In re Williston Inn Group

• Citation: 949 A.2d 1073,2008 VT 47
• Decision Date: 11 April 2008
• Docket Number: No. 07-120.,07-120.
• Parties: In re WILLISTON INN GROUP.
• Court: Vermont Supreme Court

949 A.2d 1073

2008 VT 47

In re WILLISTON INN GROUP.

No. 07-120.

Supreme Court of Vermont.

April 11, 2008.

Present: REIBER, C.J., JOHNSON, SKOGLUND and BURGESS, JJ., and JOSEPH, District Judge, Specially Assigned.

ENTRY ORDER

¶ 1. Taxpayer Williston Inn Group appeals from a determination of the Commissioner of Taxes assessing meals-and-rooms taxes based on rents paid for the first thirty days of stays by long-term guests at its extended-stay hotel. Taxpayer argues that the Commissioner based the assessment on an erroneous interpretation of the governing regulation. We disagree, and therefore affirm.

¶ 2. The parties stipulated to the following facts. Taxpayer owns and operates the Marriott TownePlace Suites, an extended-stay hotel in Williston, Vermont. The hotel is duly licensed as a hotel by the State of Vermont Department of Health pursuant to 18 V.S.A. §§ 4351-4358, and by the Town of Williston pursuant to 9 V.S.A. §§ 3061-3063. According to the parties, the hotel also complies with all other requirements of Vermont law applicable to hotels. For instance, it keeps the guest register required by 9 V.S.A. § 3101 and gives notice of the availability of its safe for the safe-keeping of money, jewelry, and valuable papers and articles belonging to its guests pursuant to 9 V.S.A. § 3141.

¶ 3. The hotel offers accommodations with separate living, working and sleeping areas as well as fully equipped kitchens. In addition, each suite is equipped with a sofa bed, free high-speed internet access, separate telephone and data lines, a television, personalized voice mail, and other predictable items. The hotel's amenities include an exercise room, indoor pool, vending machines, twenty-four-hour staffing, housekeeping services, on-site fax, copy and printing services and a coin-operated laundry. Guests are also welcome to use a computer terminal and printer located in the hotel lobby, as well as safe deposit boxes.

¶ 4. Taxpayer's rates for suites are quoted on a per-night basis. The pricing varies with the length of stay and is tiered as follows: one rate for stays of one to four days, a lower rate for stays of five to eleven days, an even lower rate for stays of twelve to twenty-nine days, and, with a few exceptions, the lowest rate for stays of thirty days or more. In some cases, the hotel offers negotiated, discounted rates to corporate and government entities based upon forecasted volume, and these may be lower than the tiered rates. Taxpayer often makes direct billing arrangements with companies and governmental agencies in the case of planned stays in excess of thirty days.

¶ 5. Taxpayer does not charge guests the meals-and-rooms tax on the first thirty days of occupancy for stays exceeding thirty days. When an occupant who has checked in for a stay of thirty days or more fails to stay for at least thirty days of that previously agreed stay, taxpayer's practice is to increase the room rate for each night of that stay, and to impose the meals-and-rooms tax on the total, increased rates paid for the duration of the stay.

¶ 6. All of the guests who occupied suites for any number of nights at the hotel during the period of time relevant to this suit did so pursuant to documentation consisting of: (1) a reservation printout providing terms including the date of arrival and the departure date, the type of accommodation, a nightly rate quote, a term that advised that the rate is based upon continuous length of stay and that early departure may result in rate change, and other terms relating to the penalties for cancellation; (2) a registration card or slip attached to the reservation print-out and signed by the guest, indicating the type of suite, the suite number, arrival and departure dates, the rate, and that the rate is based upon continuous length of stay and that early departure may result in an upward rate adjustment; and (3) for those who made reservations online, an email confirmation. Other than these three documents, there were no written agreements between the hotel and its guests.

¶ 7. Taxpayer treats the documentation as imposing an obligation on the hotel to provide the indicated accommodations to the guest for the period noted in the reservation and at check-in. It also treats the documentation as imposing an obligation on the guest to take and pay for the indicated accommodations at the stated rate for the period noted or, if the guest makes a reservation for but does not stay for at least thirty days, to pay an increased rate, plus meals-and-rooms tax, for the entire portion of the initial thirty days used.

¶ 8. Any person with the ability to pay the room rate may arrive at the hotel without a reservation and rent a room for any term, subject only to availability. Any such guest would be required to take a suite under the same terms as one who has made an advance reservation. At the time a reservation is made, taxpayer does not guarantee any guest any particular suite. Upon check-in and the signing of the registration card with the attached reservation printout, an occupant is assigned to a specific suite. The hotel does not charge any of its guests a security deposit. On occasion, guests who fail to pay for their rooms have been locked out of their rooms by the management or employees of the hotel; the hotel represents that it has taken such action solely for the purpose of inducing discussions concerning payment arrangements.

¶ 9. The statutory and regulatory framework is as follows. All rentals of hotel rooms in Vermont are presumptively subject to the meals-and-rooms tax. 32 V.S.A. § 9241(a). The tax is not due, however, when the occupant is a "permanent resident" of the hotel. Id. § 9202(6). A "permanent resident" is defined by statute as "any occupant who has occupied any room or rooms in a `hotel' for at least thirty consecutive days." Id. § 9202(7). Tax Department Regulation 1.9202(7)-1 further clarifies the term "permanent resident." It provides in pertinent part as follows:

The term "Permanent Resident" includes the following:

(a) Occupants for more than thirty days. A person who occupies any room in a Hotel for more than thirty consecutive days becomes a Permanent Resident effective as of the thirty-first day and will continue to be considered a Permanent Resident thereafter as long as Occupancy remains continuous and uninterrupted. . . . Since qualification as a Permanent Resident under this subsection is not effective until the person has occupied a room or rooms in a Hotel for thirty consecutive days, Rent from the first thirty days of Occupancy is subject to rooms and meals tax.

(b) Occupants under leases covering more than thirty days. A person who has a right to occupy a room for more than thirty days pursuant to a pre-existing lease is considered a Permanent Resident for the entire period of Occupancy pursuant to such lease, and no meals and rooms tax is payable with respect to any rent paid or received under such lease.

Tax Department Regulation 1.9202(7)-1, 1 Code of Vermont Rules 10 060 023-2.

¶ 10. Following an audit, the Department of Taxes assessed taxpayer for meals-and-rooms tax on the unreported first thirty days of long-term stays at its hotel for a nearly three-year period. In addition to the $74,172.44 tax due, the Department assessed penalties and interest; the interest continues to accrue. Taxpayer timely appealed the tax assessments to the Commissioner. Taxpayer asserted that the guests upon whose first thirty days of long-term stays at the hotel the Department sought to impose the meals-and-rooms tax were "permanent residents" under Regulation 1.9202(7)-1(b) and, accordingly, that their occupancies were not subject to the meals-and-rooms tax. Specifically taxpayer argued that under subsection (b) of the regulation, guests who sign hotel registration cards indicating that they plan to occupy the accommodations for more than thirty days are subject to leases, and their occupancies are therefore exempt from the tax for their entire stay. The Commissioner affirmed the assessment, ruling that the registration cards are not leases because they do not create landlord-tenant relationships between the hotel and its guests. Taxpayer appealed to the Chittenden Superior Court. The superior court denied taxpayer's appeal, reasoning that taxpayer's guest registration cards were not leases, but rather an "option" to occupy a room without any obligation on the part of taxpayer's guests to pay for an entire leased term. This appeal followed.

¶ 11. This Court reviews the Commissioner's decision directly, independent of the conclusion on the intermediate, on-the-record appeal of the superior court. See Devers-Scott v. Office of Prof'l Regulation, 2007 VT 4, ¶ 4, 181 Vt. 248, 918 A.2d 230. And, out of respect for the "expertise and informed judgment" of agencies, In re Twenty-Four Electric Utilities, 160 Vt. 227, 233, 627 A.2d 355, 359 (1993) (quotation omitted), and in recognition of our proper role in the separation of powers, Town of Victory v. State, 2004 VT 110, ¶ 16, 177 Vt. 383, 865 A.2d 373 ("[t]o preserve the appropriate separation of judicial and executive powers, we presume that judicial review of administrative decisions is deferential."); see also In re Prof'l Nurses Serv., 2006 VT 112, ¶ 12, 180 Vt. 479, 913 A.2d 381 (applying deferential standard in recognition of a broad legislative delegation to an administrative agency), we apply a deferential standard of review to agency decisions. See, e.g., Gasoline Marketers of Vt., Inc. v. Agency of Natural Res., 169 Vt. 504, 508, 739 A.2d 1230, 1233 (1999) ("[A]bsent a clear and convincing showing to the contrary, decisions made within the expertise of administrative agencies are presumed to be correct, valid, and reasonable."). The Commissioner's decisions are no exception. See Town of Killington v. Dep't of Taxes, 2003 VT 88, ¶ 5, 176 Vt. 70, 838 A.2d 91 (applying deferential standard to Commissioner's...