Buehner Block v. Wyoming Dept. of Revenue

• Citation: 2006 WY 90,139 P.3d 1150
• Decision Date: 27 July 2006
• Docket Number: No. 05-175.,05-175.
• Parties: BUEHNER BLOCK COMPANY, INC., Appellant (Petitioner), v. WYOMING DEPARTMENT OF REVENUE, Excise Tax Division, Appellee (Respondent).
• Court: Wyoming Supreme Court

Page 1150

139 P.3d 1150

2006 WY 90

BUEHNER BLOCK COMPANY, INC., Appellant (Petitioner), v. WYOMING DEPARTMENT OF REVENUE, Excise Tax Division, Appellee (Respondent).

No. 05-175.

Supreme Court of Wyoming.

July 27, 2006.

Representing Appellant: John A. Coppede and Scott Homar of Hickey & Evans LLP, Cheyenne, Wyoming.

Representing Appellee: Patrick J. Crank, Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General; and Ryan T. Schelhaas, Senior Assistant Attorney General. Argument by Mr. Schelhaas.

Before VOIGT, C.J., and GOLDEN, HILL^*, KITE, and BURKE, JJ.

VOIGT, Chief Justice.

[¶ 1] Buehner Block Company, Inc. (Buehner Block) manufactures concrete blocks in Utah and sells its products both inside and outside that state. Some of Buehner Block's customers are in Wyoming, and the company has held a Wyoming sales and use tax vendor's license. However, Buehner Block did not collect and remit Wyoming sales taxes for the sales at issue in this case. Following certification from the district court pursuant to W.R.A.P. 12.09(b), we affirm the decision of the Wyoming State Board of Equalization that Buehner Block was obligated to collect and remit Wyoming sales taxes for these transactions.

ISSUES

[¶ 2] 1. Did the Board err in deciding that these sales were not exempt from Wyoming's sales tax authority under Wyo. Stat. Ann. § 39-15-105(a)(i)(A)?

2. Did the Board err in concluding that these sales were subject to Wyoming's sales tax authority despite the fact that title to the goods passed in Utah where the goods were transferred to a common carrier?

3. Did the Board err in any event in failing to give Buehner Block a claimed credit?

FACTS

[¶ 3] Buehner Block is a Utah corporation operating out of Salt Lake City. It manufactures and sells concrete blocks throughout the intermountain West. In 1983, the company applied for and received a Wyoming sales and use tax vendor's license. Between 1997 and 2004, Buehner Block reported Wyoming sales totaling $173,733.87 and remitted Wyoming sales taxes totaling $6,288.51.

[¶ 4] In 2002, the Wyoming Department of Audit contacted Buehner Block to engage an audit, in part because the audit of one of Buehner Block's customers revealed several invoices where it appeared Buehner Block had failed to collect and remit Wyoming sales tax. The audit covered the period from July 1, 1999 through December 31, 2002. A review of about 80,000 invoices revealed 318 instances where Buehner Block delivered product to Wyoming destinations without collecting Wyoming sales tax.¹ During the audit, Buehner Block did not deny that it arranged for the delivery of its product into Wyoming, that it charged the customer a delivery fee, or that it was making Wyoming sales that required it to collect sales taxes.

[¶ 5] Later, however, Buehner Block responded to the preliminary audit findings by taking the position that: (1) it was not a vendor as defined by Wyoming law; (2) the sales were made to customers that were not Wyoming based, and it was unable precisely to calculate the tax; and (3) it used a common carrier to deliver the goods after the product was sold at the point of pickup in Utah. The Board did not accept these contentions, concluding instead that Buehner Block's customers received title or possession in Wyoming, and that Buehner Block actually treated the transactions as if they were Wyoming sales.

THE STATUTORY SCHEME

[¶ 6] Wyo. Stat. Ann. § 39-15-103(a)(i)(A) (LexisNexis 2005) imposes an excise tax upon "[t]he sales price of every retail sale of tangible personal property within the state."² "Sale" is defined in relevant part as "any transfer of title or possession in this state for a consideration . . . ." Wyo. Stat. Ann. § 39-15-101(a)(vii) (LexisNexis 2005 & Supp.2006). In turn, the rules of the Wyoming Department of Revenue provide that "[t]he point at which title or possession of tangible personal property passes to the purchaser shall determine the location of the sale." Department of Revenue Rules and Regulations, ch. 2, § 14(p)(i) (2000). Sales by a vendor are presumed to have occurred within Wyoming unless the vendor retains sale documents showing otherwise:

Contract of sale, sales invoices, bills of lading or other documentary evidence of the passage of title or delivery of tangible personal property to the purchaser outside this state shall be retained by the vendor to establish the nature of the sale. If no such evidence is present, it shall be presumed that the sale occurred within the state and the vendor shall be liable for the sales tax thereon.

Id. at ch. 2, § 14(p)(iii) (2000).

[¶ 7] The tax is paid by the purchaser and is collected by the vendor at the time of the sale. Wyo. Stat. Ann. § 39-15-103(b)(i), (c)(i) (LexisNexis 2005); Rock Springs Ford Nissan v. State Bd. of Equalization, 890 P.2d 1100, 1101 (Wyo.1995). A vendor is "any person engaged in the business of selling at retail or wholesale tangible personal property, admissions or services which are subject to taxation under this article...." Wyo. Stat. Ann. § 39-15-101(a)(xv) (LexisNexis 2005 & Supp.2006). Every vendor as defined is required to obtain from the Department of Revenue a sales tax license to conduct business in the state, and to remit collected taxes on a monthly basis. Wyo. Stat. Ann. §§ 39-15-106(a) (LexisNexis 2005), 39-15-107(a)(i) (LexisNexis 2005 & Supp.2006).

[¶ 8] At issue in the present case is the exemption found in Wyo. Stat. Ann. § 39-15-105(a)(i)(A) (LexisNexis 2001 & Supp.2002):

(a) The following sales or leases are exempt from the excise tax imposed by this article:

(i) For the purpose of exempting sales of services and tangible personal property which are protected by the United States constitution and the Wyoming constitution, the following are exempt:

(A) Sales which the state of Wyoming is prohibited from taxing under the laws or constitutions of the United States or Wyoming.

STANDARD OF REVIEW

[¶ 9] Appellate review under W.R.A.P. 12.09 is "limited to a determination of the matters specified in" Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2005 & Supp.2006), which provides as follows:

(c) To the extent necessary to make a decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. In making the following determinations, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error. The reviewing court shall:

(i) Compel agency action unlawfully withheld or unreasonably delayed; and

(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(B) Contrary to constitutional right, power, privilege or immunity;

(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(D) Without observance of procedure required by law; or

(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.

[¶ 10] We give deference to the agency's findings of fact, and do not disturb them unless they are contrary to the great weight of the evidence. EOG Res., Inc. v. Dep't of Revenue, 2004 WY 35, ¶ 12, 86 P.3d 1280, 1284 (Wyo.2004). Likewise, we do not substitute our judgment for that of the agency if its decision is supported by substantial evidence. State ex rel. Wyo. Dep't of Revenue v. Union Pac. R.R. Co., 2003 WY 54, ¶ 29, 67 P.3d 1176, 1187 (Wyo.2003). We described the substantial evidence test in this context in Newman v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2002 WY 91, ¶¶ 12, 22, 49 P.3d 163, 168, 171 (Wyo.2002):

In this jurisdiction, we have described the substantial evidence test in cases where factual findings are challenged as follows:

In reviewing findings of fact, we examine the entire record to determine whether there is substantial evidence to support an agency's findings.... Substantial evidence is relevant evidence which a reasonable mind might accept in support of the agency's conclusions. It is more than a scintilla of evidence.

State ex rel. Wyoming Workers' Safety and Compensation Division v. Jensen, 2001 WY 51, ¶ 10, 24 P.3d 1133, ¶ 10 (Wyo. 2001) (citations omitted).

[W]e hold the substantial evidence test is the appropriate standard of review in appeals from WAPA contested case proceedings when factual findings are involved and both parties submit evidence.

[¶ 11] As to questions of law, "[o]ur function is to correct any error that an agency makes in its interpretation or application of the law." EOG Res., Inc., 2004 WY 35, ¶ 12, 86 P.3d at 1284. Stated differently, if an agency's conclusions of law are in accordance with the law, we will affirm them. Wyodak Res. Dev. Corp. v. State Bd. of Equalization, 9 P.3d 987, 989 (Wyo.2000). An agency's interpretation of statutory language which the agency normally implements is entitled to deference, unless clearly erroneous. Laramie County Bd. of Equalization v. Wyo. State Bd. of Equalization, 915 P.2d 1184, 1190 (Wyo.1996); Mowry v. State ex rel. Wyo. Ret. Bd., 866 P.2d 729, 731 (Wyo. 1993).

DISCUSSION

Did the Board err in deciding that these sales were not exempt from Wyoming's sales tax authority under Wyo. Stat. Ann. § 39-15-105(a)(i)(A)?

[¶ 12] This case involves a fundamental taxing issue—the same issue that was a primary impetus in 1789 when our forebears abandoned the Articles of Confederation in favor of our present constitution. The conflict results from our federal system. The imposition of individual state taxes upon interstate commerce may impede that commerce. On the other hand, if individual states are not permitted to impose any tax upon interstate commerce, interstate commerce does not...