Case Title: BUEHNER BLOCK COMPANY, INC. V WYOMING DEPARTMENT OF REVENUE, EXCISE TAX DIVISION

Citation: 

Docket Number: 05-175

State: wyoming

Court: Wyoming Supreme Court

Date: 2006-07-27T00:00:00Z

Document:
BUEHNER BLOCK COMPANY, INC. V WYOMING DEPARTMENT OF REVENUE, EXCISE TAX DIVISION2006 WY 90139 P.3d 1150Case Number: 05-175Decided: 07/27/2006
APRIL 
TERM, A.D. 2006

 
 
BUEHNER 
BLOCK COMPANY, INC.,

 
 
Appellant

(Petitioner),

 
 
v.

 
 
WYOMING 
DEPARTMENT OF REVENUE, EXCISE TAX DIVISION,

 
 
Appellee

(Respondent).

 
 
W.R.A.P. 
12.09(b) Certification from the DistrictCourtofLaramieCounty

 
 

Representing 
Appellant:

John A. 
Coppede and Scott Homar of Hickey & Evans LLP, Cheyenne, Wyoming.

 
 

Representing 
Appellee:

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.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL*, KITE, and BURKE, 
JJ.

 
 
*Chief 
Justice at time of oral argument.

 
 

VOIGT, Chief Justice.

 
 
[¶1]      Buehner Block 
Company, Inc. (Buehner Block) manufactures concrete blocks in Utah and sells its 
products both inside and outside that state.  Some of Buehner Block's customers are in 
Wyoming, and the company has held a Wyoming sales and use tax 
vendor's license.  However, Buehner 
Block did not collect and remit Wyoming sales taxes for the sales at issue in 
this case.  Following certification 
from the district court pursuant to W.R.A.P. 12.09(b), we affirm the decision of 
the Wyoming State Board of Equalization that Buehner Block was obligated to 
collect and remit Wyoming sales taxes for these 
transactions.

 
 
ISSUES

 
 
[¶2]     1.   Did the Board err in deciding that 
these sales were not exempt from Wyoming's sales tax authority under Wyo. Stat. 
Ann. § 39-15-105(a)(i)(A)?

 
 
           
2.   Did the Board err 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?

 
 
           
3.   Did the Board err in 
any event in failing to give Buehner Block a claimed 
credit?

 
 
FACTS

 
 
[¶3]      Buehner Block is 
a Utah corporation operating out of Salt Lake City.  It manufactures and sells concrete 
blocks throughout the intermountain West.  
In 1983, the company applied for and received a Wyoming sales and use tax 
vendor's license.  Between 1997 and 
2004, Buehner Block reported Wyoming sales 
totaling $173,733.87 and remitted Wyoming sales taxes totaling 
$6,288.51.

 
 
[¶4]      In 2002, the 
Wyoming Department of Audit contacted Buehner Block to engage an audit, in part 
because the audit of one of Buehner Block's customers revealed several invoices 
where it appeared Buehner Block had failed to collect and remit Wyoming sales tax.  The audit covered the period from July 1, 
1999 through December 31, 2002.  A 
review of about 80,000 invoices revealed 318 instances where Buehner Block 
delivered product to Wyoming destinations 
without collecting Wyoming sales tax.1  During the audit, Buehner Block did not 
deny that it arranged for the delivery of its product into Wyoming, that it charged the customer a delivery fee, or 
that it was making Wyoming sales that required it to collect 
sales taxes.

 
 
[¶5]      Later, however, 
Buehner Block 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.  The Board did not 
accept these contentions, concluding instead that Buehner Block's customers 
received title or possession in Wyoming, and 
that Buehner Block actually treated the transactions as if they were Wyoming 
sales.

 
 
THE 
STATUTORY SCHEME

 
 
[¶6]      Wyo. Stat. Ann. § 
39-15-103(a)(i)(A) (LexisNexis 2005) imposes an excise tax upon "[t]he sales 
price of every retail sale of tangible personal property within the state."2  "Sale" is defined in relevant part as "any 
transfer of title or possession in this state for a consideration . . . ."  Wyo. Stat. Ann. § 39-15-101(a)(vii) 
(LexisNexis 2005 & Supp. 2006).  
In turn, the rules of the Wyoming Department of Revenue provide that 
"[t]he point at which title or possession of tangible personal property passes 
to the purchaser shall determine the location of the sale."  Department of Revenue Rules and Regulations, 
ch. 2, § 14(p)(i) (2000).  Sales 
by a vendor are presumed to have occurred within Wyoming unless the vendor retains sale 
documents showing otherwise:

 
 
Contract 
of sale, sales invoices, bills of lading or other documentary evidence of the 
passage of title or delivery of tangible personal property to the purchaser 
outside this state shall be retained by the vendor to establish the nature of 
the sale.  If no such evidence is 
present, it shall be presumed that the sale occurred within the state and the 
vendor shall be liable for the sales tax thereon.

 
 

Id. at ch. 2, § 14(p)(iii) 
(2000).

 
 
[¶7]      The tax is paid 
by the purchaser and is collected by the vendor at the time of the sale.  Wyo. 
Stat. Ann. § 39-15-103(b)(i), (c)(i) (LexisNexis 2005); Rock Springs Ford Nissan v. State Bd. of Equalization, 
890 P.2d 1100, 1101 (Wyo. 1995).  A vendor is "any person engaged in the 
business of selling at retail or wholesale tangible personal property, 
admissions or services which are subject to taxation under this article.  . . ."  Wyo. Stat. Ann. § 39-15-101(a)(xv) 
(LexisNexis 2005 & Supp. 2006).  
Every vendor as defined is required to obtain from the Department of 
Revenue a sales tax license to conduct business in the state, and to remit 
collected taxes on a monthly basis.  
Wyo. 
Stat. Ann. §§ 39-15-106(a) (LexisNexis 2005), 39-15-107(a)(i) (LexisNexis 2005 
& Supp. 2006).

 
 
[¶8]      At issue in the 
present case is the exemption found in Wyo. Stat. Ann. § 39-15-105(a)(i)(A) 
(LexisNexis 2001 & Supp. 2002):

 
 
(a)    The following sales or leases 
are exempt from the excise tax imposed by this article:

 
 
(i)     For the purpose of 
exempting sales of services and tangible personal property which are protected 
by the United States 
constitution and the Wyoming constitution, the following are 
exempt:

 
 
(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

 
 
[¶9]      Appellate review 
under W.R.A.P. 12.09 is "limited to a determination of the matters specified in" 
Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2005 & Supp. 2006), which provides 
as follows:

 
 
(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.

 
 
[¶10]   We give deference to the agency's 
findings of fact, and do not disturb them unless they are contrary to the great 
weight of the evidence.  EOG Res., Inc. v. Dep't of Revenue, 2004 
WY 35, ¶ 12, 86 P.3d 1280, 1284 (Wyo. 2004).  Likewise, we do not substitute our 
judgment for that of the agency if its decision is supported by substantial 
evidence.  State ex rel. Wyo. Dep't of Revenue v. Union 
Pac. R.R. Co., 2003 WY 54, ¶ 29, 67 P.3d 1176, 1187 (Wyo. 2003).  We  described the substantial evidence test 
in this context in Newman v. State ex 
rel. Wyo. Workers' Safety & Comp. Div., 2002 WY 91, ¶¶ 12, 22, 49 P.3d 163, 168, 171 (Wyo. 2002):

 
 
In this 
jurisdiction, we have described the substantial evidence test in cases where 
factual findings are challenged as follows:

 
 
In 
reviewing findings of fact, we examine the entire record to determine whether 
there is substantial evidence to support an agency's findings. . . .  Substantial evidence is relevant 
evidence which a reasonable mind might accept in support of the agency's 
conclusions.  It is more than a 
scintilla of evidence.

 
 

State ex 
rel. Wyoming Workers' Safety and Compensation Division v. Jensen, 
2001 WY 
51, ¶ 10, 24 P.3d 1133, ¶ 10 (Wyo. 2001) (citations 
omitted).

 
 
[W]e 
hold the substantial evidence test is the appropriate standard of review in 
appeals from WAPA contested case proceedings when factual findings are involved 
and both parties submit evidence.

 
 
[¶11]   As to questions of law, 
"[o]ur function 
is to correct any error that an agency makes in its interpretation or 
application of the law."  EOG Res., Inc., 2004 WY 35, ¶ 12, 86 P.3d  at 1284.  Stated differently, 
if an agency's conclusions of law are in accordance with the law, we will affirm 
them.  Wyodak Res. Dev. Corp. v. State Bd. of 
Equalization, 9 P.3d 987, 989 (Wyo. 2000).  An agency's interpretation of statutory 
language which the agency normally implements is entitled to deference, unless 
clearly erroneous.  Laramie CountyBd. of 
Equalization v. Wyo.State Bd. of Equalization, 915 P.2d 1184, 1190 
(Wyo. 1996);  Mowry v. State ex rel. Wyo. Ret. Bd., 866 P.2d 729, 731 (Wyo. 
1993).

 
 
DISCUSSION

 
 
Did the 
Board err in deciding that these sales were not exempt from Wyoming's sales tax 
authority under Wyo. Stat. Ann. § 
39-15-105(a)(i)(A)?

 
 
[¶12]   This case involves a fundamental 
taxing issuethe same issue that was a primary impetus in 1789 when our 
forebears abandoned the Articles of Confederation in favor of our present 
constitution.  The conflict results 
from our federal system.  The 
imposition of individual state taxes upon interstate commerce may impede that 
commerce.  On the other hand, if 
individual states are not permitted to impose any tax upon interstate commerce, 
interstate commerce does not share in the burden of sustaining the 
infrastructure necessary for its very existence.3  Over history, a balance has been 
struck.  Article I, § 8, cl. 3, of 
the Constitutionthe Commerce Clauseauthorizes Congress "[t]o regulate Commerce 
with foreign Nations, and among the several States, and with the Indian 
Tribes[.]"  As will be seen 
hereinafter, however, the courts have not interpreted the Commerce Clause as a 
complete ban upon state taxation of interstate commerce.  Instead, tests have been devised to 
determine what taxes are permitted, thereby allowing state taxation that does 
not discriminate against interstate commerce.

 
 
[¶13]   The question posed by Buehner Block 
is whether imposition of Wyoming sales tax upon the sales at issue 
violates the Commerce Clause.  Two 
United States Supreme Court cases are central to that inquiry.  The first of those cases is National Bellas Hess, Inc. v. Dep't of 
Revenue of the State of Illinois, 386 U.S. 753, 87 S. Ct. 1389, 18 L. Ed. 2d 505 (1967).  
National Bellas Hess was a Missouri mail 
order company with no business outlets or sales personnel in Illinois.  Bi-annually, it mailed catalogues to 
customers in Illinois, and flyers occasionally were mailed 
into that state.  Customer orders 
were received by mail in Missouri, and goods 
were sent to customers in Illinois only by mail or by common 
carrier.   Id., 
386 U.S.  at 753-55, 87 S. Ct.  at 
1389-1390.  This conduct was 
sufficient under the Illinois statutes to 
constitute National Bellas Hess to be an in-state retailer, and to require it to 
collect and remit Illinois use taxes.4  Id. 
at 755, 87 S. Ct.  at 1390.

 
 
[¶14]   In analyzing the claim of National 
Bellas Hess that the liabilities imposed by Illinois violated both its due process rights 
under the Fourteenth Amendment, and the Commerce Clause, the Court said the 
following:

 
 
These 
two claims are closely related.  For 
the test whether a particular state exaction is such as to invade the exclusive 
authority of Congress to regulate trade between the States, and the test for a 
State's compliance with the requirements of due process in this area are 
similar.  See Central R. Co. v. Pennsylvania, 370 U.S. 607, 621-22 
[(1962)] (concurring opinion of Mr. Justice Black).  As to the former, the Court has held 
that "State taxation falling on interstate commerce . . . can only be justified 
as designed to make such commerce bear a fair share of the cost of the local 
government whose protection it enjoys."  
Freeman v. Hewit, 329 U.S. 249, 253 [(1946)].  And in determining whether a state tax 
falls within the confines of the Due Process Clause, the Court has said that the 
"simple but controlling question is whether the state has given anything for 
which it can ask return."  
Wisconsin v. J.C. Penney Co., 311 U.S. 435, 444 [(1940)].  The same principles have been held 
applicable in determining the power of a State to impose the burdens of 
collecting use taxes upon interstate sales.  Here, too, the Constitution requires 
"some definite link, some minimum connection, between a state and the person, 
property or transaction it seeks to tax."  
Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-345 [(1954)].  

 
 

Id., 
386 U.S.  at 756, 87 S. Ct.  at 1391 (some 
citations omitted).

 
 
[¶15]   After characterizing this practice 
as a state "deputiz[ing] an out-of-state retailer as its collection agent," the 
Court declared that the Commerce Clause did not allow a state to "impose the 
duty of use tax collection and payment upon a seller whose only connection with 
customers in the State is by common carrier or the United States 
mail."  Id. at 757-58, 87 S. Ct.  at 1391-92.  Significantly, the Court concluded that, 
"[i]ndeed, it is difficult to conceive of commercial transactions more 
exclusively interstate in character than the mail order transactions here 
involved."  Id. at 759, 87 S. Ct.  at 
1392.

 
 
[¶16]   The second and more recent United 
States Supreme Court case applicable to these issues is Quill Corp. v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992).  Like National Bellas Hess, Quill involved a 
state's attempt to require an out-of-state mail-order business to collect use 
taxes.  Quill, 504 U.S.  at 301, 112 S. Ct.  at 1907.  The Supreme Court of 
North Dakota had declined to follow National Bellas Hess on the ground that 
its holding had been made obsolete by intervening social, commercial, economic 
and legal developments, in particular the remarkable growth of the mail-order 
business and computer technology.  
Id., 504 U.S.  at 301, 
303, 112 S. Ct.  at 1907-08.

 
 
[¶17]   The Quill court considered both due process 
and the Commerce Clause in reversing the North Dakota Supreme Court.  As to due process, Quill focused upon the requirement that, 
before a state may tax an entity or transaction, there must be a definite link 
or minimum connection between the state and the entity or transaction.  Id., 504 U.S.  at 306, 112 S. Ct.  at 1909.  The court reiterated 
its abandonment of formalistic tests based upon presence within a state, in 
favor of "a more flexible inquiry into whether a defendant's contacts with the 
forum made it reasonable, in the context of our federal system of Government," 
to assert jurisdiction over the entity or transaction.  Id., 504 U.S.  at 307, 112 S. Ct.  at 1910.  Its reasoning and 
conclusion, found at Id., 504 U.S.  at 307-08, 
112 S. Ct.  at 1910-11, were as follows:

 
 
Applying 
these principles, we have held that if a foreign corporation purposefully avails 
itself of the benefits of an economic market in the forumState, it may subject itself to the 
State's in personam jurisdiction even 
if it has no physical presence in the State.  As we explained in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985):

 
 
"Jurisdiction 
in these circumstances may not be avoided merely because the defendant did not 
physically enter the forumState.  Although territorial presence frequently 
will enhance a potential defendant's affiliation with a State and reinforce the 
reasonable foreseeability of suit there, it is an inescapable fact of modern 
commercial life that a substantial amount of business is transacted solely by 
mail and wire communications across state lines, thus obviating the need for 
physical presence within a State in which business is conducted.  So long as a commercial actor's efforts 
are purposefully directed' toward residents of another State, we have 
consistently rejected the notion that an absence of physical contacts can defeat 
personal jurisdiction there."  
Id., at 476 (emphasis in 
original).

 
 
            
Comparable reasoning justifies the imposition of the collection duty on a 
mail-order house that is engaged in continuous and widespread solicitation of 
business within a State.  Such a 
corporation clearly has "fair warning that [its] activity may subject [it] to 
the jurisdiction of a foreign sovereign."  
Shaffer v. Heitner, 433 
U.S., [186, 218 (1977)] (STEVENS, J., 
concurring in judgment).  In "modern 
commercial life" it matters little that such solicitation is accomplished by a 
deluge of catalogs rather than a phalanx of drummers:  The requirements of due process are met 
irrespective of a corporation's lack of physical presence in the taxing 
State.  Thus, to the extent that our 
decisions have indicated that the Due Process Clause requires physical presence 
in a State for the imposition of duty to collect a use tax, we overrule those 
holdings as superseded by developments in the law of due 
process.

 
 
            
In this case, there is no question that Quill has purposefully directed 
its activities at North Dakota residents, that 
the magnitude of those contacts is more than sufficient for due process 
purposes, and that the use tax is related to the benefits Quill receives from 
access to the State.  We therefore 
agree with the North Dakota Supreme Court's conclusion that the Due Process 
Clause does not bar enforcement of that State's use tax against 
Quill.

 
 
[¶18]   North Dakota did not fare so well, however, 
under the Supreme Court's application of the Commerce Clause.  The Quill court began its analysis of the 
effect of the Commerce Clause with a reminder that "the Commerce Clause is more 
than an affirmative grant of power; it has a negative sweep as well."  Id., 504 U.S.  at 309, 112 S. Ct.  at 1911 (citing Gibbons v. Ogden, 22 U.S. 1, 9 Wheat. 
1, 231-32, 239, 6 L. Ed. 23 (1824)).  
"By its own force," the Commerce Clause "prohibits certain state actions 
that interfere with interstate commerce."  
Id. (citing South Carolina State Highway Dep't. v. 
Barnwell Bros., Inc., 303 U.S. 177, 185, 58 S. Ct. 510, 514, 82 L.Ed 734 
(1938), reh'g denied, 303 
U.S. 667).  Consistent with these statements, Quill revitalized both National Bellas Hess and the four-part 
test of Complete Auto Transit, Inc. v. 
Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L. Ed. 2d 326 
(1977):

 
 
            
While contemporary Commerce Clause jurisprudence might not dictate the 
same result were the issue to arise for the first time today, Bellas Hess is not inconsistent with Complete Auto and our recent cases.  Under Complete Auto's four-part test, we will 
sustain a tax against a Commerce Clause challenge so long as the "tax [1] is 
applied to an activity with a substantial nexus with the taxing State, [2] is 
fairly apportioned, [3] does not discriminate against interstate commerce, and 
[4] is fairly related to the services provided by the State."  430 U.S., at 
279.  Bellas Hess concerns the first of these 
tests and stands for the proposition that a vendor whose only contacts with the 
taxing State are by mail or common carrier lacks the "substantial nexus" 
required by the Commerce Clause.

 
 

Id., 
504 U.S.  at 311, 112 S. Ct.  at 1912.  The court then went on to distinguish 
due process analysis from Commerce Clause analysis:

 
 
            
The State of North Dakota relies less on Complete Auto and more on the evolution 
of our due process jurisprudence. The State contends that the nexus requirements 
imposed by the Due Process and Commerce Clauses are equivalent and that if, as 
we concluded above, a mail-order house that lacks a physical presence in the 
taxing State nonetheless satisfies the due process "minimum contacts" test, then 
that corporation also meets the Commerce Clause "substantial nexus" test.  We disagree.  Despite the similarity in phrasing, the 
nexus requirements of the Due Process and Commerce Clauses are not 
identical.  The two standards are 
animated by different constitutional concerns and 
policies.

 
 
            
Due process centrally concerns the fundamental fairness of governmental 
activity.  Thus, at the most general 
level, the due process nexus analysis requires that we ask whether an 
individual's connections with a State are substantial enough to legitimate the 
State's exercise of power over him.  
We have, therefore, often identified "notice" or "fair warning" as the 
analytic touchstone of due process nexus analysis.  In contrast, the Commerce Clause and its 
nexus requirement are informed not so much by concerns about fairness for the 
individual defendant as by structural concerns about the effects of state 
regulation on the national economy.  
Under the Articles of Confederation, state taxes and duties hindered and 
suppressed interstate commerce; the Framers intended the Commerce Clause as a 
cure for these structural ills.  See 
generally The Federalist Nos. 7, 11 (A. Hamilton).  It is in this light that we have 
interpreted the negative implication of the Commerce Clause.  Accordingly, we have ruled that that 
Clause prohibits discrimination against interstate commerce, see, e.g., Philadelphia v. New 
Jersey, 437 U.S. 617 (1978), and bars state regulations that 
unduly burden interstate commerce, see, e.g., Kassel v. Consolidated Freightways 
Corp. of Del., 
450 U.S. 662 (1981).

 
 
            
The Complete Auto analysis 
reflects these concerns about the national economy.  The second and third parts of that 
analysis, which require fair apportionment and non-discrimination, prohibit 
taxes that pass an unfair share of the tax burden onto interstate commerce.  The first and fourth prongs, which 
require a substantial nexus and a relationship between the tax and 
state-provided services, limit the reach of state taxing authority so as to 
ensure that state taxation does not unduly burden interstate commerce.  Thus, the "substantial nexus" 
requirement is not, like due process' "minimum contacts" requirement, a proxy 
for notice, but rather a means for limiting state burdens on interstate 
commerce.  Accordingly, contrary to 
the State's suggestion, a corporation may have the "minimum contacts" with a 
taxing State as required by the Due Process Clause, and yet lack the 
"substantial nexus" with that State as required by the Commerce 
Clause.

 
 

Id., 
504 U.S. 312-13, 112 S. Ct.  at 1913-14 
(internal footnotes omitted).  The 
Supreme Court's ultimate conclusion in Quill was that the bright-line rule of 
National Bellas Hessthe 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 carrierremains viable.  Id., 504 U.S.  at 317, 112 S. Ct.  at 1915.

 
 
[¶19]   Buehner Block relies heavily upon 
National Bellas Hess and Quill.  It argues that because it has no 
physical presence in Wyoming, and its only 
connection with the State is delivery of goods to Wyoming customers via common carrier, the bright line rule 
of these cases and the Commerce Clause protect it from Wyoming taxation.  In that regard, 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 Buehner Block's 1983 application for a Wyoming sales tax 
vendor license, and more importantly, because Buehner Block voluntarily held a 
Wyoming sales tax vendor license and collected and remitted Wyoming sales 
taxes.5  The State Board's principal conclusion 
as to the effect of the Commerce Clause is contained in paragraph 60 of its 
final order:

 
 
60.       We read Quill Corporation as extending the 
Commerce Clause prohibitions principally to those instances in which a state 
seeks to impose a duty on a foreign 
vendor to collect sales or use taxes, or make the vendor secure a license as a 
condition of carrying on interstate commerce.  Quill Corporation, at 315.  Where the vendor proactively seeks a 
sales tax license, it cannot claim that it has been obliged to assume an 
unwanted duty.  When Buehner Block 
voluntarily applied for the license, Buehner Block also voluntarily subjected 
itself to the requirements of the Wyoming sales tax statutes.  See Arrington v. LouisianaState Racing Commission, 482 So. 2d 200, 202 
(La. 
1986).  Where the vendor collects 
sales tax pursuant to that same license, adherence to the requirements of the 
state's licensing scheme is merely an adherence to valid conditions and 
regulations that follow from the voluntary acquisition of the license.  See 53 C.J.S. Licenses § 46.  Buehner Block was required as well as 
authorized to collect taxes on behalf of the State of Wyoming.  Wyo. Stat. Ann. § 
39-15-106(a).

 
 
[¶20]   We cannot disagree with the State 
Board's conclusion as to this limited issue.  The question here is not one of due 
process.  Neither is it whether 
these particular sales were taxable events under the Wyoming sales tax 
statutes.  Rather, the question is 
simply whether Buehner Block, shipping goods by common carrier, lacked the 
"substantial nexus" with Wyoming so as to allow this State, in light of 
the Commerce Clause, to impose its sales tax.  We conclude that the bright-line rule of 
National Bellas Hess and Quill does not apply here to prohibit 
imposition of the tax because Buehner Block's connection with Wyoming was substantially 
more than the shipping of goods by a non-resident seller.  For years, Buehner Block voluntarily 
held a Wyoming sales tax vendor's license and 
voluntarily collected and remitted Wyoming sales taxes on many other similar 
transactions.

 
 
[¶21]   The bright-line rule of National Bellas Hess and Quill does not require physical presence 
in a state.  Rather, the bright-line 
rule simply holds that, where there is no physical presence in a state, and the 
only connection between the state and the entity or transaction is by mail or 
common carrier, there is no "substantial nexus" that will support imposition of 
a sales or use tax.  The requirement 
of a substantial nexus, rather than the requirement of actual physical presence, 
necessarily implies that something less than physical presence may suffice.  While mail or common carrier delivery, 
alone, cannot support a state's taxing authority, neither does the existence of 
either of those factors, ipso facto, 
prohibit the imposition of a tax.  
Instead, determining the existence or non-existence of "substantial 
nexus" is a fact-driven inquiry, different in each case.  We are satisfied in the instant case 
that Buehner Block's historical connection with the Wyoming taxing system, 
including its voluntary possession and use of a Wyoming vendor's license, in 
combination with common-carrier delivery of its goods into this state, provided 
that nexus.6

 
 
Did the 
Board err 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?

 
 
[¶22]   We have outlined the applicable 
portion of Wyoming's sales tax statutes hereinabove.  Succinctly stated, Wyoming sales tax is due on every sale, with sale defined 
as "any transfer of title or possession in Wyoming."  Wyo. Stat. Ann. § 
39-15-101(a)(vii).  The 
complementary administrative rule provides that the location of the sale is 
determined by the "point at which title or possession" passes to the 
purchaser.  Department of Revenue Rules and Regulations, 
ch. 2, § 14(p)(i) (2000).  The 
present question is whether the sales at issue took place in Utah or in Wyoming.

 
 
[¶23]   Buehner Block's position is that 
the sales occurred in Utah because (1) all 
goods were shipped from Utah via common carrier; and (2) all goods 
were accepted by the carrier via straight bills of lading under which title 
immediately passed to the buyer.  In 
support of its position, Buehner Block compares itself to the appellant in Hercules Powder Co. v. State Bd. of 
Equalization, 208 P.2d 1096, reh'g 
denied, 210 P.2d 824 (Wyo. 1949).  
Hercules Powder was a Delaware 
corporation, with offices in Salt Lake City, 
Utah, and Denver, Colorado, and 
little or no physical presence in Wyoming.  
Id., 208 P.2d  at 
1097.  As part of its businessthe 
manufacture and sale of "explosives and incidental materials"Hercules Powder 
sometimes took mail orders, from inside or outside Wyoming, for its products to 
be delivered to destination points within Wyoming.  Id., 208 P.2d  at 1097-1100.  This Court concluded that the sales at 
issue in that case were not subject to the Wyoming sales tax statutes because the 
straight bills of lading under which the goods were shipped acted to transfer 
title to the goods to the consignees immediately upon shipment thereunder.  Id., 208 P.2d  at 1098-1105.  See also Creamery Package Mfg. Co. v. State 
Bd. of Equalization, 62 Wyo. 265, 166 P.2d 952, 953, 956-57 (1946); and Toms v. Whitmore, 6 Wyo. 220, 44 P. 56, 
57 (1896).7  

 
 
[¶24]   The principal findings of the State 
Board in regard to this issue are contained in the following paragraphs of its 
final order:

 
 
7.         
On November 4, 2002, T.R. Lindsay of Audit held an opening conference 
with Bruce Hiller of Buehner Block.  
Hiller has been the controller of Buehner Block since 1997.  He oversees financial statements, human 
resources, the general ledger, and credit functions, among other 
responsibilities.  Hiller advised 
Lindsay that Buehner Block had no Wyoming 
assets and no Wyoming employees.  Hiller also advised Lindsay that Buehner 
Block's Wyoming sales were designated by a 
ship-to/delivery location address.

 
 
11.       During the 
audit, Hiller confirmed to Lindsay that the ship-to location shown on an invoice 
reliably indicated the destination of the shipment.

 
 
12.       At the 
hearing of this matter, Hiller explained pertinent aspects of Buehner Block's 
shipping and billing procedures, supported by extensive documentation not made 
available to the Department until the Friday before the hearing.  Generally, Buehner Block's sales manager 
provides the service of arranging for shipment of products to the customer's 
destination.  Buehner Block shipped 
to Wyoming 
customers by common carrier.  The 
carrier picks up the product at Buehner Block's facilities, provides a bill of 
lading, bills Buehner Block for shipping, and delivers the product.  A memorandum of the bill of lading and a 
copy of the invoice go into a customer file.

 
 
13.       When 
Buehner Block shipped by common carrier, it included the carrier's delivery 
charge on its sales invoice.  When 
Buehner Block collected a sales tax, the tax was calculated on the total of 
product and delivery charges.  
Sometimes Buehner Block quoted a single price which included the delivery 
charge.  Buehner Block's computer 
system assigned the appropriate sales tax based on county of 
destination.

 
 
14.       Buehner 
Block's standard invoice includes the following language on its reverse 
side:

 
 
It is 
the responsibility of the purchaser to examine and inspect these materials at 
the point of delivery.  If there are 
any problems Buehner Block Co. must be notified 
immediately.

 
 
* * 
*

 
 
Sellers 
liability is limited to replacement of the merchandise at no more than the value 
of the material proven to be defective.

 
 
* * 
*

 
 
Our 
drivers will make reasonable effort to place materials where customer 
designates, however, in so doing we assume no responsibility for damages inside 
of curb or property lines.

 
 
* * 
*

 
 
Purchaser 
assumes full responsibility for keeping lime, cement, and related products dry, 
after he receives possession of these products, i.e.  delivery on job site 
constitutes possession.

 
 
Hiller's 
testimony was consistent with these terms.

 
 
15.       On 
occasions when product suffered damage en route, the freight company paid 
Buehner Block, not the purchaser, for such damages.

 
 
26.       Dan Noble 
testified to the factors that influenced the Department's position regarding its 
authority to assess the sales tax in dispute.  Noble explained that by statute, a sale 
is a transfer of title or possession for consideration.  The Department viewed Buehner Block's 
sales as destination sales that accordingly occurred in Wyoming.  He noted the standard invoice provisions 
providing for inspection rights, and providing that title passes once the block 
enters the job site.  Noble said his 
view of title to the goods was reinforced by the fact that any claim for damages 
in transit was made by Buehner Block against the carrier, implying that the 
title remained in Buehner Block.  
His view was further reinforced by the fact that Buehner Block indeed 
collected sales tax on some Wyoming transactions.  The reference on the invoice to "our 
drivers" is not definitive, but was part of the 
consideration.

 
 
(Internal 
record references omitted.)

 
 
[¶25]   Based upon these findings, the 
State Board reached the following conclusion of law:

 
 
57.       On the 
facts in the record, the Department properly concluded that the transactions in 
question met the Wyoming statutory standards for imposition of 
sales tax.  The tax is imposed in 
retail sales, and a sale occurs when there is transfer of title or possession in 
Wyoming for 
consideration.  Since Buehner 
Block's business involved destination sales, the transfer of title and 
possession occurred in Wyoming even though Buehner Block customarily 
employed common carriers for delivery.

 
 
[¶26]   It may be helpful, before we 
analyze these findings and conclusions, briefly to review some mercantile 
concepts.  First, 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.  Union Pac. R.R. Co., 2003 WY 54, ¶ 26, 
67 P.3d  at 1186 (Wyo. 2003).  
Second, 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 during 
transit.  For instance, we said in 
Hercules Powder that shipment of 
goods "F.O.B." does not change the general rule of immediate passage of title 
under a straight bill of lading, unless such intent is clearly shown, the term 
"F.O.B." being used in such case merely to designate the party who is to pay the 
freight charges.8  Hercules Powder Co., 208 P.2d  at 
1104-05.  These cases inform us that 
the separate questions of passage of title, payment of freight charges, and risk 
of loss are determined by the intent of the parties, as reflected in the 
documents used.  See also Buenger v. Pruden, 713 P.2d 771, 772 (Wyo. 1986); and S-Creek Ranch v. Monier & Co., 509 P.2d 777, 780-81 (Wyo. 1973).

 
 
[¶27]   As refined, the question before the 
Court is whether title or possession of the goods involved in these sales 
changed hands in Wyoming, making them 
destination sales taxable in Wyoming, or 
whether title or possession of the goods changed hands in Utah where the goods were 
accepted by the common carrier.  In 
reviewing the record to determine whether there was substantial evidence to 
support the conclusions of the State Board, we note again that Buehner Block 
bears the burden of proving that the State Board was wrong.  Williams Prod. RMT Co. v. State Dep't of 
Revenue, 2005 WY 28, ¶ 7, 107 P.3d 179, 183 (Wyo. 2005), reh'g denied, No. 04-41 (Mar. 29, 
2005).

 
 
[¶28]   The State Board concluded that the 
parties intended these to be destination sales.  We find there is substantial evidence in 
the record to sustain that conclusion.  
That evidence includes these facts:  
(1) the invoices specified a delivery address in Wyoming; (2) the 
invoices specified that the goods were to be inspected by the purchaser at the 
destination point; (3) the invoices specified that "delivery on job site 
constitutes possession"; (4) Buehner Block collected and remitted Wyoming sales 
taxes on many similar transactions; (5) Buehner Block did not collect and remit 
Utah sales taxes on these transactions; (6) when Buehner Block did not collect 
and remit Wyoming sales taxes on Wyoming destination sales, it was because 
Buehner Block mistakenly collected and remitted taxes for another state, such as 
Idaho, or because Buehner Block mistakenly believed at the time that the 
transaction was "government exempt"; (7) Buehner Block collected and remitted 
sales taxes for similar transactions in Idaho and Nevada; and (8) Buehner Block 
voluntarily held and used a Wyoming sales tax vendor's 
license.

 
 
[¶29]   There is, of course, evidence in 
the record to the contrary.  For 
instance, numerous straight bills of lading were placed into evidence.  And Buehner Block's controller testified 
that he believed the customer "was responsible for" the product once it was 
loaded by a common carrier.  Where 
the evidence is in dispute, we do not, however, substitute our judgment for that 
of the State Board, so long as there is substantial evidence to support the 
State Board's conclusions.  Union Pac. R.R. Co., 2003 WY 54, ¶¶ 
28-29, 67 P.3d  at 1186-87.

 
 
Did the 
Board err in any event in failing to give Buehner Block a claimed 
credit?

 
 
[¶30]   During the hearing before the State 
Board, Buehner Block sought a credit against any assessment that might be 
imposed, based upon certain transactions with Tensar Corporation.9  Buehner Block's controller described the 
underlying facts as follows:  
Buehner Block sold over $300,000 worth of concrete block to Tensar 
Corporation for a Wyoming Department of Transportation job at Alpine 
Junction.  The two companies got 
into a dispute over whether or not the block met specifications and, eventually, 
Buehner Block ended up giving Tensar Corporation a $122,621.12 credit against 
amounts due on the project.  This 
credit was not reflected in the audit because it was not contained in the 
regular invoices reviewed by the auditor.  
Instead, it had been computed on a spreadsheet, with the information 
later transferred to a separate credit invoice.  That credit invoice was prepared in 2002 
or 2003, but was manually dated June 1, 2001.  The State's auditor testified that, had 
the credit been given, the tax assessment would have been approximately $5,000 
less.

 
 
[¶31]   The State Board's findings 
concerning the Tensar Corporation credit were as follows:

 
 
27.       The 
Department's assessment rested principally on sales to four contractors:  McQueen Masonry, Tensar, Pete Mickelsen 
& Sons, and M-L Masonry.  
Following the issuance of the preliminary audit findings, Buehner Block 
began to produce documents related to these four contractors.  However, Buehner Block did not call any 
witnesses from any of the four contractors to testify at the hearing of this 
matter.

 
 
28.       All of the 
documents produced after the audit relate to claims that Buehner Block did not 
have to pay taxes on transactions involving the four contractors.  Generally speaking, the principal 
auditor testified that if he had seen these documents during the audit, he would 
have conducted further investigation before drawing any conclusions.  

 
 
39.       Exhibit 115 
is an invoice reflecting a credit of $122,621.12 to Tensar because the block 
provided by Petitioner failed to meet specifications.  Tensar had previously made partial 
payments on the job when Buehner Block originally issued invoices in 
1999.

 
 
40.       Although 
the invoice is dated June 1, 2001, Bruce Hiller testified that the date was 
entered manually, and "it was done after the audit period because we hadn't 
settled everything up."  On its 
face, the invoice has a telefax date of March 12, 2003.  Hiller conceded the credit was granted 
no earlier than late 2002, and may have been in 2003.  The invoice was not given to the 
auditor, from which we infer that it was not available.

 
 
41.       Dan Noble 
explained that in the instance of a rescinded sale, the vendor can either 
request a refund or take a credit on a subsequent sales tax return.  Either way, the change in the 
transaction is not reflected until it actually occurs.

 
 
42.       We find 
that Buehner Block did not carry its burden of persuasion to demonstrate that 
the Tensar credit was issued during the audit period.  Our finding in no way precludes Buehner 
Block from pursuing a refund request as authorized by statute; we only find that 
the credit did not affect the audit assessment.

 
 
(Internal 
record references omitted.)

 
 
[¶32]   Those findings of fact led the 
State Board to the following conclusion of law:

 
 
65.       We also 
conclude that Buehner Block failed to provide sufficient evidence to support its 
claim that the Tensar credit of $122,621.12 applied to the audit period in 
question.

 
 
[¶33]   The substance of the State Board's 
conclusion is simply that Buehner Block did not prove that the Tensar 
Corporation credit actually was given during the period audited, that being July 
1, 1999 through June 30, 2002.  The 
record evidence is sufficiently cloudy in that regard that we cannot 
disagree.  There is no question that 
neither the initial spreadsheet, nor the credit invoice, were made available to 
the State's auditors, and the spreadsheet was not entered into evidence.  One reasonable inference from those 
facts is that the credit invoice did not exist at the time of the audit, and we 
cannot fault the State Board for making that inference.  Furthermore, inasmuch as the State 
Board's order did not determine the merits of the credit itself, neither does 
this Court, and Buehner Block is free to pursue a refund or 
credit.

 
 
CONCLUSIONS

 
 
[¶34]   The sales at issue in this case 
were Wyoming destination sales, subject to the 
Wyoming sales 
tax scheme.  Application of that tax 
scheme to these sales did not violate the Commerce Clause of the United States 
Constitution because Buehner Block had a substantial nexus with this State, and 
there was no showing that the tax was unfairly apportioned, was not related to 
the services provided by Wyoming, or discriminated against interstate 
commerce.

 
 
[¶35]   We affirm the decision of the 
Wyoming State Board of Equalization.

 
 
FOOTNOTES

 
 

1The 
phrase "Wyoming customers" appears repeatedly 
throughout the record and the briefs.  
The audit, however, focused upon sales where the destination of the goods was within 
Wyoming, not whether the customer was a resident of Wyoming.  Buehner Block's customer may or may not 
have been in Wyoming, and the order may or may 
not have been placed from within Wyoming.  
It was Buehner Block's position that, because all of the orders were 
received in Utah, and because, according to 
Buehner Block, title to the goods passed in Utah, all of its customers were Utah 
customers.

 
 

2An 
"excise" tax is a "tax imposed on the manufacture, sale, or use of goods (such 
as a cigarette tax), or on an occupation or activity (such as a license tax or 
an attorney occupation fee)."  Black's Law Dictionary 585 (7th ed. 
1999).  See also Ludwig v. Harston, 65 
Wyo. 134, 197 P.2d 252, 256 (1948).

 
 

3Complete 
Auto Transit, Inc. v. Brady, 430 U.S. 274, 288, 97 S. Ct. 1076, 1083, 51 L. Ed. 2d 326 (1977), provides a quick but 
detailed analysis of the "perennial problem" of the validity of state taxes that 
affect interstate commerce.  See also Exxon Corp. v. Wyo. State Bd. of 
Equalization, 783 P.2d 685, 689-90 (Wyo. 1989); Frontier Taxidermist v. Wyo. Dep't of 
Revenue, 497 P.2d 1374, 1377 (Wyo. 1972); Morrison-Knudson Co. v. State Bd. of 
Equalization, 58 Wyo. 500, 135 P.2d 927, 933-34 (1943); and State Bd. of Equalization v. Blind Bull Coal 
Co., 55 Wyo. 438, 101 P.2d 70, 71-73 (1940).

 
 

4Use taxes 
often complement sales taxes.  A 
"use tax" is a "tax imposed on the use of certain goods that are bought outside 
the taxing authority's jurisdiction.  
Use taxes are designed to discourage the purchase of products that are 
not subject to the sales tax."  Black's Law Dictionary 1472 (7th ed. 
1999).  Wyoming's use tax 
statutes are found at Wyo. Stat. Ann. § 39-16-101 et seq. (LexisNexis 2005 & Supp. 
2006).

 
 

5"The 
burden of proof is upon the party asserting an improper valuation."  Amoco Prod. Co. v. Wyo.State 
Bd. of Equalization, 899 P.2d 855, 858 (Wyo. 1995); Teton Valley Ranch v. State Bd. of Equalization, 735 P.2d 107, 113 (Wyo. 1987); Rules, WyomingState Board of Equalization, Chapter 
2, § 20.

 
 

6The 
Department and the State Board cite Arrington v. Louisiana State Racing Comm'n, 
482 So. 2d 200, 202 (La.App. 1986) for the proposition that the holder of a 
state-issued license voluntarily subjects himself or herself to that state's 
authority to the extent of the terms and conditions of the license.  Buehner Block cites Rylander v. Bandag Licensing Corp., 18 S.W.3d 296, 298-300 (Tex.App. 2000), for the contrary proposition that the mere 
passive possession of a license to do business in a particular state does not 
create the substantial nexus sufficient for that state to impose a franchise tax 
on the licensee.  We find that 
neither case is sufficiently similar to the case sub judice to provide much 
guidance.  Neither is a sales or use 
tax case, where National Bellas Hess 
and Quill have created the 
specialized jurisprudence set forth above.

 

7A bill of 
lading is "[a] document of title acknowledging the receipt of goods by a carrier 
or by the shipper's agent . . . ."  
Black's Law Dictionary 159 (7th ed. 1999).  A "straight" bill of lading is "[a] 
nonnegotiable bill of lading that specifies a consignee to whom the carrier is 
contractually obligated to deliver the goods."  Id. at 160.  The up-to-date and somewhat more 
complicated definitions of these and related terms as contained in the Uniform 
Commercial Code can be found at Wyo. Stat. Ann. §§ 34.1-1-201(a) and 
34.1-7-102(a) (LexisNexis 2005).

 
 

8"F.O.B." 
or "free on board" is "[a] mercantile term denoting that the seller is 
responsible for delivering goods on board a ship or other conveyance for 
carriage to the consignee at a specified location .  The seller must deliver 
the goods to the vessel named and has the risk of loss until the goods reach 
that location."  Black's Law Dictionary 676 (7th ed. 
1999).  "F.O.B." is defined in 
Wyoming's 
Uniform Commercial Code at Wyo. Stat. Ann. § 34.1-2-319(a) (LexisNexis 
2005).

 
 

9Tensar 
Corporation is identified as "Tesnar Earth Tech" in the Department's brief.  All exhibits, the hearing transcript, 
and the State Board's final order refer to "Tensar Corporation."  We will use that 
name.