B-147867, FEBRUARY 27, 1962, 41 COMP. GEN. 560

B-147867: Feb 27, 1962

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IN LIEU - EVIDENCE A BLANKET TYPE TAX EXEMPTION CERTIFICATE TO BE USED TO OBTAIN THE FEDERAL GOVERNMENT'S EXEMPTION FROM STATE OR LOCAL TAXES IN THE CASE OF CONTINUING OR NUMEROUS PURCHASES FROM VENDORS IS PERMISSIBLE AND THE ADAPTION OF EITHER STANDARD FORM 1094 OR A STATE REQUIRED OR PROVIDED FORM. FOR PURPOSES OF A BLANKET TYPE EXEMPTION IS NOT SUBJECT TO LEGAL OBJECTION. FOR THE ISSUANCE OF A SEPARATE CERTIFICATE FOR EACH KIND OF TAX ( STATE OR LOCAL) FOR WHICH EXEMPTION IS CLAIMED PERTAINS ONLY TO DIFFERENT TAXING JURISDICTIONS. IN THE CASE OF EXEMPTIONS CLAIMED FROM TEXAS TAXES WHERE GASOLINE IS COVERED BY ONE TAX LAW AND OTHER ITEMS ARE SUBJECT TO A DIFFERENT TAX LAW ONLY ONE EXEMPTION CERTIFICATE FOR GASOLINE AND OTHER ITEMS PURCHASED FROM A SERVICE STATION VENDOR IS REQUIRED.

B-147867, FEBRUARY 27, 1962, 41 COMP. GEN. 560

TAXES - STATE - EXEMPTION CERTIFICATES - BLANKET TYPE - INDIVIDUAL CERTIFICATE ISSUANCE REQUIREMENT - STAMP, ETC., IN LIEU - EVIDENCE A BLANKET TYPE TAX EXEMPTION CERTIFICATE TO BE USED TO OBTAIN THE FEDERAL GOVERNMENT'S EXEMPTION FROM STATE OR LOCAL TAXES IN THE CASE OF CONTINUING OR NUMEROUS PURCHASES FROM VENDORS IS PERMISSIBLE AND THE ADAPTION OF EITHER STANDARD FORM 1094 OR A STATE REQUIRED OR PROVIDED FORM, OTHERWISE SATISFACTORY, FOR PURPOSES OF A BLANKET TYPE EXEMPTION IS NOT SUBJECT TO LEGAL OBJECTION. THE REQUIREMENT IN TITLE 7 OF THE GENERAL ACCOUNTING OFFICE POLICY AND PROCEDURES MANUAL, SECTION 4820.50, FOR THE ISSUANCE OF A SEPARATE CERTIFICATE FOR EACH KIND OF TAX ( STATE OR LOCAL) FOR WHICH EXEMPTION IS CLAIMED PERTAINS ONLY TO DIFFERENT TAXING JURISDICTIONS, I.E., STATE OR LOCAL AND DOES NOT REQUIRE SEPARATE CERTIFICATES FOR DIFFERENT KINDS OF STATE TAXES; THEREFORE, IN THE CASE OF EXEMPTIONS CLAIMED FROM TEXAS TAXES WHERE GASOLINE IS COVERED BY ONE TAX LAW AND OTHER ITEMS ARE SUBJECT TO A DIFFERENT TAX LAW ONLY ONE EXEMPTION CERTIFICATE FOR GASOLINE AND OTHER ITEMS PURCHASED FROM A SERVICE STATION VENDOR IS REQUIRED. ALTHOUGH THE USE BY THE DEPARTMENT OF AGRICULTURE OF A TAX EXEMPTION STATEMENT IMPRINTED ON THE VARIOUS ORDER FORMS INSTEAD OF THE ISSUANCE OF INDIVIDUAL TAX EXEMPTION CERTIFICATES TO OBTAIN EXEMPTION FROM TEXAS SALES TAXES IN THE CASE OF A LARGE NUMBER OF MISCELLANEOUS PURCHASES WHERE A BLANKET TYPE EXEMPTION WOULD NOT BE WARRANTED IS NOT LEGALLY OBJECTIONABLE, FOR PURPOSES OF UNIFORMITY AND APPLICABILITY TO OTHER GOVERNMENT AGENCIES IN THE STATE, THE MATTER SHOULD BE TAKEN UP WITH THE GENERAL SERVICES ADMINISTRATION. A SIMPLIFIED METHOD TO PROVIDE EVIDENCE OF EXEMPTION FROM STATE SALES TAXES BY THE USE OF A CITATION ON THE PROCUREMENT DOCUMENT TO THE SINGLE BLANKET TAX EXEMPTION CERTIFICATE WOULD NOT BE OBJECTIONABLE FROM AN AUDIT VIEWPOINT; HOWEVER, THE MATTER SHOULD BE TAKEN UP WITH THE GENERAL SERVICES ADMINISTRATION.

TO THE SECRETARY OF AGRICULTURE, FEBRUARY 27, 1962:

REFERENCE IS MADE TO LETTER DATED DECEMBER 29, 1961, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY CONCERNING SEVERAL QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH THE PROCEDURE TO ESTABLISH THE EXEMPTION OF THE UNITED STATES FROM THE RECENTLY ENACTED TEXAS LIMITED SALES, EXCISE AND USE TAX ACT, V.A.T.S. TAX.--- GEN. ART. 20.01, ET SEQ., EFFECTIVE SEPTEMBER 1, 1961.

THE FIRST QUESTION IS WHETHER A BLANKET TYPE OF EXEMPTION CERTIFICATE COULD BE USED BY THE GOVERNMENT IN LIEU OF S.F. 1094, U.S. TAX EXEMPTION CERTIFICATE, TO ASSERT THE FEDERAL GOVERNMENT'S EXEMPTION FROM THE TEXAS SALES TAX. IT IS STATED THAT SUCH CERTIFICATE WOULD BE FURNISHED TO VENDORS FROM WHOM CONTINUING OR NUMEROUS PURCHASES ARE MADE, SUCH AS UTILITY COMPANIES OR VENDORS OF SERVICE STATION ITEMS. THE GAO POLICY AND PROCEDURES MANUAL, 7 GAO 4800, PRESCRIBES THE USE OF S.F. 1094 BY ALL AGENCIES OF THE FEDERAL GOVERNMENT TO SECURE EXEMPTION FROM STATE OR LOCAL TAXES EITHER AT THE TIME OF EACH SALE, OR, WHERE CONTRACTS PROVIDE FOR MULTIPLE DELIVERIES, WITH EACH INVOICE COVERING PARTIAL DELIVERY OR UPON COMPLETION OF THE ENTIRE CONTRACT. THE MANUAL DOES NOT SPECIFICALLY PROVIDE FOR THE USE OF S.F. 1094 AS A BLANKET TYPE EXEMPTION CERTIFICATE.

IN SUPPORT OF THE REQUEST FOR AUTHORITY TO USE BLANKET TYPE EXEMPTION CERTIFICATES, THE ADMINISTRATIVE ASSISTANT SECRETARY SAYS THAT A SIZABLE ECONOMY WOULD RESULT FROM YOUR DEPARTMENT; THAT WHERE THE BILLED TAX IS OVER ONE DOLLAR AND IS REPETITIVE IN CHARACTER, SUCH AS IS THE CASE WITH UTILITIES, THE VOLUME OF INDIVIDUAL EXEMPTION CERTIFICATES OTHERWISE REQUIRED WOULD BE MATERIALLY REDUCED; THAT IN ADDITION, WHERE THE BILLED TAX IS A DOLLAR OR LESS UNDER 7 GAO 4820.10 AN EXEMPTION CERTIFICATE CANNOT BE USED AND THE TAX IS PAID; AND THAT IN THOSE CASES, WHILE THE INDIVIDUAL TAX ITEMS MAY BE A DOLLAR OR LESS, OVER A PERIOD OF A YEAR THE TOTAL TAX WHICH WOULD HAVE TO BE PAID COULD RUN INTO THOUSANDS OF DOLLARS, AND THE USE OF A BLANKET EXEMPTION CERTIFICATE WOULD RESULT IN THE SAVING OF SUCH AMOUNTS SINCE THE TAX WOULD NOT BE INCLUDED IN THE BILLINGS.

THE SECOND QUESTION RAISED HAS TO DO WITH THE INTERPRETATION OF 7 GAO 4820.50 WHICH PROVIDES, IN PART, THAT "A SEPARATE CERTIFICATE WILL BE ISSUED FOR EACH KIND OF TAX ( STATE OR LOCAL) FOR WHICH EXEMPTION IS CLAIMED.' THE QUESTION IS STATED TO HAVE ARISEN PARTICULARLY WITH RESPECT TO THE PURCHASE OF GASOLINE, WHICH IS COVERED BY A DIFFERENT TAX LAW IN TEXAS, THE BILLING FOR WHICH ALSO COVERS THE PURCHASE OF OTHER ITEMS SUBJECT TO THE SALES TAX.

THE THIRD QUESTION INVOLVES THE LARGE NUMBER OF MISCELLANEOUS PURCHASES MADE THROUGHOUT THE STATE BY EMPLOYEES OF THE DEPARTMENT FROM VENDORS TO WHOM ISSUANCE OF A BLANKET EXEMPTION CERTIFICATE WOULD NOT BE WARRANTED BECAUSE OF THE SMALL VOLUME OF ORDERS TO ANY ONE VENDOR. IT APPEARS TO HAVE BEEN REQUESTED WITHIN YOUR DEPARTMENT THAT AUTHORITY BE OBTAINED FOR THE INCLUSION OF A TAX EXEMPTION STATEMENT ON THE ORDER FORMS, PARTICULARLY WHERE IT WAS ANTICIPATED THAT THE BILLED TAX WOULD BE A DOLLAR OR LESS, AND THAT SUCH AUTHORIZATION PERMIT THE USE OF A RUBBER STAMP CONTAINING THE EXEMPTION STATEMENT. IN THIS CASE, TOO, IT IS STATED THAT THE INCLUSION OF A TAX EXEMPTION STATEMENT ON THE ORDER FORMS WOULD ELIMINATE THE ISSUANCE OF A LARGE VOLUME OF OTHERWISE REQUIRED INDIVIDUAL CERTIFICATES, AS WELL AS RESULT IN THE SAVINGS REPRESENTED BY THE MANY DOLLAR OR LESS TAX ITEMS WHICH WOULD THUS BE ELIMINATED.

THE FOURTH QUESTION INVOLVES A PROPOSED FURTHER SIMPLIFIED METHOD OF PROVIDING EVIDENCE OF EXEMPTION FROM THE TAX WITH RESPECT TO ALL TRANSACTIONS SUBJECT TO THE TEXAS LIMITED SALES, EXCISE AND USE TAX ACT. THIS METHOD WOULD PROVIDE FOR THE ISSUANCE OF A SINGLE BLANKET CERTIFICATE WHICH WOULD BE APPLICABLE TO ALL UNITED STATES GOVERNMENT PROCUREMENT TRANSACTIONS. CITATIONS IN EACH INSTANCE WOULD BE MADE ON THE PROCUREMENT DOCUMENT TO SUCH CERTIFICATE. IT IS POINTED OUT THAT THIS METHOD HAS BEEN IN USE IN THE STATE OF MARYLAND SINCE 1947 ON A GOVERNMENT-WIDE BASIS.

YOUR DEPARTMENT BELIEVES THAT OTHER GOVERNMENT AGENCIES WITH FIELD PERSONNEL IN TEXAS COULD ALSO ADOPT THE PROCEDURES SUGGESTED ABOVE AND IT IS FURTHER STATED IN THE LETTER THAT THE USE OF EITHER A BLANKET EXEMPTION CERTIFICATE OR A TAX EXEMPTION STATEMENT ON THE ORDERS MIGHT BE LEGALLY UNOBJECTIONABLE IN OTHER STATES AND THAT IN EITHER EVENT, THE GOVERNMENT WOULD STAND TO BENEFIT CONSIDERABLY IF THE SUGGESTED PROCEDURES WERE ADOPTED.

THE TEXAS LIMITED SALES, EXCISE AND USE TAX ACT IMPOSES A TWO PERCENT SALES TAX UPON EACH SEPARATE SALE AT RETAIL OF TANGIBLE PERSONAL PROPERTY WITHIN THE STATE OF TEXAS AND A TWO PERCENT EXCISE TAX ON THE STORAGE, USE OF, OR OTHER CONSUMPTION WITHIN THE STATE OF TEXAS OF TANGIBLE PERSONAL PROPERTY PURCHASED, LEASED OR RENTED FROM ANY RETAILER. SUCH TAX IS TO BE COLLECTED BY THE RETAILER FROM THE CONSUMER. V.A.T.S. TAX.--- GEN. ART. 20.04 (A) EXEMPTS FROM SUCH TAXES, SALES OR USES WHICH THE STATE IS PROHIBITED FROM TAXING UNDER THE CONSTITUTION OR LAWS OF THE UNITED STATES OR UNDER THE STATE CONSTITUTION, AND V.A.T.S. TAX.--- GEN. ART. 20.04 (F) (1) AND (2) SPECIFICALLY EXEMPT FROM SUCH TAXES SALES TO OR USE BY THE UNITED STATES AND ITS UNINCORPORATED AND INCORPORATED AGENCIES AND INSTRUMENTALITIES.

FURTHER, V.A.T.S. TAX.--- GEN. ART. 20.04 PROVIDES, IN PART, AS FOLLOWS:

* * * IF A PURCHASER CERTIFIES IN WRITING TO A SELLER THAT THE TANGIBLE PERSONAL PROPERTY PURCHASED WILL BE USED IN A MANNER OR FOR A PURPOSE ENTITLING THE SELLER TO REGARD THE RECEIPTS FROM THE SALE AS EXEMPTED BY THIS CHAPTER FROM THE COMPUTATION OF THE AMOUNT OF THE LIMITED SALES TAX, AND IF THE PURCHASER THEN USES THE TANGIBLE PERSONAL PROPERTY IN SOME OTHER MANNER OR FOR SOME OTHER PURPOSE, THE PURCHASER SHALL BE LIABLE FOR PAYMENT OF THE LIMITED SALES TAX AS IF HE WERE A RETAILER MAKING A RETAIL SALE OF THE TANGIBLE PERSONAL PROPERTY AT THE TIME OF SUCH USE, AND THE COST OF THE TANGIBLE PERSONAL PROPERTY TO HIM SHALL BE DEEMED THE RECEIPTS FROM SUCH RETAIL SALE FOR THE PURPOSE OF DETERMINING THE AMOUNT OF TAX FOR WHICH HE IS LIABLE.

RULING NO. 7 BY THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS IMPLEMENTS SUCH PROVISION BY SETTING FORTH THE BASIC FORM OF EXEMPTION CERTIFICATES TO BE EXECUTED IN CONFORMITY THEREWITH.

THE ADMINISTRATIVE ASSISTANT SECRETARY HAS TRANSMITTED WITH HIS LETTER SUCH AN EXEMPTION CERTIFICATE FORM ADAPTED FOR BLANKET USE WHICH HAS BEEN PREPARED BY A PRIVATE OIL COMPANY.

WHERE ACCEPTABLE TO THE STATE, WE HAVE NO OBJECTION TO S.F. 1094 BEING ADAPTED FOR PURPOSES OF BLANKET TYPE EXEMPTION. FROM AN AUDIT VIEWPOINT WE FORESEE NO OBJECTION TO THE USE OF A SPECIFIC TAX EXEMPTION FORM WHEN EITHER REQUIRED OR PROVIDED BY A STATE IF OTHERWISE LEGALLY PROPER AND ITS CONTENTS ARE SATISFACTORY TO THE GOVERNMENT. CF. SECTION 1-11.302, FEDERAL PROCUREMENT REGULATIONS.

ACCORDINGLY, WITH RESPECT TO THE FIRST QUESTION, WE SEE NO LEGAL OBJECTION TO THE BASIC TAX EXEMPTION CERTIFICATE FORM REQUIRED BY THE STATE OF TEXAS AND SEE NO LEGAL OBJECTION TO SUCH FORM BEING ADAPTED FOR BLANKET USE AS EXEMPLIFIED BY THE TRANSMITTED SAMPLE FORM.

WITH RESPECT TO THE SECOND QUESTION, 7 GAO 4820.50 WAS NOT INTENDED TO REQUIRE SEPARATE CERTIFICATES FOR DIFFERENT KINDS OF STATE TAXES BUT ONLY PERTAINS TO DIFFERENT TAXING JURISDICTIONS, I.E., STATE OR LOCAL.

WITH RESPECT TO THE THIRD QUESTION, FROM AN AUDIT VIEWPOINT WE HAVE NO OBJECTION TO THE SUGGESTED PROCEDURE. HOWEVER, WE BELIEVE THAT THE DEPARTMENT SHOULD TAKE THIS MATTER UP WITH THE GENERAL SERVICES ADMINISTRATION SINCE IT INVOLVES PROCUREMENT AND THE USE OF PROCUREMENT FORMS. ALSO, IT WILL GIVE THE GENERAL SERVICES ADMINISTRATION AN OPPORTUNITY TO CONSIDER THE MATTER FOR APPLICATION TO OTHER GOVERNMENT AGENCIES IN TEXAS AS WELL AS IN OTHER STATES.

WITH RESPECT TO THE FOURTH QUESTION, FROM AN AUDIT VIEWPOINT THERE APPEARS TO BE NO OBJECTION TO THE USE IN TEXAS OR ANY OTHER STATE OF A SINGLE BLANKET EXEMPTION CERTIFICATE PROVIDED IT WOULD OTHERWISE BE LEGALLY APPROPRIATE. ALSO, WE BELIEVE THAT THIS MATTER SHOULD BE TAKEN UP WITH THE GENERAL SERVICES ADMINISTRATION.