B-148226, APRIL 12, 1962, 41 COMP. GEN. 668

B-148226: Apr 12, 1962

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IS CONDUCTING ONE OF ITS OFFICIAL. IN A MEMORANDUM FROM YOUR DALLAS REGIONAL OFFICE (ENCLOSED WITH YOUR LETTER) IT IS STATED THAT THE APPLICATION OF THE PROVISIONS OF THE TEXAS LIMITED SALES. IT IS ALSO STATED THAT THE ACT PROVIDES FOR A ONE PERCENT DISCOUNT OF THE TAX COLLECTED TO REIMBURSE THE SELLER FOR THE COST OF COLLECTING THE TAX. IT IS FURTHER STATED IN THE MEMORANDUM THAT THE TEXAS STATUTE CONTAINS NO PROVISION FOR EXEMPTING SALES BY THE FEDERAL GOVERNMENT AND THAT THERE APPEARS TO BE CONFLICTING AUTHORITY WITH RESPECT TO SUCH MATTERS. APPARENTLY THE DOUBT IN THE MATTER IS OCCASIONED BY THE HOLDING OF THE UNITED STATES SUPREME COURT IN COLORADO NATIONAL BANK OF DENVER V. IT IS NOT IN THE SAME CATEGORY AS AN AGENCY OF THE UNITED STATES GOVERNMENT.

B-148226, APRIL 12, 1962, 41 COMP. GEN. 668

TAXES - STATE - GOVERNMENT IMMUNITY - GOVERNMENTAL FUNCTION, ETC. THE GENERAL SERVICES ADMINISTRATION IN DISPOSING OF FEDERAL SURPLUS PROPERTY IN TEXAS, WHICH HAS A LIMITED SALES, EXCISE AND USE TAX ACT THAT REQUIRES SELLERS TO COLLECT A TAX ON PROPERTY SALES, MAINTAIN COLLECTION RECORDS, AND REMIT THE TAX TO THE STATE, IS CONDUCTING ONE OF ITS OFFICIAL, GOVERNMENTAL FUNCTIONS WHICH UNDER THE CONSTITUTIONAL IMMUNITY PRIVILEGE MAY NOT BE INTERFERED WITH, CONTROLLED, OR REGULATED BY A STATE; THEREFORE, THE GENERAL SERVICES ADMINISTRATION MAY NOT COMPLY WITH THE TEXAS USE TAX.

TO D. C. LYNCH, GENERAL SERVICES ADMINISTRATION, APRIL 12, 1962:

YOUR LETTER OF FEBRUARY 19, 1962 (YOUR REFERENCE: CAO), ENCLOSES A VOUCHER PAYABLE TO THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS IN THE AMOUNT OF $146.09, REPRESENTING THE AMOUNT OF THE TEXAS STATE SALES TAX REMITTED TO THE GENERAL SERVICES ADMINISTRATION BY PURCHASERS OF FEDERAL SURPLUS PROPERTY. YOU REQUEST A DECISION AS TO WHETHER THE VOUCHER MAY PROPERLY BE CERTIFIED FOR PAYMENT.

IN A MEMORANDUM FROM YOUR DALLAS REGIONAL OFFICE (ENCLOSED WITH YOUR LETTER) IT IS STATED THAT THE APPLICATION OF THE PROVISIONS OF THE TEXAS LIMITED SALES, EXCISE AND USE TAX ACT TO AN AGENCY OF THE FEDERAL GOVERNMENT WOULD REQUIRE THE AGENCY TO APPLY TO THE STATE COMPTROLLER FOR A PERMIT TO CONDUCT BUSINESS AS A SELLER WITHIN THE STATE, TO COLLECT THE TAX, MAINTAIN ADDITIONAL ACCOUNTABILITY RECORDS OF RECEIPTS AND DEPOSITS AND QUARTERLY REMIT TO THE STATE COMPTROLLER. IT IS ALSO STATED THAT THE ACT PROVIDES FOR A ONE PERCENT DISCOUNT OF THE TAX COLLECTED TO REIMBURSE THE SELLER FOR THE COST OF COLLECTING THE TAX.

IT IS FURTHER STATED IN THE MEMORANDUM THAT THE TEXAS STATUTE CONTAINS NO PROVISION FOR EXEMPTING SALES BY THE FEDERAL GOVERNMENT AND THAT THERE APPEARS TO BE CONFLICTING AUTHORITY WITH RESPECT TO SUCH MATTERS. THE MEMORANDUM THEN REFERS TO FIVE COURT CASES AS WELL AS 31 COMP. GEN. 81 AND 5 U.S.C. 84B AND C. APPARENTLY THE DOUBT IN THE MATTER IS OCCASIONED BY THE HOLDING OF THE UNITED STATES SUPREME COURT IN COLORADO NATIONAL BANK OF DENVER V. BEDFORD, TREASURER OF STATE OF COLORADO, 310 U.S. 41, WHICH, THE MEMORANDUM INDICATES, CONFLICTS WITH THE HOLDINGS OF THE COURT IN THE OTHER CASES CITED THEREIN, NAMELY MCCULLOCH V. MARYLAND, 4 WHEAT. 316; OHIO V. THOMAS, 173 U.S. 276; JOHNSON V. MARYLAND, 254 U.S. 51; AND MAYO V. UNITED STATES, 319 U.S. 441.

IN THE BANK OF DENVER CASE THE COURT HELD, IN EFFECT, THAT A STATE LAW REQUIRING A NATIONAL BANK (WHICH HAS BEEN HELD BY THE SUPREME COURT TO BE A FEDERAL INSTRUMENTALITY) TO COLLECT AND REMIT FROM ITS SAFE DEPOSIT BOX USERS A PERCENTAGE TAX ON THE USERS OF SUCH BOXES DOES NOT IMPOSE AN UNCONSTITUTIONAL BINDER ON A FEDERAL INSTRUMENTALITY.

WHILE A "NATIONAL BANK" MAY BE A FEDERAL INSTRUMENTALITY FOR CERTAIN PURPOSES, IT IS NOT IN THE SAME CATEGORY AS AN AGENCY OF THE UNITED STATES GOVERNMENT, SUCH AS THE GENERAL SERVICES ADMINISTRATION. " NATIONAL BANKS" ARE PRIVATE CORPORATIONS ORGANIZED UNDER A GENERAL LAW OF CONGRESS BY INDIVIDUAL STOCKHOLDERS, WITH THEIR OWN CAPITAL, FOR PRIVATE GAIN, AND MANAGED BY OFFICERS, AGENTS AND EMPLOYEES OF THEIR OWN SELECTION. THEY CONSTITUTE NO PART OF ANY BRANCH OF THE GOVERNMENT OF THE UNITED STATES. SEE BRANCH V. UNITED STATES, 12 CT.1CL. 281. IN GUTHRIE V. HARKNESS, 199 U.S. 148, THE COURT SAID: " IT IS TRUE THAT FOR SOME PURPOSES A NATIONAL BANK IS A PUBLIC INSTITUTION, NOTWITHSTANDING IT IS THE SUBJECT OF PRIVATE OWNERSHIP.' THE GENERAL SERVICES ADMINISTRATION IS PART OF THE EXECUTIVE BRANCH OF THE GOVERNMENT OF THE UNITED STATES AND ITS EMPLOYEES ARE EMPLOYEES OF THE UNITED STATES. THUS, THE INSTANT CASE IS CLEARLY DISTINGUISHABLE FROM THE BANK OF DENVER CASE.

IN CONNECTION WITH A STATE STATUTE PROVIDING FOR WITHHOLDING BY EMPLOYERS OF THEIR EMPLOYEES' STATE INCOME TAX IT WAS STATED IN 27 COMP. GEN. 372 THAT:

IN VIEW OF THE WELL SETTLED CONSTITUTIONAL PRINCIPLE WHICH PRECLUDES THE REGULATION OR CONTROL BY A STATE, OR POLITICAL SUBDIVISION THEREOF, OF THE UNITED STATES IN THE EXERCISE OF ITS GOVERNMENTAL FUNCTIONS (SEE MAYO, ET AL. V. UNITED STATES, 319 U.S. 441; JOHNSON V. MARYLAND, 254 U.S. 51; OHIO V. THOMAS, 173, U.S. 276), AND SINCE IT IS OBVIOUS THAT THE EFFECT OF THE PROVISIONS OF THE OREGON TAX LAW HERE INVOLVED, SO FAR AS THE MATTER OF THE WITHHOLDING AND PAYMENT BY THE FEDERAL GOVERNMENT OF THE TAX IN QUESTION IS CONCERNED, IS SUCH AS TO IMPOSE A DIRECT BURDEN UPON THE UNITED STATES, IT MUST BE CONCLUDED THAT THE WITHHOLDING FEATURE OF THE OREGON INCOME TAX LAW IS NOT FOR APPLICATION IN THE CASE OF PAYMENTS OF SALARY OR WAGES TO FEDERAL EMPLOYEES. * * *

ALSO, IN A DECISION DATED AUGUST 17, 1948, 28 COMP. GEN. 101, THE SAME PRINCIPLE WAS APPLIED TO AN ORDINANCE OF THE CITY OF LOUISVILLE, KENTUCKY, REQUIRING EMPLOYERS TO COLLECT BY WITHHOLDING FROM THEIR EMPLOYEES' SALARIES OR WAGES AN ANNUAL LICENSE FEE IMPOSED THEREBY UPON EVERY PERSON ENGAGED IN AN OCCUPATION, TRADE, ETC., IN THE CITY. IT WAS STATED IN THE DECISION THAT IT IS APPARENT THAT NO DUTY OR RESPONSIBILITY WITH RESPECT TO THE LICENSE FEE PRESCRIBED BY THE SAID ORDINANCE CAN BE IMPOSED UPON THE UNITED STATES CONSISTENTLY WITH THE CONSTITUTIONAL PRINCIPLE INVOLVED.

IN CONNECTION WITH A STATE STATUTE PROVIDING THAT NO PERSON SHALL BE PERMITTED TO PROJECT ANY MOTION PICTURE WITHOUT FIRST OBTAINING A STATE LICENSE WE STATED IN 31 COMP. GEN. 81 THAT:

IT IS WELL ESTABLISHED THAT THE STATES HAVE NO POWER BY TAXATION OR OTHERWISE TO RETARD, IMPEDE, BURDEN OR IN ANY MANNER CONTROL THE OPERATION OF THE CONSTITUTIONAL LAWS ENACTED BY THE CONGRESS TO CARRY INTO EFFECT THE POWERS VESTED IN THE FEDERAL GOVERNMENT. SEE MCCULLOCH V. MARYLAND, 4 WHEAT. 316; OHIO V. THOMAS, 173 U.S. 276; JOHNSON V. MARYLAND, 254 U.S. 51; MAYO V. UNITED STATES, 319 U.S. 441. THIS RULE HAS BEEN FOLLOWED IN MANY CASES BY THIS OFFICE. SEE, AMONG OTHERS, 3 COMP. GEN. 663; 21 ID. 769; 22 ID. 537; 27 ID. 232; ID. 273; ID. 372, SOME OF WHICH ARE CITED IN YOUR LETTER. IN THE PRESENT CASE IT APPEARS THAT THE FOREST SERVICE IS CONDUCTING THE WORK INVOLVED AS ONE OF ITS OFFICIAL ACTIVITIES. ALSO, IT IS FOR THE FEDERAL GOVERNMENT TO DETERMINE THE COMPETENCY OF ITS EMPLOYEES FOR THE PERFORMANCE OF THE SERVICES FOR WHICH THEY ARE EMPLOYED. JOHNSON V. MARYLAND, SUPRA; 21 COMP. GEN. 507, 510. IT IS APPARENT, THEREFORE, THAT THE REQUIREMENT OF THE STATE STATUTE FOR AN EXAMINATION AND A LICENSE FOR A PROJECTIONIST TO PERFORM SUCH SERVICES HAVE NO APPLICATION TO THE UNITED STATES. NOTE THAT THE FOUR COURT CASES CITED IN THE ABOVE QUOTATION ARE THE OTHER ONES REFERRED TO IN THE REGIONAL OFFICE MEMORANDUM. 5 U.S.C. 84B AND 10, CITED IN THE DALLAS REGIONAL OFFICE MEMORANDUM, SPECIFICALLY AUTHORIZES FEDERAL AGENCIES TO WITHHOLD STATE INCOME TAXES FROM THE SALARIES OF FEDERAL EMPLOYEES IN STATES HAVING INCOME TAX WITHHOLDING LAWS.

THE PRINCIPLE SET FORTH IN THE ABOVE-CITED CASES IS EQUALLY FOR APPLICATION IN THE INSTANT CASE. IN DISPOSING OF FEDERAL SURPLUS PROPERTY THE GENERAL SERVICES ADMINISTRATION IS CONDUCTING THE WORK INVOLVED AS ONE OF ITS OFFICIAL ACTIVITIES (I.E., A GOVERNMENTAL FUNCTION) UNDER THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED. IS OBVIOUS THAT THE ABOVE-MENTIONED REQUIREMENTS OF THE TEXAS SALES TAX STATUTE, INSOFAR AS THE EXERCISE OF THE ACTIVITIES OF THE FEDERAL GOVERNMENT IS CONCERNED, INFRINGE UPON THE RIGHT OF THE GOVERNMENT TO CONDUCT SUCH ACTIVITIES FREE FROM STATE INTERFERENCE, CONTROL, OR REGULATION. HENCE, THERE IS NO BASIS UPON WHICH THE STATE MAY PROPERLY REQUIRE THE GENERAL SERVICES ADMINISTRATION TO COMPLY WITH THE TEXAS LIMITED SALES, EXCISE AND USE TAX ACT, INCLUDING THE COLLECTION PROVISION.

AS FAR AS THE INSTANT VOUCHER IS CONCERNED, IT MAY BE CERTIFIED FOR PAYMENT INASMUCH AS IT WOULD BE LESS BURDENSOME FOR THE GOVERNMENT TO DISPOSE OF THE FUNDS COLLECTED IN SUCH MANNER--- IT BEING UNDERSTOOD THAT IT DOES NOT SIGNIFY ACQUIESCENCE BY THE UNITED STATES TO THE PROVISIONS OF THE TEXAS STATE SALES STATUTE. THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS SHOULD BE SO ADVISED AND IT IS SUGGESTED THAT HE BE FURNISHED A COPY OF THIS DECISION.