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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
S
505.0000 Sales to the United States and Its Instrumentalities—Regulation 1614
Annotation 505.0413
(b) Agencies Not Qualifying for Exemption
505.0413 California Army National Guard. Pursuant to a licensing agreement, the California National Guard operates three clubs at an Armed Forces Reserves Center. The licensing agreement is for an indefinite term but revocable at will by the Secretary of Army. Among the licensing provisions is one which requires performance in accordance with Department of Defense regulations subject to the provisions of adequate funding to the licensee. Absent such funding, each component occupying the facilities must pay its pro-rata share of costs. The licensing agreement also allows for short term licenses to community service activities provided such use is not at the expense of the Federal Government.
The operation of the club system is a "community service activity" and therefore is run at no expense to the Federal Government. Since federal funds are not used the clubs cannot be considered instrumentalities of the United States. Accordingly, tax applies to any sales and purchases made by the club. 4/29/80.