B-134654, FEB. 11, 1958

B-134654: Feb 11, 1958

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WE HAVE HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY FOR SUPPLIES PROCURED IN A STATE OR MUNICIPALITY AT A PRICE INCLUSIVE OF A TAX IMPOSED BY THAT STATE OR MUNICIPALITY RESTS UPON A DETERMINATION OF WHETHER THE INCIDENCE OF TAX IS ON THE VENDOR OR THE VENDEE. 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 AND MUNICIPAL TAXES AND TO RECOVER ANY SUCH TAXES AS IT MAY HAVE PAID. WHERE THE INCIDENCE OF THE TAX IS ON THE VENDOR. THE NEW MEXICO GROSS RECEIPTS USE TAX IS IMPOSED BY SECTION 72-16 4. SHOULD THE VENDOR FAIL TO COLLECT THE TAX FROM THE VENDEE HIS LIABILITY THEREFOR IS IN NO WAY AFFECTED.

B-134654, FEB. 11, 1958

TO MR. GEORGE W. MILES, AUTHORIZED CERTIFYING OFFICER, BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR:

YOUR LETTER OF DECEMBER 10, 1957, FINANCE, TRANSMITTED FOR OUR CONSIDERATION A STANDARD FORM NO. 1034 IN THE AMOUNT OF $32.76, REPRESENTING THE NEW MEXICO GROSS RECEIPTS USE TAX AND THE ALBUQUERQUE GROSS RECEIPTS USE TAX BILLED TO YOUR OFFICE BY THE INTERNATIONAL BUSINESS MACHINES CORPORATION IN CONNECTION WITH THE PURCHASE OF THREE IBM ELECTRIC TYPEWRITERS UNDER CONTRACT NO. GS-00S-3365. YOU INQUIRE WHETHER THE STATE AND MUNICIPAL TAXES INVOLVED MAY BE PAID FROM APPROPRIATED FUNDS.

CONCERNING THE PAYMENT OF STATE AND MUNICIPAL TAXES GENERALLY, WE HAVE HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY FOR SUPPLIES PROCURED IN A STATE OR MUNICIPALITY AT A PRICE INCLUSIVE OF A TAX IMPOSED BY THAT STATE OR MUNICIPALITY RESTS UPON A DETERMINATION OF WHETHER THE INCIDENCE OF TAX IS ON THE VENDOR OR THE VENDEE. 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 AND MUNICIPAL TAXES AND TO RECOVER ANY SUCH TAXES AS IT MAY HAVE PAID. ON THE OTHER HAND, WHERE THE INCIDENCE OF THE TAX IS ON THE VENDOR, THE UNITED STATES HAS NO RIGHT, APART FROM STATE STATUTES OR MUNICIPAL ORDINANCES OR REGULATIONS PROMULGATED THEREUNDER, TO PURCHASE SUPPLIES WITHIN THE TERRITORIAL JURISDICTION OF THE STATE OR MUNICIPALITY ON A TAX FREE BASIS. SEE ALABAMA V. KING AND BOOZER, 314 U.S. 1; 33 COMP. GEN. 453; 32 ID. 423; ID. 577.

THE NEW MEXICO GROSS RECEIPTS USE TAX IS IMPOSED BY SECTION 72-16 4, NEW MEXICO STATUTES ANNOTATED, 1953 (SUPPLEMENT 1957), WHICH CLEARLY ASSESSES THE TAX AGAINST THE VENDOR. SHOULD THE VENDOR FAIL TO COLLECT THE TAX FROM THE VENDEE HIS LIABILITY THEREFOR IS IN NO WAY AFFECTED, SINCE THE VENDOR HAS THE LEGAL RESPONSIBILITY FOR PAYING THE TAX. HOWEVER, WHERE THE GOVERNMENT HAS, BY CONTRACT, AGREED TO REIMBURSE THE VENDOR FOR TAXES PAID TO A STATE OR MUNICIPALITY, WE HAVE CONSISTENTLY HELD THAT SUCH PAYMENTS ARE PROPER. SEE 33 COMP. GEN. 453; 32 ID. 423; 27 ID 179. CF. 31 COMP. GEN. 1.

THE INTERNATIONAL BUSINESS MACHINES CORPORATION, IN ITS BID DATED APRIL 4, 1956, PROVIDED AS FOLLOWS:

"* * * IN CASES WHERE FEDERAL, STATE, TERRITORIAL, MUNICIPAL AND OTHER LOCAL TAXES (EXCISE, SALES, USE, COMPENSATING, OCCUPATIONAL, GROSS INCOME, GROSS RECEIPTS, ET CETERA) ARE LEVIED OR BASED ON (OR PAYABLE BY THE CONTRACTOR IN RESPECT OF) THE CHARGES LISTED IN THE ATTACHED CATALOG, AMOUNTS WILL BE ADDED TO SUCH CHARGES EQUIVALENT TO SUCH TAXES. IN THE EVENT SUCH ADDITIONAL CHARGES ARE MADE, THE GOVERNMENT IS TO PAY SUCH INCREASES IN CHARGES EQUAL TO SUCH TAXES. * * *"

THIS BID WAS ACCEPTED BY THE GOVERNMENT AND INCORPORATED AS A PART OF CONTRACT NO. GS-00S-3365, UNDER WHICH THE ELECTRIC TYPEWRITERS HERE INVOLVED WERE PURCHASED. THIS PROVISION CLEARLY RENDERS THE GOVERNMENT LIABLE FOR STATE AND MUNICIPAL TAXES ASSESSED AGAINST THE VENDOR.

THEREFORE, THE NEW MEXICO GROSS RECEIPTS USE TAX MAY BE PAID FROM APPROPRIATED FUNDS. WHILE WE DO NOT HAVE AVAILABLE THE ORDINANCE OF THE CITY OF ALBUQUERQUE ESTABLISHING ITS GROSS RECEIPTS USE TAX AND A COPY THEREOF WAS NOT FORWARDED WITH YOUR LETTER, THE PRINCIPLES SET FORTH ABOVE ARE EQUALLY APPLICABLE THERETO AND, IF THE INCIDENCE OF THAT TAX LIKEWISE IS UPON THE VENDOR, IT ALSO MAY BE PAID FROM APPROPRIATED FUNDS. THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.