Bud Crossman Plumbing & Heating v. Commissioner of Taxes, 474-81

• Decision Date: 02 November 1982
• Docket Number: No. 474-81,474-81
• Citation: 142 Vt. 179,455 A.2d 799
• Court: Vermont Supreme Court
• Parties: BUD CROSSMAN PLUMBING & HEATING v. COMMISSIONER OF TAXES.

Page 799

455 A.2d 799

142 Vt. 179

BUD CROSSMAN PLUMBING & HEATING v. COMMISSIONER OF TAXES.

No. 474-81.

Supreme Court of Vermont.

Nov. 2, 1982.

Reargument Denied Dec. 6, 1982.

John Paul Faignant of Miller, Norton & Cleary, Rutland, for plaintiff-appellant.

George Brooks, Montpelier, for defendant-appellee.

Before BARNEY, C.J., and BILLINGS, HILL, UNDERWOOD and PECK, JJ.

PECK, Justice.

This is an appeal by the plaintiff, a Rutland plumbing and heating contractor, from an order of the Washington Superior Court upholding a sales tax deficiency assessed against him by the Vermont Department of Taxes. Plaintiff applied to the Commissioner of Taxes for a hearing in accordance with 32 V.S.A. § 9777. At the conclusion of the hearing, the Commissioner determined the assessment was proper under 32 V.S.A., Chapter 233, whereupon the plaintiff appealed to the superior court, 32 V.S.A. § 9817, and subsequently to this Court. We affirm.

In the regular course of business, plaintiff bought materials and supplies from various sources to be incorporated into his jobs. The invoices received from the suppliers sometimes stated an amount for the sales tax, but often they did not.

The Department assessed the deficiency based upon the invoices for taxable purchases which did not state the three percent sales tax. Of particular concern here are sales made to the plaintiff by a New York supplier who formerly had a place of business in Vermont, but has since ceased its operation in this state. Interest was added to the assessment, but no penalty was imposed. The Department seeks to collect the deficiency assessment from the plaintiff rather than from the vendor-supplier.

Plaintiff raises five issues for review. They are: (1) whether the sales tax is imposed on the vendor or the purchaser; (2) whether the state may collect the sales tax from the purchaser; (3) whether the presumption of taxability under 32 V.S.A. § 9813 applies to the facts of this case; (4) whether plaintiff was wrongfully denied access to certain confidential records of the Department; (5) whether there is here the possibility of an unconstitutional double taxation. We consider these issues in the order listed.

I.

It is the position of the Department that the sales tax payable under Chapter 233 of Title 32 is imposed on the purchaser, not the vendor, and that the latter, under our statutory scheme, is merely the tax collector on behalf of the state. Rowe-Genereux, Inc. v. Department of Taxes, 138 Vt. 130, 133, 411 A.2d 1345, 1347 (1980).

Plaintiff's argument to the contrary, that the vendor is the taxpayer, is based in part on decisions by courts of other jurisdictions whose statutes are different from those in Vermont. In addition, plaintiff construes the obligation of a vendor to pay to the state the tax collected from a purchaser, coupled with a vendor's personal liability in the event of his failure to do so, 32 V.S.A. § 9703, as an indication of legislative intent to impose the tax on the vendor.

Perhaps 32 V.S.A. § 9771, standing alone and considered out of context with the rest of Chapter 233, contains some ambiguity. It reads in part: "there shall be paid a tax of four percent upon the receipts from [various sources]." In its generic sense, "receipts" might well refer to money received by a vendor for the goods sold, thus giving some plausibility to the argument that since the purchase price is a receipt in this context, and since it is "received" by the vendor, the tax must be the responsibility of the recipient, that is, the vendor.

Individual statutes, however, are to be construed with others in pari materia as parts of one system. In re Preseault, 130 Vt. 343, 346, 292 A.2d 832, 834 (1972). When this is done in the instant case, the plaintiff's argument collapses.

The word "receipt" as used in 32 V.S.A., Chapter 233, has a special meaning, differing in some respects from the broader or generic meanings to be found in the dictionaries. It is expressly defined by 32 V.S.A. § 9701(4) to mean "the sales price of any property and the charge for any amusement taxable under this chapter valued in money ...." Therefore, the word "receipt" as it appears in § 9771, by definition, does not refer to the person who receives the purchase price, it refers to the purchase price itself. Accordingly, § 9771 provides no support for the plaintiff's position, while several of the other statutory sections of Chapter 233, interpreted reasonably and consistently, are fatal to it.

It is too clear for any acceptable argument that there are two persons involved in the processing of the amount of the sales tax prior to its ultimate remission to the state: the person responsible to pay the amount of the tax, and the person obligated to collect the tax in the first instance from the payor. If this were not so (if, for example, the payor and the collector are one and the same entity) many of the relevant statutes would be virtually meaningless.

By definition, vendors are collectors of the sales tax. 32 V.S.A. § 9701(14). It is so patently unlikely the legislature meant by this definition that a vendor should "collect" a tax from himself that the suggestion does not merit serious consideration. As a simple logical progression, it must be contemplated that, as in the case of all the historically unpopular tax collectors, they will collect from someone: the taxpayer.

If the statutes are intended to make the vendor the taxpayer, and to do no more than permit the vendor to charge the amount of the tax over against the purchaser, it is not believable that 32 V.S.A. § 9705 would have been worded as it is. This section reads in part:

(a) Where any purchaser has failed to pay a tax ... to the person required to collect the same ... the tax shall be payable by the purchaser directly to the commissioner ....

(b) The commissioner may ... provide by rule that purchasers shall file returns and pay directly to the commissioner any tax herein imposed, at such times as returns are required to be filed and paid by persons required to collect the tax. (emphasis added)

Any interpretation of this language consistent with the position of the plaintiff would be a strained reading at best. Section 9705 is, however, entirely consistent with the purchaser-payor, vendor-collector interpretation of Chapter 233 urged by the State, and seemingly adopted by this Court in Rowe-Genereux, Inc. v. Department of Taxes, supra.

The personal liability of the vendor for the amount of the tax under § 9703 does not change our conclusion. This section serves only to put teeth into the vendor's responsibility to collect and pay over to the state the tax collected. Moreover, the further provisions of this section, giving the vendor a right of action against his purchaser as an aid in collecting the tax, lends still further support for our interpretation of the statutory roles of purchasers and vendors as taxpayers and collectors respectively.

In the light of the above analysis, we affirm our brief statement on the question in Rowe-Genereux, Inc. v. Department of Taxes, supra, and hold that in this state the sales tax is imposed on the purchaser of goods and services, not on the vendor; the latter is merely the collector of the tax on behalf of the state.

II.

Plaintiff contends next that even if the purchaser is the "taxpayer," the state's right to collect the tax lies only against the vendor and not against the purchaser. In support of this contention he again cites § 9703, which imposes personal liability on a vendor, defined in 32 V.S.A. § 9701(14) as the person required to collect sales taxes, for the tax "imposed, collected or required to be collected."

Once again, however, plaintiff is isolating one statutory section from others in the same chapter and, as a result, he interprets it out of context with the statutes which stand in pari materia with it. In re Preseault, supra. The fact that one person may incur a liability in a particular situation is quite another thing from a holding that such liability is necessarily exclusive, or that there is no right to seek recovery against another person who is otherwise equally liable.

As we indicated above, § 9703 is a device to put teeth into a vendor's duty to collect. In the absence of such a measure, a vendor might ignore his obligation with impunity. There is nothing in this statute to compel acceptance of plaintiff's interpretation that the imposition of this conditional liability, per se, makes it exclusive. Moreover, § 9705 imposes on a purchaser who fails to pay a sales tax to the vendor a duty to pay the tax directly to the state. This section carries with it, by implication, the right to assess deficiencies against the purchaser resulting from his failure to pay the taxes to the vendor. "Every statute is understood to contain by implication, if it does not by its express terms, all such provisions as are necessary to make effective the rights and privileges that it grants." State v. Mayer, 139 Vt. 176, 178, 423 A.2d 492, 493 (1980).

It would be a strange law indeed which imposes the sales tax responsibility on a buyer in the first instance, and thereafter forecloses the taxing authority from assessing his deficiencies against him. Accordingly, we hold that the State was within its rights under § 9705 in assessing the alleged deficiency against the plaintiff. The alternative of assessing the deficiency against the vendor, based on his statutory liability under § 9703, is no more than an option; it is not exclusive.

III.

In arguing that the presumption of taxability under 32 V.S.A. § 9813 does not apply here, plaintiff confuses the distinction between taxability on the one hand, and assessment of the tax (here as a deficiency) on the other. This confusion may be attributable in part to language appearing in McClure Newspapers, Inc. v. Vermont Department of Taxes, 132 Vt. 169, 315 A.2d 452 (1974), which he cites. In that case, we said...