Were USIA purchases in California exempt when paid through official federal procurement methods or personally by reimbursed employees?

Plain-English summary

USIA planned to send 80 staff members to San Diego for the Republican National Convention and acquire workspace equipment, telecommunications, vehicles, lodging, and other goods and services. The letter recognized USIA as a United States government agency.

Sales or leases of tangible personal property were exempt when the United States was the purchaser, shown by a U.S. government purchase order, a credit card issued to the United States, a Treasury check, or a federal wire transfer.

The official sources conflict on employees who paid directly and were later reimbursed. The annotation summary says cash, personal-check, or personal-card purchases by employees are taxable even when made officially and reimbursed. The complete supporting letter instead says “tax does not apply” under those facts. Because both statements are official and irreconcilable on their face, this page does not state a definitive employee-payment rule.

What this means for you

Federal procurement staff, vendors, event teams, and tax advisers

Use procurement records that clearly identify the United States as purchaser. Official purchase orders, government-issued cards, and Treasury payments avoid the ambiguity created when an employee pays personally.

Common questions

Q: Did official USIA purchase orders support exemption?

A: Yes.

Q: What about a credit card issued to the United States?

A: The letter treated that payment method as exempt.

Q: Were Treasury checks and wire transfers sufficient?

A: Yes, when they paid for the federal purchase.

Q: What if an employee paid personally and was reimbursed?

A: The annotation and complete letter give opposite answers, so this page does not resolve that fact pattern.

Citations and references

• The letter cited the California Sales and Use Tax Law generally but no numbered statute or regulation.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 505.0362.120
• Original supporting opinion: 505.0362.120 PDF

Original ruling text

505.0362.120

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
LEGAL DIVISION – MIC:82
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE: (916) 445-3723
FAX: (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

June 24, 1996

E. L. SORENSEN, JR
Executive Director

Mr. J--- G. B--Chief, Products & Services Division
Office of Contracts
United Stated Information Agency
Washington, D.C. 20547-0001
Dear Mr. B---:
This is in response to your facsimile transmission to the Honorable Ernest J. Dronenburg, Jr., of June 18, 1996 We understand that the United States Information Agency (USIA) is an agency of the United States Government. You perform your function through the Voice of America (VOA) international radio network, Worldnet international television network, Radio/TV Marti broadcasting to Cuba, and you support the foreign press in the United States covering major government newsworthy events. In furtherance of your mission, you will have 80 staff members, acting in their official government capacity, in San Diego to cover the Republican National Convention. To perform your duties, you will acquire by U. S. Government credit card, purchase order, and contract, a variety of goods and services. These goods and services range from outfitting and equipping work space in the Convention Center, telecommunications equipment and services, vehicle rental, hotel room rental, etc. The U. S. Treasury will make payment by check or wire transfer of funds. Under the California Sales and Use Tax Law, tax does not apply to the sale or lease of tangible personal property to the United States Government or its entities or instrumentalities. Tax does not apply where there is a U. S. Government purchase order, or where the goods are paid for by credit card issued to the United States, or where payment is made by U. S. Treasury check or wire transfer of funds. Tax does not apply to sales or leases to U. S. Government employees, including employees acting in their official capacity, if payment is made directly by the employee by cash, check, or

Mr. J--- G. B---

-2-

June 24, 1996
505.0362.120

personal credit card, notwithstanding the fact that the U. S. Government may reimburse the employee for expenses. By copy of this letter to Mr. Glenn A. Bystrom, Deputy Director for the State Board of Equalization’s sales and use tax program, we are requesting that he assist you with sales and use tax exemption documentation. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel

GJJ:sr

cc:

Mr. Glenn A. Bystrom – MIC:43