX AS DISTINGUISHED FROM A VENDEE TYPE TAX" AND THAT. THE VENDOR IS REQUIRED TO PAY THE TAX TO THE STATE ON SALES TO THE FEDERAL GOVERNMENT. GEN. 1002 IT WAS HELD. THE PROCEDURE SET FORTH IN THAT DECISION IS NOT FOR APPLICATION WHERE THE LEGAL INCIDENCE OF A STATE TAX IS FOUND TO BE ON THE VENDOR. OUR OFFICE HAS HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY FOR SUPPLIES PROCURED IN A STATE AT A PRICE INCLUSIVE OF THE SALES TAX IMPOSED BY THAT STATE RESTS UPON A DETERMINATION OF WHETHER THE INCIDENCE OF THE TAX IS ON THE VENDOR OR ON THE VENDEE.

B-128720, AUG. 7, 1956

TO MR. M. R. SCOTT, AUTHORIZED CERTIFYING OFFICER, DEPARTMENT OF AGRICULTURE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1956, TRANSMITTING A CERTIFIED INVOICE IN FAVOR OF THE TIDEWATER SUPPLY COMPANY, INCORPORATED, POST OFFICE BOX 1138, COLUMBIA, SOUTH CAROLINA, COVERING AN OPEN MARKET PURCHASE OF SUPPLIES IN SOUTH CAROLINA. THE INVOICE IS IN THE AMOUNT OF $13.60, INCLUDING THE SOUTH CAROLINA SALES TAX, WHICH AMOUNTS TO 40 CENTS. ATTACHED TO THE INVOICE ARE COPIES OF LETTERS DATED APRIL 19, 1956, FROM THE SOUTH CAROLINA TAX COMMISSION TO TWO FOREST SERVICE INSTALLATIONS IN SOUTH CAROLINA ADVISING SUCH INSTALLATIONS THAT THE COMMISSION HAD DETERMINED THAT THE STATE SALES TAX "IS A VENDOR TYPE TAX AS DISTINGUISHED FROM A VENDEE TYPE TAX" AND THAT, HENCE, THE VENDOR IS REQUIRED TO PAY THE TAX TO THE STATE ON SALES TO THE FEDERAL GOVERNMENT. YOU REQUEST A DECISION AS TO WHETHER YOU MAY CERTIFY THE FULL AMOUNT OF THE INVOICE FOR PAYMENT, INCLUDING THE SOUTH CAROLINA SALES TAX, WITHOUT FOLLOWING THE PROCEDURE DESCRIBED IN 19 COMP. GEN. 1002, IN VIEW OF THE RULING OF THE SOUTH CAROLINA STATE TAX COMMISSION.

IN 19 COMP. GEN. 1002 IT WAS HELD, QUOTING THE SYLLABUS, AS FOLLOWS:

"WHERE NECESSITY REQUIRES THE PURCHASE OF GASOLINE IN THE OPEN MARKET IN NORTH DAKOTA AND THE VENDOR REFUSES TO SELL AT A PRICE EXCLUSIVE OF THE STATE TAX, PAYMENT MAY BE MADE AT THE VENDOR'S PRICE IF HE FURNISHES AN APPROPRIATE CERTIFICATE SHOWING THE AMOUNT OF THE TAX SO PAID ON THE PURCHASE, SUCH CERTIFICATES TO BE PROMPTLY TRANSMITTED TO THIS OFFICE FOR USE IN OBTAINING REIMBURSEMENT FROM THE STATE FOR THE AMOUNT OF THE TAX. 19 COMP. GEN. 822; ID. 909, AMPLIFIED.'

THE PROCEDURE SET FORTH IN THAT DECISION IS NOT FOR APPLICATION WHERE THE LEGAL INCIDENCE OF A STATE TAX IS FOUND TO BE ON THE VENDOR. SEE 21 COMP. GEN. 843 AND 24 COMP. GEN. 150.

CONCERNING THE PAYMENT OF STATE SALES TAXES GENERALLY, OUR OFFICE HAS HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY FOR SUPPLIES PROCURED IN A STATE AT A PRICE INCLUSIVE OF THE SALES 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 STATE STATUTORY REGULATIONS PROMULGATED THEREUNDER BY STATE AUTHORITIES--- TO PURCHASE SUPPLIES 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 SUPPLIES FOR OFFICIAL USE IS ENTITLED UNDER ITS CONSTITUTIONAL PREROGATIVE TO MAKE PURCHASES FREE FROM STATE TAXES AND TO RECOVER ANY AMOUNT OF SUCH TAXES WHICH MAY HAVE BEEN PAID BY IT. SEE 33 COMP. GEN. 453.

THE SALES TAX LAW OF SOUTH CAROLINA APPEARS IN SECTION 65-1401 TO 65-1411 OF THE 1952 CODE OF THAT STATE, AS AMENDED. SECTION 65-1401 IMPOSES UPON EVERY PERSON ENGAGED OR CONTINUING WITHIN THE STATE IN THE BUSINESS OF SELLING AT RETAIL ANY TANGIBLE PERSONAL PROPERTY WHATSOEVER, INCLUDING MERCHANDISE AND COMMODITIES OF EVERY KIND AND CHARACTER, A TAX EQUAL TO THREE PERCENT OF THE GROSS PROCEEDS OF SALES OF THE BUSINESS. SECTION 65- 1407 PROVIDES IN EFFECT THAT THE VENDOR MAY ADD TO THE SALES PRICE THE AMOUNT OF THE TAX. SECTION 65-1409 PROVIDES THAT THE FAILURE TO PASS THE TAX ON TO THE PURCHASER SHALL IN NO WAY RELIEVE THE VENDOR FROM PAYING THE TAX.

IT IS OBVIOUS FROM THE ABOVE-CITED PROVISIONS OF SOUTH CAROLINA LAW THAT THE TAX IN QUESTION IS A TAX ON THE VENDOR. ALTHOUGH UNDER SECTION 65- 1407 THE VENDOR MAY PASS ON THE TAX TO THE VENDEE, THIS IS NOT MANDATORY AND THE VENDOR'S FAILURE TO DO SO DOES NOT AFFECT HIS LIABILITY FOR THE TAX. THUS, IT IS CLEAR THAT THE LEGAL INCIDENCE OF THE TAX IS ON THE VENDOR RATHER THAN THE PURCHASER AND, CONSEQUENTLY, THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE TO STATE TAXATION IS NOT FOR APPLICATION HERE. SEE ESSO STANDARD OIL COMPANY V. EVANS, 345 U.S. 495, AND 24 COMP. GEN. 150.

IN VIEW OF THE FOREGOING YOU ARE ADVISED THAT THE INVOICE IN QUESTION MAY BE CERTIFIED FOR PAYMENT IN THE FULL AMOUNT, PROVIDED IT IS DETERMINED THAT THE VENDOR INVOLVED HERE REGULARLY SELLS TO THE GENERAL PUBLIC AT THE SPECIFIED PRICE PLUS A CHARGE FOR "TAX.' MOREOVER, THERE WOULD BE NO NECESSITY FOR FOLLOWING THE PROCEDURE DESCRIBED IN 19 COMP. GEN. 1002, SINCE THE LEGAL INCIDENCE OF THE TAX IS NOT ON THE VENDEE.