State, Dept. of Revenue v. Sanborn Telephone Co-op., No. 16710

CourtSupreme Court of South Dakota
Writing for the CourtMILLER
Citation455 N.W.2d 223
PartiesSTATE of South Dakota, DEPARTMENT OF REVENUE, Plaintiff and Appellant, v. SANBORN TELEPHONE COOPERATIVE and Communication Enterprises, Inc., Defendants and Appellees. . Considered on Briefs
Decision Date14 February 1990
Docket NumberNo. 16710

Page 223

455 N.W.2d 223
STATE of South Dakota, DEPARTMENT OF REVENUE, Plaintiff and Appellant,
v.
SANBORN TELEPHONE COOPERATIVE and Communication Enterprises,
Inc., Defendants and Appellees.
No. 16710.
Supreme Court of South Dakota.
Considered on Briefs Feb. 14, 1990.
Decided April 25, 1990.

Timothy T. Weber, Asst. Atty. Gen., Pierre, for plaintiff and appellant; Roger A. Tellinghuisen, Atty. Gen., Pierre, on the brief.

Jeffrey D. Larson of Larson & Nipe, Woonsocket, for defendants and appellees.

MILLER, Justice.

In this appeal we hold that a telephone cooperative and its wholly owned subsidiary are liable for use tax on telephone directories and cable television guides purchased from out-of-state printers, but that the cooperative is not liable for service tax on reimbursements received from its subsidiary for various routine business expenses.

FACTS

The appellees are two entities, namely: Sanborn Telephone Cooperative (Sanborn), and Communication Enterprises Inc. (CEI). Sanborn provides telecommunication services to areas in south central South Dakota. CEI, a wholly owned subsidiary of Sanborn, provides cable television service to four communities and sells residential and business telephone systems, VCRs and other telecommunication equipment. CEI is operated out of the same facility as Sanborn with certain expenses and overhead being shared in a manner described later herein.

Sanborn provided its customers with telephone directories. CEI furnished its customers with cable TV guides. Both entities purchased these publications from out-of-state printers and paid no sales tax thereon.

In July, 1987, after an audit by the Department of Revenue (Department), additional sales and use taxes were assessed against both entities, with certificates of assessments being issued by the Department Secretary regarding the out-of-state purchase of the directories and guides and their subsequent use in South Dakota.

An administrative hearing was held before Department at the request of Sanborn and CEI. The Secretary ultimately affirmed the assessment. Sanborn and CEI appealed Department's decision to the circuit court which reversed the holding. Department appeals.

Page 225

DECISION

ISSUE I

ARE A TELEPHONE COOPERATIVE AND A CABLE TELEVISION COMPANY LIABLE FOR USE TAX ON TELEPHONE DIRECTORIES AND CABLE TELEVISION GUIDES PURCHASED WITHOUT TAX FROM OUT-OF-STATE VENDORS FOR USE AND DISTRIBUTION IN SOUTH DAKOTA?

"Whether a statute imposes a tax under a given factual situation is a question of law and thus no deference is given to any conclusion reached by [the] Department [of Revenue] or the circuit court." Midcontinent Broadcasting v. Revenue Dept., 424 N.W.2d 153, 154 (S.D.1988).

Our use tax is provided in SDCL 10-46-2 and imposes a tax "on the privilege of the use, storage, and consumption in this state of tangible personal property purchased ... for use in this state[.]"

As we said in Sioux Falls Newspapers v. Secretary of Revenue, 423 N.W.2d 806, 810 n. 3 (S.D.1988), the use tax "is levied on property used within the state if that property would have been subject to sales tax if purchased within the state." Further, "[u]se tax compliments and supplements the sales tax by imposing upon those subject to it a tax burden equal to the sales tax in order that property sold or utilized in this state would be taxable once for the support of state government." Sioux Falls Newspapers, supra at 810 n. 3; National Bank of Sioux Falls v. Gillis, 82 S.D. 457, 467, 148 N.W.2d 293, 298 (1967). Use tax generally applies to retail transactions and not to transactions where items are purchased for resale. Sioux Falls Newspapers, supra.

It is undisputed that Sanborn and CEI purchased the telephone directories and cable television guides from out-of-state printers and paid no sales tax to the printers. * They are furnished to their customers with no specific charge. Sanborn and CEI claim that because use tax may not be imposed on the sale of property sold in the regular course of business, i.e., resale, the directories and guides are exempt from...

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11 practice notes
  • State v. Dorhout, No. 18249
    • United States
    • Supreme Court of South Dakota
    • April 15, 1994
    ...is a question of law and thus no deference is given to any conclusion reached by the Department of Revenue or the circuit court." 455 N.W.2d 223, 225 The United States Supreme Court discussed the difference between a sales tax and a use tax in McLeod v. J.E. Dilworth Co. A sales tax an......
  • WATERTOWN COOP. ELEVATOR v. Dept. of Rev., No. 21570.
    • United States
    • South Dakota Supreme Court
    • May 2, 2001
    ...is given to any conclusion reached by [the] Department [of Revenue] or the circuit court." Dep't. of Revenue v. Sanborn Tel. Co-op., 455 N.W.2d 223, 225 (S.D.1990) (citing Midcontinent Broadcasting Co. v. Dept. of Revenue, 424 N.W.2d 153, 154 (S.D.1988)) (bracketed text in original). S......
  • Magellan Pipeline Co. v. S.D. Dep't of Revenue & Regulation, No. 26553.
    • United States
    • Supreme Court of South Dakota
    • October 22, 2013
    ...Corp. v. S.D. Dep't of Revenue & Regulation, 2010 S.D. 90, ¶ 3, 793 N.W.2d 1, 3 (quoting S.D. Dep't of Revenue v. Sanborn Tel. Coop., 455 N.W.2d 223, 225 (S.D.1990)); see also Mauch v. S.D. Dep't of Revenue & Regulation, 2007 S.D. 90, ¶ 8, 738 N.W.2d 537, 540. Further, “[s]tatutory ......
  • Robinson & Muenster Assocs. v. Dept. of Rev., No. 20730.
    • United States
    • Supreme Court of South Dakota
    • October 6, 1999
    ...to any conclusion reached by [the] Department [of Revenue] or the circuit court.'" Department of Revenue v. Sanborn Tel. Coop., 455 N.W.2d 223, 225 (S.D.1990) (alterations in original) (quoting Midcontinent Broad. Co. v. Revenue Dep't, 424 N.W.2d 153, 154 DECISION [¶ 8.] Whether the sa......
  • Request a trial to view additional results
11 cases
  • State v. Dorhout, No. 18249
    • United States
    • Supreme Court of South Dakota
    • April 15, 1994
    ...is a question of law and thus no deference is given to any conclusion reached by the Department of Revenue or the circuit court." 455 N.W.2d 223, 225 The United States Supreme Court discussed the difference between a sales tax and a use tax in McLeod v. J.E. Dilworth Co. A sales tax an......
  • WATERTOWN COOP. ELEVATOR v. Dept. of Rev., No. 21570.
    • United States
    • South Dakota Supreme Court
    • May 2, 2001
    ...is given to any conclusion reached by [the] Department [of Revenue] or the circuit court." Dep't. of Revenue v. Sanborn Tel. Co-op., 455 N.W.2d 223, 225 (S.D.1990) (citing Midcontinent Broadcasting Co. v. Dept. of Revenue, 424 N.W.2d 153, 154 (S.D.1988)) (bracketed text in original). S......
  • Magellan Pipeline Co. v. S.D. Dep't of Revenue & Regulation, No. 26553.
    • United States
    • Supreme Court of South Dakota
    • October 22, 2013
    ...Corp. v. S.D. Dep't of Revenue & Regulation, 2010 S.D. 90, ¶ 3, 793 N.W.2d 1, 3 (quoting S.D. Dep't of Revenue v. Sanborn Tel. Coop., 455 N.W.2d 223, 225 (S.D.1990)); see also Mauch v. S.D. Dep't of Revenue & Regulation, 2007 S.D. 90, ¶ 8, 738 N.W.2d 537, 540. Further, “[s]tatutory ......
  • Robinson & Muenster Assocs. v. Dept. of Rev., No. 20730.
    • United States
    • Supreme Court of South Dakota
    • October 6, 1999
    ...to any conclusion reached by [the] Department [of Revenue] or the circuit court.'" Department of Revenue v. Sanborn Tel. Coop., 455 N.W.2d 223, 225 (S.D.1990) (alterations in original) (quoting Midcontinent Broad. Co. v. Revenue Dep't, 424 N.W.2d 153, 154 DECISION [¶ 8.] Whether the sa......
  • Request a trial to view additional results

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