Maverick Motorsports Group Llc v. Dep't of Revenue

• Decision Date: 03 May 2011
• Docket Number: No. S–10–0220.,S–10–0220.
• Parties: MAVERICK MOTORSPORTS GROUP, LLC, Appellant (Petitioner),v.DEPARTMENT OF REVENUE, State of Wyoming, Appellee (Respondent).
• Court: Wyoming Supreme Court

253 P.3d 125

74 UCC Rep.Serv.2d 576

2011 WY 76

MAVERICK MOTORSPORTS GROUP, LLC, Appellant (Petitioner),

v.DEPARTMENT OF REVENUE, State of Wyoming, Appellee (Respondent).

No. S–10–0220.

Supreme Court of Wyoming.

May 3, 2011.

Representing Appellant: John M. Kuker and James M. Peterson of Romsa & Kuker, LLC, Cheyenne, Wyoming. Argument by Mr. Kuker.Representing Appellee: Bruce A. Salzburg, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General; and William F. Russell, Senior Assistant Attorney General. Argument by Mr. Russell.Before KITE, C.J., and GOLDEN, HILL, VOIGT, JJ., and PARK, D.J.PARK, District Judge.

[¶ 1] This is a case about whether a Wyoming dealer must pay sales tax on sales of recreational vehicles to out-of-state buyers. The Appellant, Maverick Motorsports Group, LLC (hereinafter “Maverick”), challenges a decision of the State Board of Equalization (hereinafter “SBOE”) that certain sales by Maverick were subject to Wyoming sales tax. Maverick petitioned for judicial review, and the District Court affirmed the SBOE's decision. In this appeal, Maverick challenges the SBOE's decision which held that sales by Maverick were subject to Wyoming sales tax and that imposition of Wyoming sales tax did not violate Art. 1, § 8, of the United States Constitution (the Commerce Clause).

[¶ 2] We affirm the SBOE's decision.

ISSUES

[¶ 3] The following issues are presented on appeal:

I. Whether sales of recreational vehicles were taxable in Wyoming because possession was transferred in Wyoming.

II. Whether enforcement and collection of Wyoming sales taxes violate the Commerce Clause, Art. 1, § 8, of the United States Constitution.

FACTS

[¶ 4] Maverick was formed in 2005 to purchase the assets of an existing business. Justin Johnson (hereinafter “Johnson”) is the company president. Maverick operates stores in Cheyenne and Laramie, Wyoming. Both stores had sales tax licenses and both sold motorcycles, all-terrain vehicles (ATVs), snowmobiles, and various accessories. The parties agree that many of Maverick's customers lived in other states. Johnson had been informed by the previous owner that no Wyoming sales tax would be due for sales to nonresidents if the invoices were marked “delivered out of state”; so Maverick marked invoices in that manner and did not collect Wyoming sales tax. The Department of Revenue (hereinafter “Department”) conducted audits of both stores for the period including June 2005 through September 2006. The Department concluded that sales tax was due from both stores. Maverick objected to both audits, and these objections were consolidated into one hearing before the SBOE. Maverick and the Department continued to work together up to the date of the hearing and came to an agreement on several issues. By the time of the hearing, the only issues were whether Wyoming could collect sales tax on sales of recreational vehicles to nonresidents; and, if so, did this tax violate the Commerce Clause.

[¶ 5] The vehicles were transferred in three ways: most were picked up by the purchaser at one of the stores, some were delivered by a common carrier selected by the purchaser, and some were delivered by Maverick. Maverick would mail any documents necessary to title or register the vehicle to the buyer a few weeks after the sale. These documents were retained, in part, to ensure that the buyer's check would clear the bank. In some cases, the documents were mailed to the buyer's financier.

[¶ 6] The SBOE's primary concern about vehicles delivered by Maverick was a lack of documentation. The SBOE, although critical of Maverick's recordkeeping, agreed that Maverick had provided adequate proof and ruled that most of these sales were “destination sales” where transfer of title or possession took place outside Wyoming and no sales tax was due. The Department did not appeal this ruling. In addition, there were some instances where Maverick had no documentation to prove how the vehicle was delivered, and the SBOE affirmed the Department's finding. Maverick did not appeal from this part of the SBOE's decision.

[¶ 7] The majority of the sales involved customers who came to one of the stores, picked up the vehicle and then returned to their home state with the purchase. Maverick refers to these as “self-deliveries.” Maverick asserted that the parties intended to transfer possession in the buyer's home state; the Department countered that the record did not support this assertion.

[¶ 8] In some sales, Johnson testified that Maverick would recommend a common carrier to the buyer, and then the buyer would contract directly with the carrier. The SBOE found that delivery to the carrier was the equivalent of delivery to the buyer and that there was no contract or other evidence that the parties intended that Maverick would be responsible for the goods until delivery was complete.

[¶ 9] Maverick and the Department entered into a stipulation that Maverick did not have to contact any of its customers to obtain documentation that the customer had paid sales or use tax in another state. The Department agreed to this because it asserted that its only contention was that the State of Wyoming was entitled to the tax.

[¶ 10] The SBOE found that possession of the vehicles was transferred to the buyer in Wyoming; therefore, Wyoming sales tax was due. In general terms, the question before the Court is whether the SBOE's decision is supported by substantial evidence and not arbitrary or capricious, or otherwise contrary to law.

STANDARD OF REVIEW

[¶ 11] Our standard of review is well-established. We give “no special deference to the district court's decision” in considering appeals from district court reviews of administrative actions, but instead review the case as if it had come directly from the administrative agency. Dale v. S & S Builders, LLC, 2008 WY 84, ¶ 8, 188 P.3d 554, 557 (Wyo.2008). Reviews of an administrative agency's action are governed by the Wyoming Administrative Procedure Act, which provides in pertinent part that the reviewing court shall:

(i) Compel agency action unlawfully withheld or unreasonably delayed; and

(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(B) Contrary to constitutional right, power, privilege or immunity;

(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(D) Without observance of procedure required by law; or

(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.

Wyo. Stat. Ann. § 16–3–114(c) (LexisNexis 2009).

[¶ 12] Questions of law are reviewed de novo, and “ ‘[c]onclusions of law made by an administrative agency are affirmed only if they are in accord with the law. We do not afford any deference to the agency's determination, and we will correct any error made by the agency in either interpreting or applying the law.’ ” Bowen v. State, Dep't of Transp., 2011 WY 1, ¶ 7, 245 P.3d 827, 829 (Wyo.2011) (quoting State ex rel. Workers' Safety & Comp. Div. v. Garl, 2001 WY 59, ¶ 9, 26 P.3d 1029, 1032 (Wyo.2001)).

[¶ 13] We give “considerable deference” to the agency's findings of fact and do not disturb them unless they are “contrary to the overwhelming weight of the evidence.” EOG Resources, Inc. v. Wyo. Dep't of Revenue, 2004 WY 35, ¶ 12, 86 P.3d 1280, 1284 (Wyo.2004). This Court reviews the entire record of an agency's decision for substantial evidence, and it will determine if there is relevant evidence that a reasonable mind might accept in support of the agency's decision. Herrera v. State ex rel., Wyo. Workers' Safety & Comp. Div., 2010 WY 103, ¶ 9, 236 P.3d 277, 281 (Wyo.2010).

[¶ 14] The scope of our review is controlled by Wyo. Stat. Ann. § 39–11–109 and § 16–3–115. Section 39–11–109(b) ¹ provides:

(i) Any person aggrieved by any final administrative decision of the department may appeal to the board. Appeals shall be made in a timely manner as provided by rules and regulations of the board by filing with the board a notice of appeal specifying the grounds therefor. The department shall, within a timely manner as specified by board rules and regulations, transmit to the board the complete record of the action from which the appeal is taken;

(ii) Any person including the state of Wyoming aggrieved by any order issued by the board, or any county board of equalization whose decision has been reversed or modified by the state board of equalization, may appeal the decision of the board to the district court of the county in which the property or some part thereof is situated[.]

Section 16–3–115 provides for Supreme Court review of the district court:

An aggrieved party may obtain a review of any final judgment of the district court under this act by appeal to the supreme court. The appeal shall be taken as in other civil cases.

DISCUSSION

1. Was sales tax due in Wyoming?

[¶ 15] There are two types of sales at issue. The first includes sales in which out-of-state buyers would pick up a vehicle from Maverick at either the Cheyenne or Laramie store and return with the vehicle to their home state. The second includes sales in which a common carrier, acting on behalf of the out-of-state buyer, would pick up the vehicle from Maverick and deliver it out of state. Maverick contends that these sales were “non-taxable destination” sales and not subject to Wyoming sales tax. The Department responds that the buyers took possession in Wyoming; therefore, sales tax is due. The SBOE agreed with the Department, and the record supports the SBOE's decision.

[¶ 16] Prior to January 1, 2008, and during the time at issue here, “sale” was defined as “any transfer of title or possession in this state for consideration....” Wyo. Stat. Ann. § 39–15–101(a)(vii) (LexisNexis 2005). After January 1, 2008, “...