Nice Try
Today Government Inc. would like to salute Raytheon.
In fact, let's give them a gold star for innovative efforts at bolstering the bottom line.
According to the Boston Globe, the Waltham, Mass. firm tried hard to pursuade state tax officials that it should not have to pay sales tax on a wide array of items because it does most of its contracting work for the federal government.
That's right.
What items? Among other things, they include toilet paper; a juke box; promotional gifts such as golf umbrellas, pins, and key chains; snow removal; and catering service, the Globe tells us.
"The company is already exempt from paying sales taxes on many items it purchases specifically for the federal government, such as computer chips and metal sheets used to make missiles. But Raytheon said it should also be free from paying state sales taxes on its general overhead expenses, such as pads of paper used by company engineers to jot down notes," the Globe reported.
"Specifically, Raytheon estimated that more than 81 percent of its work was for the US government in 2001 and 2002. Therefore, the company told the state tax board, it deserved a refund of 81 percent of the sales and use taxes it paid on general overhead expenses during those years in Massachusetts - about $700,000, plus interest."
This isn't the company's first try at this. As in the past, the state said no to the request.
By Robert O'Harrow |
August 29, 2008; 5:59 AM ET
Previous: Intel Contractors At The Core |
Next: Intel Contractors Again
Posted by: novahorn | August 29, 2008 3:07 PM
Really surprised companies have been successful in TX and CA. They are pretty tough on sales and use tax audits. Items used in general operations are not exempt from sales tax just because their work is for the federal govt. Companies are trying the same thing when building projects on Federal lands-a Bush/Cheney push to "Yard sale" taxpayer assets to benefit their buds. Private businesses operating on Federal land owe state and local taxes. It is unfair business practices to give businesses that are already benefitting from the "federal govt land giveaway on BRAC etc." additional tax breaks.
Posted by: CarmanK | August 29, 2008 4:53 PM
The comments to this entry are closed.
State sales and use taxes are governed by state law. Therefore, whether certain transactions are exempt from those taxes is a matter for the legislature of each state to decide. It is not far fetched for Raytheon to seek an exemption in general, as contractors have successfully made similar arguments in California, Arizona, Texas and Indiana. As the Supreme Court has stated on numerous occasions, tax avoidance is to be encouraged.