B-72101, JANUARY 28, 1948, 27 COMP. GEN. 412

B-72101: Jan 28, 1948

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- THE LEGAL INCIDENCE OF WHICH IS UPON THE VENDOR. - CERTIFIED ON ITS INVOICE THAT " STATE OR LOCAL SALES TAXES ARE INCLUDED IN THE AMOUNT BILLED. " PAYMENT IS REQUIRED TO BE MADE TO THE VENDOR WITHOUT DEDUCTION FROM THE QUOTED PRICES OF AN AMOUNT EQUIVALENT TO SAID TAX. EXECUTION OF A TAX EXEMPTION CERTIFICATE ( STANDARD FORM 1094/REVISED) IS NOT REQUIRED OF THE VENDOR. 1948: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 11. REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF INTERNATIONAL GENERAL ELECTRIC S.A. IT IS STATED IN YOUR LETTER THAT: * * * THIS VOUCHER IS SUPPORTED BY AN ATTACHED INVOICE DETAILING THE SALE OF CERTAIN ELECTRICAL SUPPLIES TO THE UNITED STATES GOVERNMENT.

B-72101, JANUARY 28, 1948, 27 COMP. GEN. 412

TAXES - PUERTO RICO INSULAR EXCISE TAX - INCLUSION IN PURCHASE PRICE WHERE A VENDOR FURNISHING SUPPLIES TO THE GOVERNMENT AT QUOTED PRICES, INCLUDING THE AMOUNT THE APPLICABLE PUERTO RICO INSULAR EXCISE TAX--- THE LEGAL INCIDENCE OF WHICH IS UPON THE VENDOR--- CERTIFIED ON ITS INVOICE THAT " STATE OR LOCAL SALES TAXES ARE INCLUDED IN THE AMOUNT BILLED," PAYMENT IS REQUIRED TO BE MADE TO THE VENDOR WITHOUT DEDUCTION FROM THE QUOTED PRICES OF AN AMOUNT EQUIVALENT TO SAID TAX, AND EXECUTION OF A TAX EXEMPTION CERTIFICATE ( STANDARD FORM 1094/REVISED) IS NOT REQUIRED OF THE VENDOR.

ACTING COMPTROLLER GENERAL YATES TO ROGER M. WILSON, DEPARTMENT OF COMMERCE, JANUARY 28, 1948:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 11, 1947, WITH ENCLOSURES, REQUESTING DECISION WHETHER YOU ARE AUTHORIZED TO CERTIFY FOR PAYMENT A VOUCHER TRANSMITTED THEREWITH IN FAVOR OF INTERNATIONAL GENERAL ELECTRIC S.A., INC., SAN JUAN, PUERTO RICO, IN THE AMOUNT OF $5.80, AND IF SO, AS TO THE FORM OF CERTIFICATION WITH RESPECT TO STATE AND LOCAL TAXES TO BE REQUIRED ON THE VOUCHER OR SUPPORTING INVOICE.

IT IS STATED IN YOUR LETTER THAT:

* * * THIS VOUCHER IS SUPPORTED BY AN ATTACHED INVOICE DETAILING THE SALE OF CERTAIN ELECTRICAL SUPPLIES TO THE UNITED STATES GOVERNMENT. UNDER THE LAWS OF PUERTO RICO, THESE ARTICLES ARE SUBJECT TO A TAX COMMONLY KNOWN AS AN INSULAR EXCISE-TAX WHICH IS ASSESSED AT THE TIME OF IMPORTATION UPON THE PERSON OR FIRM RESPONSIBLE FOR THEIR INTRODUCTION INTO PUERTO RICO. THE TREASURER OF PUERTO RICO HAS ANNOUNCED IN A CIRCULAR LETTER DATED MARCH 20, 1947, THAT THIS EXCISE TAX IS NOT SUBJECT TO REFUND TO EITHER THE VENDOR OR THE FEDERAL GOVERNMENT UPON LOCAL PURCHASES OF TAXABLE ITEMS BY THE LATTER AND ITS AGENCIES AND INSTRUMENTALITIES. IN VIEW OF THIS ANNOUNCEMENT, INTERNATIONAL GENERAL ELECTRIC S.A., INC., HAS NOT SEEN FIT TO SHOW THE AMOUNT OF THE TAX AS A SEPARATE ITEM ON THE ABOVE MENTIONED INVOICE, BUT INSTEAD HAS CERTIFIED THAT " STATE OR LOCAL SALES TAXES ARE INCLUDED IN THE AMOUNTS BILLED.'

ASIDE FROM ANY CONSIDERATION OF THE LEGAL EFFECT OF THE PROVISIONS OF THE TAXING STATUTES HERE INVOLVED, COGNIZANCE MUST BE HAD OF THE FACT THAT A VENDOR CANNOT BE COMPELLED TO SELL SUPPLIES TO THE UNITED STATES EXCEPT UPON SUCH TERMS AS HE MAY SEE FIT TO PRESCRIBE, AND THAT WHERE SUPPLIES ARE FURNISHED TO THE GOVERNMENT AT THE PRICE QUOTED BY A VENDOR THE GOVERNMENT IS OBLIGATED TO PAY THE FULL AMOUNT OF THE QUOTED PRICE EVEN THOUGH IT INCLUDES AN ITEM REPRESENTING A STATE OR LOCAL TAX. SEE 21 COMP. GEN. 719. THERE IS NO EXPRESS RECITAL IN THE INSTANT SUBMISSION AS TO THE PRECISE TERMS UPON WHICH THE PROCUREMENT IN THE OPEN MARKET OF THE SUPPLIES INVOLVED WAS CONSUMMATED. HOWEVER, IT IS ASSUMED, IN THE ABSENCE OF ANY REPRESENTATION BY YOU TO THE CONTRARY, THAT THE PRICES SET FORTH IN THE SUBJECT INVOICE ARE IDENTICAL WITH THE QUOTED PRICES AND THAT THERE WAS NO AGREEMENT OR UNDERSTANDING WITH RESPECT TO THE DEDUCTION FROM THE QUOTED PRICES OF AN AMOUNT EQUIVALENT TO THE TAX IN QUESTION. HENCE, PAYMENT IS REQUIRED TO BE MADE TO THE CONTRACTOR OF THE FULL AMOUNT OF THE INSTANT VOUCHER; AND, SINCE THERE IS NOTHING TO INDICATE THAT THE CERTIFICATION APPEARING ON THE INVOICE THAT " STATE OR LOCAL SALES TAXES ARE INCLUDED IN THE AMOUNTS BILLED" DOES NOT CORRECTLY STATE THE BASIS ON WHICH THE TRANSACTIONS COVERED THEREBY WERE CONSUMMATED, THE GOVERNMENT WOULD NOT BE JUSTIFIED IN REQUIRING A DIFFERENT FORM OF CERTIFICATION.

ACCORDINGLY, YOU ARE ADVISED THAT CERTIFICATION FOR PAYMENT OF THE INSTANT VOUCHER--- WHICH TOGETHER WITH RELATED PAPERS IS RETURNED HEREWITH --- IS AUTHORIZED, IF CORRECT IN OTHER RESPECTS.

MOREOVER, IT MAY BE STATED THAT NO REASONABLE BASIS IS APPARENT FOR A CLAIM BY THE UNITED STATES FOR A REFUND FROM THE TERRITORY OF PUERTO RICO OF THE AMOUNT PAID TO THE CONTRACTOR ON ACCOUNT OF THE INSULAR EXCISE TAX. IN THIS CONNECTION, IT IS TO BE OBSERVED THAT AN EXAMINATION OF THE PUERTO RICO LAWS HERE INVOLVED LEAVES NO ROOM FOR DOUBT THAT THE LEGAL INCIDENCE OF THE TAX PRESCRIBED THEREBY MUST BE REGARDED, SO FAR AS THE PRESENT MATTER IS CONCERNED, AS RESTING UPON THE CONTRACTOR RATHER THAN UPON THE UNITED STATES. ALSO, IT APPEARS THAT NEITHER THE STATUTORY PROVISIONS NOW IN EFFECT NOR THE REGULATIONS WITH RESPECT THERETO PROMULGATED BY THE PUERTO RICO TAXING AUTHORITIES PURPORT TO EXEMPT SUPPLIES PROCURED BY THE UNITED STATES IN PUERTO RICO, AS WERE THE SUPPLIES HERE INVOLVED, FROM THE INSULAR EXCISE TAX. CONSEQUENTLY, IT WILL NOT BE NECESSARY TO REQUIRE THE CONTRACTOR TO EXECUTE A UNITED STATES TAX EXEMPTION CERTIFICATE ( STANDARD FORM 1094/REVISED) WITH RESPECT TO THE TAX.