Did the 1986 federal Job Corps amendment exempt contractor sales, purchases, and uses—including construction materials—from California sales and use tax?

Plain-English summary

A 1986 federal amendment protected both for-profit and nonprofit contractors operating Job Corps centers, programs, or activities from state taxes imposed on or measured by their operating receipts. It also said they were not liable to collect or pay sales, excise, use, or similar tax on property, services, or other items connected with those operations.

California concluded that the exemption covered tangible personal property sold to or by, purchased by, or used by a Job Corps operator. It also covered property used in construction contracts.

The rule applied only from the amendment's October 16, 1986 effective date. Job Corps operators had no comparable sales or use tax exemption for construction contracts or other transactions before that date.

What this means for you

Job Corps operators, construction contractors, vendors, and tax advisers

Confirm that the transaction connects to operation of a covered Job Corps center, program, or activity and falls within the applicable statutory period. The memorandum does not support retroactive claims before October 16, 1986.

Common questions

Q: Did the exemption cover for-profit operators?

A: Yes, as well as nonprofit contractors.

Q: Did it cover construction materials?

A: Yes, when used in covered Job Corps construction contracts.

Q: Could an operator claim the exemption before October 16, 1986?

A: No.

Citations and references

• 29 U.S.C. § 1707(c), as quoted from the 1986 amendment

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 505.0230
• Original supporting opinion: 505.0230 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Ms. Joan Albu
Audit Evaluation & Planning

From:

Donald J. Hennessy
Senior Tax Counsel

Subject:

Job Training Partnership Act Amendments of 1986

505.0230

June 12, 1987

This is in reply to your May 26, 1987 memo to Assistant Chief Counsel Gary Jugum asking our opinion on the sales and use tax effects fo the amendment to the Federal Job Training Partnership Act, 29 USCA 1707, effective October 16, 1986. Such amendment reads as follows: “(c) Transactions conducted by a private for-profit contractor or a nonprofit contractor in connection with the contractor’s operation of a Job Corps Center, program, or activity shall not be considered as generating gross receipts. Such contractors shall no be liable, directly or indirectly, to any State or subdivision thereof (nor to any person acting on behalf thereof) for any gross receipts taxes, business privilege taxes measured by gross receipts, or any similar taxes imposed on, or measured by, gross receipts in connection with any payments made to or by such contractor for operating a Job Corps Center, program, or activity. Such contractors shall not be liable to any State or subdivision thereof to collect or pay any sales, excise, use, or similar tax imposed upon the sale to or use by such contractors of any property, service, or other item in connection with the operations of a Job Corps Center, program or activity.” We agree that such amendment exempts sales or purchases of tangible personal property used on construction contracts as well as any other sales or purchases of tangible personal property sold to or by, or used by, an operator of a Job Corps Center, program or activity. But such exemption should be given no retroactive effect for periods prior to October 16, 1986. Job Corps Center operators had no exemption from sales or use tax, either as to construction contracts or otherwise, prior to October 16, 1986. In our next CLD we will delete annotation 505.0500 stating that sales to a Job Corps Center are taxable since it is not an agency of the United States. We will add an annotation

Ms. Joan Albu

-2-

June 12, 1987
505.0230

stating that sales to or by, or use by, a Job Corps Center, program or activity are exempt, and that such exemption applies event to U. S. construction contracts. We plan to add such annotation under both Sales to the U.S., etc., and U.S. Contractors in the Business Taxes Law Guide.

DJH:rar

cc:

505.0230.doc

Mr. Gary J. Jugum
Mr. W. E. Burkett
Mr. E. L. Sorensen, Jr.
Mr. John. G. Abbott