Wisconsin Dept. of Revenue v. Moebius Printing Co., Nos. 76-766

CourtUnited States State Supreme Court of Wisconsin
Writing for the CourtABRAHAMSON
Citation89 Wis.2d 610,279 N.W.2d 213
PartiesWISCONSIN DEPARTMENT OF REVENUE, Petitioner-Appellant, v. MOEBIUS PRINTING COMPANY, Respondent. MOEBIUS PRINTING COMPANY, Petitioner-Respondent, v. WISCONSIN DEPARTMENT OF REVENUE, Appellant.
Decision Date30 May 1979
Docket Number76-767,Nos. 76-766

Page 213

279 N.W.2d 213
89 Wis.2d 610
WISCONSIN DEPARTMENT OF REVENUE, Petitioner-Appellant,
v.
MOEBIUS PRINTING COMPANY, Respondent.
MOEBIUS PRINTING COMPANY, Petitioner-Respondent,
v.
WISCONSIN DEPARTMENT OF REVENUE, Appellant.
Nos. 76-766, 76-767.
Supreme Court of Wisconsin.
Argued March 28, 1979.
Decided May 30, 1979.

Page 215

[89 Wis.2d 615] E. Weston Wood, Asst. Atty. Gen. (argued), Bronson C. La Follette, Atty. Gen., on brief, for appellant.

Frank J. Pelisek (argued), Gordon K. Miller and Michael, Best & Friedrich, Milwaukee, on brief, for respondent.

ABRAHAMSON, Justice.

The appeals are taken by the Wisconsin Department of Revenue (Department) from judgments entered by the circuit court in two sales tax proceedings involving Moebius Printing Company.

Both judgments of the circuit court are based on a single memorandum decision in which the circuit court construed ch. 77, Stats., to exempt the gross receipts from certain sales by Moebius from sales tax.

Case No. 76-766 relates to that part of the decision and order of the Wisconsin Tax Appeals Commission holding that the Department's sales tax assessment against Moebius for August 1970 was barred by a prior field audit. The Department sought review in circuit court; the circuit court affirmed the Commission. We affirm this judgment.

[89 Wis.2d 616] Case No. 76-767 relates to that part of the decision and order of the Wisconsin Tax Appeals Commission upholding the Department's sales tax assessment against Moebius for the period from September 1, 1969 to December 31, 1971 (excluding August 1970). Moebius sought review in circuit court. The circuit court reversed the Commission. We modify this judgment and remand the case to the circuit court.

I.

Moebius is a printing and lithographing firm whose primary business is the sale of illustrated brochures, catalogs and folders which Moebius produces to special order by a four-color process. Moebius provided all the materials used in the printing involved in the sales in question and delivered all of the printed matter to its customers in Wisconsin.

In most of the sales involved in these proceedings, Moebius' customer executed a form prescribed by the Wisconsin Department of Revenue entitled "Certificate of Exemption." This form lists exemptions, which the purchaser can check, and concludes with the line: "Other purchases exempted by law. (State items and exempted use)." Moebius' customers checked this line and completed it by stating that all (or a specified percentage) of the printed materials purchased was to be distributed outside of Wisconsin. In a few of the sales involved in these proceedings, similar statements were made by the purchaser on Department "Resale Certificates" or in letters to Moebius. The Commission found that Moebius accepted these certificates in the belief that the purchases covered by these documents were exempt from the sales tax and that Moebius did not collect a sales tax on that portion of the printed material which the customers indicated would be used outside the State of Wisconsin. [89 Wis.2d 617] These uncollected taxes are the subject matter of this dispute.

In October 1970, James Lydon, a tax representative of the Department, called at the Moebius office in Milwaukee and examined Moebius' books and records for the month of August, 1970. It appears that Moebius made available to Lydon all of its sales records from September 1, 1969, to the date of his visit. However, there is no evidence that Lydon examined any records for any month other than August, 1970.

Page 216

In a letter dated October 9, 1970, after the conclusion of his two-day "spot check," Lydon wrote Moebius advising Moebius that his report to the Department regarding Moebius included the following:

". . . A spot check was made of all accounts payable and all sales for the month of August 1970, list attached. For every purchase Moebius made during the period there had been either tax paid or valid exemption certificates on file. Sales for the same period was checked and again proper certificates were on file.

". . .per

"In my opinion Moebius is doing an excellent all around job in compliance with the Wisconsin sales tax law."

On July 7, 1972, the Department issued a sales and use tax assessment against Moebius covering the period from September 1, 1969 through December 31, 1971 in the total amount of $33,891.36, including interest. This determination was based upon a field audit made sometime in 1972, covering the tax period from September 1, 1969 to December 31, 1971. Moebius objected to the Department's determination of its tax liability and sought a redetermination. The Department redetermined the deficiency to be $34,523.49, based on a revised audit report. Sec. 77.59(6), Stats.

Moebius petitioned the Tax Appeals Commission for review of the action of the Department. Sec. 73.01(5), [89 Wis.2d 618] Stats. After a hearing, the Commission concluded that the transfer for consideration of the printed materials at issue during the tax period from September 1, 1969, to December 31, 1971, constituted a sale of tangible personal property within the meaning of sec. 77.51(4)(h), Stats.; 1 that the sale was subject to sales tax under sec. 77.52(1), Stats.; 2 and that these sales were not exempt from sales tax either under sec. 77.52(2)(a) 11, Stats., 3 [89 Wis.2d 619] because Moebius, not the customer, furnished the printing materials involved, or under sec. 77.54(25), Stats., 4 because this section became effective on May 22, 1972, after the tax period here at issue. The Commission further concluded that the exemption certificates submitted by Moebius do not meet the requirements of sec. 77.52(14), Stats., in that they do not on their

Page 217

face indicate a legal basis for the claimed exemption and do not relieve Moebius from the sales tax due thereon. 5 However the Commission concluded that the examination of Moebius' records in October, 1970, by Tax Representative Lydon, constituted a field audit determination of Moebius' sales tax liability for the month of August, 1970, and that the Department[89 Wis.2d 620] was therefore barred from assessing a deficiency for that month. 6

The circuit court held that the Commission's reading of the relevant provisions of the sales and use tax act rendered those provisions unconstitutional and that the proper construction of those provisions is that the legislature did not intend to subject to sales tax transactions such as those at issue in the case at bar. On this basis the trial court reversed the Commission's order, except for that portion barring the Department from assessing a deficiency against Moebius for August, 1970.

II.

Moebius and the Department agree the transactions at issue are "sales" and are taxable under sec. 77.52(1), Stats., (see note 2) unless an exemption provision applies.

[89 Wis.2d 621] During the tax period in issue no statutory provision in the sales tax law expressly exempted sales in Wisconsin of tangible personal property generally or printed advertising material specifically which were to be used solely outside the state. However, sec. 77.51(16), Stats., 7 exempts from the use tax the retention of tangible personal property in Wisconsin for the purpose of subsequently transporting it outside the state for use solely outside the state. Moebius argues that the legislature intended the sales tax and use tax to be complementary; that in sec. 77.51(16), Stats., the legislature expressly exempted from the use tax the retention of tangible personal property in Wisconsin for subsequent transportation and later use solely outside Wisconsin; and that the intended complementariness of the sales and use tax statutes requires the court to interpret the sales tax statute to include an exemption which corresponds to the use tax exemption, namely, a sales tax exemption for the sale in Wisconsin of printed

Page 218

materials for use solely outside the state. We conclude that the overall complementariness of the use tax and sales tax does not justify this court's reading into the statutes a sales tax exemption which was not specifically set forth by the legislature.

It is generally conceded that the use tax was conceived as a necessary supplement to the sales tax and that the two taxes together should provide a symmetrical and complete tax system. The purpose of the use tax is to [89 Wis.2d 622] prevent a buyer from avoiding a sales tax by purchasing goods outside the state. The use tax is designed to assure, as far as feasible, that there is a tax not only when the property is sold at retail in this state but also when it is purchased in another state for use here. Due, State & Local Sales Taxation: Structure & Administration 247-251 (1971); U. S. Gypsum Co. v. Green, 110 So.2d 409, 412 (Fla.1959); Avco Mfg. Corp. v. Connelly, 145 Conn. 161, 140 A.2d 479 (1958); State ex rel. Transport, Manufacturing and Equipment Co. v. Bates, 359 Mo. 1002, 224 S.W.2d 996, 999 (1949).

Although the use and sales taxes are complementary and supplementary, the scope of the use tax is not merely a function of the scope of the sales tax. The two are separate taxes. American Airlines, Inc. v. State Bd. of Equalization, 216 Cal.App.2d 180, 190, 30 Cal.Rptr. 590 (1963). The taxes cover different events involving the same kinds of tangible personal property or services.

The sales tax is imposed on the retailer for the "privilege of selling, leasing or renting tangible personal property . . . at retail" and upon persons for the privilege of "selling, performing or furnishing . . . services . . . at retail . . . ." Sec. 77.52(1)(2), Stats. The use tax is imposed on a person for the storage, use or other consumption in this state of tangible personal property or taxable services described in sec. 77.52, Stats., the sale of which has not been reached by the sales tax. Secs. 77.53(1)(2), 77.53(16), 77.56(1), Stats. If tangible property or a service is not stored,...

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51 practice notes
  • Midcontinent Broadcasting Co. of Wisconsin, Inc. v. Wisconsin Dept. of Revenue, No. 78-203
    • United States
    • United States State Supreme Court of Wisconsin
    • 30 September 1980
    ...913; State ex rel. Schopf v. Schubert (1970), 45 Wis.2d 644, 173 N.W.2d 673." See also: Department of Revenue v. Moebius Printing Co., 89 Wis.2d 610, 624-26, 279 N.W.2d 213 [98 Wis.2d 404] This court answered an equal protection challenge to sec. 77.51(10)(a), Stats., (1969) in Ramrod, Inc.......
  • Willow Creek Ranch v. Town of Shelby, No. 97-2075
    • United States
    • United States State Supreme Court of Wisconsin
    • 20 June 2000
    ...be fact finding so that the circuit court can attempt to strike the balance described in Department of Revenue v. Moebius Printing Co., 89 Wis. 2d 610, 638, 279 N.W.2d 213 (1979). That would require a remand in this s 169. In a future hearing, Willow Creek might try to estop a forfeiture ac......
  • Meinholz, LLC v. Dane Town Bd. of Zoning Appeals & Adjustment, 2021AP346
    • United States
    • Court of Appeals of Wisconsin
    • 5 May 2022
    ...of property owners and residents of the neighborhood adversely affected by the violation."); see also DOR v. Moebius Printing Co., 89 Wis.2d 610, 638, 279 N.W.2d 213 (1979) ("estoppel may be available as a defense against the government if the government's conduct would work a serious injus......
  • Treiber v. Knoll, No. 85-2115
    • United States
    • Wisconsin Supreme Court
    • 6 January 1987
    ...Simanco, Inc. v. Department of Revenue, 57 Wis.2d 47, 54, 203 N.W.2d 648 (1973); Department of Revenue v. Moebius Printing Co., 89 Wis.2d 610, 625, 279 N.W.2d 213 The United States Supreme Court has also recognized this broad discretion in the legislature as to tax legislation. According to......
  • Request a trial to view additional results
51 cases
  • Midcontinent Broadcasting Co. of Wisconsin, Inc. v. Wisconsin Dept. of Revenue, No. 78-203
    • United States
    • United States State Supreme Court of Wisconsin
    • 30 September 1980
    ...State ex rel. Schopf v. Schubert (1970), 45 Wis.2d 644, 173 N.W.2d 673." See also: Department of Revenue v. Moebius Printing Co., 89 Wis.2d 610, 624-26, 279 N.W.2d 213 [98 Wis.2d 404] This court answered an equal protection challenge to sec. 77.51(10)(a), Stats., (1969) in Ramrod, Inc.......
  • Willow Creek Ranch v. Town of Shelby, No. 97-2075
    • United States
    • United States State Supreme Court of Wisconsin
    • 20 June 2000
    ...be fact finding so that the circuit court can attempt to strike the balance described in Department of Revenue v. Moebius Printing Co., 89 Wis. 2d 610, 638, 279 N.W.2d 213 (1979). That would require a remand in this s 169. In a future hearing, Willow Creek might try to estop a forfeiture ac......
  • Meinholz, LLC v. Dane Town Bd. of Zoning Appeals & Adjustment, 2021AP346
    • United States
    • Court of Appeals of Wisconsin
    • 5 May 2022
    ...of property owners and residents of the neighborhood adversely affected by the violation."); see also DOR v. Moebius Printing Co., 89 Wis.2d 610, 638, 279 N.W.2d 213 (1979) ("estoppel may be available as a defense against the government if the government's conduct would work a ser......
  • Treiber v. Knoll, No. 85-2115
    • United States
    • Wisconsin Supreme Court
    • 6 January 1987
    ...Simanco, Inc. v. Department of Revenue, 57 Wis.2d 47, 54, 203 N.W.2d 648 (1973); Department of Revenue v. Moebius Printing Co., 89 Wis.2d 610, 625, 279 N.W.2d 213 The United States Supreme Court has also recognized this broad discretion in the legislature as to tax legislation. According to......
  • Request a trial to view additional results

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