Towle v. Commissioner of Revenue

• Decision Date: 20 May 1986
• Citation: 492 N.E.2d 739,397 Mass. 599
• Parties: Murray J. TOWLE v. COMMISSIONER OF REVENUE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 739

492 N.E.2d 739

397 Mass. 599

Murray J. TOWLE v. COMMISSIONER OF REVENUE.

Supreme Judicial Court of Massachusetts Suffolk.

Submitted on Briefs Feb. 3, 1986.

Decided May 20, 1986.

Murray J. Towle, pro se.

Suzanne E. Durrell, Asst. Atty. Gen., for Com'r of Revenue.

Before HENNESSEY, C.J., and LIACOS, NOLAN, LYNCH and O'CONNOR, JJ.

HENNESSEY, Chief Justice.

The taxpayer appeals, pursuant to G.L. c. 58A, § 13 (1984 ed.), a decision of the Appellate Tax Board (board) affirming the denial of an abatement of a use tax on the purchase price of a boat. G.L. c. 64I, §§ 2, 3, 8 (f) (1984 ed.). On appeal, the taxpayer claims that nonresidents are not subject to sales or use tax on out-of-State purchases, that the assessment of a use tax on the taxpayer's boat was improper because the boat was not purchased for use within the Commonwealth, and that the assessment was discriminatory and violated the Fourteenth Amendment to the Constitution of the United States. In addition, the taxpayer alleges that, even if the tax was properly assessed, interest and penalties were improperly calculated. We conclude that the taxpayer raises no valid objections to the assessment of the tax, but agree that the commissioner improperly calculated the amount of interest and penalties for which the taxpayer was liable. We, therefore, remand the case to the board for recalculation of interest and penalties in a manner consistent with this opinion.

Murray J. Towle, the taxpayer, is a resident of New Hampshire. He purchased a thirty-three foot sailboat in Connecticut on May 3, 1982, at a price of $42,700. No sales tax was due or paid in Connecticut. On April 20, 1982, shortly before his purchase of the sailboat, the taxpayer entered into an agreement with Constitution Marina in Charlestown, Massachusetts, to lease a berth for the period May 1, 1982, through October 31, 1982. In June, 1982, the taxpayer brought the sailboat into Massachusetts and it was docked at the Constitution Marina in Charlestown when not in use. Subsequently, the taxpayer entered into an agreement with Barlow's Boatyard in Pocasset, Massachusetts, for storage of the sailboat for the period October 5, 1982, through May 31, 1983. The sailboat was stored at Barlow's Boatyard from October 5, 1982, through May, 1983, when the taxpayer removed the sailboat after the use tax at issue in this case was assessed. From the time the taxpayer removed the boat from Barlow's Boatyard until the time of the hearing before the board, the taxpayer docked the sailboat in Rhode Island or New Hampshire.

On October 26, 1982, the Commissioner of Revenue (commissioner) notified the taxpayer in writing that his sailboat had been found in use in Massachusetts. The notice requested that the taxpayer provide the commissioner with a copy of the sales or use tax return for the sailboat, or, if a sales or use tax had not been paid as specified in G.L. c. 64H and G.L. c. 64I, that a return be filed and the tax paid. On November 15, 1982, the commissioner issued to the taxpayer a notice of intention to assess a sales or use tax. The taxpayer filed an individual use tax return, dated November 9, 1982, which stated a purchase date of May 3, 1982, and no sales or use tax paid or due. On December 15, 1982, the commissioner issued a final notice and on December 16, the taxpayer filed a second individual use tax return and under protest paid the tax. Subsequently, the taxpayer filed an application for an abatement pursuant to G.L. c. 62C, § 37. By letter dated August 22, 1983, the commissioner denied the application for an abatement on the grounds that the taxpayer had used and stored his sailboat in Massachusetts after it was purchased in Connecticut and had paid no sales or use tax to any jurisdiction.

Following the denial of the abatement application, the taxpayer appealed the commissioner's decision to the board by filing a petition, invoking the formal procedure established by G.L. c. 62C, § 39, and G.L. c. 58A, § 7. After a hearing, the board issued a summary decision for the commissioner on March 22, 1985. Although the parties submitted requests for findings of fact and rulings of law before the board rendered its decision, neither party requested findings or a report pursuant to G.L. c. 58A, § 13, after the decision was rendered. The taxpayer requested a transcript of the hearing and a transcript is part of the record of this appeal.

1. Scope of Review.

Our review of any decision of the board is limited to questions of law. Coomey v. Assessors of Sandwich, 367 Mass. 836, 839, 329 N.E.2d 117 (1975). Boston Tow Boat Co. v. State Tax Comm'n, 366 Mass. 474, 319 N.E.2d 908 (1974). See G.L. c. 58A, § 13 (1984 ed.). While the board's findings of fact are final, G.L. c. 58A, § 13; Coomey, supra; Boston Tow Boat Co., supra, this court can consider whether, as a matter of law, the board's factual findings are supported by substantial evidence. G.L. c. 58A, § 10. New Bedford Gas & Edison Light Co. v. Assessors of Dartmouth, 368 Mass. 745, 749, 335 N.E.2d 897 (1975). Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 n. 2, 310 N.E.2d 602 (1974). To invoke judicial review, a taxpayer appealing the board's denial of an abatement must furnish a record that will enable the reviewing court to consider the points of law raised. If the parties to the appeal fail to request and provide a transcript of the hearing before the board, or written findings and a report from the board, "all parties shall be deemed ... to have waived all rights of appeal to the supreme judicial court upon questions as to the admission or exclusion of evidence, or as to whether a finding was warranted by the evidence." G.L. c. 58A, § 13 (1984 ed.). Minchin v. Commissioner of Revenue, 393 Mass. 1004, 1005, 471 N.E.2d 53 (1984). Stearns v. Assessors of Worcester, 376 Mass. 930, 383 N.E.2d 506 (1978). New Bedford Gas & Edison Light Co., supra, 368 Mass. at 749, 335 N.E.2d 897. Coomey, supra 367 Mass. at 839, 329 N.E.2d 117. Schlaiker, supra 365 Mass. at 245 n. 2, 310 N.E.2d 602.

The commissioner argues that the taxpayer's factually based arguments cannot be reviewed by this court because the taxpayer requested no transcript pursuant to G.L. c. 58A, §§ 10, 13. This claim is without merit. In a letter to the board dated December 9, 1984, the taxpayer inquired as to the extensive delay in producing a transcript of the proceedings. The transcript has been filed with this court. Although the transcript does little, if anything, to advance the taxpayer's claims, the availability of the transcript permits us to consider the merits of the taxpayer's factually based claims.

The commissioner also asserts that the constitutional claims the taxpayer raises on appeal cannot be reached because the taxpayer failed to raise the issues before the board. This court does not "consider any issue of law which does not appear to have been raised in the proceedings before the board." G.L. c. 58A, § 13. Minchin v. Commissioner of Revenue, supra 393 Mass. at 1004, 471 N.E.2d 53. New Bedford Gas & Edison Light Co. v. Assessors of Dartmouth, supra 368 Mass. at 751-752, 335 N.E.2d 897. "To raise a constitutional question on appeal to this court from the board, the taxpayer must present the question to the board and, in so doing, make a proper record for appeal. Otherwise, the taxpayer waives the right to press the constitutional argument." Id. at 752, 335 N.E.2d 897. The taxpayer in this case has met the statutory burden. While the transcript of the hearing before the board reveals barely a glimmer of a constitutional argument by the taxpayer, following the hearing the taxpayer filed a request for rulings of law which effectively raise the taxpayer's claims under the Fourteenth Amendment to the Constitution of the United States. See Minchin, supra 393 Mass. at 1004, 471 N.E.2d 53 (court cannot consider constitutional issues taxpayer raised on appeal where taxpayer had not requested rulings on any constitutional issue from the board). It is true that, in raising these issues in the request for rulings of law, the taxpayer did not articulate these constitutional claims using the legal terminology an attorney may have used, but he nevertheless fairly raised the issues. Further, by specifically denying the taxpayer's request for rulings of law in its summary decision in this case, the board removed any doubt that the issues raised by the taxpayer are the proper subject of an appeal.

2. The Taxpayer's Statutory Claims.

The taxpayer bears the burden of proving as a matter of law the right to an abatement of a tax. Coomey, supra 367 Mass. at 838, 329 N.E.2d 117. Schlaiker, supra 365 Mass. at 245, 310 N.E.2d 602. In reviewing the commissioner's decision to assess the tax on the taxpayer's sailboat, this court must be cognizant of the deference to which the determination of the State agency administering the tax is entitled. McCarthy v. Commissioner of Revenue, 391 Mass. 630, 632, 462 N.E.2d 1357 (1984). French v. Assessors of Boston, 383 Mass. 481, 482, 419 N.E.2d 1372 (1981).

In denying the taxpayer's application for an abatement and assessing the tax pursuant to G.L. c. 64I, the commissioner noted that the taxpayer's vessel was stored in Massachusetts after having been purchased in Connecticut; that there was no indication of any tax paid to Connecticut or any other jurisdiction; and that the taxpayer sailed the vessel in the waters of several States, including Massachusetts. The taxpayer apparently contends that he purchased the sailboat for use outside Massachusetts and that the use tax statute, therefore, does not apply to his sailboat.

With certain statutory exceptions, G.L. c. 64I, § 2, imposes a tax on "the storage, use or other consumption in the commonwealth of tangible personal property purchased from any vendor for storage, use or consumption within the commonwealth." "Every person" who stores, uses or otherwise consumes such...