State ex rel. Dept. of Rev. v. Buggy Bath Unlimited, Inc.

• Decision Date: 08 March 2001
• Docket Number: No. 00-149., No. 00-148
• Citation: 18 P.3d 1182,2001 WY 27
• Parties: STATE of Wyoming by and through the WYOMING DEPARTMENT OF REVENUE, Appellant (Petitioner), v. BUGGY BATH UNLIMITED, INC.; and Richard D. Hall, Appellees (Respondents). Buggy Bath Unlimited, Inc.; and Richard D. Hall d/b/a Buggy Bath Car Wash, Appellants (Petitioners), v. State of Wyoming, Department of Revenue, Appellee (Respondent).
• Court: Wyoming Supreme Court

18 P.3d 1182

2001 WY 27

STATE of Wyoming by and through the WYOMING DEPARTMENT OF REVENUE, Appellant (Petitioner), v. BUGGY BATH UNLIMITED, INC.; and Richard D. Hall, Appellees (Respondents).

Buggy Bath Unlimited, Inc.; and Richard D. Hall d/b/a Buggy Bath Car Wash, Appellants (Petitioners), v. State of Wyoming, Department of Revenue, Appellee (Respondent).

Nos. 00-148, 00-149.

Supreme Court of Wyoming.

March 8, 2001.

Representing State of Wyoming, Department of Revenue: Gay Woodhouse, Attorney General; Harold E. Meier, Senior Assistant Attorney General; and Michael Dinnerstein, Senior Assistant Attorney General.

Representing Buggy Bath Unlimited & Hall: Nancy D. Freudenthal of Davis & Cannon, Cheyenne, WY.

Before LEHMAN, C.J.; GOLDEN and KITE, JJ.; and SPANGLER, D.J. (Ret.).

KITE, Justice.

[¶ 1] Buggy Bath Unlimited, Inc.¹ (Buggy Bath) submitted sales tax refund claims for the periods of January 1996 through October 1998 to the Department of Revenue (Department). The Department denied the claims pursuant to application of its rules. Buggy Bath appealed to the State Board of Equalization (Board of Equalization) which interpreted § 39-6-410(c),² prior to a 1997 amendment, to require erroneously collected sales tax be refunded to purchasers and, subsequent to the amendment, to require erroneously collected sales tax be refunded to vendors. The Department and Buggy Bath petitioned the district court for review of the decision, and the cases were certified to this court. We affirm in part and reverse in part, holding that § 39-6-410(c), both pre- and post 1997 amendment, requires all erroneously collected sales tax be refunded to the vendor.

ISSUES

[¶ 2] The Department, as the appellant in Case No. 00-148, structures the issues in its opening brief and reply brief in this manner:

Do refunds of overpaid sales taxes belong to the customers who paid them or the vendors who merely collected them? (Opening Brief)

Are The Vendors Here Estopped From Denying That They Collected Sales Tax From Their Customers And Calculated Their Sales Tax Based Upon Their Net Receipts by Their Own Admissions? (Reply Brief)

Buggy Bath, as the appellee in Case No. 00-148, states one issue as follows:

Was the State Board of Equalization correct to order a sales tax refund of erroneous payments made by Buggy Bath based on gross receipts from coin operated car wash machines?

Buggy Bath, as the appellant in Case No. 00-149, frames one issue:

Did the State Board of Equalization err in denying a portion of Appellant's sales tax refund claim by (1) applying a prior refund law existing at the time the overpayments were made instead of the law in effect on the date of the claim; and (2) construing that prior law so that only purchasers and not vendors may receive a refund of tax erroneously paid by the vendor?

FACTS

[¶ 3] In February 1997, the Department adopted a regulation imposing sales tax on the sales price charged for washing motor vehicles (car-wash rule).³ Department of Revenue Rules ch. 2 (Sales and Use Tax), § 13(d) (Specific Taxability Issues) (2/24/97) (superseded 4/13/00). Subsequently, through a declaratory judgment action filed by another car wash business, the Seventh Judicial District Court declared the rule null and void. The Department did not appeal this final decision and ceased collecting sales tax pursuant to the car wash rule.

[¶ 4] Buggy Bath is a car wash business with four separate facilities in various parts of Wyoming. On January 26, 1999, Buggy Bath filed a claim for refund of $3,781.28, which it had paid under protest to the Department pursuant to the car wash rule, for the months of September and October 1998. On January 28, 1999, Buggy Bath filed a second claim for refund of $114,974.08 it had paid for the periods of January 1996 through August 1998. The total amount of monies claimed for refund was $118,755.36. The claims were denied pursuant to Chapter 2, Section 6(g)(i) of the Department of Revenue Rules⁴ because Buggy Bath did not provide evidence that the taxes it requested to be refunded had in fact been returned by Buggy Bath to its purchasers. Buggy Bath appealed the denial to the Board of Equalization. Upon notice to the parties, the matter was considered on briefs and documentary evidence without a contested case hearing. The Board of Equalization issued a final decision concluding that (1) prior to the amendment effective July 1, 1997, § 39-6-410(c)⁵ required erroneously collected sales tax to be refunded to the purchasers of Buggy Bath's services and (2) taxes collected subsequent to the July 1, 1997, amendment required refund to the vendor, Buggy Bath. It also concluded that Chapter 2, Section 6(g)(i) did not apply and the proper rule was Chapter 2, Section 8,⁶ which authorized refund of erroneous taxes to the vendor. Both parties filed petitions for review to the district court which certified the case to this court pursuant to W.R.A.P. 12.09(b).

STANDARD OF REVIEW

[¶ 5] When we review cases that have been certified to the Wyoming Supreme Court pursuant to W.R.A.P. 12.09(b), we apply the appellate standards which are applicable to the court of the first instance. Union Telephone Company, Inc. v. Wyoming Public Service Commission, 907 P.2d 340, 341-42 (Wyo.1995). Wyo.Stat.Ann. § 16-3-114(c) (LEXIS 1999) governs judicial review of administrative decisions. W.R.A.P. 12.09(a); Everheart v. S & L Industrial, 957 P.2d 847, 851 (Wyo.1998).

[¶ 6] The issues presented in this case require us to interpret Chapter 2, Sections 6(g)(i) and 8 of the Department of Revenue Rules to the extent they pertain to the refund of erroneously collected sales tax. Statutory interpretation is a question of law. Wright v. State ex rel. Wyoming Workers' Safety and Compensation Division, 952 P.2d 209, 211 (Wyo.1998). An agency's conclusions of law are affirmed when they are in accordance with the law. Corman v. State ex rel. Wyoming Workers' Compensation Division, 909 P.2d 966, 970 (Wyo.1996). However, we correct the agency's error when it has failed to invoke and properly apply the correct rule of law. State v. Bannon Energy Corporation, 999 P.2d 1306, 1308 (Wyo.2000). The rules of statutory interpretation also apply to the interpretation of administrative rules and regulations. Antelope Valley Improvement v. State Board of Equalization for State of Wyoming, 992 P.2d 563, 566 (Wyo. 1999), opinion clarified at 4 P.3d 876 (Wyo. 2000).

[¶ 7] Our review of statutory interpretation begins with an inquiry into the ordinary and obvious meaning of the words employed by the legislature according to the manner in which those words are arranged. If more than one reasonable interpretation exists, we resort to general principles of statutory construction. When the legislature has spoken in unambiguous terms, however, we are bound to the results so expressed. Osenbaugh v. State ex rel. Workers' Safety and Compensation Division, 10 P.3d 544, 548 (Wyo.2000).

DISCUSSION

[¶ 8] Upon evaluation of the petitions for review, we concisely restate the issues for consideration as follows:

Did the Board of Equalization properly construe § 39-6-410(c) to conclude that, prior to the 1997 amendment, refund to purchasers was required and, subsequent to amendment, refund to vendors was required?

Did the Board of Equalization err in determining Chapter 2, Section 8 of the Department of Revenue Rules, as opposed to Chapter 2, Section 6(g)(i), was applicable?

[¶ 9] The Department denied Buggy Bath's claims on the sole basis of Chapter 2, Section 6(g)(i) without reference to § 39-6-410(c).⁷ The Board of Equalization concluded the proper rule was Chapter 2, Section 8. The Department takes issue with this determination.

[¶ 10] Administrative agencies have only those powers expressly conferred by statute. US West Communications, Inc. v. Wyoming Public Service Commission, 907 P.2d 343, 346 (Wyo.1995). This legal principle applies with equal force to an agency's authority to promulgate rules. State Department of Revenue and Taxation v. Pacificorp, 872 P.2d 1163, 1166 (Wyo.1994). Rules promulgated in excess of an agency's statutory authority are null and void. State Board of Equalization v. Jackson Hole Ski Corporation, 737 P.2d 350, 356 (Wyo.1987). On this legal basis, we must first consider the proper construction of § 39-6-410(c) to ultimately determine whether the Board of Equalization's application of the Department's rules was correct.

A. Construction of § 39-6-410(c): Pre- and Post-1997 Amendment

[¶ 11] The 1997 amendments made to § 39-6-410(c) are illustrated below, with strikeout text indicating language which was removed and underlined text denoting language which was added:

(c) Any license fee, tax, assessment, penalty or interest which has been erroneously paid, collected or computed shall either be credited against any subsequent tax liability of the vendor or may be refunded. No credit or refund shall be allowed after eighteen (18) months three (3) years from the date of overpayment. The receipt of a claim for a refund by the department shall toll the statute of limitations. All refund requests received by the department shall be approved or denied within ninety (90) days of receipt. Any refund or credit erroneously made or allowed may be recovered in an action brought by the attorney general in any court of competent jurisdiction.

1997 Wyo. Sess. Laws ch. 111, § 1.

[¶ 12] The difference between the pre-1997 and post-1997 amended statutory language is minimal. The only substantive change was the increase of the refund claim period from eighteen months to three years from the date of overpayment. The remaining changes appear to have been made for the sake of clarification of the statutory language; e.g., the removal of the terms "license fee" and "assessment," the addition of "either," and the removal of "may be."

[¶ 13] The Board of Equalization, interpreting this court's decision in M & B Drilling and Construction Company,...