Summary 2006 WY 35

Summary of Decision issued March 22, 2006

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Case Name: Qwest Corp. v. State, Dep’t of Revenue

Citation: 2006 WY 35

Docket Number: 05-7

W.R.A.P. 12.09(b) Certification from the District Court of Laramie County, the Honorable Nicholas G. Kalokathis, Judge

Representing Appellant (Petitioner): Ryan Schwartz and John E. Masters, Hathaway & Kunz, PC, Cheyenne, Wyoming; Larry H. McMillin, Qwest Services Corporation, Denver, Colorado; Robert R. Gunning and Neil I. Pomerantz, Silverstein & Pomeranz, LLP, Denver, Colorado.

Representing Appellee (Respondent): Patrick J. Crank, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin Hardsocg, Senior Assistant Attorney General; Catherine D. Parker, Assistant Attorney General.

Date of Decision: March 22, 2006

Issue: Whether the State Board correctly concluded that the “end User Common Line Charge” paid by Wyoming consumers to Qwest for local telephone service was subject to sales tax pursuant to Wyo. Stat. Ann. § 39-15-103(a)(i)(C). Whether the State Board properly concluded that Wyo. Stat. Ann. § 39-15-110(b) did not operate as a bar on the portion of the assessment from July 1997 through May 2000. Whether the State Board violated its own rules when it failed to recite the Department’s burden of proof.

Holding: This matter relates to the sales and use tax assessed against Qwest resulting from an audit for the period of July 1, 1997 through December 31, 2001. When reviewing cases certified pursuant to W.R.A.P. 12.09(b), the Court applies the appellate standards which are applicable to the court of the first instance. The Court affirms an agency’s conclusions of law when they are in accordance with the law. The paramount issue in this case is whether the EUCL charge is subject to taxation under Wyoming law. This determination involves the interpretation of Wyoming’s tax imposition statute and the Department’s rules which are reviewed de novo. The Court generally defers to the construction placed on a statute by the agency charged with its execution provided the agency’s construction does not conflict with the legislature’s intent. Tax statutes are to be construed in favor of the taxpayer. Taxes may not be imposed by any means other than a clear, definite and unambiguous statement of legislative authority.
The EUCL charge compensates Qwest for providing long distance access to Wyoming customers. As such, it is not a charge for interstate telephone services as contemplated by Wyo. Stat. Ann. § 39-15-103(a)(i)(C) and the Department’s Rules and Regulations. Because the statute does not clearly, definitely, and unambiguously tax the EUCL charge, the Court construed the statute in favor of the tax payer and found that the access service is not properly taxable. Having reached that result, the Court did not need to consider the parties’ remaining contentions.

Reversed.

J. Burke delivered the opinion for the court.

Link to the case: http://tinyurl.com/fx2h2 .