Ahlburn v. Clark

• Decision Date: 07 April 1999
• Docket Number: No. 97-558-M.P.,97-558-M.P.
• Citation: 728 A.2d 449
• Parties: Thomas AHLBURN et al. v. R. Gary CLARK, Tax Administrator, State of Rhode Island, Division of Taxation.
• Court: Rhode Island Supreme Court

728 A.2d 449

Thomas AHLBURN et al. v. R. Gary CLARK, Tax Administrator, State of Rhode Island, Division of Taxation.

No. 97-558-M.P.

Supreme Court of Rhode Island.

April 7, 1999.

Kevin M. Brill, Providence, for Plaintiff.

Rebecca Tedford Partington, Providence, for Defendant.

Present WEISBERGER, C.J., and LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.

OPINION

FLANDERS, Justice.

The constitutionality of a state statute exempting bibles and other canonized religious scriptures from the state sales tax forms the nub of this petition for certiorari. The defendant, R. Gary Clark, Tax Administrator (tax administrator) of the State of Rhode Island, Division of Taxation (collectively, the state), asks us to reverse a District Court judgment finding G.L.1956 § 44-18-30(30) unconstitutional under the Establishment Clause of the First Amendment to the United States Constitution. After reviewing the statute and the applicable legal authorities, we affirm, but on different grounds than those relied upon by the District Court. For the reasons set forth below, we conclude that the statute violates the Free Press Clause of the First Amendment to the Federal Constitution ("Congress shall make no law * * * abridging the freedom of speech, or of the press * * *."), a prohibition that the Fourteenth Amendment makes applicable to the states. See Murdock v. Pennsylvania, 319 U.S. 105, 63 S.Ct. 870, 87 L.Ed. 1292 (1943)

.

Introduction

Section 44-18-30(30), entitled Bibles, provides that no state sales tax shall be due "[f]rom the sale and from the storage, use, or other consumption in the state of any canonized scriptures of any tax exempt nonprofit religious organization including but not limited to the Old Testament and the New Testament versions." However, in 1989, the United States Supreme Court rendered its decision in Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 109 S.Ct. 890, 103 L.Ed.2d 1 (1989). There, the Court held that a Texas sales-tax exemption for bibles and other religious literature was unconstitutional. In response to Texas Monthly, the tax administrator promulgated regulation SU 92-136.¹ This regulation purports to subject bibles and other canonized scriptures to the Rhode Island sales tax, notwithstanding the contrary mandate of § 44-18-30(30). Thus, regulation SU 92-136 leaves Rhode Island booksellers and book buyers at sea over whether the sales of bibles and other canonized scriptures are subject to the sales tax.

The plaintiffs comprise both commercial retailers and consumers of various types of publications, including religious literature that is subject to the statutory exemption. As a result of the regulation, however, plaintiffs have been left to determine at their own peril whether a state sales tax is due on their respective sales and purchases of bibles and other canonized scriptures. They petitioned the tax administrator for a definitive ruling as to whether the regulation or the statute would apply to their transactions in such literature. In response, the tax administrator communicated his inability to resolve the alleged constitutional infirmity of the statute as applied to each plaintiff. He simply emphasized the applicability of the regulation, leaving any constitutional determination of the statutory exemption's validity to a later judicial resolution.

Unsatisfied with the tax administrator's answer and still uncertain about whether to collect and/or to pay sales taxes on the purchase of bibles and other canonized scriptures, plaintiffs then filed a complaint in the District Court seeking injunctive relief and a declaration of their rights with respect to the constitutionality of § 44-18-30(30). After reviewing Texas Monthly, the District Court took note of several cases that were decided in its wake before concluding that the § 44-18-30(30) exemption violated the Establishment Clause of the First Amendment to the Federal Constitution. The District Court, however, denied plaintiffs' request for injunctive relief because it believed that the continuing viability of regulation SU 92-136 in the aftermath of § 44-18-30(30)'s demise effectively granted the injunctive relief requested by plaintiffs. In other words, after the District Court struck down the statute, the validated existence of the regulation— untrammeled by a contrary statutory exemption—indicated that the tax administrator would not attempt to enforce the exemptions set forth in § 44-18-30(30). Thus, the sale of such publications would continue to be taxable pursuant to the regulation.

We have reviewed the statute at issue and the relevant case law with respect to this type of an exemption from state sales taxation, and we are of the opinion that § 44-18-30(30) is indeed unconstitutional. We reach this result, however, not on Establishment Clause grounds, but because we conclude that the tax exemption is inconsistent with the pronouncements of the United States Supreme Court concerning the free-press guaranty embodied in the First Amendment to the Federal Constitution.

I Standing

We first address whether plaintiffs have standing to assert these claims. We conclude that they do. In Pontbriand v. Sundlun, 699 A.2d 856 (R.I.1997), we recently addressed our standing requirements in light of the guidelines set forth in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). There, we held that standing is a matter of determining "whether the person whose standing is challenged has alleged an injury in fact resulting from the challenged [act]. If he [or she] has, he [or she] satisfies the requirement of standing." Pontbriand, 699 A.2d at 862 (quoting Rhode Island Ophthalmological Society v. Cannon, 113 R.I. 16, 26, 317 A.2d 124, 129 (1974)). We also described our standing requirement as boiling down to an issue of "whether the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise." Pontbriand, 699 A.2d at 862 (quoting Camp, 397 U.S. at 152, 90 S.Ct. at 829, 25 L.Ed.2d at 187). Further, we noted that this "injury in fact" requirement has been described as "an invasion of a legally protected interest which is (a) concrete and particularized * * * and (b) actual or imminent, not `conjectural' or `hypothetical.'" 699 A.2d at 862 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351, 364 (1992)). In deciding whether a particular plaintiff possesses the requisite standing, a court should draw the line not between whether the plaintiff has suffered a substantial injury or an insubstantial injury, but between injury and no injury. See id.; see also Blackstone Valley Chamber of Commerce v. Public Utilities Commission, 452 A.2d 931, 933 (R.I.1982); Matunuck Beach Hotel, Inc. v. Sheldon, 121 R.I. 386, 396, 399 A.2d 489, 494 (1979).

Here, plaintiffs have asserted the requisite injury-in-fact to satisfy this test. They are sellers and buyers of both canonized scriptures and secular publications who claim to be aggrieved by the existence of § 44-18-30(30). This statute exempts bibles and other canonized scriptures from the state sales tax. Because of the manifest conflict between the regulation and the statute, the sellers of such publications contend that they cannot determine whether to collect and remit sales taxes on such sales. Under Rhode Island law: "All taxes collected by any retailer from purchasers * * * shall constitute a trust fund for the state until paid to the tax administrator. That trust shall be enforced against: (1) The retailer * * *." G.L.1956 § 44-19-35. Additionally, § 44-19-12 provides for pecuniary penalties if retailers like these book-selling plaintiffs fail to remit all of the sales taxes due to the appropriate taxing authorities:

"If any part of the deficiency for which a deficiency determination is made is due to negligence or intentional disregard of the provisions of this chapter and chapter 18 of this title, a penalty of ten percent (10%) of the amount of the determination shall be added thereto. If any part of the deficiency for which a deficiency determination is made is due to fraud or an intent to evade the provisions of this chapter or chapter 18 of this title, a penalty of fifty percent (50%) of the amount of the determination shall be added thereto."

Therefore, in addition to their liability for any uncollected sales taxes, retailers of bibles and other canonized scriptures face possible pecuniary penalties for failing to collect such taxes under § 44-19-12.

Those who purchase taxable literature from retailers also may incur liability for unpaid sales taxes. Pursuant to § 44-18-19, a seller of publications subject to the sales tax:

"shall add the tax hereby imposed to the sale price or charge, and when added the tax shall constitute a part of the price, or charge, [and] shall be a debt from the consumer or user to the retailer, and shall be recoverable at law in the same manner as other debts." (Emphasis added.)

Thus, Rhode Island law specifically designates the retail seller as the authorized collector of the tax from the consumer. See § 44-18-22; see also In re Melino Cigar & Candy Co., 22 B.R. 703, 705 n. 4 (Bankr. D.R.I.1982). Moreover, assuming a retailer maintains personal identification records for purchasers—for example, credit-card receipts—or is able to identify buyers using other means, a purchaser may be liable to indemnify the seller for any unpaid sales taxes that the seller failed to collect when the sale occurred. Given these statutory provisions, plaintiffs face economic injury if bibles and other canonized scriptures are indeed subject to the sales tax, as the regulation indicates, notwithstanding a statutory exemption indicating that no sales taxes are to be collected with respect to sales involving this type of literature. Based upon the above considerations, and mindful that "[s]tanding is [simply] an access barrier...