The United States government, which paid $235 million to the District of Columbia as the 1979 federal payment, is suing the District to recover $8,199.95 in sales and use taxes paid -- wrongfully, in the federal view of the matter -- to the city.
Unless the two governments can work out a resolution of their differences themselves, lawyers from the U.S. Department of Commerce, the U.S. Justice Department and the D.C. Corporation Counsel's office will be appearing before a United States District Court judge and the usual complement of court personnel -- including a courtroom bailiff, a courtroom clerk, a court stenographer and the judge's law clerk -- to ask the court to settle the matter.
Nobody involved in the dispute has been able to estimate the cost of the time already spent or what it may cost if the suit is not settled out of court, but everyone agrees that the cost of litigating the matter would exceed the amount at stake.
The dispute arose over the bill for a conference on balanced national growth and economic development conducted by the White House in January 1978. About 500 participants, including prominent business persons, economists, mayors, governors, lieutenant governors and other dignitaries, were invited by the government to attend and participate. The federal government ultimately paid for the food and lodging of those attending.
The White House had turned over the task of setting up the conference to the Commerce Department, which in turn hired a private firm, Courtesy Associates, to handle logistics. Hiring Courtesy, from the federal government's point of view, was merely a convenience, since the federal government signed the contracts with the Sheraton Park Hotel, where the conference was held.
When the bill for about $350,000 came in, Commerce paid it without questioning the $8,199.95 in sales and use taxes paid to the District, even though a provision of District law specifically exempts the federal government from paying city taxes.
A later review by a Commerce certifying officer raised questions about the taxes, and Commerce asked the District to refund the money. The District refused, citing a 1941 Supreme Court ruling upholding the right of a local government to tax a private company doing business with the federal government. The federal government claims that Courtesy was just a middle man.
A subsequent meeting between District and federal lawyers to resolve the matter resulted in no agreement.
Ed Weintraub, the Commerce Department lawyer handling the matter, said the suit was filed to protect the federal government's interest before the statute of limitations would prevent it from raising the issue in court.
Weintraub and others involved in the suit expressed bewilderment at why anyone should be interested in the matter. "This is peanut stuff," Weintraub said. When a caller suggested that it was precisely because the amount of money was so small that it was of interest, Weintraub said, "Do you know how many times we fight between agencies? We do this all the time. It's SOP. This is not unusual."
Marika Lancaster, an assistant D.C. corporation counsel, reached by telephone, said the District is still considering returning the money without going forward with the lawsuit and is awaiting more information from the federal government before deciding what to do.
Asked why he didn't simply forget the whole matter and let the District keep the $8,200, Weintraub said, "This may happen."