B-162060, AUG. 29, 1969

B-162060, AUG. 29, 1969

CONTRACTS - STATE TAX ON RENTALS UNDER FEDERAL SUPPLY SCHEDULE DECISION TO ARMY ENGINEER CORPS DISTRICT COUNSEL, CONCERNING DECISION B- 162020, MAY 27, 1968, RELATIVE TO REIMBURSEMENT OF CALIFORNIA SALES AND USE TAX TO MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC. WITH AIR FORCE. DECISION OF MAY 27, 1968, AUTHORIZED PAYMENT OF THE TAXES FOR THE PERIOD SEPTEMBER 1963 THROUGH DECEMBER 1965. THE QUESTION OF THE REIMBURSABILITY OF TAXES UNDER LEASES DATING BACK TO 1962 MUST BE DETERMINED ON THE BASIS OF THE TAX CLAUSES IN THE PARTICULAR CONTRACTS IF DIFFERENT FROM THOSE IN THE CONTRACT IN THE 1968 DECISION.

TO MR. GREENFIELD:

WE ARE IN RECEIPT OF YOUR LETTER (YOUR REFERENCE: SPLOC) OF JULY 7, 1969, CONCERNING OUR DECISION B-162060, MAY 27, 1968, RELATIVE TO THE REIMBURSEMENT OF CALIFORNIA SALES AND USE TAX TO THE MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC. (MOTOROLA), UNDER AIR FORCE CONTRACTS NOS. AF 30/635/-34430 AND AF 34/601/-23068.

YOU INDICATE THAT A DISPUTE HAS ARISEN BETWEEN YOUR OFFICE AND MOTOROLA AS TO THE INTERPRETATION OF THE FOLLOWING PARAGRAPHS OF OUR MAY 27 DECISION:

"WE ALSO ARE ADVISED THAT GSA ISSUED A NOTICE UNDER DATE OF APRIL 1, 1968, ADVISING AGENCIES WHICH HAD RENTED PERSONAL PROPERTY UNDER FEDERAL SUPPLY SCHEDULE CONTRACTS THAT PAYMENT IS NOW IN ORDER FOR ANY CALIFORNIA SALES AND USE TAXES LEVIED UPON SUCH RENTALS SUBSEQUENT TO AUGUST 1, 1965.

"IN THE CIRCUMSTANCES WE HAVE NO OBJECTIONS TO PAYMENT TO THE MOTOROLA COMPANY OF SUCH CALIFORNIA TAXES PAID BY IT ON RENTALS UNDER THE CONTRACTS OF YOUR DEPARTMENT.'

YOU ADVISE THAT YOUR OFFICE BELIEVES THAT WE INTENDED TO WAIVE OBJECTION TO THE PAYMENT OF ONLY THOSE TAXES LEVIED SUBSEQUENT TO AUGUST 1, 1965; WHEREAS THE MOTOROLA COMPANY INTERPRETS OUR DECISION AS MEANING THAT WE HAD NO OBJECTION TO THE PAYMENT OF ANY TAXES LEVIED, WHETHER BEFORE OR AFTER AUGUST 1, 1965. SPECIFICALLY, YOU WISH TO BE ADVISED AS TO WHETHER WE HAVE ANY OBJECTION TO THE REIMBURSEMENT OF TAXES PAID BY MOTOROLA PRIOR TO AUGUST 1, 1965, SINCE YOUR RENTALS FROM THE MOTOROLA COMPANY, UNDER THE SAME LEASES WHICH WERE INVOLVED IN OUR DECISION, DATE BACK TO 1962, AND THE MOTOROLA COMPANY HAS PAID TAXES FROM THAT TIME.

AS INDICATED IN OUR DECISION OF MAY 27, 1968, THE SOLE QUESTION BEFORE US WAS THE PROPRIETY OF THE ALLOWANCES OF PAYMENT OF TWO VOUCHERS IN FAVOR OF THE MOTOROLA COMPANY UNDER THE AIR FORCE CONTRACTS AFOREMENTIONED FOR THE PERIOD SEPTEMBER 1963 THROUGH DECEMBER 1965. WE HAD EARLIER FOUND IN OUR DECISION OF FEBRUARY 12, 1968, THAT THE GOVERNMENT APPEARED TO BE LIABLE TO REIMBURSE MOTOROLA COMPANY FOR CALIFORNIA SALES AND USE TAXES PROPERLY IMPOSED ON RENTALS OF TANGIBLE PERSONAL PROPERTY LEASED PURSUANT TO THE AIR FORCE CONTRACTS. WHILE THE AIR FORCE DID NOT QUESTION THE PROPRIETY OF SUCH REIMBURSEMENT, THE GENERAL SERVICES ADMINISTRATION HAD REQUESTED THAT PAYMENT BE DEFERRED PENDING ITS EFFORTS TO SETTLE A DISPUTE BETWEEN THE GOVERNMENT AND THE STATE OF CALIFORNIA AS TO THE APPLICABILITY OF CALIFORNIA SALES AND USE TAXES TO RENTALS PAID UNDER CERTAIN LEASES TO GOVERNMENT INSTALLATIONS UNDER FEDERAL SUPPLY SCHEDULE CONTRACTS SUBSEQUENT TO AUGUST 1, 1965. TO AVOID ANY PREJUDICE TO THE POSITION OF THE GOVERNMENT WITH REGARD TO THOSE TAXES LEVIED AFTER AUGUST 1, 1965, WE ADVISED THE CERTIFYING OFFICER IN THE DECISION OF FEBRUARY 12, 1968, NOT TO CERTIFY THE MOTOROLA VOUCHERS FOR PAYMENT AT THAT TIME, EVEN THOUGH SOME OF THE TAXES WERE LEVIED AGAINST MOTOROLA PRIOR TO THAT DATE.

THEREAFTER, AS INDICATED IN THE ABOVE-QUOTED PORTION OF OUR DECISION OF MAY 27, 1968, GSA AUTHORIZED THE PAYMENT OF TAXES LEVIED AFTER AUGUST 1, 1965, UNDER GSA CONTRACTS, AND ADVISED THE AIR FORCE THAT IT HAD NO FURTHER OBJECTION TO PAYMENT OF THE MOTOROLA CLAIMS UNDER THE AIR FORCE CONTRACTS. OUR DECISION OF MAY 27, 1968, THEREFORE AUTHORIZED THE PAYMENT OF THE VOUCHERS REFERENCED IN THAT DECISION, WHICH COVERED TAXES FOR THE PERIOD SEPTEMBER 1963 THROUGH DECEMBER 1965, IF OTHERWISE CORRECT.

SINCE WE NOTE YOU REFER TO LEASES DATING BACK TO 1962, FOR WHICH TAXES HAVE BEEN PAID BY MOTOROLA ON RENTALS PAID TO IT BY YOUR OFFICE, WE PRESUME THAT THERE MAY BE OTHER CONTRACTS OR VOUCHERS NOT BEFORE US. WE ARE THEREFORE NOT IN A POSITION TO EXPRESS ANY OPINION AS TO WHETHER MOTOROLA SHOULD BE REIMBURSED FOR THE TAXES PAID IN THOSE CONTRACTS. WOULD APPEAR THAT THE REIMBURSABILITY OF SUCH TAXES IS FOR DETERMINATION ON THE BASIS OF THE TAX CLAUSES IN THE PARTICULAR CONTRACTS INVOLVED, IF DIFFERENT FROM THOSE OF THE CONTRACTS INVOLVED IN OUR PREVIOUS DECISION.