Case Title: Wyo. Dep't of Revenue v. Qwest Corp.

Citation: 

Docket Number: S-11-0002

State: wyoming

Court: Wyoming Supreme Court

Date: 2011-10-21T00:00:00Z

Document:
WYOMING DEPARTMENT OF REVENUE v. QWEST CORPORATION2011 WY 146Case Number: No. S-11-0002Decided: 10/21/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2011
 
WYOMING 
DEPARTMENT OF REVENUE,Appellant (Petitioner),v.QWEST 
CORPORATION,Appellee (Respondent).
 
Appeal 
from the District Court of Laramie County
The 
Honorable Peter G. Arnold, Judge
 
Representing 
Appellant:
Gregory 
A. Phillips, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney 
General; Cathleen D. Parker, Senior Assistant Attorney General; Martin L. 
Hardsocg, Senior Assistant Attorney General.  Argument by Mr. 
Hardsocg.
 
Representing 
Appellee:
Michael 
Rosenthal and Lucas Buckley, Hathaway & Kunz, P.C.; Larry H. McMillin and 
Roy A. Adkins, Qwest Corporation, Denver, Colorado.  Argument by Mr. 
McMillin.
 
Before 
KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.
 
KITE, 
Chief Justice.            

[¶1]      This case 
involves issues of administrative procedure and sales tax audits and 
refunds.  After an audit by the 
Department of Audit (DOA), the Department of Revenue (DOR) determined that Qwest 
was not entitled to a refund of sales tax which was incorrectly collected from 
its customers and remitted to the state because Qwest did not provide data 
showing the actual amount of tax collected and remitted by month and by 
county.  Qwest appealed the DOR’s 
determination to the State Board of Equalization (SBOE), asserting it did not 
retain that type of information and its refund should be estimated using a 
process employed in a prior audit to assess sales tax.    
 
[¶2]      The SBOE held a 
contested case hearing, then stayed the matter to give the parties an 
opportunity to settle their differences.  
Two months after the evidentiary portion of the contested case hearing 
concluded, Qwest produced to the DOR the actual sales tax information it had 
claimed did not exist.  It explained 
that another department of the Qwest organization had the material and Qwest 
employees involved with the DOA audit were not previously aware that the 
information existed.  The SBOE 
supplemented the record with the actual data, reversed the DOR’s decision that 
Qwest was not entitled to a refund and remanded the case to the DOR to 
accomplish the refund in accordance with the newly produced evidence.    
 
[¶3]      The DOR 
petitioned the district court for review, it affirmed, and the DOR appealed to 
this Court.  At issue in this appeal 
is the specific question of whether the SBOE erred by considering the newly 
produced evidence.  The general 
issues presented include the interrelationship between the DOR, DOA and SBOE and 
the rights of taxpayers to refunds of incorrectly collected sales taxes.  We affirm the SBOE’s decision that Qwest 
was entitled to a refund, but conclude the SBOE erred by considering Qwest’s 
evidence which was not produced to the DOR/DOA during the audit.  The refund amount should have been 
calculated using the estimate procedure and information available during the 
audit.  This matter is remanded for 
further proceedings consistent with this decision. 
 
 
ISSUES
 
[¶4]      The DOR sets out 
eight issues in its opening brief, many of which are redundant.  The critical issues for our 
consideration are:  

 
I.              
Did 
the SBOE err by considering, in a contested case proceeding, Qwest’s evidence of 
the actual sales tax collected when Qwest did not provide such information to 
the DOR/DOA prior to the final assessment, despite repeated requests by the 
DOR/DOA for such information?
 
2.       Is there 
substantial evidence in the record to support the SBOE’s ruling that Qwest was 
entitled to a refund of sales tax?
 
FACTS
[¶5]      Qwest 
provides telephone service to customers within Wyoming.  Its bills include a federal access line 
charge called the Customer Access Line Charge (CALC)1 and a charge for 911 emergency 
services.  The CALC charge is 
governed by tariffs which require approval by the Federal Communications 
Commission (FCC).  Charges for 911 
services are not revenue to Qwest.  
Instead, they are simply collected by Qwest and then remitted to the 
taxing authorities.  The 911 taxing 
authorities in Wyoming are the counties; therefore, Qwest tracks the 911 charges 
by individual county.         

[¶6]      The DOA audited 
Qwest’s sales and use tax compliance for 1997 through 2001 and the DOR 
determined that sales tax should have been assessed on the CALC charges.  As part of that audit, the DOA requested 
a list of cumulative CALC charges by county for the audit period.  Qwest stated that cumulative CALC 
charges were not available on either the county or state level.  In the absence of that information, the 
DOA and Qwest agreed to estimate the CALC charges to calculate the amount of 
sales tax due.  Specifically, the 
auditors estimated the CALC charges by analyzing the relationship between the 
single line residential CALC charge ($5.00 per line) and the 911 charge ($0.50 
per line).  The 911 charges were 
used for the estimate because they were available by county, while the CALC 
charges were not.  The ten to one 
ratio between the CALC charges and the 911 charges was applied to the total 911 
fees remitted by Qwest to the various counties to project the taxable CALC on a 
county by county basis.  The sales 
tax due was calculated by applying the applicable sales tax rate to the 
projected CALC.  The ratio method 
was found to be the best information available at that time to determine the 
amount of sales tax to be assessed.    
 
[¶7]      Qwest did not 
believe the CALC should be subject to sales tax.  Consequently, at the conclusion of the 
1997-2001 audit and after the DOR assessed the sales tax, Qwest appealed to the 
SBOE, which ruled the CALC was taxable.  
Qwest sought judicial review of the SBOE decision.  This Court issued a decision on March 
22, 2006, ruling that the CALC (referred to in the opinion as the EUCL charge) 
was not subject to sales tax.  Qwest Corp. v. State ex rel. Wyo. Dep’t of 
Revenue, 2006 WY 35, 130 P.3d 507 (Wyo. 2006) (Qwest I).  
 
[¶8]      In the meantime, 
Qwest started collecting sales tax on the CALC charges in February 2003 as 
directed by the DOR.  In January 
2005, the DOA began another sales and use tax audit of Qwest for 2002 through 
2004.  At first the auditors were 
focused, among other things, on determining the sales tax due on the CALC 
charges for 2002 and January 2003.  
To that end, the DOA reviewed information in Qwest’s corporate office, 
including 911 and CALC charges as shown on a sample of accounts requested by the 
DOA, and calculated a ratio between the charges comparable to the previous 
audit.  The auditors did not do a 
similar calculation for the remainder of 2003 or 2004 because Qwest had 
collected sales tax on the CALC charges during that time period and the auditors 
believed if a sales tax refund was due, Qwest would know the amount of the 
refund since it had charged the customers.           

 
[¶9]      When the decision 
in Qwest I was issued, Qwest 
submitted amended tax returns to the DOR seeking a refund of sales tax paid on 
the CALC charges for February 2003 through 2004.  Qwest sought refunds of $60,000 per 
month, totaling more than a million dollars.  Qwest did not, however, submit any 
supporting documentation to justify the amounts of the refund requests.    
 
[¶10]   Because the audit was on-going, the 
DOR asked the DOA to review Qwest’s refund requests.  The DOA requested additional information 
and when Qwest did not submit anything, the DOA determined Qwest was not 
entitled to refunds for the CALC sales tax because it had not adequately 
verified its requested refund amounts.  The DOR adopted the audit findings and 
issued a decision denying Qwest’s requests for refund of the CALC sales tax.2          

 
[¶11]   Qwest appealed the DOR’s decision 
to the SBOE, arguing that it was entitled to a refund of sales tax on the CALC 
charges.  The SBOE held a contested 
case hearing.  The DOR asserted that 
it was justified in denying the refunds because, despite specific requests, 
Qwest had not provided sufficient information to determine the amount of refund, 
in particular the actual amount of sales tax collected and remitted on the CALC 
charges by month and by county.  
Qwest responded that it did not retain data showing the amounts actually 
collected and the estimate procedure used in the first audit to assess sales tax 
on CALC charges should have been applied to the sample of accounts requested by, 
and provided to, the DOA to calculate the refund amounts.  Qwest also provided expert testimony 
calculating the refunds using the estimate methodology.  Qwest’s expert calculations resulted in 
an estimate of sales tax paid (and subject to refund) of almost exactly $69,000 
per month for February through December 2003 and $65,793 per month for 2004.3    
 
[¶12]   At the end of the hearing, the SBOE 
issued a stay and encouraged the parties to reach an agreement on the 
matter.  Two months after the 
hearing concluded, Qwest presented to the DOR, in a supplemental discovery 
response, records showing the actual sales tax collected on CALC charges by 
month and county for February 2003 through 2004.  Qwest explained that its employees 
involved with the audit were unaware the sales tax data was maintained by a 
different Qwest department.  The 
actual sales tax data indicated the amount collected was similar to, though 
somewhat higher than, the amounts estimated by Qwest’s expert.  The DOR requested that the record be 
supplemented with the new information4 or, in the alternative, the hearing 
be reopened so that it could challenge the newly produced evidence and confront 
the Qwest employees who had claimed such information was not available.  The SBOE held a hearing on the motion to 
supplement and reopen.  It ruled 
that there was a “complete absence of any evidence of bad faith on the part of 
Qwest in its failure to produce the monthly tax calculations prior to or during 
the evidentiary hearing in this matter.”  
It granted the motion to supplement and reopened the hearing, but only 
for the purpose of allowing Qwest to present a plan to distribute the refund to 
its customers.    

 
[¶13]   The SBOE subsequently held a 
hearing to consider Qwest’s proposed plan for refunding its customers.  The SBOE issued a decision allowing a 
refund in accordance with the actual sales tax data Qwest ultimately produced 
and concluding that Qwest’s refund plan was “a clearly reasonable and common 
sense approach to return to the original source, the Wyoming customers of Qwest, 
the sales tax collected on exempt CALC charges.”  The SBOE remanded to the DOR for 
implementation of the refund plan.  
The DOR petitioned the district court for review of the SBOE decision and 
that court affirmed.  The DOR then 
appealed to this Court.       

 
 
STANDARD 
OF REVIEW
 
[¶14]   When an appeal is taken from a 
district court’s review of an administrative agency’s decision, we review the 
case as if it had come directly from the administrative agency without giving 
any deference to the district court’s decision. Dutcher v. State ex rel. Wyo. Workers’ 
Safety & Comp. Div., 2010 WY 10, ¶ 9, 223 P.3d 559, 561 (Wyo. 2010); 
Dale v. S & S Builders, LLC, 2008 WY 84, ¶ 8, 188 P.3d 554, 557 (Wyo. 
2008). Our review is governed by Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 
2011):
 
(c) 
To the extent necessary to make a decision and when presented, the reviewing 
court shall decide all relevant questions of law, interpret constitutional and 
statutory provisions, and determine the meaning or applicability of the terms of 
an agency action. In making the following determinations, the court shall review 
the whole record or those parts of it cited by a party and due account shall be 
taken of the rule of prejudicial error. The reviewing court 
shall:
         
(i) Compel agency action unlawfully withheld or unreasonably delayed; 
and
         
(ii) Hold unlawful and set aside agency action, findings and conclusions 
found to be:
         
    (A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;
         
    (B) Contrary to 
constitutional right, power, privilege or immunity;
         
    (C) In excess 
of statutory jurisdiction, authority or limitations or lacking statutory 
right;
         
    (D) Without 
observance of procedure required by law; or
         
    (E) Unsupported 
by substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute.
 
[¶15]   In accordance with § 16-3-114(c), 
we review the agency’s findings of fact by applying the substantial evidence 
standard.  Dale, ¶ 22, 188 P.3d  at 561. 
 Substantial evidence means “such relevant evidence 
as a reasonable mind might accept as adequate to support a conclusion.”  Bush v. State ex rel. Wyo. Workers’ 
Comp. Div., 2005 WY 120, ¶ 5, 120 P.3d 176, 179 (Wyo. 2005) (citation 
omitted).  See also Kenyon v. State ex rel. Wyo. Workers’ Comp. 
Div., 2011 WY 14, ¶ 11, 247 P.3d 845, 849 (Wyo. 2011).  “'Findings of fact are supported by 
substantial evidence if, from the evidence 
preserved in the record, we can discern a rational premise for those findings.’” 
 Kenyon, ¶ 11, 247 P.3d  at 849, quoting 
Bush, ¶ 5, 120 P.3d  at 179.  “'We 
review an agency’s conclusions of law de novo, and will affirm only if the 
agency’s conclusions are in accordance with the law.’”  Kenyon, ¶ 13, 247 P.3d  at 849, quoting 
Moss v. State ex rel. Wyo. Workers’ Comp. 
Div., 2010 WY 66, ¶ 11, 232 P.3d 1, 4 (Wyo. 2010); Dale, ¶ 26, 188 P.3d  at 
561-62.
 
 
DISCUSSION
 
[¶16]   This case presents a dilemma 
harkening back to King Solomon.  
Each party purports to stand on principle and requests judgment in its 
favor to vindicate an important public policy.  The DOR wants us to protect the 
integrity of its tax decision making process and the DOA’s audit process; Qwest 
apparently wants us to recognize the difficulty of maintaining voluminous and 
complex records and to overlook the fact that it failed to produce information 
which existed and was requested by the DOR/DOA but unknown to the Qwest 
employees involved with the audit and refund requests.  Unfortunately, by becoming entrenched in 
their respective legal positions, each party has lost sight of the true victim 
in this case—Wyoming telephone customers who paid a tax they did not owe.  Our decision will address the legal 
questions presented by the parties and, at the same time, provide relief to the 
customers who are entitled to it.  

 
[¶17]   The DOR denied Qwest a refund 
because it did not provide the actual sales tax data during the audit.  Qwest claimed, at the time of the audit 
and throughout the contested case hearing, that it was entitled to a refund, it 
did not have the actual tax data, and the DOA should have used the estimate 
methodology it employed to calculate the tax due in the previous audit to 
determine the amount of Qwest’s refund in this case.  The SBOE did not directly address the 
issue of whether it was appropriate for the DOR to deny Qwest’s refund request 
on the basis that it failed to provide sufficient information to the 
auditors.    

 
[¶18]   To determine whether the DOR had 
the authority to deny Qwest’s refund requests on the basis of insufficient 
information, we begin with the taxpayer’s and the DOR’s respective 
responsibilities with regard to providing and reviewing data relevant to  whether the taxpayer is entitled to a 
sales tax refund or credit.  

 
[¶19]   Wyo. Stat. Ann. § 39-15-107(a) 
(LexisNexis 2009) sets forth the taxpayer’s responsibility to retain tax records 
and provides as follows:
                        
. . . .
   (ii) Every vendor and person 
liable for the payment of sales tax under this article shall preserve for three 
(3) years at his principal place of business, suitable records and books as may 
be necessary to determine the amount of tax for which he is liable under this 
article, together with all invoices and books showing all merchandise purchased 
for resale. All records, books and invoices shall be available for examination 
by the department during regular business hours except as arranged by mutual 
consent;
   (iii) If any vendor or person 
liable for the payment of sales tax under this article fails to comply with 
paragraph (ii) of this subsection, he shall bear the burden of proof as to the 
correctness of any assessment of taxes imposed by the department for the period 
for which records were not preserved in any court action or 
proceeding[.]
 
Therefore, 
sales tax payers have an obligation to preserve tax records and make them 
available for examination by the DOR and failure to comply with the record 
retention requirement will result in the taxpayer bearing the burden of proof as 
to the correctness of the assessment.  
Consistently, the current DOR Rules require the taxpayer to provide 
information to support refund claims.  
See Wyo. Dep’t of Revenue Rules, Sales and 
Use Tax, ch. 2, § 10 (a), (b) and (c) (2006).  Similar rules existed at the time of the 
audit, assessment and filing of the requests for refund.  See Wyo. Dep’t of Revenue Rules, Sales and 
Use Tax, Emergency Rules, ch. 2, § 9 (2000).    
 
[¶20]   Section 39-15-107(a) (ix) requires 
the DOR to examine each sales tax return and determine if the amount of tax 
remitted is incorrect.  If the 
amount paid exceeds that which is due, the excess shall be refunded to the 
taxpayer or credited against subsequent tax liability.  Wyo. Stat. Ann. § 39-15-109 (LexisNexis 
2011) states in relevant part:
            
. . . .
(c) 
Refunds. The following shall apply:
     (i) Any tax, penalty 
or interest which has been erroneously paid, collected or computed shall either 
be credited against any subsequent tax liability of the vendor or refunded. No 
credit or refund shall be allowed after three (3) years from the date of 
overpayment. The receipt of a claim for a refund by the department shall toll 
the statute of limitations. All refund requests received by the department shall 
be approved or denied within ninety (90) days of receipt. . . 
.
(ii) 
Any tax erroneously paid by a taxpayer shall be refunded by the vendor who 
originally collected the tax. No cause of action shall lie against the vendor by 
the taxpayer until not less than sixty (60) days elapse following a request by 
the taxpayer for a refund from the vendor.
(d) 
Credits. The following shall apply:
     (i) Any tax, penalty 
or interest which has been erroneously paid, collected or computed shall either 
be credited against any subsequent tax liability of the vendor or refunded. No 
credit or refund shall be allowed after three (3) years from the date of 
overpayment. The receipt of a claim for a refund by the department shall toll 
the statute of limitations. Any refund or credit erroneously made or allowed may 
be recovered in an action brought by the attorney general in any court of 
competent jurisdiction;
. 
. . .
(iii) 
As soon as practicable after the return is filed the department shall examine it 
and if it appears the tax to be remitted is incorrect it shall be recomputed. If 
the amount paid exceeds that which is due the excess shall be refunded to the 
vendor or credited against any subsequent liability of the 
vendor[.]
 
See 
also 
Wyo. Stat. Ann. § 39-16-109 (LexisNexis 2011) (similar provisions regarding 
state use taxes).  The clear 
language of §§ 39-15-107 and 39-15-109 obligates the DOR to review sales tax 
returns and refund or credit taxes erroneously paid.   
 
[¶21]   These provisions do not, however, 
answer the question of whether a taxpayer can withhold or fail to produce tax 
information to the DOR/DOA and then have such withheld information considered in 
a subsequent contested case hearing before the SBOE.  That question encompasses many 
underlying principles and concerns, including the autonomy of the DOR and DOA 
and the respective roles of those agencies and the SBOE.  
 
[¶22]   The 
legislature reorganized the tax system in 1991 and separated the administrative 
responsibilities of the SBOE and the DOR.  
See Union Pacific Resources Co. v. State, 
839 P.2d 356, 363 (Wyo. 1992).  
In Amoco Prod. Co. v. Wyo. State 
Bd. of Equalization, 12 P.3d 668 (Wyo. 2000), a natural gas valuation case, 
we undertook a detailed review of the statutory structure to determine the respective duties and limitations of the DOR 
and the SBOE:
 
The 
Board is a constitutional body, and the legislature is required to establish a 
Board of Equalization charged with the duty to equalize the valuation of all 
property in the state. Wyo. Const. art. 15, §§ 9 & 10.  In Wyo. Sess. Laws. ch. 174, §§ 
39-1-101, et seq. (1991), the legislature created the Department as a 
separate agency from the Board, and assigned to it administrative functions 
relating to taxation and revenue that previously had been the responsibilities 
of the Board. Union Pacific Resources Co. v. State, 839 P.2d 356, 363 
(Wyo.1992) (UPRC I). It specifically charged the Department with the 
function of valuation of property for purposes of tax assessment, “while the 
Board 'became an independent quasi-judicial organization with constitutional and 
statutory duties to equalize valuation and decide disagreements regarding 
statutory provisions affecting the assessment, levy and collection of taxes.’ 
UPRC I, 839 P.2d  at 363.” Union Pacific Resources Co. v. State Bd. of 
Equalization for the State of Wyo., 895 P.2d 464, 466 (Wyo.1995) (UPRC 
II ). . . . 
 
[The 
review or appellate function of the Board] is described in various ways. In Wyo. 
Stat. Ann. § 39-1-302 (Michie 1997) provision is made for a person aggrieved by 
a final decision of the Department to appeal to the Board pursuant to the 
Board’s rules and regulations. The statute requires that the Department shall, 
as specified by the Board’s rules and regulations, transmit to the Board the 
complete record of its action from which the appeal is taken. In a subsequent 
section of the statute, Wyo. Stat. Ann. § 39-1-304(a), the Board is charged with 
hearing appeals from county boards of equalization and reviewing final decisions 
of the Department under the contested case procedures of the Wyoming 
Administrative Procedure Act. This statutory approach suggests a de novo 
review rather than a record review. 
In Wyo. Stat. Ann. § 39-1-304(a)(ix), the Board is charged with holding 
hearings after due notice in the manner and form provided in the Wyoming 
Administrative Procedure Act and its rules and regulations.  
 . . . .
Amoco 
and the Department had agreed that the actual costs should be relied upon 
instead of the twenty-five percent allowance, but they could not agree as to 
which costs were to be utilized in connection with the formula. The issue that 
was properly before the Board was whether Amoco or the Department was correct 
with respect to those costs, and we previously have acknowledged the authority 
of the Board to decide that question. Amax Coal West, Inc. v. Wyoming State 
Bd. of Equalization, 896 P.2d 1329, 1334 (Wyo. 1995). Instead of 
adjudicating the dispute between Amoco and the Department, however, the Board in 
this instance determined to arrive at its own valuation. The statutes that we 
have alluded to earlier are clear with respect to the assignment of the 
valuation function to the Department, not the Board. 
                        
. . . .
The 
only way to harmonize the various descriptions of the review or appeal function 
of the Board is to hold that the Board is limited to an adjudicatory decision 
making its review on the record. It is only by either approving the 
determination of the Department, or by disapproving the determination and 
remanding the matter to the Department, that the issues brought before the Board 
for review can be resolved successfully without invading the statutory 
prerogatives of the Department. 
The statutory mandate to the Board is not to maximize revenue or to punish 
nettlesome taxpayers, but to assure the equality of taxation and fairly 
adjudicate disputes brought before it. 
 
Id. 
at 672-74 (emphasis added).
 
[¶23]   The Amoco decision, with its detailed 
explanation of the roles of the DOR and SBOE, is more than a decade old.  While other changes have been made to 
the tax system and its sections have been reorganized over the years, the 
legislature has not made material revisions to the statutory provisions defining 
the relative responsibilities of the DOR and SBOE.  Accordingly, the legislature seems to 
have concurred with our interpretation of the relevant statutes.  As we have said, “[w]hen this Court 
interprets a statute and the legislature makes no material 
legislative change in the provision thereafter, the legislature is presumed to acquiesce in the Court’s 
interpretation.  SLB v. JEO, 2006 WY 74, ¶ 14, 136 P.3d 797, 801 (Wyo. 2006), citing Bridle Bit Ranch Co. v. Basin Elec. Power 
Co-op., 2005 WY 108, ¶ 22, 118 P.3d 996, 1008 (Wyo. 2005).  Further, the Amoco decision was not made in a 
vacuum.  Earlier decisions had 
emphasized that, after the statutory reorganization in 1991, the administrative 
obligations of the DOR and SBOE were separate and distinct.  See, e.g., Amax Coal Co. v. Wyo. State Bd. of 
Equalization, 819 P.2d 825, 833 (Wyo. 1991); Exxon Corp. v. Bd. of County Comm’rs, 
Sublette County, 987 P.2d 158, 162 (Wyo. 1999).  
 
[¶24]   Applying the teachings of Amoco to this case, the SBOE was charged 
with determining whether the DOR erred by denying Qwest a refund on the grounds 
that it did not provide the actual sales tax data.  It was not charged with determining de novo, without any consideration of 
the state of the record at the time of the assessment decision, whether Qwest was entitled to a 
refund.  See also Antelope 
Valley Improvement Serv. Dist. v. State Bd. of Equalization, 
992 P.2d 563 (Wyo. 1999), opinion clarified in Antelope Valley Improvement Serv. Dist. v. 
State Bd. of Equalization, 4 P.3d 876 (Wyo. 2000), and Amoco v. Dep’t of Revenue, 2004 WY 89, 
94 P.3d 430 (Wyo. 2004) (stating the SBOE is required to act as appellate 
tribunal, not to assume the DOR’s responsibility). 
 
[¶25]   The 
cases describing the responsibilities of the DOR and SBOE make clear the SBOE’s 
role is limited to considering the factual record which was available to the 
DOR/DOA during the assessment process.  
Airtouch Commun., Inc. v. 
Dep’t of Revenue, 2003 WY 114, ¶¶ 13, 38-39, 40, 76 P.3d 342 at 348, 356-57 
(Wyo. 2003) specifically addressed this issue:
 
The 
burden is on the taxpayers to provide the information necessary for DOR to 
prepare an accurate valuation of the properties and to prove at the contested 
case hearing before SBOE that the methodology used and valuations reached by DOR 
were not supported by substantial evidence available in the agency record. 

. 
. . .
[T]he burden falls on the taxpayers to prove the value of that 
property was identifiable and separable from the enhanced value of the business 
determined through the unitary method. DOR contended the taxpayers failed to 
carry that burden in two ways. First, they failed to provide DOR with the 
necessary information to support their claim at the time they filed their annual 
reports which were the basis for DOR’s valuation even though the forms requested 
such information. Most of the information that formed the basis of the 
taxpayers’ claimed value for the intangibles was available to them at the time 
they filed the annual report and had been included in the contemporaneous 
reports they filed with the federal Securities and Exchange Commission. However, 
not until over a year after the value had been certified to the counties did the 
taxpayers provide the information to DOR in the form of an independent 
appraisal. For the 1999 tax year, the taxpayers (excluding Airtouch) did request 
an informal conference allowed under the rules and asked for a reduction in the 
valuation for the intangible property. However, they did not identify that 
property or its value. After that conference, DOR reduced the income portion of 
the valuation formula by ten percent which resulted in lower valuations. In 
2000, none of the taxpayers requested an informal conference because, as they 
testified, they considered it to be a futile effort.  
 
            
A striking similarity exists between the failure of the taxpayers in this 
case to supply the necessary information to support their contentions to DOR 
during the valuation process and the failure of the taxpayers in RT 
Communications to do the same. As we stated in RT Communications, 
“The Telephone Companies are ill positioned now to complain that DOR failed to 
perform an analysis when they failed to provide the necessary information.” 11 P.3d  at 927. While it may be true this failure was due to the evolutionary 
process of addressing intangible property in the rapidly developing 
telecommunications business, DOR was not provided information on the separate 
value of the FCC licenses and the customer lists and cannot be faulted for 
failing to generate that information on its own especially given the 
self-reporting nature of Wyoming's tax system as it relates to state assessed 
property. Id.; State Board of Equalization Rules, Ch. 2, § 20; Amoco 
Production Company v. Wyoming State Board of Equalization, 899 P.2d 855, 858 
(Wyo.1995); Gray v. Wyoming State Board of Equalization, 896 P.2d 1347, 
1350 (Wyo.1995).
 
(Footnote 
omitted.)  See also RT Commun., Inc. v. State Bd. of 
Equalization, 11 P.3d 915, 927 (Wyo. 2000) (stating that a taxpayer cannot 
complain about the DOR’s valuation when it failed to timely provide 
information); Wyo. Dep’t of Revenue v. 
Guthrie, 2005 WY 79,  ¶¶ 35-36, 115 P.3d 1086, 1098 (Wyo. 
2005) (stating “[t]here are three possible results 
from an audit: taxpayer’s tax liability stays the same; the tax liability is 
reduced, or the tax liability is increased. . . . [Taxpayers] can[not] blame the 
Department for any increased tax liability caused by the reporting practices 
chosen by [them] that resulted in a self-reported taxable value that [they] 
could not adequately verify upon request by the 
Department.”).
 
[¶26]   Qwest argues, and the SBOE agreed, 
that the Airtouch and RT Communications decisions are 
distinguishable because they concerned state assessment and complex property 
valuation matters and required expert appraisal of the property.  Here, the issues are straightforward 
and, according to the SBOE, “[n]o state official in this appeal was put to the 
trouble of preparing any complex calculations to reach conclusions analogous to 
those required for valuation of state-assessed property.”  We do not agree with this analysis of 
our precedent.  We were clear in Airtouch and RT Communications that the taxpayer has 
the responsibility to provide relevant information to the DOR to enable it to 
make its calculations.  Section 
39-15-107(a) and the Wyo. Dep’t of Revenue Rules, Sales and Use Tax, ch. 2, § 10 (a), (b) and (c) (2006) 
(formerly Wyo. Dep’t of Revenue Rules, 
Sales and Use Tax, Emergency Rules, ch. 2, § 9 (2000)) confirm that 
the same responsibility applies to sales taxpayers.  It is impossible for the DOR and DOA to 
do their jobs without sufficient relevant information.  
 
[¶27]   Here, the DOR/DOA sought specific 
information from Qwest, including the amounts of actual sales tax collected on 
the CALC charges by month and by county.  
Qwest did not provide that information at the time of the audit.  Following the hearing, Qwest revealed 
the requested information did exist and it wanted to use the information to 
support its claim that it was entitled to a refund.  By allowing the late produced 
information to be admitted into evidence in the contested case proceeding, the 
SBOE denigrated the entire assessment and audit process.  The reasons espoused in Airtouch and RT Communications support prohibiting a 
sales taxpayer from bringing late information to the SBOE.6
 
[¶28]   The SBOE stated that a ruling 
excluding evidence which was not produced by the taxpayer during the audit and 
prior to the assessment would have prevented Qwest from offering its expert 
opinion on the proper amount of the refunds using the estimate/ratio procedure 
employed in the first audit.  We 
disagree.  Although the auditors did 
not have the 911 information for 2003 and 2004, the information was available to 
them.  The Qwest employee who had 
responsibility for working with the auditors testified that the 911 information 
for 2003 and 2004 was accessible and she would have provided it to the auditors 
had they asked for it.  A DOA 
auditor also testified the 2003 and 2004 information was available to the audit 
team.  The auditor stated that he 
chose not to list the 911 and CALC charges from 2003 and 2004 because he 
believed actual sales tax data should be used to calculate the refund.  The availability of the 911 information 
is further confirmed because the auditors used 911 data to estimate the sales 
tax due on the CALC charges for 2002, prior to the issuance of the Qwest I decision.  They took that information from Qwest’s 
records, incorporated it into a spreadsheet which was admitted as Exhibit 140 at 
the hearing, and calculated a ratio to determine the sales tax deficiency for 
2002.    

 
[¶29]   Qwest’s expert simply took the 911 
information for 2003 and 2004 and, like the DOA did with the first audit and for 
2002, calculated a ratio and presented that to the SBOE.  There is nothing wrong with an expert 
using information available during an audit and applying his expertise to reach 
conclusions about the issues at a contested case hearing.  That type of analysis is done frequently 
in administrative hearings.  See, e.g., Sierra Club v. Wyo. Dep’t of Envtl. 
Quality, 2011 WY 42, ¶¶ 26-29, 251 P.3d 310, 317-18 (Wyo. 2011) 
(demonstrating that the Environmental Quality Council allowed, in administrative 
hearing proceedings, expert analysis of the information used by the DEQ in 
reaching its decision).  The fact 
that the DOA did not avail itself of the 2003 and 2004 information in order to 
perform its own estimate of the amount of sales tax that should be refunded or 
credited to Qwest does not change the fact that the data was available for such 
an analysis.  Thus, at the time of 
the audit and assessment, the DOA could have determined a refund amount by using 
an estimating procedure consistent with the one the DOA employed to determine 
the amount of tax due in the previous audit and for 2002.
 
[¶30]   Applying the precedent described 
above to the facts of this case, we conclude the SBOE erred by allowing Qwest to 
submit evidence that it did not make available to the auditors.  Under the combined teachings of Amoco and Airtouch, the SBOE should have restricted its 
decision to the record existing at the time of the audit and assessment.  Nevertheless, the SBOE was correct in 
ruling that Qwest (and ultimately, its Wyoming telephone customers) was entitled 
to a refund.  Once it was clear the 
CALC charges were not taxable and Qwest had collected the tax starting in 
February 2003, the DOR/DOA was required to refund the excess tax to the 
taxpayer.  Section 39-15-109 (c) 
states: “Any tax, penalty or interest which has been 
erroneously paid, collected or computed shall either be credited against any 
subsequent tax liability of the vendor or refunded.” (Emphasis added).  The use of the 
word “shall” in a statute makes the 
provision mandatory.  See LM v. Laramie County Dep’t of 
Family Servs. (In re MN), 2007 WY 189, ¶ 5, 171 P.3d 1077, 1080 (Wyo. 2007); 
Wilson v. Tyrell, 2011 WY 7, ¶ 52, 
246 P.3d 265, 279-80 (Wyo. 2011).  

 
[¶31]   Wyo. Stat. Ann. § 39-15-107(a)(iv) 
states that the DOR should use the best information available to determine an 
assessment of taxes when the taxpayer has not supplied sufficient 
information.  We see no reason why, 
when it is clear as it was here that a taxpayer is entitled to a refund, the 
best information available to the DOR/DOA should not be used to calculate the 
refund/credit.  The DOA had 
determined that the best information available to calculate the sales tax 
deficiency for the previous audit was the 911 and CALC ratio.  After we ruled in Qwest I that the CALC charge was not 
taxable, Qwest was entitled, as a matter of law, to a refund.  Because Qwest was insisting the actual 
sales tax information was not available, the DOA should have used the same 
procedure and type of information to calculate the refund as it had previously 
used to impose the tax, i.e., the 911 and CALC ratio.   By refusing to use the data 
available to it, the DOA/DOR expended significant time and taxpayer money in 
litigation when it was clear, as a matter of law, the taxpayer was entitled to a 
refund.    

 
[¶32]   We are left with the question of 
the consequences for Qwest’s failure to provide the information to the DOA.  In one respect Qwest will endure the 
consequences of failing to provide that information because the amount of refund 
it will be entitled to using the estimate procedure is less (though not a great 
deal) than the amount it would have been entitled to had the actual sales tax 
data been used.  The parties do not 
direct us to any other statutory penalties which may be imposed against a 
taxpayer that fails to provide data in its possession to the auditors.  It may be worth the Wyoming 
Legislature’s time to study the issue to determine whether it believes the 
DOR/DOA has sufficient statutory authority to compel taxpayers to preserve 
information and provide it to the taxing authorities and whether some sort of 
statutory sanction should be imposed for the failure to do so.  Such authority could, possibly, prevent 
a recurrence of this type of litigation which has resulted in a waste of time 
and taxpayer money.   

 
CONCLUSION
[¶33]   We affirm the SBOE’s decision that 
Qwest is entitled to a refund.  The 
SBOE erred, however, by ordering the DOR to use the actual sales tax data which 
was not provided to the DOA during the audit process to determine the refund 
amount. The DOR/DOA should have used the best information available to it during 
the audit, i.e., the 911 and CALC ratio data, to estimate the amount to be 
refunded to Qwest.  We, therefore, 
remand for a recalculation of the refund amount in accordance with the estimate 
methodology and the information available to the DOA during the audit.  We emphasize that these actions should 
be taken with haste so the proper amounts may be refunded to Wyoming customers 
who paid the tax in the first place and continue to bear the burden of the 
parties’ failure to act in the customers’ best interests.  
 
[¶34]   Affirmed in part, reversed in part, 
and remanded for further proceedings consistent with this 
decision.

 
FOOTNOTES
 
1This charge is also referred to as the End User Common Line Charge 
(EUCL).  The EUCL terminology was 
used in Qwest Corp. v. State ex rel. Wyo. Dep’t of 
Revenue, 2006 WY 35, 130 P.3d 507 (Wyo. 2006) (Qwest I).  However, because the parties, the SBOE 
and the district court referred to the charge as CALC in this case, that is the 
terminology we will use. 
 
2The DOR’s decision after the audit actually resulted in a net credit to 
Qwest on other matters.  

 
3It was discovered during the contested case hearing that Qwest’s expert 
had used the wrong tax rates for Campbell and Uinta counties.  When the correct tax rates were used, 
there was a net decrease in the refund calculation of approximately $3,000 for 
the February 2003 through 2004 period.  

 
4The DOR’s attorney explained the DOR was not requesting that the SBOE 
consider the actual sales tax information; instead, it sought to supplement the 
record to provide proof that the data existed even though Qwest employees had 
repeatedly informed the DOR/DOA otherwise.  
 
 
5The SBOE distinguished between taxpayer and the DOR/DOA obligations with 
regard to refunds and credits, indicating that a refund request requires 
supporting documentation while a credit issued during an audit would be applied 
automatically against the taxpayer’s future liability.  We do not need to address whether there 
is a legal distinction between refund requests and credits as both circumstances 
existed here.  Qwest requested a 
refund and there was an on-going audit in which a credit could be allowed.  We do note as a practical matter that, 
under either scenario, the taxpayer is obligated to retain appropriate records 
and provide the information to the DOR and/or DOA in order for a determination 
to be made.  Section 39-15-107.             

6There are procedures by which true “newly discovered” evidence may be 
addressed or considered as part of an administrative proceeding.  See, e.g., W.R.C.P. 60(b)(2) and  W.R.A.P. 12.08.  Each of these rules require some type of 
showing of good cause for failure to present the evidence earlier, although Rule 
12.08 is more flexible in allowing supplementation of agency records than Rule 
60’s provisions for allowing additional evidence after a trial.  See State ex rel. Wyo. Workers’ Safety & 
Comp. Div. v. Carson, 2011 WY 61, 252 P.3d 929 (Wyo. 2011).  These rules were not expressly 
considered by the SBOE; consequently, we will not determine whether they apply 
under the circumstances presented here.  
Furthermore, we seriously doubt whether Qwest could have established good 
cause for its failure to provide the information to the DOR/DOA.  The information was available within the 
Qwest organization although the Qwest employees working on the audit were 
unaware of its existence and availability.  
A communication problem within the organization does not seem to be a 
sufficient reason for failing to provide the information to the agencies.  
 
The district court also cited to a SBOE rule which allows it to consider 
“additional, newly discovered evidence on material issues” when submitted to the 
SBOE after a hearing but before a decision has been issued.  State Bd. of Equalization Rules, ch. 2, 
§ 33 (2006).  Although this rule 
does not include an express “good cause” requirement, we conclude that one must 
be read into the rule or it would allow consideration of all supposedly “newly 
discovered” evidence and completely undermine the DOR, DOA and SBOE processes, 
in violation of the statutory roles of each agency.