B-103047, JUNE 22, 1951, 30 COMP. GEN. 519

B-103047, JUNE 22, 1951, 30 COMP. GEN. 519

TAXES - STATE AND FEDERAL - GASOLINE - VENDOR'S PAYMENT LIABILITY THE LEGAL LIABILITY FOR PAYMENT OF FEDERAL AND ARIZONA GASOLINE TAXES RESTS UPON THE PRODUCER, DISTRIBUTOR OR VENDOR AND IS IN NO WAY AFFECTED BY FAILURE TO COLLECT THE TAX FROM THE CONSUMER, SO THAT AMOUNTS REPRESENTING SUCH TAXES COLLECTED BY A CONCESSIONER INCIDENT TO THE SALE OF GASOLINE UNDER A GOVERNMENT CONTRACT SHOULD BE INCLUDED IN THE GROSS RECEIPTS UPON WHICH THE FRANCHISE FEE PAYABLE TO THE UNITED STATES IS COMPUTED UNDER THE CONTRACT.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE INTERIOR, JUNE 22, 1951:

REFERENCE IS MADE TO LETTER DATED APRIL 25, 1951, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY, REQUESTING ADVICE AS TO WHETHER THE PERCENTAGE OF GROSS REVENUE FRANCHISE FEE PAYABLE BY FRED HARVEY, CONCESSIONER, UNDER CONTRACT I-1P-1114, IS REQUIRED TO BE COMPUTED UPON AMOUNTS REPRESENTING STATE OF ARIZONA AND FEDERAL GASOLINE TAXES COLLECTED BY THE CONCESSIONER INCIDENT TO THE STATE OF GASOLINE IN THE COURSE OF THE CONCESSION BUSINESS.

UNDER THE CONTRACT IN QUESTION MR. HARVEY WAS GRANTED CONCESSION RIGHTS IN THE GRAND CANYON NATIONAL PARK IN RETURN FOR WHICH HE WAS TO PAY THE UNITED STATES A FRANCHISE FEE OF THREE PERCENT OF GROSS RECEIPTS IN EXCESS OF $600,000 PER ANNUM AS PROVIDED BY ARTICLE V (B) OF THE CONTRACT. CONNECTION WITH THE MATTER THE ADMINISTRATIVE ASSISTANT SECRETARY MAKES REFERENCE TO SIMILAR PROVISIONS IN CONTRACT I 1P-246 GRANTING CONCESSION RIGHTS IN THE SEQUOIA AND KINGS CANYON NATIONAL PARKS ( CALIFORNIA) TO THE SEQUOIA AND KINGS CANYON NATIONAL PARKS COMPANY, UNDER WHICH THE AUDIT DIVISION OF THIS OFFICE QUESTIONED THE PRACTICE OF EXCLUDING FROM GROSS RECEIPTS--- UPON WHICH THE FRANCHISE FEE PAYABLE TO THE GOVERNMENT WAS COMPUTED--- AMOUNTS REPRESENTING FEDERAL AND CALIFORNIA GASOLINE TAXES.

ARTICLE V (B) OF THE CONCESSION CONTRACT HERE INVOLVED IS IN PART AS FOLLOWS:

GROSS REVENUES FOR THE PURPOSE OF THIS PARAGRAPH SHALL BE UNDERSTOOD TO MEAN THE TOTAL AMOUNT RECEIVED, REALIZED, OR ACCRUING TO THE COMPANY FROM ALL SALES, FOR CASH OR CREDIT, OF SERVICES, ACCOMMODATIONS, MATERIALS, AND OTHER CONSIDERATIONS MADE PURSUANT TO THE PRIVILEGES AUTHORIZED IN THIS AGREEMENT, INCLUDING COMMISSIONS EARNED ON CONTRACTS OR AGREEMENTS WITH OTHER PERSONS OR COMPANIES OPERATING IN THE PARK, AND EXCLUDING INTRA- COMPANY EARNINGS ON ACCOUNT OF CHARGES TO OTHER DEPARTMENTS OF THE CORPORATION. (SUCH AS LAUNDRY; CHARGES TO EMPLOYEES EMPLOYEES FOR MEALS, TRANSPORTATION, LAUNDRY, ETC.: CASH DISCOUNTS ON PURCHASES; INTEREST ON MONEY LOANED OR IN BANK ACCOUNTS; INCOME FROM INVESTMENTS OR FROM SUBSIDIARY COMPANIES OUTSIDE OF THE PARK; AND SALES OF PROPERTY OTHER THAN THAT PURCHASED IN THE REGULAR COURSE OF BUSINESS FOR THE PURPOSE OF RESALE;), PROVIDED, HOWEVER, THE RIGHT IS RESERVED TO THE SECRETARY, IN CASE OF DISPUTE AS TO ANY ITEM OR ITEMS OF REVENUE, TO DETERMINE WHETHER OR NOT SAID ITEM OR ITEMS SHOULD BE INCLUDED IN THE AMOUNT OF GROSS REVENUES REPORTED BY THE COMPANY FOR THE PURPOSE OF COMPUTING THE COMPENSATION TO BE PAID THE GOVERNMENT UNDER THIS CONTRACT, AND HIS DECISION IN THE PREMISES SHALL BE FINAL;

THUS, AS THE SECRETARY OF THE INTERIOR YOU ARE VESTED WITH FINAL AUTHORITY TO DETERMINE THE ITEMS OF REVENUE TO BE INCLUDED WITHIN THE TERM "GROSS RECEIPTS" AND GENERALLY SUCH A DETERMINATION WILL NOT BE QUESTIONED BY THIS OFFICE. SEE UNITED STATES V. MOORMAN, 338 U.S. 457. HOWEVER, THE LETTER OF THE ADMINISTRATIVE ASSISTANT SECRETARY PRESENTS SEVERAL QUESTIONS ON WHICH ADVISE IS REQUESTED PRIOR TO YOUR MAKING A DETERMINATION IN THE INSTANT MATTER, THE FIRST OF WHICH IS:

1. WHERE DOES THE LEGAL INCIDENCE OF THE FEDERAL, ARIZONA, AND CALIFORNIA GASOLINE TAXES FALL?

THE FEDERAL TAX ON GASOLINE IMPOSED UNDER SECTION 3412 OF THE INTERNAL REVENUE CODE IS A TAX LEVIED AGAINST THE PRODUCER OR IMPORTER AS DEFINED IN THAT SECTION. IT IS THE PRODUCER OR IMPORTER WHO IS REQUIRED TO FILE RETURNS AND PAY THE TAX, AND, WHILE IN THE NORMAL COURSE OF BUSINESS SUCH TAX IS PASSED ALONG TO THE CONSUMER, NEVERTHELESS THE LEGAL INCIDENCE OF THE TAX IS UPON THE PRODUCER OR IMPORTER. LIKEWISE, THE LEGAL INCIDENCE OF THE GASOLINE TAX IMPOSED IN ACCORDANCE WITH SECTION 7351 OF DEERINGS CALIFORNIA REVENUE AND TAXATION CODE RESTS UPON THE DISTRIBUTOR OR VENDOR OF THE GASOLINE RATHER THAN UPON THE CONSUMER OR VENDEE. SEE 27 COMP. GEN. 180. AS POINTED OUT IN THE LETTER OF THE ADMINISTRATIVE ASSISTANT SECRETARY, THE ARIZONA GASOLINE TAX LEVIED IN ACCORDANCE WITH 66-301 OF THE ARIZONA CODE, ANNOTATED, IS SUBSTANTIALLY SIMILAR TO THE CALIFORNIA GASOLINE TAX IN THAT BOTH SUCH TAXES ARE "LICENSE TAXES" IMPOSED UPON THE DISTRIBUTOR RATHER THAN THE CONSUMER OF GASOLINE. NEITHER OF THE LAWS REQUIRES THAT THE TAX BE PASSED ON TO THE CONSUMER, AND SHOULD THE DISTRIBUTOR FOR ANY REASON FAIL TO COLLECT THE TAX, HIS LIABILITY FOR THE SAME IS IN NO WAY AFFECTED. HENCE, IT IS THE VIEW OF THIS OFFICE THAT THE LEGAL INCIDENCE OF THE ARIZONA GASOLINE TAX ALSO IS UPON THE DISTRIBUTOR OR VENDOR.

THE SECOND QUESTION PRESENTED IS AS FOLLOWS:

2. IN THE EVENT YOU BELIEVE THAT THE LEGAL INCIDENCE OF THE ABOVE MENTIONED TAXES FALLS ON THE REFINER IN THE CASE OF THE FEDERAL GASOLINE TAX AND ON THE BULK DISTRIBUTORS IN THE CASE OF THE STATE TAXES, THEN SHOULD THE RESPECTIVE TAXES BE TREATED MERELY AS "COST OF GOODS" TO THE RETAILER AND NOT EXCLUDED FROM GROSS REVENUES IN COMPUTING FRANCHISE FEES DUE THE GOVERNMENT.

SINCE IN ALL THREE CASES THE LEGAL LIABILITY FOR PAYMENT OF THE GASOLINE TAXES IN QUESTION RESTS UPON PARTIES OTHER THAN THE VENDEES (CONSUMERS) OF THE CONCESSIONER, IT LOGICALLY CANNOT BE CONTENDED THAT THE CONCESSIONER ACTS ONLY IN THE CAPACITY OF A TAX COLLECTION AGENT IN COLLECTING AND FORWARDING TAXES PAID BY SUCH VENDEES. ON THE CONTRARY IT WOULD APPEAR THAT THE AMOUNTS COLLECTED BY THE CONCESSIONER AS TAXES ARE RETAINED BY HIM AS REIMBURSEMENT FOR SIMILAR AMOUNTS PAID BY HIM TO HIS SUPPLIER. CONNECTION WITH THE MATTER YOUR ATTENTION IS INVITED TO THE FOLLOWING DEFINITION IN WEBSTER'S NEW INTERNATIONAL DICTIONARY: " THE GROSS EARNINGS, RECEIPTS, OR THE LIKE, ARE THE ENTIRE EARNINGS, RECEIPTS, OR THE LIKE, UNDER CONSIDERATION, WITHOUT ANY DEDUCTIONS.' THERE IS NO INDICATION THAT THE TERM "GROSS RECEIPTS" WAS EMPLOYED IN THE CONTRACT HERE INVOLVED IN OTHER THAN ITS ORDINARY MEANING. IN FACT, THOSE ITEMS WHICH WERE INTENDED TO HAVE BEEN EXCLUDED FROM ITS SCOPE WERE SPECIFICALLY ENUMERATED IN THE CONTRACT. SINCE STATE AND FEDERAL GASOLINE TAXES WERE NOT SET FORTH AMONG THE ITEMS EXCLUDED FROM THE TERM "GROSS RECEIPTS" AS EMPLOYED IN THE CONTRACT, IT FOLLOWS THAT THEY WERE NOT INTENDED TO HAVE BEEN SO EXCLUDED.

ACCORDINGLY, IT IS THE VIEW OF THIS OFFICE THAT THE AMOUNTS COLLECTED BY THE CONCESSIONER REPRESENTING STATE AND FEDERAL GASOLINE TAXES SHOULD BE INCLUDED IN THE GROSS RECEIPTS UPON WHICH THE FRANCHISE FEE PAYABLE TO THE UNITED STATES IS COMPUTED. THAT BEING SO, DISCUSSION OF THE REMAINING QUESTIONS PRESENTED IN THE LETTER OF THE ADMINISTRATIVE ASSISTANT SECRETARY IS NOT DEEMED APPROPRIATE. AS TO FUTURE CONCESSION CONTRACTS, IT APPEARS DESIRABLE, AS SUGGESTED IN THE LETTER, THAT APPROPRIATE LANGUAGE BE INCLUDED THEREIN SPECIFICALLY SETTING FORTH THE INTENTIONS OF THE PARTIES AS TO THE TREATMENT TO BE ACCORDED SUCH TAXES.