Middlebury College Sales and Use Tax, In re, 144-78
| Decision Date | 06 February 1979 |
| Docket Number | No. 144-78,144-78 |
| Citation | 137 Vt. 28,400 A.2d 965 |
| Parties | In re MIDDLEBURY COLLEGE SALES AND USE TAX. |
| Court | Vermont Supreme Court |
Dinse, Allen & Erdmann, Burlington, for plaintiff.
Richard Johnston King, Gen. Counsel, Dept. of Taxes, Montpelier, for defendant.
Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.
Middlebury College appeals from an order of the Addison Superior Court affirming an assessment of sales and use tax by the Vermont Department of Taxes. The tax is based upon Middlebury College's use of equipment and supplies purchased outside the state in connection with its operation of the Middlebury Snow Bowl and a golf course, both in Vermont. The college has at all times claimed an exemption from the operation of this tax.
The Snow Bowl, located in Hancock, Vermont, is used extensively by Middlebury College for various school purposes. Students learn to ski and practice on the area's downhill slopes, cross-country trails, and ski jumps as part of the school's physical education program. In order to graduate, Middlebury College students are required to demonstrate proficiency at several so-called "lifetime sports," of which skiing can be one. The area is used for intercollegiate competitions and for training by Middlebury College students and students from other schools and colleges. The area is also used for general recreation by students from Middlebury College and elsewhere.
This controversy arises primarily because the ski area is open to the public. Any individual may purchase a lift ticket at a rate comparable to that charged by similar facilities elsewhere. Students using the area for recreation, whether Middlebury College students or not, must also purchase tickets to use the ski lifts, but are eligible for reduced rates. Middlebury College students use the facilities free of charge while competing, training, or receiving instruction. Although paying customers may be excluded from specific areas at certain times because of a competition, the Snow Bowl is open to the public every day during the ski season except Christmas Day, when the Snow Bowl closes down entirely.
The golf course is located next to the college's campus in Middlebury. Its operation is similar to that of the Snow Bowl. The school uses the area for various purposes, including the "lifetime sport" program and the general recreation of its students. The golf course is open to any person upon payment of a greens fee. Middlebury College students receiving instruction have the privilege of playing through. Middlebury College does not attempt to make a profit on the operation of either facility.
Vermont imposes a sales tax on certain transactions within the state. 32 V.S.A. § 9771. In order to avoid bestowing a tax advantage on out-of-state suppliers and to preclude avoidance of the sales tax, Vermont imposes a compensating use tax, 32 V.S.A. § 9773. This latter tax reaches, among other things, all tangible personal property purchased at retail for use within the state and not subject to the sales tax, and clearly covers the supplies and equipment purchased by Middlebury College from out-of-state sources for use in connection with its sports facilities in Vermont. The taxes here in issue cover a period from September of 1972 through June of 1975.
Middlebury claims an exemption from the operation of the use tax under 32 V.S.A. § 9743, which reads in part:
Any . . . use by any of the following (is) not subject to the . . . use (tax) imposed under this chapter: . . . (3) Organizations which qualify for exempt status under the provisions of section 501(c)(3) of the United States Internal Revenue Code, as the same may be amended or redesignated, excepting . . . use in activities which are mainly commercial enterprises; provided, however, (A) that the organization first shall have obtained a certificate from the commissioner stating that it is entitled to the exemption, (B) that the . . . use is for the exempt purpose of such organization, and (C) that the vendor...
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