Farm and Home Sav. Ass'n v. Spradling
| Decision Date | 14 June 1976 |
| Docket Number | No. 59091,No. 1,59091,1 |
| Citation | 538 S.W.2d 313 |
| Parties | FARM AND HOME SAVINGS ASSOCIATION, Respondent, v. James R. SPRADLING, as Director of Revenue of the State of Missouri, Appellant |
| Court | Missouri Supreme Court |
John C. Danforth, Atty. Gen., John D. Ashcroft, Asst. Atty. Gen., appellant.
Ewing, Ewing, Carter & Woodfill, Gilbert Carter, Nevada, for respondent.
The question presented is whether section 148.250, RSMo 1969, exempts the purchase of items otherwise taxable under the Missouri Sales and Use Tax statutes, sections 144.010 to 144.745, RSMo 1969, from those taxes when the purchaser is a savings and loan association.
Farm & Home Savings Association (Association) instituted this suit by the filing of an agreed statement of facts in the circuit court of Vernon county, Missouri, against the director of revenue, state of Missouri (Director), seeking a refund of sales and use taxes paid by the Association, purchaser, or International Business Machines Corp. (IBM), the seller, to the Director under protest.
The Association also contends that if this court decides that the sales tax is payable on the purchases then it is entitled to the 2% deduction for remitting the same under section 144.140.
The refund claims are described as follows:
1. 2. 3. 4. 5. 6
Claim Claim Tax By Whom Paid Date or Dates Date
No. Amount Type of Payment Claim Filed
1 $ 4,686.55 Use Farm & Home 1-30-74 1-30-74
2 65,734.05 Use Farm & Home 1-30-74 1-30-74
3 34,897.50 Use Farm & Home 4-24-72 1-30-74
4 31,759.53 Use IBM Various 1-30-74
5 2,576.33 Use Farm & Home 4-24-74 4-24-74
6 4,522.39 Use Farm & Home 4-24-74 4-24-74
7 1,582.82 Use Farm & Home 7-19-74 7-19-74
8 1,458.84 Use Farm & Home 7-19-74 7-19-74
9 5,420.70 Sales Farm & Home 7-19-74 7-19-74
10 6,735.54 Sales/Use Farm & Home 10-10-74 10-10-74
11 1,265.44 Use Farm & Home 10-10-74 10-10-74
Column one assigns to each claim the numerical designation given it for purposes of this agreement.
Column two shows the amount of each claim as it appears in the claim for refund or protest affidavit that Farm & Home filed with the Director (as amended in the case of claim No. 4). It is agreed that such amount was paid to the Department of Revenue.
Column three shows for each claim the type of tax that was paid, that is, whether use tax or sales tax.
Column four shows for each claim by whom (whether by Farm & Home or by its supplier or suppliers) the tax amount shown in column two was paid to the Department of Revenue.
Column five shows for each claim the date or dates of payment to the Department of Revenue of the tax amount shown in column two.
Column six shows for each claim the date that it was filed with the Director.
The Association is a mutual savings and loan association as defined in section 148.470.
The circuit court held that the purchases by the Association were exempt from the sales and use tax under section 148.520 and the Director appealed. This court has jurisdiction because the case involves the construction of the revenue laws of this state. Art. V, sec. 3, Mo.Const., as amended.
The Association's claims for refund are based entirely upon section 148.520 which provides:
Sections 148.470 to 148.530 constitute a classification of accounts of associations as intangible property, and the annual tax imposed by the sections upon the earnings, including dividends and interest, paid or credited to an account, which shall be the annual yield from the account, is exclusive and in lieu of all other taxes of whatsoever nature against or upon associations, their property, capital or income, except ad valorem taxes upon real and tangible personal property and social security, unemployment compensation and franchise taxes.
As noted supra, some of the purchases are claimed by the Director to be subject to the sales tax and others to the use tax. Missouri's sales tax provisions were originally adopted in 1934 (Laws of Mo.1933--34, Ex.Sess., p. 155), while the first general use tax known as the 'Compensating Use Tax Law' was enacted in 1959 (Laws of Mo.1959, H.B. 35). Since the sales tax was enacted before the use tax, the sales tax will be considered initially.
The Director contends that the sales tax is a tax on the seller, not the purchaser, and therefore the exemption provisions of section 148.520 do not apply because the Association is the purchaser, not the seller. The Association argues that the burden of sales taxes falls on the purchaser and therefore it is exempt from the imposition of this tax under section 148.520.
In Automatic Retailers of America, Inc., v. Morris, Director of Revenue, 386 S.W.2d 901 (Mo. banc 1965), this court held the sales tax law, sections 144.010--144.430, as amended Laws 1963, pp. 195--199, constituted a tax upon the purchaser and not upon the seller. The court invited the general assembly, which was then in session, to consider whether it desired to take legislative action which respect to the nature of the sales tax. The general assembly readily accepted the invitation with the adoption of H.B. 523 with an emergency clause. See Laws of Mo.1965, p. 261.
Subsequently, this court has on two occasions considered the question of whether the sales tax law, as amended in 1965, constituted a tax on the buyer or the seller and on both occasions held the sales tax law as amended was a gross-receipts tax imposed upon the seller. Fabick and Company v. Schaffner, 492 S.W.2d 737 (Mo.1973); Virden v. Schaffner, 496 S.W.2d 846 (Mo.1973). In Virden, the second of the two cases, the court said at 848: 'We reaffirm that the entire tax imposed by Chapter 144 is a gross receipts tax.'
In this case the Association is the purchaser. The sales tax is a tax upon the gross receipts of the seller. The fact that section 144.060, RSMo 1969, imposes the duty upon the purchaser to pay the amount of the tax to the seller does not alter the legal nature of the tax. In Ferrara v. Director, Division of Taxation, 127 N.J.Super. 240, 317 A.2d 80, 83 (1974), it was said, See also Martin Oil Service, Inc. v. Department of Revenue, 49 Ill.2d 260, 273 N.E.2d 823 (1971), cert. denied 405 U.S. 923, 92 S.Ct. 961, 30 L.Ed.2d 794.
The court holds that section 148.520, supra, does not afford the Association a tax exempt status as to sales taxes.
Section 148.520 was enacted in 1945, Laws of Mo.1945, p. 1919, sec. 7, but, as noted supra, it was not until 1959 that the general assembly enacted the 'Compensating Use Tax Law' in Missouri. See sections 144.600--144.745; RSMo 1969. Section 144.610(1) imposes a tax for the privilege of storing, using or consuming within Missouri any article of tangible personal property purchased on or after a certain date in an amount equivalent to the percentage imposed on the sales price in the sales tax law in section 144.020. The purchaser is liable for the tax although there are provisions whereby the seller can collect the tax and remit it to the state and give the purchaser a receipt therefor. Sec. 144.610(2). 'Person' is defined by section 144.605(2) as 'any individual, firm, copartnership, joint adventure, association, corporation, municipal or private, and whether organized for profit or not, state, county, political subdivision, state department, commission, board, bureau or agency, except the state highway department, estate, trust, business trust, receiver or trustee appointed by the state or federal court, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular number; . . .'
The act provides for specific exemptions from the tax by section 144.615 and incorporates as exemptions from the use tax some of the exemption provisions of the sales tax law. There are no provisions exempting savings and loan associations from the tax either by use of a description of the type of enterprise such as 'religious and charitable organizations' (144.040) and 'ticket sales made by benevolent, scientific and educational associations' (144.042) or by a description of the use to which the property is to be put by the purchaser (144.030).
The 'use tax' has been characterized as ". . . a levy on the privilege of using within the taxing state property purchased outside the state, if the property would have been subject to the sales tax had it been purchased at home." Southwestern Bell Telephone Co. v. Morris, 345 S.W.2d 62, 66 (Mo. banc 1961), 85 A.L.R.2d 1033, 1039. It is not a tax on the property itself, but rather on the privilege of buying or selling the property. Sullivan v. United States, 395 U.S. 169, 175, 89 S.Ct. 1648, 23 L.Ed.2d 182.
In Southwestern Bell v. Morris, supra, this court considered the use tax act in depth and clearly demonstrated that the primary function of a use tax is to complement the sales tax, to supplement and protect the sales tax, to complement the sales tax by creating equality of taxation of purchasers on use of property purchased outside the state which cannot be reached as sales because of the commerce clause of the federal constitution.
With respect to exemption, this court in Southwestern Bell said at 67--68: ...
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