Was equipment sold for former President Ronald Reagan's office exempt when the GSA supplied congressionally appropriated funds and paid by U.S. Treasury check?

Plain-English summary

An equipment seller asked about a sale for former President Ronald Reagan's office. Congress appropriated the funds, the General Services Administration supplied the services and facilities authorized by federal law, and payment was made by checks drawn on the U.S. Treasury.

California concluded that the GSA purchased the property for the former president's office. Because the United States was the purchaser under those circumstances, the sale was exempt under Revenue and Taxation Code section 6381.

What this means for you

Vendors to federal offices, procurement teams, and tax advisers

Identify the legal purchaser and the statutory procurement arrangement. A Treasury check supported the conclusion here together with the GSA's federal purchasing authority; the memorandum did not establish a check-only test.

Common questions

Q: Who did California regard as the purchaser?

A: The General Services Administration.

Q: Did the purchase serve a former president rather than an active agency office?

A: Yes, but federal statutes authorized the GSA to provide the office's necessary services and facilities.

Q: Was the sale exempt?

A: Yes, as a sale to the United States.

Citations and references

• California Revenue and Taxation Code § 6381
• Public Law 85-745, August 25, 1958, 72 Stat. 838, as amended
• Presidential Transition Act of 1963 § 4, as amended
• Notes under 3 U.S.C. § 102

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 505.0365
• Original supporting opinion: 505.0365 PDF

Original ruling text

505.0365

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

March 30, 1990
REDACTED TEXT
Dear Sir or Madam:
The Franchise Tax Board has sent to the State Board of Equalization legal staff a copy of a January 23, 1990 letter to you from Mrs. M. L. Ciranni, Regional Budget Director of Region 9 of the United States General Services Administration. The letter states that, “the office of Former President Ronald Reagan is considered to be a Federal entity and therefore exempt from all Federal, State and Local taxes.” We assume that you wish an opinion as to whether sales tax applies to sales of equipment to the office of former President Ronald Reagan. We have discussed the facts of the sale with Mrs. Cirianni. The funds used for purchasing property for the office of a former president are provided by the General Services Administration pursuant to subsection (c) of Public law 85-745, August 25, 1958, 72 Stat. 838, as amended, and section 4 of the Presidential Transition Act of 1963, as amended. Each of the statutes are set out as notes under Title 3, United States Code section 102. The provisions of the Act of August 25, 1958, other than subsections (a) and (e), are not effective with respect to a former president until six months after the expiration of the term of office as president. Until that time, section 4 of the Presidential Transition Act of 1963 provides that the administrator of General Services is authorized to provide the former president with necessary services and facilities. Mrs. Cirianni notified us that the funding for the offices of former presidents is appropriated by Congress; payment for the facilities and equipment is made by checks drawn on the U. S. Treasury. It is our opinion that, since under the federal statutes cited above, the General Services Administration purchases the property for the office of former President Ronald Reagan, the sale is exempt from sales tax pursuant to Revenue and Taxation Code section 6381. If you have any questions regarding this, feel free to contact me. Very truly yours,

RLD:sr

Ronald L. Dick
Tax Counsel