B-168580, JAN. 2, 1970

B-168580, JAN. 2, 1970

TRANSPORTATION--STATE TAXES--AIR CHARTER SERVICE DECISION TO CERTIFYING OFFICER OF BUREAU OF RECLAMATION CONCLUDING THAT VOUCHER FOR CALIFORNIA USE TAX ON CHARTER AIR SERVICE FURNISHED BY PATTERSON AIRCRAFT CO. MAY NOT BE CERTIFIED FOR PAYMENT. SINCE LEGAL INCIDENCE OF CALIFORNIA "USE" TAX ON CHARTER AIRPLANE SERVICE LEASED BY FEDERAL GOVERNMENT IS ON THE VENDEE, THE USER OF TANGIBLE PERSONAL PROPERTY, THE UNITED STATES IS ENTITLED TO ITS CONSTITUTIONAL PREROGATIVE OF IMMUNITY FROM THE PAYMENT OF SUCH TAX INCIDENT TO THE TRANSACTION AND THEREFORE IN ABSENCE OF ANY PROVISION IN THE CHARTER AGREEMENT FOR PAYMENT OF STATE AND LOCAL TAXES SUCH USE TAX MAY NOT BE PAID.

TO MR. A. E. DAZELL:

YOUR LETTER OF DECEMBER 5, 1969, FILE 2-363, WITH ENCLOSURES, REQUESTS AN ADVANCE DECISION AS TO WHETHER YOU MAY PROPERLY CERTIFY FOR PAYMENT CALIFORNIA USE TAX ON A CHARTER SERVICE BILLING BY PATTERSON AIRCRAFT COMPANY. YOU ENCLOSE COPIES OF CHARTER AIRPLANE AGREEMENT NO. 200-S- 55,148, GOVERNMENT TRANSPORTATION REQUEST A 8,877,292 ISSUED FOR THE CHARTERED FLIGHT, AND PATTERSON'S INVOICE NO. 2812 FOR $223.05 WHICH INCLUDES $9.21 REPRESENTING THE CALIFORNIA USE TAX. YOU QUESTION PAYMENT OF THE TAX AS YOU ARE UNABLE TO FIND AUTHORITY FOR PAYING USE TAXES ON CHARTERED AIR SERVICE BILLINGS.

YOUR LETTER STATES THAT REPRESENTATIVES OF PATTERSON AIRCRAFT COMPANY INSIST THAT, IF THE CALIFORNIA SALES TAX WAS NOT PAID ON A PLANE ORIGINALLY PURCHASED FOR RESALE, THE CALIFORNIA FRANCHISE TAX BOARD REQUIRES THE PAYMENT OF USE TAX ON ALL MONEYS RECEIVED FOR RENTAL OF THAT PARTICULAR PLANE.

CONCERNING THE PAYMENT OF STATE SALES AND USE TAXES GENERALLY, OUR OFFICE HAS HELD THAT THE QUESTION OF WHETHER THE UNITED STATES IS REQUIRED TO PAY TAX IMPOSED BY A 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 LAW OR STATE STATUTORY REGULATIONS PROMULGATED THEREUNDER BY STATE AUTHORITIES -- TO PURCHASE (OR LEASE) ITEMS WITHIN THE TERRITORIAL JURISDICTION OF THE STATE ON A TAX FREE BASIS. SEE ALABAMA V. KING AND BOOZER, 314 U.S. 1; 24 COMP. GEN. 150; 32 COMP. GEN. 423; ID. 577; 33 COMP. GEN. 453; AND 41 COMP. GEN. 719. ON THE OTHER HAND WHERE THE INCIDENCE OF THE TAX IS ON THE VENDEE, THE UNITED STATES IN PURCHASING OR LEASING ITEMS FOR OFFICIAL USE IS ENTITLED UNDER ITS CONSTITUTIONAL PREROGATIVE TO MAKE PURCHASES OR LEASES FREE FROM STATE TAXES AND TO RECOVER ANY AMOUNT OF SUCH TAXES WHICH MAY HAVE BEEN PAID BY IT.

AN EXAMINATION OF THE LAWS OF CALIFORNIA DISCLOSES THAT THE LEGAL INCIDENCE OF THE STATE "USE" TAX IS ON THE VENDEE, THE USER OF THE TANGIBLE PERSONAL PROPERTY AND THE UNITED STATES IS THUS CONSTITUTIONALLY IMMUNE FROM SUCH TAX. ADDITIONALLY WE NOTE THAT CHARTERED AIRPLANE AGREEMENT NO. 200-S-55,148 MAKES NO PROVISION FOR PAYMENT BY THE UNITED STATES OF STATE AND LOCAL TAXES.

ACCORDINGLY, THE CLAIM FOR $9.21 REPRESENTING THE CALIFORNIA USE TAX MAY NOT PROPERLY BE CERTIFIED FOR PAYMENT.

IT IS NOT CLEAR TO US FROM YOUR LETTER AND ENCLOSURES WHETHER THE AMOUNT CLAIMED FOR THE ACTUAL FLYING TIME AND STANDBY TIME (EXCLUSIVE OF THE AMOUNT CLAIMED AS USE TAX), $213.84, HAS PREVIOUSLY BEEN PAID. IF NOT, WE OF COURSE HAVE NO OBJECTION TO PAYMENT OF SUCH AMOUNT.

THE ENCLOSURES TO YOUR LETTER APPEAR TO BE MACHINE REPRODUCED COPIES OF ORIGINAL DOCUMENTS, AND WILL BE RETAINED HERE.