Ford Motor Co. v. Director of Revenue

CourtUnited States State Supreme Court of Missouri
Citation97 S.W.3d 458
Docket NumberNo. SC 84523.,SC 84523.
PartiesFORD MOTOR COMPANY, d/b/a American Road, Respondent, v. DIRECTOR OF REVENUE, Appellant.
Decision Date14 January 2003

Jeremiah W. (Jay) Nixon, Atty. Gen., Erwin O. Switzer, III, Asst. Atty. Gen., St. Louis, for Appellant.

James C. Owen, Katherine S. Walsh, Chesterfield, for Respondent.


The Director of Revenue (Director) seeks review of the decision of the Administrative Hearing Commission (Commission) that Ford Motor Company (Ford) is entitled to a refund of use taxes.

This Court has jurisdiction. Mo. Const. art. V, section 3. Ford's claim for a refund was not filed within the three-year limitations period of section The three-year limitations period of section 144.190.2 (as to erroneously or illegally collected or computed tax) is started when the taxpayer remits payment of tax on the transactions that generate the issue of overpayment. The Commission's decision is reversed, and the case is remanded.


Ford is a Michigan corporation doing business in Missouri. Ford manufactures motor vehicles. This case involves Ford's Kansas City plant operations.

As of June 1993, Ford became a direct pay taxpayer, remitting sales/use tax directly to the Department of Revenue (Department) monthly.

Beginning in 1996, the Department conducted an audit of Ford's sales and use tax payments for October 1992 through September 1995. At no time during the audit did Ford contend that any taxes it had previously paid for the 1992-1995 tax periods were overpayments. The auditors determined that Ford failed to pay use taxes during the 1992-1995 tax periods on more than $17 million in purchases on which use taxes should have been paid. The taxes, plus interest, totaled $1,031,011.22.2 Ford did not contest the audit findings and paid the total in February 1998.3

The Department then conducted an audit of the subsequent three years: October 1995 through December 1998. Ford hired a tax consultant for that audit, who found that Ford paid use taxes on exempt transactions during the 1992-1995 and 1995-1998 tax periods. The Director allowed credits for the 1995-1998 payments during the course of the audit. On November 17, 1999, Ford filed a refund claim for the 1992-1995 tax periods. The taxes that are the subject of Ford's refund claim were originally paid with returns filed between February 1993 and October 31, 1995. None of the transactions on which Ford claimed refunds were transactions on which it paid the post-audit tax in February 1998.

The Director and Ford executed a series of limitations-waiver letters, with the last one-year extension signed on November 10, 1997. That extension expired more than one year before Ford filed the refund claim.

The Director issued a final decision rejecting Ford's refund request for 1992-1995, on the basis that it was made outside the statutory limitations period. The Commission disagreed and concluded that Ford is entitled to the refund. The Director seeks review.

Standard of review

This Court reviews the Commission's interpretation of revenue law de novo. Southwestern Bell Telephone Co. v. Director of Revenue, 78 S.W.3d 763, 765 (Mo. banc 2002). The Commission's "factual determinations are upheld if they are supported by the law and, after reviewing the whole record, there is substantial evidence to support them." Id.


This case is governed by section 144.190.2, which provides:

If any tax, penalty or interest has been paid more than once, or has been erroneously or illegally collected, or has been erroneously or illegally computed, such sum shall be credited on any taxes then due from the person legally obligated to remit the tax pursuant to sections 144.010 and 144.510, and the balance, with interest as determined by section 32.065, RSMo, shall be refunded to the person legally obligated to remit the tax, but no such credit or refund shall be allowed unless duplicate copies of a claim for refund are filed within three years from date of overpayment.

Ford argues that, after its overpayment of use taxes for the 1995-1998 tax periods, it became entitled to claim a refund for the 1992-1995 tax periods within three years of the 1995-1998 tax periods overpayment. Ford seeks to have section 144.190.2 constructed so broadly as to allow a new unrelated overpayment to start a new three-year limitations period for refund claims, no matter how long ago the taxpayer filed the returns that are the subject of the refund claims.

The Director argues that the three-year limitations period is measured from the date of overpayment of the tax on transactions for which the refund is sought, noting that Ford's interpretation of the section could reward taxpayers who fail to pay their taxes on time.

The question is the meaning of "date of overpayment." The legislature did not provide explicit guidance as to the meaning within section 144.190.2. However, the legislature's intent and the meaning of "date of overpayment" is revealed by (1) the standard for statutory construction and (2) the context of the Missouri tax code.

First, section 144.190.2 must be strictly construed against the taxpayer. Sprint Communications Co., L.P. v. Director of Revenue, 64 S.W.3d 832, 834 (Mo. banc 2002).

As a general rule the sovereign need not refund taxes voluntarily paid even if illegally collected. Section 144.190, however, provides a limited waiver of sovereign immunity to allow the recovery of taxes, penalties, or interest paid that have been illegally or erroneously computed or collected. Statutory provisions waiving sovereign immunity are strictly construed, and when the state consents to be sued, it may prescribe the manner, extent, procedure to be followed, and any other "terms and conditions as it sees fit."

Id. (citations omitted).

Second, section 144.190.2 must be considered in context. Section 144.115 only requires the Director to keep sales and use tax returns (for taxes that have been paid) on file in his custody for four years after the sales or use tax becomes due. Moreover, section 144.190.2 is within a tax code that ties similar rights and obligations to...

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