Case Title: WYOMING DEPARTMENT OF REVENUE v. POWDER RIVER COAL COMPANY

Citation: 

Docket Number: 03-9

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-05-14T00:00:00Z

Document:
WYOMING DEPARTMENT OF REVENUE v. POWDER RIVER COAL COMPANY2004 WY 5490 P.3d 1158Case Number: 03-9Decided: 05/14/2004
APRIL 
TERM, A.D. 2004

 

                                                                                                            

 

STATE 
OF WYOMING, by and through

THE 
WYOMING DEPARTMENT OF

REVENUE,

 

Appellant(Petitioner),

 

v.

 

POWDER 
RIVER COAL COMPANY,

 

Appellee(Respondent).

 

W.R.A.P. 
12.09(b) Certification from the District Court of Campbell 
County

 

Representing 
Appellant:

Patrick 
J. Crank, Wyoming Attorney General; Martin L. Hardsocg, Senior Assistant 
Attorney General; William F. Russell, Assistant Attorney General.  Argument by Mr. 
Russell.

 

Representing 
Appellee:

Lawrence 
J. Wolfe, P.C., and James R. Belcher, P.C., of Holland & Hart LLP, Cheyenne, 
Wyoming.  Argument by Mr. 
Belcher.

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

 

GOLDEN, 
Justice.

 

[¶1]           
Appellant 
Department of Revenue (Department) imposed sales tax on that portion of Appellee 
Powder River Coal Company's (PRCC) revenue collected to pay for another tax, the 
Leaking Underground Storage Tank tax1 also known as LUST tax.   Following a hearing, the Board of 
Equalization (Board) reversed the Department, finding no legislative intent to 
impose sales tax on another tax.  
The Department contends that the Board erred in this determination and 
requests reversal of the Board's decision.

 

[¶2]           
We 
affirm the Board's order.

 

 

ISSUES

 

[¶3]           
The 
Department presents the following statement of the issues:

 

1.  Did the State Board of Equalization 
correctly determine that the legislature intended to exclude the LUST tax from 
the amount subject to sales tax, when the LUST tax is imposed by the fuel tax 
articles, and Wyo. Stat. § 39-15-101(a)(viii) expressly excluded taxes imposed 
by the federal government or the sales tax article from the amount subject to 
sales tax, but did not exclude taxes imposed by the fuel tax 
articles?

 

2.  Did the State Board of Equalization 
correctly determine that the LUST tax only attaches at the consummation of a 
sale and, therefore, is not part of the sales price, when Wyo. Stat. § 
39-17-204(b) levies the LUST tax on all diesel fuels used, sold, or distributed 
for sale or use in Wyoming?

 

3.  Did the State Board of Equalization 
correctly determine that the LUST tax is a separate payment owed by the consumer 
to the State and, therefore, is not part of the consideration paid by the 
consumer to the vendor, when Wyo. Stat. § 39-17-207(b) requires a licensed 
supplier, refiner, or importer to pay the LUST tax to the 
State?

 

PRCC 
states the issue as:

Believing 
that the law did not require it, [PRCC] did not pay sales tax calculated to 
include in the sales price the LUST tax on diesel fuel it purchased between 
February 1, 1996, and January 1, 1999.  
After an audit, the Department assessed $39,384.41 against PRCC, which 
represents sales tax on the LUST tax.  
PRCC appealed, and the State Board of Equalization ruled that the 
Department improperly assessed sales tax on the LUST tax.  The issue before this Court is whether 
the Wyoming Sales Tax statutes authorize the Department to assess sales tax on 
LUST tax.

 

 

FACTS

 

[¶4]           
PRCC 
purchased diesel fuel from Wyoming vendors to use in operating off-road 
equipment at PRCC's coal mines in Wyoming's Powder River Basin. PRCC paid sales 
tax on the price charged for the diesel fuel and paid a one cent per gallon tax 
pursuant to § 39-17-204(b), known as the LUST tax.  PRCC did not pay sales tax on the 
revenue that had been collected for the purpose of paying the LUST tax.  Following an audit of PRCC for the 
period of February 1, 1996, through January 1, 1999, the Department assessed 
additional excise taxes, and PRCC filed a notice of appeal with the Board.  Following negotiations, the parties 
agreed that the disputed amount was $39,384.41, and the sole issue was whether 
sales tax was properly imposed upon the sales price of dyed diesel fuel without 
deduction for the LUST tax.  The 
Board found that sales tax is not due on LUST tax and reversed the Department's 
assessment in the disputed amount.  
The Department appealed to the district court, which certified the issues 
to this Court.

 

 

DISCUSSION

 

Standard 
of Review

 

[¶5]           
The 
parties have stipulated to the facts and present questions of statutory 
interpretation.  Statutory 
interpretation is a question of law and is reviewed de novo.  Chevron 
U.S.A., Inc. v. State, 
918 P.2d 980, 983 (Wyo. 1996).  If 
an agency did not apply the correct rule of law, or applied it incorrectly, this 
Court does not defer to the agency's conclusion but will correct any errors of 
law.  Id.  When interpreting statutes, we follow an 
established set of guidelines.  
First, we determine if the statute is ambiguous or unambiguous.  A statute is unambiguous if its wording 
is such that reasonable persons are able to agree as to its meaning with 
consistency and predictability.  
Unless another meaning is clearly intended, words and phrases shall be 
taken in their ordinary and usual sense.  
Conversely, a statute is ambiguous only if it is found to be vague or 
uncertain and subject to varying interpretations.  Parker 
Land & Cattle Co. v. Wyoming Game & Fish Comm'n, 
845 P.2d 1040, 1042-43 (Wyo. 1993).

 

 

Applicable 
Sales and Fuels Taxation Statutes

 

[¶6]           
In 
Wyoming, sales tax is levied upon "[t]he sales price of every retail sale of 
tangible personal property." Wyo. Stat. Ann. § 39-15-103(a)(i)(A) (Michie 1998 
Supp.).  Fuel is taxed under 
separate statutes.  Wyo. Stat. Ann. 
§ 39-6-901 through § 39-6-914 (Michie 1996), recodified 
as Wyo. 
Stat. Ann. § 39-17-101 through § 39-17-211 (Michie 1998 Supp.).  Nearly all fuel sales were exempt from 
sales tax; however, for the audit period, dyed diesel fuel was not exempted2 and was subject to sales tax and 
the LUST tax.  § 39-6-405(iii)(E).3  The Department contends that before the 
sales tax is computed, the statutory definition of  "sales price" requires that the LUST tax 
be included as part of the sales price.  
That definition states:

 

. 
. . the consideration paid by the purchaser of tangible personal 
propertyexcluding any taxes imposed by the federal government or this 
article[.]

 

§ 
39-6-402(a)(iv), recodified 
as § 
39-15-101(a)(i)(vi).

 

[¶7]           
The 
Board determined that consideration is the amount that a purchaser pays to the 
vendor and, based on the applicable statute, the Board decided that the 
purchaser does not pay the LUST tax to the vendor, but pays it to the State of 
Wyoming.  That statute 
states:

 

The 
taxes imposed on motor fuel shall be conclusively presumed to be a direct tax on 
the ultimate or retail consumer.  
When taxes are paid by any person other than the ultimate or retail 
consumer, the payment shall be considered as precollected and as an advance 
payment for the purpose of convenience and facility to the consumer and shall 
thereafter be added to the price of the motor fuel and recovered from the 
ultimate or retail consumer, regardless of where or how the taxable fuel is 
ultimately consumed.

 

Wyo. 
Stat. Ann. § 39-6-904(n) (Michie 1997), recodified 
as § 
39-17-203(b)(ii) and § 203(c)(i) (Michie 1998 Supp.).  The 
Board concluded that the LUST tax creates a debt of the purchaser, not the 
vendor, to the State of Wyoming, and consequently, the LUST tax is not 
consideration to the vendor and not taxable for sales tax purposes. 

 

[¶8]           
The 
Department believes that because the LUST tax was not specifically exempted from 
sales tax in any statutes while several other types of taxes were specifically 
exempted, the legislature intended that the LUST tax become part of the sales 
price and the Board's determination is in error.  PRCC contends that the Board correctly 
ruled 
that the LUST tax is not part of the consideration between the parties to the 
sale but, instead, is a separate payment owed by the purchaser to the State of 
Wyoming upon completion of the sale.  
PRCC argues that the legislature intended that the LUST tax receive the 
same treatment as all other fuel taxes, meaning that both the sales and LUST 
taxes are imposed simultaneously and then added to the sales price and the total 
amount is then charged to the retail customer.  

 

[¶9]           
To 
support their arguments, both parties extensively discuss the historical 
background of the numerous fuel and sales taxation provisions (back to the 
1920s), and  several decisions from 
other jurisdictions with the most relevant ones predating 1997 concerning 
different kinds of taxation statutes to determine if, generally, a tax should be 
taxed.  However, we agree with the 
Board that the legislature's adoption of § 39-6-904(n) in 1997, recodified as § 39-17-203(b)(ii) and § 
203(c)(i), changed fuel taxes from a tax on wholesalers to a direct tax on the 
ultimate consumer.  The statutory 
language of § 904(n) plainly states this to be the legislative intent, and 
effectively requires that motor fuel taxes, including the LUST tax, be "added to 
the price of the motor fuel."  § 
39-6-904(n).  The use of the term 
"added" was deliberate and is intended to mean that the LUST tax is not 
"included" as part of the price but is meant to be supplementary, meaning that 
the tax is separately but simultaneously imposed and then added to the base 
price of the fuel to arrive at the total amount that the ultimate consumer 
pays.   This interpretation is 
required, first, because the LUST tax is due from the consumer on a per gallon 
basis after the vendor has set the price and, logically, cannot be part of the 
sales price and, second, because the legislature has historically exempted fuel 
sales from sales taxation.  1980 
Wyo. Sess. Laws Ch. 12, § 1;4 1986 Wyo. Sess. Laws Ch. 87, §1.5  

 

[¶10]      Our 
interpretation is supported by the later recodification of the fuel and sales 
tax statutes when the legislature completely reorganized and renumbered Title 39 
of the Wyoming Statutes.  1998 Wyo. 
Sess. Laws. Ch. 5.  Effective 
March 6, 1998, the Legislature repealed these articles and recodified Title 39, 
stating:

            
This act is intended simply as a recodification.  The Wyoming legislature intends to make 
no substantive change to prior law including, but not limited to revenue, either 
increases or decreases, powers, duties, authorities, obligations, definitions, 
administration, confidentiality, imposition, tax rates, exemptions, licenses, 
permits, compliance, collection procedures, enforcement, remedies, statutes of 
limitation or distribution of taxes.  
This act is not intended to affect the validity of any rule or regulation 
promulgated prior to the effective date of this act.

 

1998 
Wyo. Sess. Laws Ch. 5, §§ 6, 8. 

 

[¶11]      Under 
the recodification, the LUST tax was specifically exempted from sales 
taxation.  Wyo. Stat. Ann. § 
39-15-105(a)(v)(C) (Michie 1998 Supp.).6  Although the Department contends that 
the Legislature made a mistake and the LUST tax remained subject to sales 
taxation, we do not see how the plain language of the exemption statutes can be 
ignored or determined to be a mistake.  
We think the reasonable view is that the LUST tax was exempted by § 
39-6-904(n) before the recodification, the recodification confirmed that no 
change to the law was intended, and then, by statute, the LUST tax was 
specifically exempted.  The Board 
believed that this view was also historically supported by past legislation and 
interpretations indicating that a tax on a tax is not favored.  While we agree that these past 
interpretations of other taxation legislation are persuasive, we fortunately 
have specific statutory language requiring that the Board's decision be 
affirmed.

 

[¶12]      The 
Board's order reversing the Department is affirmed.

 

FOOTNOTES

 

1Wyo. Stat. Ann. § 39-6-914(a) (Michie 1996), recodified as § 
39-17-204(b) (Michie 1998 Supp.), provides:  "In addition to the tax collected 
pursuant to W.S. § 39-6-909, there is levied and shall be collected a license 
tax of one cent ($.01) per gallon on all special fuels used, sold, or 
distributed for sale or used in this state . . . ." 

 

2Dyed diesel fuel is exempt from the primary fuel tax and subject to sales 
tax.  § 39-6-909(a)(vi), 
recodified  as  § 
39-17-205(d).

 

3The 
exemption was extended to sales of gasoline taxed under § 39-6-201 through § 
39-6-216 and of special fuels taxed under § 39-6-901 through § 39-6-913.  Because the LUST tax was governed by § 
39-6-914, PRCC was required to pay sales tax and LUST tax on the dyed diesel 
fuel that it used to operate its equipment.

 

4Enacting § 39-6-405 exempting gasoline or gasohol from sales 
tax.

 

5Enacting § 39-6-505(a)(vii) exempting motor vehicle fuel which is subject 
to taxation under § 39-6-201 through § 39-6-214 or § 39-6-901 through § 
39-6-913.  

 

6Exempts diesel fuels taxed under § 39-17-201 through § 39-17-211 which 
includes the LUST tax imposed under § 39-17-204.