Opinion ID: 2188488
Heading Depth: 1
Heading Rank: 4

Heading: is the use tax imposed by sdcl 10-46a-5 applicable to property furnished by the united states government to brink which brink installed in performance of its contracts with the government?

Text: Brink contends that the state may not impose use tax under SDCL 10-46 on government-owned property furnished to Brink to be used for its contracts on government installations. Brink says that the materials were not used within the meaning of SDCL 10-46-1(2) and 10-46-5. We have previously held that even if government-owned materials are furnished to a contractor for incorporation into a government project, the materials are used within the meaning of those statutes and the contractor is subject to use tax on the value of the government-furnished property. Friessen Const. Co., Inc. v. Erickson, 90 S.D. 60, 238 N.W.2d 278 (1976). This reasoning has withstood later scrutiny by the United States Supreme Court in other jurisdictions. See, e.g., United States v. New Mexico, 455 U.S. 720, 102 S.Ct. 1373, 71 L.Ed.2d 580 (1982). Brink nonetheless argues that since some government-furnished materials were installed under the supervision of the manufacturer, the materials are not subject to the use tax. [A] use tax may be valid only to the extent that it reaches the contractor's interest in Government-owned property.... United States v. New Mexico, 102 S.Ct. at 1386, n. 14. Brink installed these materials and was paid for such installation; therefore, it used the materials within the meaning of the statute. See United States v. City of Detroit, 355 U.S. 466, 78 S.Ct. 474, 2 L.Ed.2d 424 (1958).