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Tax Policy and Administration: Sales Tax Refunds Due from Naval Petroleum Reserve

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Report Type Reports and Testimonies
Report Date Dec. 13, 1978
Report No. LCD-79-300
Subject
Summary:

The operation of Naval Petroleum Reserve (NPR) No. 1, Elk Hills, California, was reviewed because previous reviews have indicated problems in the operating contractor's system of estimating and billing costs to the Navy. Most of these problems have been resolved, but one question remains concerning recovery of previously paid sales taxes. Until April 1976, purchases made in California by NPR contract operators were subject to the State's sales tax, with certain exceptions. At that time, the U.S. Supreme Court decided that the sales tax applied to the purchaser not to the seller. NPR contractors may have paid at least $1 million in sales taxes which may be recoverable if the Supreme Court decision is retroactive. If the decision applies retroactively, the Secretary of Energy should recover the sales taxes paid on all tangible personal property purchases made from April 1973 through April 1976.

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