Title: STATE v. BANNON ENERGY CORP.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

STATE v. BANNON ENERGY CORP.2000 WY 54999 P.2d 1306Case Number: 98-314, 98-315, 98-316, 98-317Decided: 03/23/2000Supreme Court of Wyoming
 
THE STATE OF WYOMING, 
DEPARTMENT OF REVENUE, Appellant (Petitioner), v.BANNON ENERGY 
CORPORATION; and WYOMING STATE BOARD OF EQUALIZATION, Appellees (Respondents). 
THE STATE OF WYOMING, DEPARTMENT OF REVENUE, Appellant (Petitioner), 
v.BANNON ENERGY CORPORATION; and WYOMING STATE BOARD OF EQUALIZATION, 
Appellees (Respondents). THE STATE OF WYOMING, DEPARTMENT OF REVENUE, 
Appellant (Petitioner), v.BANNON ENERGY CORPORATION; and WYOMING STATE 
BOARD OF EQUALIZATION, Appellees (Respondents). THE STATE OF WYOMING, 
DEPARTMENT OF REVENUE, Appellant (Petitioner), v.BANNON ENERGY 
CORPORATION, Appellee (Respondent).

Supreme Court of Wyoming, 
October Term, A.D. 1999. March 23, 2000.*

* This case was originally 
assigned to Justice Thomas on April 16, 1999, for the rendering of a proffered 
majority opinion. The case was reassigned to Justice Macy on December 16, 1999. 
Justice Macy distributed a proffered opinion to the Court on February 14, 
2000.

 

Case No. 98-314: W.R.A.P. 
12.09(b) Certification from the District Court of Uinta County, Honorable John 
D. Troughton, Judge.

Case No. 98-315: W.R.A.P. 
12.09(b) Certification from the District Court of Lincoln County, Honorable John 
D. Troughton, Judge.

Case No. 98-316: W.R.A.P. 
12.09(b) Certification from the District Court of Sweetwater County, Honorable 
Jere Ryckman, Judge.

Case No. 98-317: W.R.A.P. 
12.09(b) Certification from the District Court of Laramie County, Honorable 
Nicholas G. Kalokathis, Judge.

Vicci M. Colgan, 
Chief Deputy Attorney General; and Charles T. Solomon, Assistant Attorney 
General, Representing the Department of Revenue.Brent R. Kunz and Ian 
D. Shaw of Hathaway, Speight & Kunz, LLC, Cheyenne, Wyoming, Representing 
Bannon Energy Corporation.Michael L. Hubbard, Deputy Attorney General; and 
Harry D. Ivey, Assistant Attorney General, Representing the State Board of 
Equalization.

Before 
THOMAS, MACY, GOLDEN & HILL, JJ., and ELIZABETH A. KAIL, D.J. 
(RET.)

MACY, 
Justice.

[¶1] The 
Department of Revenue petitioned the district courts for a review of an order 
issued by the State Board of Equalization which reversed the Department of 
Revenue's assessment of interest and penalties against Bannon Energy 
Corporation, a purchaser who owed a sales tax deficiency. The district courts 
certified the cases to the Wyoming Supreme Court pursuant to W.R.A.P. 
12.09(b).

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

ISSUE

[¶3] The 
Department of Revenue presents this issue:

A. Did the State Board of 
Equalization erroneously conclude that the sales tax statutes prohibit the 
Department of Revenue from assessing interest and penalty against purchasers who 
do not timely pay sales taxes[?]

FACTS

[¶4] Bannon 
Energy is a corporation engaged in oil and gas exploration and production in 
Wyoming. The Department of Audit conducted a sales and use tax audit of Bannon 
Energy for the period July 1, 1992, through December 31, 1994. It found that 
Bannon Energy had underpaid sales taxes in the amount of $327,874.55 on items it 
had purchased. The Department of Revenue assessed Bannon Energy a tax deficiency 
in that amount plus interest in the amount of $115,501.63 and a ten percent 
penalty of $32,787.46. Bannon Energy appealed from the assessment of the 
interest and penalty to the State Board of Equalization, but it did not appeal 
from the assessment of unpaid taxes.

[¶5] The State 
Board of Equalization decided the appeal without holding a hearing, relying 
solely upon the statutes and the written arguments presented by Bannon Energy 
and the Department of Revenue. The State Board of Equalization found in favor of 
Bannon Energy and reversed the assessed interest and penalty. It concluded: 
"[T]he sales tax statutes do not permit the [Department of Revenue] to assess 
interest and penalty against purchasers owing a sales tax deficiency." The 
Department of Revenue appealed to the district courts, and those courts 
certified the cases to this Court pursuant to W.R.A.P. 
12.09(b).

STANDARD OF 
REVIEW

[¶6] When we 
review cases that have been certified to the Wyoming Supreme Court pursuant to 
W.R.A.P. 12.09(b), we apply the appellate standards which are applicable to the 
court of the first instance. Union Telephone Company, Inc. v. Wyoming Public 
Service Commission, 907 P.2d 340, 341-42 (Wyo. 1995). Wyo. Stat. Ann. § 
16-3-114(c) (LEXIS 1999) governs judicial review of administrative decisions. 
W.R.A.P. 12.09(a); Everheart v. S & L Industrial, 957 P.2d 847, 851 (Wyo. 
1998).

[¶7] The issue 
presented in this case requires us to interpret several Wyoming statutes which 
pertained to the imposition and collection of sales taxes. Statutory 
interpretation is a question of law. Newton v. State ex rel. Wyoming Workers' 
Compensation Division, 922 P.2d 863, 864 (Wyo. 1996); Trefren v. Lewis, 852 P.2d 323, 325 (Wyo. 1993). We affirm an agency's conclusions of law when they are in 
accordance with the law. Corman v. State ex rel. Wyoming Workers' Compensation 
Division, 909 P.2d 966, 970 (Wyo. 1996). When an agency has not invoked and 
properly applied the correct rule of law, we correct the agency's errors. Weaver 
v. Cost Cutters, 953 P.2d 851, 855 (Wyo. 1998); Gneiting v. State ex rel. 
Wyoming Workers' Compensation Division, 897 P.2d 1306, 1308 (Wyo. 
1995).

DISCUSSION

[¶8] The only 
question before us is whether the Department of Revenue could assess and collect 
interest and penalties from purchasers who failed to timely pay sales taxes. The 
Department of Revenue contends that the State Board of Equalization incorrectly 
interpreted various Wyoming statutes when it concluded that the department was 
without power to impose interest and penalties against purchasers. Specifically, 
the Department of Revenue claims that, although the statutes prescribed interest 
and penalties for vendors only, we should construe them as authorizing it to 
impose interest and penalties against purchasers as well.

[¶9] Our rules 
of statutory interpretation are well established. We first decide whether the 
statute is clear or ambiguous. Lyles v. State ex rel. Division of Workers' 
Compensation, 957 P.2d 843, 845 (Wyo. 1998). This Court makes that determination 
as a matter of law. Parker Land and Cattle Company v. Wyoming Game and Fish 
Commission, 845 P.2d 1040, 1043 (Wyo. 1993); Allied-Signal, Inc. v. Wyoming 
State Board of Equalization, 813 P.2d 214, 220 (Wyo. 1991). A "statute is 
unambiguous if its wording is such that reasonable persons are able to agree as 
to its meaning with consistency and predictability." Allied-Signal, Inc., 813 P.2d  at 220. A "statute is ambiguous only if it is found to be vague or 
uncertain and subject to varying interpretations." 813 P.2d  at 
219-20.

[¶10] If we 
determine that a statute is clear and unambiguous, we give effect to the plain 
language of the statute. Lyles, 957 P.2d  at 846; Gunderson v. State, 925 P.2d 1300, 1304 (Wyo. 1996).

[¶11] We begin 
by making an "`inquiry respecting the ordinary and obvious meaning of the words 
employed according to their arrangement and connection.'" Parker Land and Cattle 
Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1042 (Wyo. 1993) 
(quoting Rasmussen v. Baker, 7 Wyo. 117, 133, 50 P. 819, 823 (1897)). We 
construe the statute as a whole, giving effect to every word, clause, and 
sentence, and we construe together all parts of the statute in pari 
materia.

[¶12] State 
Department of Revenue and Taxation v. Pacificorp, 872 P.2d 1163, 1166 (Wyo. 
1994). If we determine that the statute is ambiguous, we resort to general 
principles of statutory construction to determine the legislature's intent. 
Parker Land and Cattle Company, 845 P.2d  at 1044.

[¶13] Before its 
amendment in 1997 and its repeal in 1998, § 39-6-407 stated in pertinent 
part:

(a) Except as otherwise 
provided every vendor shall collect the tax imposed by this article and is 
liable for the entire amount of taxes imposed. . . .

. . . 
.

(d) Taxes imposed by this 
article shall be paid to the department by the purchaser unless the taxes have 
been paid to a vendor.

[¶14] Wyo. Stat. 
Ann. § 39-6-407 (Michie 1994) (amended 1997 & repealed 1998). Before its 
amendment in 1997 and its repeal in 1998, § 39-6-409 provided in relevant 
part:

(a) 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 credited against any 
subsequent liability of the vendor. If the amount paid is less than the amount 
due, the difference together with interest thereon at the rate of one percent 
(1%) per month from the time the return was due shall be paid by the vendor 
within ten (10) days after notice and demand is made by the department. . . 
.

(b) If any part of the 
deficiency is due to negligence or intentional disregard of rules and 
regulations but without intent to defraud there shall be added a penalty of ten 
percent (10%) of the amount of the deficiency plus interest as provided by 
subsection (a) of this section. The taxes, penalty and interest shall be paid by 
the vendor within ten (10) days after notice and demand is made by the 
department.

Wyo. Stat. Ann. 
§ 39-6-409 (Michie 1994) (amended 1997 & repealed 
1998).

[¶15] The 
Department of Revenue points out, and we agree, that § 39-6-407(d) clearly 
obligated the purchaser to pay sales tax to either the vendor or the Department 
of Revenue. See State Board of Equalization v. Jackson Hole Ski Corporation, 737 P.2d 350, 353 (Wyo. 1987). The Department of Revenue concedes that the interest 
and penalty provisions set out in § 39-6-409 referred to only vendors, but it 
goes on to argue that Wyo. Stat. Ann. § 39-6-410(a) (Michie 1994) (amended 1996 
& repealed 1998)1 unambiguously authorized interest 
and penalties for purchasers. The Department of Revenue contends that, because § 
39-6-410(a) applied to all parties to a transaction and it prescribed a method 
for collecting taxes, interest, and penalties, the statute authorized the 
Department of Revenue to assess and collect interest and penalties from 
purchasers. Bannon Energy argues that § 39-6-409 authorized the Department of 
Revenue to impose interest and penalties against only vendors. They maintain 
that § 39-6-410(a) simply provided a means to collect properly assessed taxes, 
interest, and penalties; § 39-6-410(a) did not expand the Department of 
Revenue's power to impose interest and penalties beyond that authorized in § 
39-6-409.

[¶16] A careful 
reading of the statutes involved here convinces us that they were unambiguous. 
Each statute had a clear and distinct function. Section 39-6-407 made the vendor 
primarily responsible for collecting the sales tax but held that the purchaser 
was responsible for payment even if the vendor failed to collect. Section 
39-6-409 allowed the Department of Revenue to impose interest and penalties on 
vendors when sales taxes were not paid, but that statutory section did not apply 
to purchasers. Section 39-6-410(a) provided the Department of Revenue with a 
means of collecting properly assessed taxes, interest, and penalties. It did 
not, however, give the Department of Revenue authority to assess interest and 
penalties against purchasers. In other words, the collection procedure set out 
in § 39-6-410(a) applied only after a party's obligation to pay had been 
established under another statute.

[¶17] 
Administrative agencies have only those powers that are expressly granted by 
statute. Dunning v. Ankney, 936 P.2d 61, 64 (Wyo. 1997). It is, therefore, 
axiomatic that the Department of Revenue could not collect interest and 
penalties that it did not have the statutory authority to impose. Because the 
plain language of the statutes did not authorize the Department of Revenue to 
assess interest and penalties against purchasers for delinquent sales taxes, it 
was without power to do so.

[¶18] The State 
Board of Equalization's order is affirmed.

Footnotes

1 Before its 
amendment in 1996 and its repeal in 1998, § 39-6-410(a) provided in relevant 
part:

(a) Any tax 
due under this article constitutes a debt to the state from the persons who are 
parties to the transaction and is a lien from the date the tax is due on all the 
real and personal property of those persons. . . . Notice of the lien shall be 
filed with the county clerk of the county in which the persons who are parties 
to the transaction reside or in which the vendor conducts business. . . . The 
tax due together with interest, penalties and costs may be collected by 
appropriate judicial proceedings or the department, with board approval, or its 
representative, may seize and sell at public auction so much of the person's 
property as will pay all the tax, interest, penalties and 
costs.