Barnes v. Department of Revenue
| Decision Date | 22 December 1978 |
| Parties | Harold BARNES, d/b/a Sulphur Creek Marina, Appellant, v. DEPARTMENT OF REVENUE, Commonwealth of Kentucky, and Maurice P. Carpenter, Commissioner, Kentucky Department of Revenue and Commonwealth of Kentucky, Office of the Attorney General and the Kentucky Board of Tax Appeals, Appellees. |
| Court | Kentucky Court of Appeals |
Phyllis A. Sower, Michael L. Judy, Johnson, Judy & Gaines, Frankfort, for appellant.
William P. Sturm, Dept. of Revenue, Frankfort, for appellees.
Before HOGGE, VANCE and WINTERSHEIMER, JJ.
This appeal is from a judgment entered March 6, 1978, which affirmed an order of the Kentucky Board of Tax Appeals, holding that the appellant's houseboats were not exempt from use tax under KRS 139.483.
Appellant owns and operates a boat dock located on Dale Hollow Lake and has been in the marina business since early 1960. The business has been audited by the Revenue Department for sales and use tax purposes on three occasions. Previous audits have not resulted in any deficiency assessments regarding the houseboats. In 1974, the sales and use tax records of the appellant were examined by the Department for the years July 1, 1970, through July 30 1974, and the result was a deficiency assessment of $2,874.09 use tax for the purpose of four houseboats during the audit period. The boats are registered by the appellant as livery or boats for hire and are leased on a weekly basis. The deficiency was challenged by the appellant within the Revenue Department system and the Department ruled that the exemption relied upon by the taxpayer, for excluding the houseboats from use tax, related only to river-industrial vessels, such as barges and towboats, and was a provision of the Port and River Development Commission Act. A petition of appeal was taken to the Kentucky Board of Tax Appeals, which ruled that the houseboats were subject to use tax, and that KRS 139.483 is an integral part of the Port and River Development Act of 1966. Further appeal was taken to the circuit court which affirmed the decision of the Board of Tax Appeals. This appeal followed.
Appellant sets out the following arguments:
1) The orders of the circuit court and the Board of Tax Appeals are not in conformity with the law and are not supported by substantial evidence.
2) If the meaning of KRS 139.483 is in doubt, then any doubt must be resolved in favor of the taxpayer.
3) The Board of Tax Appeals and the circuit court erred in that they usurped the power of the legislature.
This Court reverses the judgment of the trial court and the Kentucky Board of Tax Appeals.
The crucial issue is whether the houseboats of the appellant are exempt from sales and use tax under KRS 139.483.
KRS 139.483 is a sales and use tax statute which specifically exempts from taxation ships and vessels used principally in the transportation or conveyance of persons for hire. The Revenue Department contends that the statute is an integral part of the Port and River Development Commission Act, and therefore, relates only to river-industry vessels such as barges and towboats, not including pleasure craft. It appears to us that the statute is on its face an integral part and is located in the sales and use tax provisions of Chapter 139 of the statutes.
Statutory language must be given its clear and commonly accepted meaning. We find that the statute contains no language excluding houseboats from the application of the exemption. The statute draws no distinction between industrial commercial craft and pleasure commercial craft.
We must also consider the past practice of the Department of Revenue which was not to collect use tax on houseboats. Appellant had been previously audited and no deficiency assessments regarding houseboats were made. Appellant testified that others in the marina business have not been paying nor were required to pay...
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