OAG 79-102.

• Case Date: August 22, 1979
• Court: Oregon

Oregon Attorney General Opinions 1979. OAG 79-102. 59OPINION NO. 79-102[40 Or. Op. Atty. Gen. 59]No. 7797August 22, 1979Mr. John J. LobdellPublic Utility CommissionerQUESTION PRESENTEDMultnomah County has imposed an income tax on businesses within Multnomah County, including utilities. In accordance with a Public Utility Commissioner's rule, the utilities separately state the customer's pro rata share of the tax on the utility bill. Is an agency of the State of Oregon receiving such a bill required to pay the amount of the tax which is separately stated?ANSWER GIVENYes. DISCUSSION Whether a state agency is relieved from payment of that portion of its utility bill which reflects the Multnomah County tax upon the utility depends upon whether the charge is deemed a direct tax by Multnomah County upon the state, rather than an indirect burden reflected in the price of goods or services purchased by the state. 38 Op Atty Gen 653 (1977) (Opinion No. 7420), held that the effect of separately stating the surcharge on the utility billings was to shift the legal incidence of the tax from the utility to the ultimate consumer, thereby making it a direct tax by Multnomah County upon the consumer. Upon reconsideration, we find that conclusion was incorrect. The legal incidence of the tax remains upon the businesses within Multnomah County, including the utilities. At least since Alabama v. King & Boozer, 314 US 1 (1941), the character of a tax for revenue purposes primarily has been determined by identifying the "legal incidence" of the tax. If the legal incidence of a state or municipal tax falls upon the United States, then the federal entity has no obligation to pay the tax. United States v. Tax Commission of Mississippi, 421 US 599 (1975). However, if the legal incidence of a nondiscriminatory tax is not upon the federal entity, and there is no legislation otherwise providing immunity from the tax, then the fact that the economic burden of the tax ultimately may fall upon such entity does not relieve the government from payment. Gurley v. Rhoden, 421 US 200 (1975); United States v. Sharp, 302 F Supp 668 (SD Miss 1969). This same approach has been used by state courts with respect to municipal taxes. See, e.g., Commonwealth Edison Company v. Community Unit School Dist., 44 Ill App 3rd 665, 358 NE 2d 688 (1976), City of Los...