B-172025, MAR 30, 1971

B-172025: Mar 30, 1971

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

FEDERAL TRANSACTIONS - TAXATION DECISION HOLDING THAT THE FEDERAL GOVERNMENT IS SUBJECT TO AND CAN PAY THE APPLICABLE SALES TAX IN THE STATE OF KENTUCKY. WHEN THE INCIDENCE OF THE SALES TAX IS ON THE SELLER. FEDERAL GOVERNMENT TRANSACTIONS ARE SUBJECT TO TAXATION. YOU STATE THAT YOU HAVE ALWAYS FOLLOWED THE PRINCIPLE THAT WHERE THE LEGAL INCIDENCE OF THE SALES TAX IS ON THE SELLER. FEDERAL GOVERNMENT TRANSACTIONS ARE SUBJECT TO TAXATION AND SUCH TAXES MAY BE PAID. THIS IS. THE KENTUCKY SALES TAX IS IMPOSED UNDER KENTUCKY REVISED STATUTES 139.200 WHICH PROVIDES AS FOLLOWS: "139.200 IMPOSITION OF SALES TAX. ' A TAX IS HEREBY IMPOSED UPON ALL RETAILERS AT THE RATE OF FIVE PERCENT OF THE GROSS RECEIPTS OF ANY RETAILER DERIVED FROM 'RETAIL SALES' OR 'SALES AT RETAIL' MADE WITHIN THIS COMMONWEALTH ON AND AFTER APRIL 1.

B-172025, MAR 30, 1971

FEDERAL TRANSACTIONS - TAXATION DECISION HOLDING THAT THE FEDERAL GOVERNMENT IS SUBJECT TO AND CAN PAY THE APPLICABLE SALES TAX IN THE STATE OF KENTUCKY. IN ACCORD WITH PREVIOUS DECISIONS, WHEN THE INCIDENCE OF THE SALES TAX IS ON THE SELLER, FEDERAL GOVERNMENT TRANSACTIONS ARE SUBJECT TO TAXATION. CLEARLY, KENTUCKY REVISED STATUTES 139.200 IMPOSES A TAX ON THE VENDOR AND THE HIGHEST COURT OF KENTUCKY HAS CONSISTENTLY INTERPRETED IT THAT WAY. THE VOUCHER INCLUDING TAX MAY THEREFORE BE CERTIFIED FOR PAYMENT.

TO MR. R. W. ACCARDI:

THIS REFERS TO YOUR LETTER OF FEBRUARY 8, 1971, IN WHICH YOU REQUEST AN ADVANCE DECISION CONCERNING THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN FAVOR OF DUPONT LODGE, CUMBERLAND FALLS STATE PARK, CORBIN, KENTUCKY, FOR MEALS WHICH VOUCHER INCLUDES AN ITEM REPRESENTING KENTUCKY STATE SALES TAX.

YOU STATE THAT YOU HAVE ALWAYS FOLLOWED THE PRINCIPLE THAT WHERE THE LEGAL INCIDENCE OF THE SALES TAX IS ON THE SELLER, FEDERAL GOVERNMENT TRANSACTIONS ARE SUBJECT TO TAXATION AND SUCH TAXES MAY BE PAID. THIS IS, OF COURSE, IN ACCORD WITH OUR CONSISTENTLY EXPRESSED DECISIONS. B 144504, JUNE 30, 1970; ID. JUNE 9, 1967; 33 COMP. GEN. 453 (1954); 32 ID. 423 (1953); 24 ID. 150 (1944).

THE KENTUCKY SALES TAX IS IMPOSED UNDER KENTUCKY REVISED STATUTES 139.200 WHICH PROVIDES AS FOLLOWS:

"139.200 IMPOSITION OF SALES TAX.

"FOR THE PRIVILEGE OF MAKING 'RETAIL SALES' OR 'SALES AT RETAIL,' A TAX IS HEREBY IMPOSED UPON ALL RETAILERS AT THE RATE OF FIVE PERCENT OF THE GROSS RECEIPTS OF ANY RETAILER DERIVED FROM 'RETAIL SALES' OR 'SALES AT RETAIL' MADE WITHIN THIS COMMONWEALTH ON AND AFTER APRIL 1, 1968." (1968 H 399, PT. 1, SEC 4. EFF. 4-1-68. 1960 C 5, ART 1, SEC 20.)

IT IS OBVIOUS FROM THE ABOVE-QUOTED PROVISION OF KENTUCKY LAW THAT THE TAX IN QUESTION IS A TAX ON THE VENDOR. THUS, THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE FROM STATE TAXATION IS NOT FOR APPLICATION HERE. SEE ESSO STANDARD OIL CO. V EVANS, 345 U.S. 495 AND 24 COMP. GEN. 150 (1944).

HOWEVER, YOU FURTHER STATE THAT THE DETERMINATION AS TO WHETHER THE LEGAL INCIDENCE OF TAX APPLIES ONE WAY OR THE OTHER CANNOT NECESSARILY BE MADE FROM A TAX STATUTE. THE HIGHEST COURT OF THE STATE OF KENTUCKY, THE COURT OF APPEALS OF KENTUCKY, IN MARCUM V CITY OF LOUISVILLE MUNICIPAL HOUSING COMMISSION, 374 S.W. 2D 865 (1963) ON PAGE 866, HAS STATED, REGARDING THE SALES TAX IN QUESTION, THAT:

" *** IT IS JUST AS APPARENT THE LEGISLATURE INTENDED TO PLACE THE LEGAL INCIDENCE OF THE SALES TAX ON THE RETAILER, EVEN THOUGH THE ECONOMIC BURDEN MIGHT BE PASSED ON TO THE CONSUMER."

THIS HOLDING OF THE COURT OF APPEALS THAT THE KENTUCKY STATE SALES TAX IS A TAX ON THE VENDOR AND NOT ON THE VENDEE HAS BEEN CONSISTENTLY CITED AND FOLLOWED IN THE HIGHEST COURT OF THE STATE OF KENTUCKY. SEE THOMAS V CITY OF ELIZABETHTOWN, 403 S.W. 2D 269, 272 (1965); SECOND STREET PROPERTIES, INC. V FISCAL COURT OF JEFFERSON COUNTY, 445 S.W. 2D 709, 716 (1969); KENNEDY BOOK STORE, INC. V DEPARTMENT OF REVENUE, 450 S.W. 2D 524, 525 (1970).

THUS, IN THAT IT IS CLEAR FROM THE LANGUAGE OF THE KENTUCKY STATE SALES TAX THAT IT IS IMPOSED ON THE VENDOR AND IN THAT THE HIGHEST COURT OF KENTUCKY HAS CONSISTENTLY INTERPRETED IT THAT WAY, THE VOUCHER INCLUDING THE TAX IS HEREWITH RETURNED AND MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.

YOU ALSO ASK IF IT FOLLOWS THAT IN OTHER TRANSACTIONS WITHIN THE STATE OF KENTUCKY THE FEDERAL GOVERNMENT IS SUBJECT TO, AND CAN PAY THE APPLICABLE SALES TAX?

THE FEDERAL GOVERNMENT IN OTHER TRANSACTIONS WITHIN THE STATE OF KENTUCKY IS SUBJECT TO AND CAN PAY THE KENTUCKY STATE SALES TAX, IF THE SAME PROVISIONS OF THE KENTUCKY STATE SALES TAX ARE APPLICABLE TO THE TRANSACTIONS AS ARE APPLICABLE HERE. SEE B-144504, JANUARY 27, 1961.