B-144504, JUN. 9, 1967
Highlights
YOU QUESTION WHETHER THE LEGAL INCIDENCE OF THE TAX IS ON THE VENDOR OR THE VENDEE. YOUR LETTER OF MAY 9 DISCLOSES THAT THE SOIL CONSERVATION SERVICE IN KENTUCKY OPERATES UNDER NO FORMAL CONTRACT WITH UTILITY COMPANIES SINCE RATES ARE FIXED BY A REGULATORY BODY AND INVOICES ARE ITEMIZED IN ACCORDANCE WITH 7 GAO 4510.20B. THE TAX IN QUESTION IS AUTHORIZED BY PART III OF HOUSE BILL NO. 471. AN EXAMINATION OF SECTION 9 OF PART III DISCLOSES THAT A THREE PERCENT TAX IS IMPOSED ON THE GROSS RECEIPTS DERIVED FROM FURNISHING. SECTION 9 OF THIS ACT MAY INCREASE ITS RATES IN ANY COUNTY IN WHICH IT IS REQUIRED TO PAY THE SCHOOL TAX BY THREE PERCENT. ANY UTILITY SO INCREASING ITS RATES SHALL SEPARATELY STATE ON THE BILLS SENT TO ITS CUSTOMERS THE AMOUNT OF SUCH INCREASE AND SHALL IDENTIFY SUCH AMOUNT AS: "RATE INCREASE FOR SCHOOL TAX.'" IT IS CLEAR FROM THE KENTUCKY STATUTE INVOLVED THAT THE TAX IN QUESTION IS IMPOSED ON THE VENDOR (UTILITY).
B-144504, JUN. 9, 1967
TO AUTHORIZED CERTIFYING OFFICER:
YOUR LETTER OF MARCH 7, 1967, AS SUPPLEMENTED BY YOUR LETTER OF MAY 9, 1967, AND ENCLOSURES CONCERNS PAYMENT OF THE KENTUCKY "UTILITY GROSS RECEIPTS LICENSE TAX FOR SCHOOLS" INCIDENT TO SERVICE FURNISHED BY THE SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY. YOU ENCLOSE A BILL FROM THE COMPANY WHICH INCLUDES THE TAX IN QUESTION AND INQUIRE AS TO THE PROPRIETY OF PAYMENT OF THE TAX. YOU QUESTION WHETHER THE LEGAL INCIDENCE OF THE TAX IS ON THE VENDOR OR THE VENDEE.
YOUR LETTER OF MAY 9 DISCLOSES THAT THE SOIL CONSERVATION SERVICE IN KENTUCKY OPERATES UNDER NO FORMAL CONTRACT WITH UTILITY COMPANIES SINCE RATES ARE FIXED BY A REGULATORY BODY AND INVOICES ARE ITEMIZED IN ACCORDANCE WITH 7 GAO 4510.20B.
THE TAX IN QUESTION IS AUTHORIZED BY PART III OF HOUSE BILL NO. 471, ENACTED BY THE GENERAL ASSEMBLY OF THE COMMONWEALTH OF KENTUCKY ON MARCH 9, 1966. AN EXAMINATION OF SECTION 9 OF PART III DISCLOSES THAT A THREE PERCENT TAX IS IMPOSED ON THE GROSS RECEIPTS DERIVED FROM FURNISHING--- AS FAR AS PERTINENT HERE--- TELEPHONIC SERVICES. SECTION 11 OF PART III PROVIDES, IN PART, THAT:
"* * * NOTWITHSTANDING THE PROVISIONS OF KRS 278.040 (2), ANY UTILITY REQUIRED TO PAY THE TAX AUTHORIZED BY PART III, SECTION 9 OF THIS ACT MAY INCREASE ITS RATES IN ANY COUNTY IN WHICH IT IS REQUIRED TO PAY THE SCHOOL TAX BY THREE PERCENT. ANY UTILITY SO INCREASING ITS RATES SHALL SEPARATELY STATE ON THE BILLS SENT TO ITS CUSTOMERS THE AMOUNT OF SUCH INCREASE AND SHALL IDENTIFY SUCH AMOUNT AS: "RATE INCREASE FOR SCHOOL TAX.'"
IT IS CLEAR FROM THE KENTUCKY STATUTE INVOLVED THAT THE TAX IN QUESTION IS IMPOSED ON THE VENDOR (UTILITY), ALTHOUGH THE VENDOR MAY PASS ON THE TAX BY INCREASING ITS RATES THREE PERCENT, SEPARATELY STATING ON THE BILLS THE AMOUNT OF THE TAX. SINCE THE LEGAL INCIDENCE OF THE TAX IS ON THE VENDOR THE CONSTITUTIONAL PRINCIPLE UNDER WHICH THE FEDERAL GOVERNMENT IS IMMUNE TO STATE OR LOCAL TAXATION IS NOT INVOLVED. 33 COMP. GEN. 453; 32 ID. 423; 24 ID. 150.
ACCORDINGLY, AND SINCE THE STATUTE INVOLVED AUTHORIZES THE UTILITY TO INCREASE ITS RATES BY THE AMOUNT OF THE TAX, THE BILL, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT, IF OTHERWISE CORRECT.