B-140428, SEP. 1, 1959

B-140428, SEP. 1, 1959

TO MR. CALVIN A. MARSHALL, AUTHORIZED CERTIFYING OFFICER, UNITED STATES DEPARTMENT OF AGRICULTURE:

BY LETTER OF JULY 31, 1959, YOU REQUESTED AN ADVANCE DECISION AS TO WHETHER VOUCHER DATED JULY 31, 1959, IN THE AMOUNT OF $305.61 STATED IN FAVOR OF D-1 SUNRAY OIL COMPANY, BOX 381, TULSA 2, OKLAHOMA, AS PAYMENT FOR THE PURCHASE OF SERVICE STATION DELIVERIES OF GASOLINE AND OTHER SERVICES BY THE SOIL CONSERVATION SERVICE IN THE STATE OF ARKANSAS, MAY PROPERLY BE CERTIFIED FOR PAYMENT. YOUR DOUBT IN THE MATTER ARISES BY VIRTUE OF THE FACT THAT THE AMOUNT OF $305.61 INCLUDES $16.98 FOR ARKANSAS STATE GASOLINE TAXES ON GASOLINE PURCHASED FROM RETAIL DEALERS AFTER APRIL 30, 1959.

YOU POINT OUT THAT PRIOR TO MAY 1, 1959, THE SALE OF MOTOR FUEL TO THE UNITED STATES OR ANY OF ITS INSTRUMENTALITIES WAS EXEMPT FROM THE TAX ON MOTOR FUEL LEVIED UNDER 6B ARK.STATE., 1947, ANN. 75-1106. THIS EXEMPTION WAS SPECIFICALLY GRANTED IN SUBDIVISION C OF SECTION 75 1106. YOU FURTHER POINT OUT, HOWEVER, THAT SUBDIVISION C WAS AMENDED BY ACT 273 OF THE GENERAL ASSEMBLY OF ARKANSAS OF 1959, EFFECTIVE MAY 1, 1959, LIMITING UNITED STATES EXEMPTION FROM THE TAX TO:

"THE SALE OF MOTOR FUEL TO THE ARMED FORCES OF THE UNITED STATES OF AMERICA WHERE SUCH SALE IS IN QUANTITIES OF 5,000 GALLONS OR MORE FOR DELIVERY INTO THE STORAGE FACILITIES OF THE ARMED FORCES.'

YOU STATE THAT THE MATTER WAS DISCUSSED WITH LEGAL REPRESENTATIVES OF THE DEPARTMENT OF AGRICULTURE; AND YOU SUBMITTED A LETTER FROM THE ASSISTANT GENERAL COUNSEL WHEREIN HE CONCLUDES THAT THE ARKANSAS MOTOR FUEL TAX MAY BE PAID BY THE DEPARTMENT, BASING HIS CONCLUSION ON THE FACT THAT THE TAX IS ONE ON THE VENDOR AND CITING VARIOUS AUTHORITIES, INCLUDING 24 COMP. GEN. 920 WHICH INVOLVED STATUTES IN THE STATE OF IDAHO COMPARABLE TO THE MOTOR FUEL TAX STATUTES IN ARKANSAS.

IN THE DECISION OF JUNE 22, 1945, 24 COMP. GEN. 920, TO WHICH THE ASSISTANT GENERAL COUNSEL REFERS, WE ITERATED THAT:

"A PERSON WHO SELLS APPLIES TO THE UNITED STATES IS NOT--- MERELY BECAUSE OF THE IMMUNITY OF THE FEDERAL GOVERNMENT FROM STATE TAXATION- - EXEMPT FROM THE PAYMENT OF AN OTHERWISE APPLICABLE STATE TAX WHERE IT APPEARS THAT THE LEGAL INCIDENCE OF THE TAX RESTS UPON HIM AS THE VENDOR AND NOT UPON THE UNITED STATES AS THE VENDEE. HENCE, PAYMENT PROPERLY MAY BE REQUIRED BY A STATE FROM A VENDOR OF A TAX OF THAT TYPE IN THE CASE OF SUCH SALES TO THE UNITED STATES AS ARE CONSUMMATED WITHIN THE TERRITORIAL JURISDICTION OF THE STATE UNLESS THE STATE LAW OR REGULATIONS PROMULGATED BY THE STATE TAXING AUTHORITIES WITH RESPECT THERETO EXCEPT THE TRANSACTIONS FROM OPERATION OF THE TAXING STATUTE INVOLVED.' SEE ALABAMA V. KING AND BOOZER, 314 U.S. 1; ESSO STANDARD OIL CO. V. EVANS, 345 ID. 495, 97 L.ED. 1174, 1182.

THE ARKANSAS MOTOR FUEL TAX LAW, 6B ARK.STATS., 1947, ANN. 75-1102 ET SEQ., PROVIDES IN SECTION 75-1106 THAT:

"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 * * *.'

SECTION 75-1112 ARK.STATS. PRESCRIBES THE METHOD FOR COMPUTING THE TAX TO BE PAID BY LICENSED DISTRIBUTORS AND SECTION 75-1116 PROVIDES FOR THE FURNISHING OF STATEMENTS BY PERSONS OTHER THAN LICENSED DISTRIBUTORS WHO ACQUIRE MOTOR FUEL IN WHOLESALE QUANTITIES FOR USE OR OTHER DISPOSITION.

THE TAX INVOLVED HERE IS A TAX IMPOSED ON DISTRIBUTORS FOR THE PRIVILEGE OF ENGAGING IN THE BUSINESS OF SELLING MOTOR FUEL AND ON USERS OF MOTOR FUEL ONLY WHEN WHOLESALE QUANTITIES OF FUEL ARE OBTAINED FOR USE OTHER THAN THROUGH A DISTRIBUTOR. AND THERE IS NO REQUIREMENT THAT THE TAX, WHEN PAID BY THE DISTRIBUTOR, BE PASSED ON TO THE CONSUMER. WHERE, AS HERE, THE SOIL CONSERVATION SERVICE PURCHASES GASOLINE FROM RETAIL OUTLETS, THE FACT THAT THE PURCHASE PRICE THEREOF INCLUDES AN AMOUNT FOR TAX PAID BY THE DISTRIBUTOR DOES NOT RESULT IN A TAX ON THE SERVICE OR ANY OF ITS FUNCTIONS. THE TAX, UNDER THE ARKANSAS LAW, CANNOT BE LAID DIRECTLY UPON ANY ACTIVITY OF THE SERVICE UNLESS IT ENGAGED IN BUSINESS AS A LICENSED DISTRIBUTOR OF MOTOR FUEL OR ACQUIRES GROSS QUANTITIES OF GASOLINE OTHER THAN BY PURCHASE THROUGH LICENSED DISTRIBUTORS. WHILE IT WOULD APPEAR THAT IN THE LATTER EVENT THE UNITED STATES WOULD BE EXEMPT FROM PAYMENT OF THE TAX, THE FACT THAT IN THE INSTANT CASE THE GASOLINE WAS PURCHASED THROUGH DISTRIBUTORS WHO PRESUMABLY HAD ALREADY PAID THE TAX IS SUFFICIENT TO BAR THE UNITED STATES FROM ENTITLEMENT TO AN EXEMPTION. THE MERE FACT THAT THE ULTIMATE RESTING PLACE OF THE ECONOMIC BURDEN OF THE TAX IS ON THE UNITED STATES CANNOT BE SAID TO PLACE THE INCIDENCE OF THE TAX ON THE UNITED STATES AND DOES NOT OPERATE TO EXEMPT THE VENDOR FROM PAYMENT OF THE TAX. SEE ESSO STANDARD OIL CO. V. EVANS, ABOVE; FEDERAL LAND BANK OF ST. PAUL V. DE ROCHFORD, 287 N.W. 522.

ACCORDINGLY, AND SINCE THE PURCHASES INVOLVED DO NOT FALL WITHIN THE EXEMPTION GRANTED BY 6B ARK.STATS., 1947, ANN. 75-1106 (C), YOU ARE ADVISED THAT THE INSTANT VOUCHER--- WHICH TOGETHER WITH RELATED PAPERS IS RETURNED--- MAY PROPERLY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.