Summary 2006 WY 90

Summary of Decision issued July 27, 2006

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Case Name: Buehner Block Company, Inc. v. Wyoming Department of Revenue, Excise Tax Division

Citation: 2006 WY 90

Docket Number: 05-175

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

Representing Appellant (Petitioner): John A. Coppede and Scott Homar of Hickey & Evans LLP, Cheyenne, Wyoming.

Representing Appellee (Respondent): Patrick J. Crank, Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General; and Ryan T. Schelhaas, Senior Assistant Attorney General. Argument by Mr. Schelhaas.

Date of Decision: July 27, 2006

Issue: Whether the Board erred in deciding that these sales were not exempt from Wyoming’s sales tax authority under Wyo. Stat. Ann. § 39-15-105(a)(i)(A). Whether the Board erred in concluding that these sales were subject to Wyoming’s sales tax authority despite the fact that title to the goods passed in Utah where the goods were transferred to a common carrier. Whether the Board erred in any event in failing to give Buehner Block a claimed credit.

Holding: Buehner Block is a Utah corporation, manufacturing concrete blocks in Utah and selling its products both inside and outside that state. The company applied for and received a Wyoming sales and use tax vendor’s license in 1983 but did not collect and remit taxes from the sales at issue. Buehner Block later responded to the preliminary audit findings by taking the position that: (1) it was not a vendor as defined by Wyoming law; (2) the sales were made to customers that were not Wyoming based, and it was unable precisely to calculate the tax; and (3) it used a common carrier to deliver the goods after the product was sold at the point of pickup in Utah.
Wyo. Stat. Ann. § 39-15-103(a)(i)(A) imposes an excise tax, Wyo. Stat. Ann. § 39-15-101(a)(vii) defines “sales”, and the rules of the Wyoming Dep’t of Revenue provide the point at which title or possession of tangible personal property passes to the purchaser. At issue in the instant case is the exemption found in Wyo. Stat. Ann. § 39-15-105(a)(i)(A): Sales which the state of Wyoming is prohibited from taxing under the laws or constitutions of the United States or Wyoming.
Standard of Review: Appellate review under W.R.A.P. 12.09 is limited to a determination of matters specified in Wyo. Stat. Ann. § 16-3-114(c). The Court gives deference to the agency’s findings of fact and does not disturb them unless they are contrary to the great weight of the evidence. The substantial evidence test is the appropriate standard of review in appeals when factual findings are involved and both parties submitted evidence. If the agency’s conclusions of law are in accordance with the law, the Court will affirm them.
Whether the Board erred in deciding that these sales were not exempt from Wyoming’s sales tax authority under Wyo. Stat. Ann. § 39-15-105(a)(i)(A): The question posed is whether the imposition of Wyoming sales tax upon the sales at issue violates the Commerce Clause. The Court discussed National Bellas Hess, Inc. v. Dep’t of Revenue of the State of Illinois and Quill Corp. v. North Dakota as applicable to the instant case. The Supreme Court’s ultimate conclusion in Quill was that the bright-line rule of National Bellas Hess – the Commerce Clause prohibits a state from imposing sales or use taxes upon an entity whose only contacts with that state are by mail or common carrier – remains viable. The State Board concluded that Buehner Block was not so protected because it had not met its burden of proving that its sales personnel no longer traveled in Wyoming, such travel having been asserted in the application for sales tax vendor license and because Buehner Block voluntarily held a Wyoming sales tax vendor license and collected and remitted Wyoming sales taxes. The Court was satisfied that Buehner Block’s historical connection with the Wyoming taxing system provided the substantial nexus needed.
Whether the Board erred in concluding that these sales were subject to Wyoming’s sales tax authority despite the fact that title to the goods passed in Utah where the goods were transferred to a common carrier. A destination sale is one where the seller intends that title or possession of the goods not transfer to the buyer until delivery is made at the designated destination site and the effect upon passage of title of a straight bill of lading is not necessarily changed by the parties’ additional arrangements concerning the payment of freight charges and assignment of the risk of loss. The Court reviewed the State Board’s record and found substantial evidence to sustain the conclusion that the parties intended these to be destination sales.
Whether the Board erred in any event in failing to give Buehner Block a claimed credit: The substance of the State Board’s conclusion is simply that Buehner Block did not prove that the credit actually was given during the period audited. The record evidence was sufficiently cloudy in that regard that the Court could not disagree. Neither the initial spreadsheet nor the credit invoice was made available to the State’s auditors and the spreadsheet was not entered into evidence. The Court stated that one inference from those facts was that the credit invoice did not exist at the time of the audit. Inasmuch as the State Board’s order did not determine the merits of the credit itself so neither did the Court and Buehner Block is free to pursue a refund or credit.

The Court affirmed the decision of the Wyoming Board of Equalization.

C.J. Voigt delivered the opinion for the court.

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