Cox Cable of Omaha, Inc. v. Nebraska Dept. of Revenue

• Decision Date: 08 May 1998
• Docket Number: No. S-97-083,S-97-083
• Citation: Cox Cable of Omaha, Inc. v. Nebraska Dept. of Revenue, 578 N.W.2d 423, 254 Neb. 598 (Neb. 1998)
• Parties: COX CABLE OF OMAHA, INC., a Foreign Corporation, Appellee, v. NEBRASKA DEPARTMENT OF REVENUE and M. Berri Balka, Tax Commissioner of the State of Nebraska, Appellants.
• Court: Nebraska Supreme Court

Page 423

578 N.W.2d 423

254 Neb. 598

COX CABLE OF OMAHA, INC., a Foreign Corporation, Appellee, v. NEBRASKA DEPARTMENT OF REVENUE and M. Berri Balka, Tax Commissioner of the State of Nebraska, Appellants.

No. S-97-083.

Supreme Court of Nebraska.

May 8, 1998.

Syllabus by the Court

1. Statutes: Appeal and Error. Statutory interpretation presents questions of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.

2. Administrative Law: Statutes: Legislature. Although construction of a statute by a department charged with enforcing it is not controlling, considerable weight will be given to such a construction, particularly when the Legislature has not taken any action to change such interpretation.

3. Statutes. Where words of a statute are plain and unambiguous, no interpretation is needed to ascertain their meaning.

4. Statutes: Legislature: Intent. In construing a statute, a court must determine and give effect to the purpose and intent of the Legislature as ascertained from the entire language of the statute considered it its plain, ordinary, and popular sense.

5. Statutes: Legislature: Intent. When considering a series or collection of statutes pertaining to a certain subject matter which are in pari materia, they may be conjunctively considered and construed to determine the intent of the Legislature, so that different provisions of the act are consistent and sensible.

Don Stenberg, Attorney General, and L. Jay Bartel, Lincoln, for appellants.

Norman H. Wright, of Fraser, Stryker, Vaughn, Meusey, Olson, Boyer & Bloch, P.C., Omaha, for appellee.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, GERRARD, STEPHAN, and McCORMACK, JJ.

STEPHAN, Justice.

On June 30, 1992, the Nebraska Department of Revenue (Department) issued a notice of deficiency determination to Cox Cable of Omaha, Inc. (Cox), for sales and consumer's use tax for the period from May 1, 1988, through May 31, 1991. Cox filed a timely petition for redetermination contesting portions of the deficiency determination. On December 13, 1994, M. Berri Balka, the Tax Commissioner of the State of Nebraska, issued an order sustaining the Department's deficiency determination and dismissing Cox's petition for redetermination. Cox appealed, and the district court for Lancaster County reversed the Tax Commissioner's order. The Department and the Tax Commissioner now appeal the district court's order to this court. We conclude that the Tax Commissioner correctly construed the applicable statutory provisions governing the assessment of the use tax and, therefore, reverse the judgment of the district court and remand the cause with directions to affirm the order of the Tax Commissioner.

FACTS

Cox is licensed by the Federal Communications Commission and is authorized by the city of Omaha to operate a franchise providing community antenna television service (cable television) in the Omaha metropolitan area. Cox's cable television programming emanates from satellite dishes and antennas and is distributed through fiber optics and coaxial cable to a distribution plant. In order for a subscriber to receive cable service, Cox must install a "house drop" connecting the distribution plant to the subscriber's house. The installation of a house drop requires the use of personal property such as coaxial cable, fittings, rubber boots, and tape, as well as rods, wires, straps, and blocks used for grounding.

Cox employees install some of the house drops, but Cox also hires independent contractors to perform installations during peak volume periods. These contractors are not themselves licensed to provide cable television services; however, regardless of whether a Cox employee or an independent contractor installs the house drop, the work performed is identical. Cox provides the materials used in the installations and pays sales tax on them. Cox compensates the contractors on a piece-rate basis for each type of installation performed.

Cable subscribers are assessed a standard installation charge when their service is initiated; however, the installation charge bears little relationship to the actual cost Cox incurs in installing the service. This is due, in part, to the variance in the amount of work required to install the service. For instance, some homes already have a house drop because a prior or current owner subscribed to cable and then disconnected the service. In these cases, very little work is required to reinstall the service, and Cox pays less for the installation. However, if an entire house drop must be installed at a location, the contractor will receive more compensation. In addition, Cox sometimes reduces or waives new subscribers' installation charges as a marketing strategy, further reducing the correlation between the installation charge and the actual cost of installation.

In a letter dated June 30, 1992, the Department issued Cox a notice of deficiency determination for sales and consumer's use tax for the period from May 1, 1988, through May 31, 1991. Cox filed a timely petition for redetermination protesting the deficiency determination. Specifically, Cox protested the portion of the deficiency determination holding that the charges Cox paid to independent contractors for the installation of tangible personal property in conjunction with furnishing cable television services were subject to consumer's use tax.

On December 13, 1994, the Tax Commissioner issued an order sustaining the Department's deficiency determination and dismissing Cox's petition for redetermination. Cox appealed the Tax Commissioner's decision to the district court for Lancaster County, which reversed the decision based upon its finding that cable television installation services are subject to the use tax only when performed by the entity which furnishes the actual cable service pursuant to a franchise or permit granted by a county, city, or village. The Department and the Tax Commissioner appealed from this order, and we moved the case to our docket on our motion, pursuant to our authority to regulate the dockets of the Nebraska Court of Appeals and this court.

ASSIGNMENT OF ERROR

The Department and the Tax Commissioner assert that the district court erred in holding that charges paid by Cox to independent contractors for the connection and installation of cable television services provided by Cox were not subject to use tax.

STANDARD OF REVIEW

Statutory interpretation presents questions of law, in connection with which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below. PLPSO v. Papillion/LaVista School Dist., 252 Neb. 308, 562 N.W.2d 335 (1997); Snipes v. Sperry Vickers, 251 Neb. 415, 557 N.W.2d 662 (1997).

ANALYSIS

To determine whether Cox is obligated to pay a consumer's use tax on amounts which it paid to third-party contractors, we must apply the following statute, which was in effect during the audit period:

(1) There is hereby imposed a tax of two percent upon ... the gross receipts of every person engaged ... as a community antenna television service operator or any person involved in the connecting and installing of the services defined in subdivision (4)(b) ... (iv) of section 77-2702....

....

(2) A use tax is hereby imposed ... on any transaction the gross receipts of which are subject to tax under subsection (1) of this section ... for storage, use, or other consumption in this state at the rate set as provided in subsection (1) of this section on the sales price of the property....

Neb.Rev.Stat. § 77-2703 (Reissue 1990). Subsection (2)(a) of § 77-2703 states that if a taxpayer pays sales tax on a transaction, his or her liability for use tax is extinguished. Thus, § 77-2703(1) imposes a sales tax on the gross receipts of certain transactions, including the installation of cable television, while § 77-2703(2) imposes an equivalent use tax on the gross receipts of transactions that are not subject to sales tax. In the present case, the Department asserts that Cox is liable for use taxes under § 77-2703(2). However, because the use tax described in § 77-2703(2) is defined by reference to the sales tax described in § 77-2703(1), it is necessary to refer to § 77-2703(1) in construing the use tax provisions at issue in this case.

Neb.Rev.Stat. § 77-2702(4)(b) (Cum.Supp.1988) is also relevant to the present case. The statute in effect during the relevant period provided in pertinent part:

(b) Gross receipts of every person engaged ... as a community antenna television service operator or any person involved in the connecting and installing of services defined in subdivision (4)(b) ... (iv) of this section shall mean:

....

(iv) In the furnishing of community antenna television service, the gross income received from the furnishing of such community antenna television service as regulated under sections 18-2201 to 18-2205.

Gross receipts shall also mean gross income received from the provision, installation, construction, servicing, or removal of tangible personal property used in conjunction with the furnishing, installing, or connecting of ... community antenna television service specified in subdivision (4)(b)(iv) of this section.

§ 77-2702(4). An amendment to this statute in 1989 added the term "or 23-383 to 23-388" immediately following the reference to "sections 18-2201 to 18-2205." See § 77-2702(4)(b)(iv) (Reissue 1990). Neb.Rev.Stat. §§ 23-383 to 23-388 (Reissue 1997) govern the regulation of cable television service by counties, while Neb.Rev.Stat. §§ 18-2201 to 18-2205 (Reissue 1997) govern the regulation of such services by cities and villages. These statutes make it unlawful for any person not holding a permit or franchise to construct, install, operate, or maintain a cable television service. See §§ 18-2202 and 23-384.

Since 1986, when the Legislature ame...