Steet v. Dir. of Revenue

• Decision Date: 31 January 2012
• Docket Number: No. SC 91371.,SC 91371.
• Citation: 361 S.W.3d 355
• Parties: Craig A. STREET, Appellant, v. DIRECTOR OF REVENUE, Respondent.
• Court: Missouri Supreme Court

361 S.W.3d 355

Craig A. STREET, Appellant,

v.DIRECTOR OF REVENUE, Respondent.

No. SC 91371.

Supreme Court of Missouri, En Banc.

Jan. 31, 2012.

Craig A. Street, Springfield, pro se.

James R. Layton, State Solicitor, Attorney General's Office, Jefferson City, for Respondent.

PATRICIA BRECKENRIDGE, Judge.

Craig A. Street filed a petition asking this Court to review the decision of the Administrative Hearing Commission (AHC) that denied Mr. Street's request for a refund of the local sales taxes the Missouri Director of Revenue required him to pay to license the boat, outboard motor, and trailer he purchased from a dealer in Maryland. Mr. Street claims that the AHC erred because its interpretation of sections 144.069, RSMo 2000,¹ and 32.087.12(2) to permit Greene County's assessment and collection of local sales tax on his out-of-state purchase is clearly contrary to the reasonable expectations of the General Assembly in enacting the local sales tax statutes. Because the plain and ordinary meaning of the Sales Tax Law, sections 144.010 to 144.525, authorizes a county to impose sales taxes only on sales occurring within Missouri, the decision of the AHC is reversed, and the cause is remanded.

Factual and Procedural Background

On May 13, 2009, Mr. Street purchased a boat, outboard motor, and trailer from a dealer located in Maryland. After payment of the purchase price and receipt of the certificate of title, Mr. Street transported the boat, outboard motor, and trailer from their location in Maryland to his residence in Greene County. Five days later, Mr. Street registered the boat, outboard motor, and trailer with the Missouri Department of Revenue, at which time he paid, under protest, local sales taxes of $100 on the boat, $78.75 on the outboard motor, and $12.44 on the trailer pursuant to the procedure in section 144.070. Mr. Street subsequently requested from the director of revenue a refund under section 144.190 for the local sales taxes he paid during the registration. In his request for a refund, Mr. Street asserted that his purchase was not subject to local sales taxes in Missouri because the purchase occurred outside the state. The director denied Mr. Street's request for a refund.

Mr. Street appealed the director's decision by filing a complaint with the AHC. In his complaint, Mr. Street claimed that the purchase of the boat, outboard motor, and trailer in Maryland is not subject to local sales tax in Missouri because the sale of tangible personal property is subject to sales tax only when the transfer of ownership or the certificate of title occurs in Missouri. Mr. Street also contended that the tax could not be collected as a local use tax because, at all relevant times, Greene County did not have a local use tax in effect.

In its November 10, 2010 decision, the AHC found that the director properly denied Mr. Street's request for a refund, with the exception of an overpayment of local taxes on the trailer in the amount of $41.25, as conceded by the director. The AHC specifically found that: (1) the General Assembly intended that both in-state and out-of-state purchases of motor vehicles be taxed equally; (2) local sales taxes apply in the same scope as the state Sales Tax Law, sections 144.010 to 144.525; (3) Mr. Street's purchase was subject to state use tax under section 144.440, RSMo 2000, a statute within the state Sales Tax Law; (4) section 144.440, RSMo 2000, is exempted specifically from the Compensating Use Tax Law, sections 144.600 to 144.761; and (5) Mr. Street's out-of-state transaction was deemed to occur in Greene County pursuant to sections 144.069, RSMo 2000, and 32.087.12(2). As a result, the AHC determined that the director properly assessed Greene County sales taxes against Mr. Street. Mr. Street then filed a petition for review with this Court.

Standard of Review

This Court reviews the decision of the AHC pursuant to section 621.189. Under section 621.193, RSMo 2000, the decision of the AHC is to be “upheld when authorized by law and supported by competent and substantial evidence upon the record as a whole unless clearly contrary to the reasonable expectations of the General Assembly.” Mackey v. Dir. of Revenue, 200 S.W.3d 521, 523 (Mo. banc 2006). If the evidence supports either of two opposing findings of fact, deference is afforded to the administrative decision. Coffer v. Wasson-Hunt, 281 S.W.3d 308, 310 (Mo. banc 2009). This Court, however, reviews the AHC's interpretations of the state's revenue laws de novo. Mackey, 200 S.W.3d at 523. Because Mr. Street challenges the AHC's interpretation of statutory language and there is no dispute as to the AHC's findings of fact, this Court exercises its independent judgment and reviews the AHC's decision de novo. Brambles Indus., Inc. v. Dir. of Revenue, 981 S.W.2d 568, 570 (Mo. banc 1998).

Discussion

In Mr. Street's sole point of error, he claims that the AHC erred in interpreting sections 144.069, RSMo 2000, and 32.087.12(2) to deem all out-of-state purchases of motor vehicles as occurring at the purchaser's residence in Missouri, which then permits the director to collect Greene County's local sales tax on his out-of-state purchase of a boat, outboard motor, and trailer. Mr. Street contends that imposing a sales tax on retail sales occurring outside the state is inconsistent with the General Assembly's intent that sales taxes be imposed only on retail sales occurring within the state. He challenges the AHC's determination that sections 144.069, RSMo 2000, and 32.087.12(2), which provide that the sale of motor vehicles, trailers, boats, and outboard motors are deemed to have been consummated at the address of the owner, do not compel the conclusion that the sale of the boat, outboard motor, and trailer occurred at his residence in Missouri because the statutes were intended to determine the tax situs only for in-state sales of motor vehicles involving more than one political subdivision of the state.

To resolve Mr. Street's claim of error, this Court must determine the intent of the legislature in enacting the sales and use tax statutes at issue. The primary rule in statutory construction is to “ascertain the intent of the legislature from the language used, to give effect to that intent if possible, and to consider words used in the statute in their plain and ordinary meaning.” Nelson v. Crane, 187 S.W.3d 868, 869–70 (Mo. banc 2006). In ascertaining legislative intent, the statute should be read in pari materia with related sections, and the taxing statutes should be construed in context with each other. Lane v. Lensmeyer, 158 S.W.3d 218, 226 (Mo. banc 2005). If the language of a tax statute is ambiguous, the language is to be construed strictly in favor of the taxpayer and against the taxing authority. President Casino, Inc. v. Dir. of Revenue, 219 S.W.3d 235, 239 (Mo. banc 2007).

Missouri has a comprehensive and complementary sales and use tax scheme that is “designed to assure that purchases of tangible personal property for valuable consideration by a Missouri purchaser receive identical tax treatment, no matter what the geographic location of the seller.” Olin Corp. v. Dir. of Revenue, 945 S.W.2d 442, 443 (Mo. banc 1997) (quoting House of Lloyd, Inc. v. Dir. of Revenue, 884 S.W.2d 271, 273 (Mo. banc 1994)). A sales tax is imposed on “all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state.” Section 144.020.1; see also Olin Corp., 945 S.W.2d at 443. In contrast, a use tax is “imposed for the privilege of storing, using or consuming within this state any article of tangible personal property.” Section 144.610.1, RSMo 2000; see also Smith Beverage Co. of Columbia, Inc. v. Reiss, 568 S.W.2d 61, 63 (Mo. banc 1978). Because use taxes are imposed on out-of-state purchases of tangible personal property by Missouri residents using the property within the state, they are complementary to sales taxes in that they minimize the incentive to purchase from out-of-state sellers by equalizing the tax burden on intrastate and interstate transactions. Kirkwood Glass Co. v. Dir. of Revenue, 166 S.W.3d 583, 585 (Mo. banc 2005). Under section 144.610.1, RSMo 2000, the tax burden imposed by the use tax must be equivalent in percentage to the sales tax imposed in section 144.020.

The complementary nature of sales and use taxes is reflected in chapter 144, RSMo 2000. The “Sales Tax Law” is enumerated in sections 144.010 to 144.525. Section 144.010.3. The “Compensating Use Tax Law,” however, is found generally in sections 144.600 to 144.761. Section 144.600, RSMo 2000.

Missouri's tax scheme includes provisions expressly governing the imposition of sales and use taxes on transactions involving motor vehicles, boats, outboard motors, and trailers.² The state sales tax on motor vehicle transactions is enumerated explicitly in section 144.020, which states:

1. A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state. The rate of tax shall be as follows:

(1) Upon every retail sale in this state of tangible personal property, including but not limited to motor vehicles, trailers, motorcycles, mopeds, motortricycles, boats and outboard motors, a tax equivalent to four percent of the purchase price paid or charged....

Section 144.069, RSMo 2000, further provides that the sale of motor vehicles is deemed to occur at the address of the owner. Section 144.069, RSMo 2000, provides:

All sales of motor vehicles, trailers, boards and outboard motors shall be deemed to be consummated at the address of the owner thereof ..., and all applicable sales taxes levied by any political subdivision shall be collected on such sales by the state department of revenue on that basis.

The state use tax on motor vehicle transactions, on the...