B-78693, AUGUST 17, 1948, 28 COMP. GEN. 101

B-78693, AUGUST 17, 1948, 28 COMP. GEN. 101

TAXES - MUNICIPAL - OCCUPATIONAL LICENSE FEE - WITHHOLDING FROM SALARIES OF FEDERAL EMPLOYEES EVEN THOUGH AN ORDINANCE OF THE CITY OF LOUISVILLE, KENTUCKY, REQUIRING EMPLOYERS TO COLLECT THE ANNUAL LICENSE FEE IMPOSED THEREBY UPON EVERY PERSON ENGAGED IN AN OCCUPATION, TRADE, ETC; IN THE CITY, DEFINES THE TERM "EMPLOYER" AS INCLUDING A "GOVERNMENTAL BODY OR UNIT OR ADMINISTRATION OR AGENCY," NO DUTY OR RESPONSIBILITY WITH RESPECT TO THE LICENSE FEE PRESCRIBED BY THE SAID ORDINANCE CAN BE IMPOSED UPON THE UNITED STATES SO AS TO REQUIRE FEDERAL UNITS OR AGENCIES LOCATED IN LOUISVILLE TO DEDUCT THE AMOUNT OF THE PRESCRIBED FEE FROM THE SALARY OF EMPLOYEES PERFORMING SERVICES WHOLLY OR PARTLY IN THAT CITY.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE TREASURY, AUGUST 17, 1948:

I HAVE YOUR LETTER OF JULY 16, 1948, REQUESTING A DECISION AS TO WHETHER THE RECENTLY ENACTED ANNUAL LICENSE FEE ORDINANCE OF THE CITY OF LOUISVILLE, KENTUCKY, A COPY OF WHICH ACCOMPANIED YOUR LETTER,"IS APPLICABLE TO FEDERAL UNITS OR AGENCIES LOCATED IN LOUISVILLE OR TO THE EMPLOYEES OF SUCH AGENCIES WHO ARE PAID SALARIES FOR SERVICES PERFORMED WHOLLY OR PARTLY IN THAT CITY AND, IF SO, WHETHER DEPARTMENTAL DISBURSING OFFICERS MAY PROPERLY DEDUCT THE AMOUNT OF SUCH LICENSE FEES FROM THE SALARIES OF THE EMPLOYEES CONCERNED AND PAY OVER SUCH AMOUNT TO THE CITY COLLECTING AUTHORITY.'

THE ORDINANCE PROVIDES, SO FAR AS HERE MATERIAL, FOR THE PAYMENT BY EVERY PERSON ENGAGED IN AN OCCUPATION, TRADE, PROFESSION, OR OTHER ACTIVITY IN THE CITY OF LOUISVILLE OF AN ANNUAL LICENSE FEE FOR THE PRIVILEGE OF ENGAGING IN SUCH ACTIVITIES, MEASURED BY ONE PERCENTUM OF ALL SALARIES, WAGES, COMMISSIONS, AND OTHER COMPENSATION EARNED BY THEM AFTER JUNE 30, 1948, FOR WORK DONE OR SERVICES PERFORMED IN THE CITY, AND IMPOSES ON EMPLOYERS THE DUTY OF COLLECTING THE LICENSE FEES AT THE SOURCE AND OF FURNISHING CERTAIN INFORMATION RELATIVE TO THEIR EMPLOYEES. ALSO, THE ORDINANCE STIPULATES THAT THE FAILURE OF AN EMPLOYER TO PAY THE LICENSE FEE SHALL NOT RELIEVE THE EMPLOYEE FROM THE PAYMENT THEREOF.

YOU INVITE PARTICULAR ATTENTION TO THE FACT THAT THE TERM "EMPLOYER," AS DEFINED IN THE ORDINANCE, INCLUDES A "GOVERNMENTAL BODY OR UNIT OR ADMINISTRATION OR AGENCY," AND YOU STATE THAT, IF IT IS NECESSARY FOR THE OFFICES OF THE COLLECTOR OF INTERNAL REVENUE AND OF THE DISTRICT SUPERVISOR OF DISTRICT NO. 7, ALCOHOL TAX UNIT, BUREAU OF INTERNAL REVENUE, IN LOUISVILLE, TO COMPLY WITH THE PROVISIONS OF THE ORDINANCE RELATING TO EMPLOYERS, THE SERVICES OF ONE OR MORE ADDITIONAL CLERKS FOR EACH OFFICE WILL BE REQUIRED.

ANY QUESTION AS TO THE RIGHT OF THE CITY OF LOUISVILLE TO COLLECT THE SUBJECT LICENSE FEE DIRECTLY FROM AN EMPLOYEE OF THE UNITED STATES IS A MATTER BETWEEN SUCH EMPLOYEE AND THE MUNICIPALITY AND NOT ONE IN WHICH THE UNITED STATES IS IN ANY WISE CONCERNED. CONSEQUENTLY, THIS OFFICE CANNOT UNDERTAKE TO RENDER AN AUTHORITATIVE DECISION IN RESPONSE TO YOUR REQUEST EXCEPT INSOFAR AS IT INVOLVES THE UNITED STATES IN ITS CAPACITY AS AN EMPLOYER.

IN THE FINAL ANALYSIS, THE MATTER HERE FOR DETERMINATION IS SIMILAR TO THAT CONSIDERED IN OFFICE DECISION OF JANUARY 6, 1948, TO THE ATTORNEY GENERAL, 27 COMP. GEN. 372, WHICH INVOLVED THE PROVISIONS OF THE OREGON INCOME TAX LAW REQUIRING AN EMPLOYER TO DEDUCT AND PAY OVER TO THE STATE A SPECIFIED PERCENTAGE OF EMPLOYEES' SALARIES AND WAGES. IN HOLDING THAT PAYMENT SHOULD BE MADE OF THE SALARIES OR WAGES DUE TO EMPLOYEES OF THE DEPARTMENT OF JUSTICE, WITHOUT THE DEDUCTION OF ANY AMOUNT ON ACCOUNT OF THE OREGON INCOME TAX, IT WAS SAID THAT---

IN VIEW OF THE WELL SETTLED CONSTITUTIONAL PRINCIPLE WHICH PRECLUDES THE REGULATION OR CONTROL BY A STATE, OR POLITICAL SUBDIVISION THEREOF, OF THE UNITED STATES IN THE EXERCISE OF ITS GOVERNMENTAL FUNCTIONS (SEE MAYO ET AL. V. UNITED STATES, 319 U.S. 441; JOHNSON V. MARYLAND, 254 U.S. 51; OHIO V. THOMAS, 173 U.S. 276), AND SINCE IT IS OBVIOUS THAT THE EFFECT OF THE PROVISIONS OF THE OREGON TAX LAW HERE INVOLVED, SO FAR AS THE MATTER OF THE WITHHOLDING AND PAYMENT BY THE FEDERAL GOVERNMENT OF THE TAX IN QUESTION IS CONCERNED, IS SUCH AS TO IMPOSE A DIRECT BURDEN UPON THE UNITED STATES, IT MUST BE CONCLUDED THAT THE WITHHOLDING FEATURE OF THE OREGON INCOME TAX LAW IS NOT FOR APPLICATION IN THE CASE OF PAYMENTS OF SALARY OR WAGES TO FEDERAL EMPLOYEES. * * *

IT IS TRUE THAT NO DEFINITION OF THE WORD "EMPLOYER" APPEARS IN THE OREGON STATUTE CONSIDERED IN THE CITED CASE, WHEREAS, AS POINTED OUT BY YOU, THE MUNICIPAL ORDINANCE HERE INVOLVED DEFINES THAT WORD AS INCLUDING A "GOVERNMENTAL BODY OR UNIT OR ADMINISTRATION OR AGENCY.' BUT EVEN IF THAT LANGUAGE WERE DESIGNED TO RELATE TO ANYTHING OTHER THAN THE GOVERNMENT OF THE CITY OF LOUISVILLE--- AND THERE IS NO REASON TO SUPPOSE, IN THE ABSENCE OF DEFINITE EVIDENCE TO THAT EFFECT, THAT IT WAS--- IT IS APPARENT THAT NO DUTY OR RESPONSIBILITY WITH RESPECT TO THE LICENSE FEE PRESCRIBED BY THE SAID ORDINANCE CAN BE IMPOSED UPON THE UNITED STATES CONSISTENTLY WITH THE CONSTITUTIONAL PRINCIPLE INVOLVED.

ACCORDINGLY, YOU ARE ADVISED THAT THE PROVISIONS RELATING TO EMPLOYERS CONTAINED IN THE ORDINANCE ARE NOT APPLICABLE IN THE CASE OF FEDERAL UNITS OR AGENCIES LOCATED IN LOUISVILLE AND THAT PAYMENT SHOULD BE MADE OF THE SALARY OR WAGES DUE TO EMPLOYEES OF YOUR DEPARTMENT, PERFORMING SERVICES WHOLLY OR PARTLY IN THAT CITY, WITHOUT THE DEDUCTION OF ANY AMOUNT REPRESENTING THE LICENSE FEE PRESCRIBED BY SAID ORDINANCE.