GRACELAND COLLEGE v. Dept. of Revenue, No. 22347.

CourtSupreme Court of South Dakota
Writing for the CourtAMUNDSON, Retired Justice.
Citation654 N.W.2d 779,2002 SD 145
PartiesGRACELAND COLLEGE CENTER FOR PROFESSIONAL DEVELOPMENT AND LIFELONG LEARNING, INC., Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellee.
Decision Date26 November 2002
Docket NumberNo. 22347.

654 N.W.2d 779
2002 SD 145

GRACELAND COLLEGE CENTER FOR PROFESSIONAL DEVELOPMENT AND LIFELONG LEARNING, INC., Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE, Appellee

No. 22347.

Supreme Court of South Dakota.

Considered on Briefs August 26, 2002.

Decided November 26, 2002.


654 N.W.2d 781
Timothy M. Engel of May, Adam, Gerdes & Thompson, Pierre, South Dakota, Attorney for appellant

Michael T. Kenyon, Department of Revenue, Pierre, South Dakota, Attorney for appellee.

AMUNDSON, Retired Justice.

[¶ 1.] The South Dakota Department of Revenue (Department) assessed taxes against SkillPath, a division of Graceland College Center for Professional Development and Lifelong Learning, Inc. (SkillPath), for seminars and services provided by the corporation in South Dakota. SkillPath contested the certificate of assessment with the Secretary of Revenue, alleging it should be exempt from certain taxes. The Department upheld the certificate. SkillPath appealed the Department's decision to circuit court, and the decision was affirmed. SkillPath appeals, and we affirm.

FACTS

[¶ 2.] SkillPath is a not-for-profit corporation that presents business seminars on computer training, secretarial skills and other business-related topics. The vast majority of SkillPath's seminars are presented to employees whose fees are paid by their employers. These programs are presented by independent contractors, and are generally held in hotel meeting rooms.

[¶ 3.] In September of 1999, SkillPath underwent a sales and use tax audit, covering January 1996 through December 1998. On December 7, 1999, the Department issued a certificate of assessment in the amount of $31,989.19, plus interest, to SkillPath.1 SkillPath contested the certificate. On April 14, 2000, a hearing was held before a hearing examiner. Evidence was presented regarding SkillPath's marketing, the types of seminars it provides, and to whom the seminars are provided. The hearing examiner found that SkillPath's seminars were entitled to a tax exemption. The hearing examiner found SkillPath's courses qualified for tax exemption under SDCL 10-45-12.1 under SIC Manual 8234 (Data Processing Schools) and 8244 (Business and Secretarial schools). On appeal, the Secretary of Revenue reversed the hearing examiner's decision. The Secretary of Revenue found that the services provided by SkillPath were not exempt from taxation under SDCL 10-45-12.1. The Secretary of Revenue reasoned that SkillPath was not exempt as a "vocational school" or a "continuing education program." The Secretary of Revenue found SkillPath's seminars were more appropriately classified in SIC 8299 (Schools and Educational Services, Not Elsewhere Classified) or in the alternative SIC 7389 (Lecture Bureaus), and thus not exempt from tax.

[¶ 4.] SkillPath appealed the Secretary of Revenue's final decision, and the circuit court affirmed. SkillPath appeals raising the following issue:

654 N.W.2d 782
Whether services offered by SkillPath are exempt from South Dakota sales tax pursuant to SDCL 10-45-12.1.

STANDARD OF REVIEW

[¶ 5.] This Court clarified the standard of review for administrative appeals in Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶¶ 6-7, 575 N.W.2d 225, 228-29.

Our standard of review, delineated in SDCL 1-26-36, requires us to give great weight to the findings and inferences made by the Department on factual questions. Helms v. Lynn's, Inc., 1996 SD 8, ¶¶ 9-10, 542 N.W.2d 764, 766; Finck v. Northwest Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D.1988). We examine agency findings in the same manner as the circuit court to decide whether they were clearly erroneous in light of all the evidence. In Matter of Northwestern Bell Tel. Co., 382 N.W.2d 413, 415 (S.D.1986). If after careful review of the entire record we are definitely and firmly convinced a mistake has been committed, only then will we reverse. Spitzack v. Berg Corp., 532 N.W.2d 72, 75 (S.D.1995) (citing Day v. John Morrell & Co., 490 N.W.2d 720, 723 (S.D.1992)); see also United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948)(origin of definition). Questions of law, of course, are fully reviewable. Caldwell v. John Morrell & Co. 489 N.W.2d 353, 357 (S.D.1992); Egemo v. Flores, 470 N.W.2d 817, 820 (S.D.1991).

When reviewing statutes that impose taxes we have stated:

The question of whether a statute imposes a tax under a given factual situation is a question of law. Statutes which impose taxes are to be construed liberally in favor of the taxpayer and strictly against the taxing body. Statutes exempting property from taxation should be strictly construed in favor of the taxing power. The words in such statutes should be given a reasonable, natural, and practical meaning to effectuate the purpose of the exemption. Nat'l Food Corp. v. Aurora Cty. Bd. of Comm'rs, 537 N.W.2d 564, 566 (S.D.1995) (citing Thermoset Plastics, Inc. v. Dep't of Revenue, 473 N.W.2d 136, 138-39 (S.D. 1991)); see also Estate of He Crow v. Jensen, 494 N.W.2d 186, 191 (S.D.1992) ([stating] "[w]e construe administrative rules according to their intent as determined from the rule as a whole and other rules relating to the same subject.")

Matter of Sales and Use Tax Refund Request of Media One, Inc., 1997 SD 17, ¶ 9, 559 N.W.2d 875, 877.

DECISION

[¶ 6.] SkillPath argues it should be exempt from taxation under our laws because it is either a "vocational school" or a "continuing education program." SkillPath contends that SDCL 10-45-12.1 provides two sales tax exemptions for its seminars, "educational services" or "continuing education program." SDCL 10-45-12.1 provides, in pertinent part:

The following services enumerated in the Standard Industrial Classification Manuel, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President are exempt from the provisions of this chapter: ... education services (major group 82) except schools and educational services not elsewhere classified (industry no. 8299); ... The following are also specifically exempt from the provision of this chapter:.... continuing education programs; tutoring; vocational counseling, except rehabilitation counseling....

654 N.W.2d 783
Educational Services

[¶ 7.] SkillPath claims its services qualify as a vocational school exempt from tax under Major Group 82 "educational services." SDCL 10-45-12.1 adopts the classification scheme set forth in the Standard Industrial Classification Manual (SIC)2 making it necessary to examine the SIC Manual in order to determine the proper classification. An updated version of the SIC Manual, the North American Industry Classification System (NAICS Manual), has been formulated, however the legislature has not incorporated the NAICS Manual into SDCL 10-45-12.1. "Creation of tax exemptions is exclusively within the province of the Legislature, not the judiciary." H & R Roofing of South Dakota, Inc. v. Dep't of Revenue, 2001 SD 39, ¶ 10, 623 N.W.2d 508, 511. Application of the NAICS Manual would in effect create tax exemptions not granted by our legislature.

[¶ 8.] SkillPath claims it falls...

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8 practice notes
  • Sioux Falls Shopping News v. Dept. of Rev., No. 24616.
    • United States
    • Supreme Court of South Dakota
    • 23 de abril de 2008
    ...exemption. Graceland College Center for Professional Development and Lifelong Learning, Inc. v. South Dakota Department of Revenue, 2002 SD 145, ¶ 11, 654 N.W.2d 779, [¶ 19.] Some background is necessary to aid in the analysis of Shopping News' assertion. SDCL 10-45-5.2 specifically subject......
  • N. Border Pipeline Co. v. S.D. Dep't of Revenue, Nos. 27152
    • United States
    • Supreme Court of South Dakota
    • 5 de agosto de 2015
    ...favor of the taxing power.” Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc. v. S.D. Dep't of Revenue, 2002 S.D. 145, ¶ 5, 654 N.W.2d 779, 782 (quoting In re Sales & Use Tax Refund Request of Media One, Inc., 1997 S.D. 17, ¶ 9, 559 N.W.2d 875, 877 ). The plain language of SDCL......
  • In re Graceland College Center, No. 98,409.
    • United States
    • Court of Appeals of Kansas
    • 31 de outubro de 2008
    ..."Furthermore, the evidence shows that SkillPath does not have a course of study. See also, Graceland College v. Department of Revenue (654 N.W.2d 779, 783 (S.D. 2002). SkillPath is not a degree-granting institution. Some college credit is granted to SkillPath classes through Graceland Unive......
  • N. Border Pipeline Co. v. S.D. Dep't of Revenue, #27152
    • United States
    • Supreme Court of South Dakota
    • 5 de agosto de 2015
    ...favor of the taxing power." Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc. v. S.D. Dep't of Revenue, 2002 S.D. 145, ¶ 5, 654 N.W.2d 779, 782 (quoting In re Sales & Use Tax Refund Request of Media One, Inc., 1997 S.D. 17, ¶ 9, 559 N.W.2d 875, 877). The plain language of SDCL ......
  • Request a trial to view additional results
8 cases
  • Sioux Falls Shopping News v. Dept. of Rev., No. 24616.
    • United States
    • Supreme Court of South Dakota
    • 23 de abril de 2008
    ...exemption. Graceland College Center for Professional Development and Lifelong Learning, Inc. v. South Dakota Department of Revenue, 2002 SD 145, ¶ 11, 654 N.W.2d 779, [¶ 19.] Some background is necessary to aid in the analysis of Shopping News' assertion. SDCL 10-45-5.2 specifically subject......
  • N. Border Pipeline Co. v. S.D. Dep't of Revenue, Nos. 27152
    • United States
    • Supreme Court of South Dakota
    • 5 de agosto de 2015
    ...favor of the taxing power.” Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc. v. S.D. Dep't of Revenue, 2002 S.D. 145, ¶ 5, 654 N.W.2d 779, 782 (quoting In re Sales & Use Tax Refund Request of Media One, Inc., 1997 S.D. 17, ¶ 9, 559 N.W.2d 875, 877 ). The plain language of SDCL......
  • In re Graceland College Center, No. 98,409.
    • United States
    • Court of Appeals of Kansas
    • 31 de outubro de 2008
    ..."Furthermore, the evidence shows that SkillPath does not have a course of study. See also, Graceland College v. Department of Revenue (654 N.W.2d 779, 783 (S.D. 2002). SkillPath is not a degree-granting institution. Some college credit is granted to SkillPath classes through Graceland Unive......
  • N. Border Pipeline Co. v. S.D. Dep't of Revenue, #27152
    • United States
    • Supreme Court of South Dakota
    • 5 de agosto de 2015
    ...favor of the taxing power." Graceland Coll. Ctr. for Prof'l Dev. & Lifelong Learning, Inc. v. S.D. Dep't of Revenue, 2002 S.D. 145, ¶ 5, 654 N.W.2d 779, 782 (quoting In re Sales & Use Tax Refund Request of Media One, Inc., 1997 S.D. 17, ¶ 9, 559 N.W.2d 875, 877). The plain language of SDCL ......
  • Request a trial to view additional results

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