Ratification Question

[charles]

Gov official without proper authority contracts business for services. Business demands payment. Ratification seems appropriate except for one thing. The bill for services include taxes.

The feds are exempt from state taxes.

So, how would you approach this issue?

[22vines]

Service? What State were these services performed in? As to if the Government should pay would require more info and assistance maybe from legal (FAR 29.302). I do not think you can make a blanket determination that the Federal Government is exempt from all state taxes.

[Navy_Contracting_4]

Even though you may conclude that ratification seems appropriate, there's nothing that requires you to pay the entire amount requested. The price must be fair and reasonable, and there are other limitations in FAR 1.602-3(c ) that should help prevent payment of unauthorized/improper amounts.

[joel hoffman]

Service? What State were these services performed in? As to if the Government should pay would require more info and assistance maybe from legal (FAR 29.302). I do not think you can make a blanket determination that the Federal Government is exempt from all state taxes.

22, do you have some examples of state "taxes" that the federal government must pay on direct purchases by the government? I'm just curious, thanks.

[dwgerard]

A few states have decided to tax federal travelers (New Mexico is one of them), and I believe that some state and local governments have decided to tax contractual vehicles as well, although I have not run into that problem. Most state and local goverments do not, so I would simply bring the subject up and be prepared to submit a tax exemption form if required.

[joel hoffman]

A few states have decided to tax federal travelers (New Mexico is one of them), and I believe that some state and local governments have decided to tax contractual vehicles as well, although I have not run into that problem. Most state and local goverments do not, so I would simply bring the subject up and be prepared to submit a tax exemption form if required.

dwgerald, I'm not referring to purchases by or for employee expenses or for government contractors. Government employees or contractors generally are not inherently exempt from state or local taxes, unless there is some type of exemption from the state or local taxing authority. I'm referring to and inquiring about possible state or local taxes on direct government purchases for a service or supply.

By the way, what basis do you have for saying : "Most state and local goverments do not" (tax federal travelers or contract vehicles)...?

[22vines]

22, do you have some examples of state "taxes" that the federal government must pay on direct purchases by the government? I'm just curious, thanks.

Yes see - New Mexico (B-147615, Dec. 14, 1961); and South Dakota (B211093, May 10, 1983). The GAO redbook listed other examples as well.

[joel hoffman]

Yes see - New Mexico (B-147615, Dec. 14, 1961); and South Dakota (B211093, May 10, 1983). The GAO redbook listed other examples as well.

B-147615 December 14, 1961 was an issue with a 2% tax as a business privilege tax on the vendor or supplier to the Government. The Household goods shipper had to pay the tax and passed it on to the government. The other decision B211093, May 10, 1983, was where the electric utility had to pay a sales or gross receipts tax and passed it on to the US. You are correct to the extent that when a tax falls on a government vendor, not the government as the consumer, then it can pass that obligation onto the federal government.