B-162452, MAR. 5, 1968

B-162452: Mar 5, 1968

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UNDER CONTRACT PROVIDING THAT BID PRICES ARE EXCLUSIVE OF STATE AND LOCAL SALES TAXES. YOUR LETTER OF SEPTEMBER 8 SET FORTH THE FOLLOWING FACTS AND CIRCUMSTANCES: THE POSTAL DATA CENTER (CENTER) IS THE OFFICIAL DISBURSING OFFICE FOR ALL POST OFFICES LOCATED IN THE STATES OF ILLINOIS. ONE OF ITS RESPONSIBILITIES IS THE ISSUANCE OF CHECKS FOR THE PURCHASE OF VEHICLE PARTS BY THE POST OFFICES. WITH THE UNDERSTANDING THAT THE UNITED STATES GOVERNMENT WAS NOT SUBJECT TO THE STATE OF ILLINOIS SALES TAX. MAREMONT LATER RECEIVED NOTIFICATION FROM THE STATE OF ILLINOIS THAT ITS (OR ITS PREDECESSOR-S) SALES TO THE FEDERAL GOVERNMENT WERE SUBJECT TO SALES TAX DURING THE PERIOD JANUARY 1. PAYMENT ON THE VOUCHER IS NOT AUTHORIZED AND SUCH VOUCHER WILL BE RETAINED HERE.

B-162452, MAR. 5, 1968

CONTRACTS - TAXES - STATE SALES TAXES DECISION TO CERTIFYING OFFICER OF POSTAL DATA CENTER AUTHORIZING CERTIFICATION OF VOUCHER FOR REFUND OF ILLINOIS RETAILERS' OCCUPATION TAX TO MAREMONT CORPORATION SUPPLIER OF VEHICLE PARTS TO P.O. UNDER CONTRACT PROVIDING THAT BID PRICES ARE EXCLUSIVE OF STATE AND LOCAL SALES TAXES, CONTRACTOR WHO PAID ILLINOIS STATE SALES TAX MAY BE ALLOWED REFUND ON BASIS OF DECISION IN MATHIESON CASE.

TO MR. C. W. LA MAR:

YOUR LETTER OF SEPTEMBER 8, 1967, AND ENCLOSURES, AS SUPPLEMENTED BY INFORMATION FURNISHED IN YOUR LETTER OF DECEMBER 11, 1967 (YOUR REFERENCE 9121-WH: SN), AND ENCLOSURES, CONCERNS THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER IN FAVOR OF THE MAREMONT CORPORATION (CORPORATION) FOR $430.16 COVERING A REFUND OF THE ILLINOIS RETAILERS' OCCUPATION TAX.

YOUR LETTER OF SEPTEMBER 8 SET FORTH THE FOLLOWING FACTS AND CIRCUMSTANCES:

THE POSTAL DATA CENTER (CENTER) IS THE OFFICIAL DISBURSING OFFICE FOR ALL POST OFFICES LOCATED IN THE STATES OF ILLINOIS, MICHIGAN, WISCONSIN, MINNESOTA, NORTH DAKOTA, AND SOUTH DAKOTA, AND ONE OF ITS RESPONSIBILITIES IS THE ISSUANCE OF CHECKS FOR THE PURCHASE OF VEHICLE PARTS BY THE POST OFFICES. IN THIS INSTANCE, POST OFFICE GARAGES IN CHICAGO, ILLINOIS, PURCHASED PARTS FROM THE MAREMONT CORPORATION AND THE CORPORATION PREPARED INVOICES APPLICABLE TO THESE PURCHASES, INCLUDING THE SALES TAX, AND SENT THEM TO THE CHICAGO POST OFFICE FOR CERTIFICATION. THE POST OFFICE IN TURN FORWARDED THEM TO THE CENTER FOR PAYMENT. PAYMENT OF THESE INVOICES INCLUDED THE SALES TAX IN THE AMOUNT OF $430.16.

YOU ADVISED THAT UNDER DATE OF JULY 6, 1961, THE MAREMONT CORPORATION SENT THE CENTER A CHECK IN THE AMOUNT OF $430.16 COVERING REFUND OF THE ILLINOIS RETAILERS' OCCUPATION TAX (SALES TAX) PAID BY THE CENTER FROM JANUARY 1, 1958, TO JANUARY 1, 1961, WITH THE UNDERSTANDING THAT THE UNITED STATES GOVERNMENT WAS NOT SUBJECT TO THE STATE OF ILLINOIS SALES TAX. MAREMONT LATER RECEIVED NOTIFICATION FROM THE STATE OF ILLINOIS THAT ITS (OR ITS PREDECESSOR-S) SALES TO THE FEDERAL GOVERNMENT WERE SUBJECT TO SALES TAX DURING THE PERIOD JANUARY 1, 1958, THROUGH JANUARY 1961, AND REQUESTED A REFUND OF $430.16 FROM THE POST OFFICE DEPARTMENT.

IN VIEW OF THE CORPORATION'S SWORN DECLARATION THAT IT (OR ITS PREDECESSOR) HAD PAID SAID AMOUNT TO THE STATE OF ILLINOIS AND FURTHER, THAT THE STATE HAD NOT AT ANY TIME REFUNDED THIS AMOUNT TO THE MAREMONT CORPORATION (OR ITS PREDECESSOR), YOU INQUIRED WHETHER THE VOUCHER IN FAVOR OF MAREMONT CORPORATION FOR $430.16 MAY BE CERTIFIED FOR PAYMENT.

IN OUR LETTER OF OCTOBER 6, 1967, TO YOU, WE ADVISED YOU, IN PERTINENT PART, THAT:

"ON THE BASIS OF THE PRESENT RECORD, PAYMENT ON THE VOUCHER IS NOT AUTHORIZED AND SUCH VOUCHER WILL BE RETAINED HERE. IF FURTHER CONSIDERATION OF THE MATTER IS DESIRED IT WOULD BE NECESSARY THAT ADDITIONAL INFORMATION BE FURNISHED. WE SHOULD BE ADVISED WHETHER YOU (OR YOUR DEPARTMENT) HAD SATISFACTORILY ESTABLISHED THAT THE TAXES IN QUESTION WERE PAID TO THE STATE (AND THE DATE OR DATES OF SUCH PAYMENTS) AND THAT THE STATE HAD MADE NO REFUND THEREOF TO THE CORPORATION. WE WOULD ALSO NEED INFORMATION CONCERNING THE ACTION TAKEN BY THE CORPORATION (OR ITS PREDECESSORS), IF ANY, TO OBTAIN REFUND OR CREDIT (FROM THE STATE) FOR THE TAXES PAID AND THE DATE OR DATES SUCH ACTION WAS TAKEN, AS WELL AS A COPY OF THE NOTIFICATION THE CORPORATION (OR ITS PREDECESSORS) RECEIVED FROM THE STATE OF ILLINOIS TO THE EFFECT THAT SALES TO THE UNITED STATES WERE SUBJECT TO THE TAX DURING THE PERIOD INVOLVED. ALSO, INFORMATION SHOULD BE FURNISHED INDICATING WHETHER THE CONTRACT OR CONTRACTS INVOLVED REQUIRED THE GOVERNMENT TO REIMBURSE THE CONTRACTOR THE TAX.'

THE MATERIAL SUBMITTED WITH YOUR LETTER OF DECEMBER 11, 1967, APPEARS TO SATISFACTORILY ESTABLISH THAT THE TAXES IN QUESTION WERE PAID TO THE STATE, THAT THE CORPORATION MADE CLAIM FOR REFUND AND THAT ITS CLAIM WAS TENTATIVELY DENIED.

THE COPY OF THAT PORTION OF THE CONTRACT ("INVITATION, BID, AND AWARD") ENCLOSED WITH YOUR LETTER OF DECEMBER 11 DISCLOSES THAT THE CONTRACT EXPRESSLY PROVIDED THAT THE "PRICES BID HEREIN ARE EXCLUSIVE OF ALL STATE AND/OR MUNICIPAL SALE TAXES.' ALSO, THE CONTRACT INCORPORATES BY REFERENCE THE "GENERAL PROVISIONS" CONTAINED IN STANDARD FORM 32 (PRESUMABLY THE NOVEMBER 1949 EDITION). PARAGRAPH 10 OF STANDARD FORM 32, NOV. 1949, ED., PROVIDES IN PERTINENT PART AS FOLLOWS:

"/C) STATE OR LOCAL TAXES.--- EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT, THE CONTRACT PRICE DOES NOT INCLUDE ANY STATE OR LOCAL DIRECT TAX IN EFFECT ON THE CONTRACT DATE.

"/E) PRICE ADJUSTMENT.--- IF, AFTER THE CONTRACT DATE, THE FEDERAL GOVERNMENT OR ANY STATE OF LOCAL GOVERNMENT EITHER (I) IMPOSES OR INCREASES (OR REMOVES AN EXEMPTION WITH RESPECT TO) ANY DIRECT TAX, OR ANY TAX DIRECTLY APPLICABLE TO THE MATERIALS OR COMPONENTS USED IN THE MANUFACTURE OR FURNISHING OF THE COMPLETED SUPPLIES OR SERVICES COVERED BY THIS CONTRACT, OR (II) REFUSES TO ACCEPT THE EVIDENCE OF EXEMPTION, FURNISHED UNDER PARAGRAPH (D) HEREOF, WITH RESPECT TO ANY DIRECT TAX EXCLUDED FROM THE CONTRACT PRICE, AND IF UNDER EITHER (I) OR (II) THE CONTRACTOR IS OBLIGED TO AND DOES PAY OR BEAR THE BURDEN OF ANY SUCH TAX (AND DOES NOT SECURE A REFUND THEREOF), THE CONTRACT PRICE SHALL BE CORRESPONDINGLY INCREASED. IF, AFTER THE CONTRACT DATE, THE CONTRACTOR IS RELIEVED IN WHOLE OR IN PART FROM THE PAYMENT OR THE BURDEN OF ANY DIRECT TAX INCLUDED IN THE CONTRACT PRICE, OR ANY TAX DIRECTLY APPLICABLE TO THE MATERIALS OR COMPONENTS USED IN THE MANUFACTURE OR FURNISHING OF THE COMPLETED SUPPLIES OR SERVICES COVERED BY THIS CONTRACT, THE CONTRACTOR AGREES PROMPTLY TO NOTIFY THE CONTRACTING OFFICER OF SUCH RELIEF, AND THE CONTRACT PRICE SHALL BE CORRESPONDINGLY DECREASED OR THE AMOUNT OF SUCH RELIEF PAID OVER TO THE GOVERNMENT. INVOICES OR VOUCHERS COVERING ANY INCREASE OR DECREASE IN CONTRACT PRICE PURSUANT TO THE PROVISIONS OF THIS PARAGRAPH SHALL STATE THE AMOUNT THEREOF, AS A SEPARATE ADDED OR DEDUCTED ITEM, AND SHALL IDENTIFY THE PARTICULAR TAX IMPOSED, INCREASED, ELIMINATED, OR DECREASED.'

FROM THE FOREGOING IT APPEARS THAT THE TAX INVOLVED WAS NOT INCLUDED IN THE CONTRACT SALES PRICE. UNDER PARAGRAPH 10 OF THE GENERAL PROVISIONS IF THE CORPORATION WAS OBLIGED TO, AND DID PAY OR BEAR THE BURDEN OF ANY DIRECT TAX EXCLUDED FROM THE CONTRACT PRICE (AND COULD NOT SECURE A REFUND THEREOF) THE CONTRACT PRICE WAS TO BE CORRESPONDINGLY INCREASED. THUS, UNDER THE CONTRACT IN QUESTION IT IS CLEAR THAT THE CORPORATION IS ENTITLED TO BE REIMBURSED THE AMOUNT OF THE TAX INVOLVED, IF IT WAS REQUIRED TO AND DID PAY THE TAX AND CANNOT SECURE A REFUND, PROVIDED THE CONTRACTOR HAD TAKEN SUCH STEPS AS DIRECTED BY THE CONTRACTING OFFICER TO PRESERVE ALL RIGHTS TO REFUND OF THE TAX PAID BY IT, IN ACCORDANCE WITH SUBPARAGRAPH (E) OF THE TAX CLAUSE OF THE CONTRACT. SEE 33 COMP. GEN. 74.

WE ALSO NOTE FROM THE ADDITIONAL INFORMATION FURNISHED WITH YOUR LETTER OF DECEMBER 11 THAT THE CORPORATION FILED A "CLAIM FOR CREDIT" (DATED JULY 18, 1961) FOR THE TAX IN QUESTION WITH THE STATE OF ILLINOIS; AND THAT BY LETTER DATED AUGUST 22, 1966, THE STATE ADVISED THE CORPORATION THAT "IT IS THE DEPARTMENT'S (OF REVENUE) TENTATIVE DETERMINATION THAT IT (THE CLAIM) SHOULD NOT BE APPROVED.' THUS, IT IS CLEAR THE DEPARTMENT'S (STATE -S) DETERMINATION NOT TO APPROVE THE CLAIM WAS ONLY TENTATIVE AND NOT FINAL.

IN THE CIRCUMSTANCES THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT, PROVIDED THE CORPORATION OBTAINS FROM THE STATE A FINAL DETERMINATION THAT THE TAX CLAIM WILL NOT BE ALLOWED. CF. 39 COMP. GEN. 432.

THE CORPORATION SHOULD BE ADVISED TO BASE ITS CLAIM FOR REFUND ON THE GROUNDS SET FORTH IN OUR LETTER OF OCTOBER 6, 1967, B-162452, TO YOU, I.E., ON THE BASIS OF THE COURT DECISIONS IN THE MATHIESON CASE.