Opinion ID: 2598601
Heading Depth: 2
Heading Rank: 1

Heading: Interpretation Issues

Text: [¶ 9] DOR asserts UPRC is liable for payment of sales tax on purchases of construction ballast under Wyoming statutory language and its own internal rules, as these transactions constitute the purchase of tangible personal property by UPRC in Wyoming. According to DOR, it does not matter what the nature of the ultimate use of the construction ballast is or that UPRC is or may be a common carrier with respect to these purchases. Not surprisingly, UPRC asserts that its purchases of construction ballast are destination sales and, therefore, not subject to Wyoming sales tax. [¶ 10] DOR reasons that the point of transfer of title or possession of tangible personal property determines whether a sale transpires and thereby a taxable event occurs in Wyoming. DOR argues that because UPRC takes possession of the construction ballast at the quarry located in Laramie County, these purchases subject UPRC to the payment of the imposed Wyoming sales tax. Further, DOR contests that UPRC cannot be allowed to unilaterally determine the taxability of these purchases in Wyoming by merely modifying its contract with the vendor to provide that [t]itle, ownership and constructive possession of the ballast shall not pass from Seller to Buyer until delivery is completed at a delivery site designated by Buyer. [¶ 11] Wyo. Stat. Ann. §§ 39-15-101(a)(vii) and 39-15-103(a)(i)(A), in applicable part, provide, respectively: [4] (a) As used in this article: ... (vii) Sale means any transfer of title or possession in this state for a consideration including the fabrication of tangible personal property when the materials are furnished by the purchaser.... (a) Taxable event. The following shall apply: (i) ... there is levied an excise tax upon: (A) The sales price of every retail sale of tangible personal property within the state[.] Department of Revenue Rules and Regulations, Chapter 2, § 14(p)(i) states: The point at which title or possession of tangible personal property passes to the purchaser shall determine the location of the sale. Tangible personal property shipped by the vendor at the time of sale and not used in Wyoming, to an out of state location may be considered a destination sale and not subject to the sales tax. (Emphasis added.) [¶ 12] In McClean v. State, 2003 WY 17, ¶ 6, 62 P.3d 595, ¶ 6 (Wyo.2003), we declared: We have long recognized that conclusions of law, such as questions regarding statutory interpretation, are to be reviewed by this court de novo. Hutchings v. Krachun, 2002 WY 98, ¶ 10, 49 P.3d 176, ¶ 10 (Wyo.2002). In Pagel v. Franscell, 2002 WY 169, ¶ 9, 57 P.3d 1226, ¶ 9 (Wyo.2002) (citing Wyoming Cmty. College Comm'n v. Casper Cmty. College Dist., 2001 WY 86, ¶¶ 16-18, 31 P.3d 1242, ¶¶ 16-18 (Wyo.2001)), we stated: In interpreting statutes, our primary consideration is to determine the legislature's intent. Fontaine v. Board of County Comm'rs, 4 P.3d 890, 894 (Wyo.2000); State ex rel. Motor Vehicle Div. v. Holtz, 674 P.2d 732, 736 (Wyo.1983). Legislative intent must be ascertained initially and primarily from the words used in the statute. Allied-Signal, Inc. v. State Board of Equalization, 813 P.2d 214, 219 (Wyo.1991); Phillips v. Duro-Last Roofing, Inc., 806 P.2d 834, 837 (Wyo.1991). When the words are clear and unambiguous, a court risks an impermissible substitution of its own views, or those of others, for the intent of the legislature if any effort is made to interpret or construe statutes on any basis other than the language invoked by the legislature. Allied-Signal, 813 P.2d at 219. Moreover, [a]ll statutes must be construed in pari materia; and in ascertaining the meaning of a given law, all statutes relating to the same subject or hav[ing] the same general purpose must be considered and construed in harmony. Fontaine, 4 P.3d at 894 (citing State ex rel. Motor Vehicle Div. v. Holtz, 674 P.2d at 735). Therefore, in performing our review, we look first to the plain and ordinary meaning of the words to determine if the statute is ambiguous. Olheiser v. State ex rel. Worker's Compensation Div., 866 P.2d 768, 770 (Wyo.1994) (citing Parker Land & Cattle Company v. Game & Fish Comm'n, 845 P.2d 1040, 1042-43 (Wyo.1993)). A statute is clear and unambiguous if its wording is such that reasonable persons are able to agree on its meaning with consistency and predictability. Parker Land & Cattle, at 1043. Conversely, a statute is ambiguous if it is found to be vague or uncertain and subject to varying interpretations. Id. We have said that divergent opinions among parties as to the meaning of a statute may be evidence of ambiguity. Basin Electric Power Co-op. v. State Bd. of Control, 578 P.2d 557, 561 (Wyo.1978). However, the fact that opinions may differ as to a statute's meaning is not conclusive of ambiguity. Ultimately, whether a statute is ambiguous is a matter of law to be determined by the court. Allied-Signal, 813 P.2d at 219. This same analysis must be performed when we interpret the meaning of administrative rules and regulations. Powder River Coal Co. v. State Bd. of Equalization, 2002 WY 5, ¶ 6, 38 P.3d 423, ¶ 6 (Wyo.2002) (citing State by and through Dep't of Rev. v. Buggy Bath Unlimited, Inc., 2001 WY 27, ¶ 6, 18 P.3d 1182, ¶ 6 (Wyo.2001)). [¶ 13] Applying the plain and ordinary meaning to the language used in Wyo. Stat. Ann. §§ 39-15-101(a)(vii) and 39-15-103(a)(i)(A) and Department of Revenue Rules and Regulations, Chapter 2, § 14(p)(i), we find no ambiguity. All three clearly indicate that a taxable event occurs only when title or possession of tangible personal property passes to the purchaser in Wyoming. The clearly stated language of Department of Revenue Rules and Regulations, Chapter 2, § 14(p)(i) goes even further to provide that when tangible personal property is shipped by a vendor at the time of sale to an out-of-state location and not used in Wyoming, this purchase is not subject to Wyoming sales tax. Therefore, we determine that the purchase of construction ballast by UPRC in Laramie County does not constitute a taxable event. Under these transactions, neither title or possession to the ballast transfers to UPRC in Wyoming. This ballast is simply loaded into train cars for delivery to an out-of-state location. Further, this construction ballast is designated for use outside Wyoming at the time of sale. [5] [¶ 14] The fact that UPRC is usually both the common carrier and the ultimate purchaser of the construction ballast is of little consequence. UPRC indisputably exclusively controls and operates the trains and locomotives in which the ballast is loaded and transported. However, neither title or possession to the construction ballast passes from the vendor to UPRC until it is accepted by UPRC, as the purchaser, at a predetermined destination outside of Wyoming. UPRC loads and carries the construction ballast as the common carrier agent of the vendor and never obtains complete control over this ballast during shipment as asserted by DOR. UPRC, as a common carrier, is bound to deliver the ballast to the location outside of Wyoming as directed by the vendor. Title or possession of the ballast is not transferred until UPRC, as the buyer, inspects and accepts the ballast at the construction site. [¶ 15] The determination of a taxable event does not rest merely on the physical presence of the goods on the common carrier's transport equipment, but on the rights that the vendor retains in those goods. In the event that UPRC does not accept the ballast, the ballast must be shipped back to the quarry at the vendor's expense, and title or possession to the ballast never transfers from the vendor. Hence, because the vendor intends that title or possession to the construction ballast not transfer until the ballast is accepted by UPRC, as the purchaser, and the ballast is designated for use outside Wyoming at the time of its sale, these transactions must be characterized as non-taxable destination sales. Department of Revenue Rules and Regulations do not specify that transportation of the product in a destination sale must be made by a third party common carrier unrelated to the buyer or by the vendor, personally. Rather, the product must be merely transported at the direction of the vendor to a destination outside of Wyoming. [¶ 16] It is of some interest to note that it is not practically or economically feasible to ship the huge quantities of ballast used by any other means than by railcar, and the railway owned by UPRC is the only such transportation available from the subject quarry. Nevertheless, setting these established facts aside, if ballast was able to be shipped by the vendor through some other means by a common carrier other than UPRC, the purchases of construction ballast by UPRC must absolutely be characterized as destination sales and non-taxable under Wyoming law. [¶ 17] DOR also contends that the use of the word may within Department of Revenue Rules and Regulations, Chapter 2, § 14(p)(i) gives DOR the exclusive unilateral power and discretion to determine whether a particular sale does or does not constitute a destination sale. Clearly, the plain and obvious meaning of the word may within this rule simply allows the taxpayer to treat such transactions as defined as nontaxable destination sales. DOR's characterization of its authority also runs afoul of this court's directive that it is unfair and unlawful for an administrative agency to establish a policy requiring taxation at a late hour contrary to plainly stated language already relied upon by taxpayers without first giving adequate notice and warning and clarifying its position for the benefit of taxpayers. Hercules Powder Co. v. State Bd. of Equalization, 66 Wyo. 268, 208 P.2d 1096, 1111 (1949). [¶ 18] Administrative rules and regulations adopted pursuant to statutory authority have the force and effect of law. State by and through Dep't of Rev. v. Buggy Bath Unlimited, Inc., 2001 WY 27, ¶ 19, 18 P.3d 1182, ¶ 19 (Wyo.2001) (citing Fullmer v. Wyoming Employment Security Comm'n, 858 P.2d 1122, 1123-24 (Wyo.1993)). Further, an administrative agency must follow its own rules and regulations. Id. (citing Antelope Valley Improvement v. State Bd. of Equalization, 992 P.2d 563, 566 (Wyo.1999)) (opinion clarified at 4 P.3d 876 (Wyo.2000)). Wyoming statutes are silent on this issue. Obviously, had the legislature desired a different result, it could have easily so specified. [¶ 19] In addition, DOR argues that SBOE's conclusion that purchases of construction ballast under these circumstances is not subject to sales tax in Wyoming is contrary to established Wyoming case law authority and renders an absurd, illogical, unjust and unreasonable result. We disagree. DOR asserts that the facts in State Bd. of Equalization v. Blind Bull Coal Co., 55 Wyo. 438, 101 P.2d 70 (1940), are almost indistinguishable from this case and, therefore, the holding of this court in that case is determinative. However, the facts in the Blind Bull Coal Co. case are most different than those presented in this case. [¶ 20] In Blind Bull Coal Co., it was an undisputed material fact that the vendor sold the subject coal at its mine located in Wyoming to various individual purchasers. It was further stipulated by the parties that 1) all of the coal was delivered and received by the purchasers at or near the vendor's mine in Wyoming; 2) after receiving the coal these purchasers transported the coal into Idaho for use or consumption; 3) the vendor's records did not show that the coal was purchased for transportation into Idaho or elsewhere; and 4) no claim of exemption was made by any purchaser and filed with the vendor. At 71. Therefore, unlike the situation in this case, Blind Bull Coal Company, as the vendor, transferred possession of the product to the purchasers in Wyoming, and there was no disclosure that the product was to be utilized outside of Wyoming at the time of its sale. The purchasers also did not contend that Wyoming sales tax did not have to be paid on these transactions. [¶ 21] These distinctions in the Blind Bull Coal Co. case were recognized by this court in its opinion in Morrison-Knudson Co., Inc. v. State Bd. of Equalization, 58 Wyo. 500, 135 P.2d 927, 934 (1943): This case is similar to the case of State Board of Equalization v. Blind Bull Coal Company, 55 Wyo. 438, 101 P.2d 70. In that case sales of coal were made in Lincoln County, in this state, to purchasers who hauled the coal into Idaho for use or consumption. The coal was delivered by the seller at the mine and no claim for exemption was made by the purchasers. We held that the sales were not exempt from the sales tax imposed in this state and did not interfere with interstate commerce. Upon re-examination of the case there can scarcely be any doubt of the correctness of the decision. In that case the purchasers could do with the coal after delivery to them as they pleased. They were not compelled to transport it into Idaho, but might if they wished sell it again to someone in this state. [¶ 22] In addition, utilizing primarily an intent of the vendor analysis, this court determined that a taxable event had also occurred in Morrison-Knudson Co. We stated at 934-35: In the case at bar, under the terms of the contract, the sales were made f. o. b. Parco, Wyoming. That was the place of delivery and passing of the title to the purchasers, unless an intention to the contrary appears. Sec. 98-906, Rev.St.1931; 55 C.J. 332, 333. No such contrary intention appears herein. The purchasers paid the freight, and, according to their testimony, they remitted the purchase price to the seller or, in some instances, paid it in this state. Part of the property was hauled to Parco and delivered to the railroad company. The delivery at that point was not interstate commerce. Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715. Part of the property was loaded onto trucks or trailers by the purchasers, and apparently at the Seminoe Dam in this state, where the property was located and had been used. While the purchasers in other states in most instances of course contemplated that the goods should be shipped by interstate carrier, that mere fact did not withdraw the property from the state's power to tax it. State v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131. The sellers did not agree to ship it to any destination outside of the state, and there is no evidence whatever in the record that they had any interest in the transportation beyond the point mentioned in the contract. The only testimony aside from that contract, and from what has already been stated, is the testimony of a witness who stated that the purchaser usually specifies how he wants delivery. It would seem to be clear that under these facts the delivery to the purchasers was complete, the title passed to them, and the property was accepted by them, in this state. (Emphasis added.) [¶ 23] In both Blind Bull Coal Co. and Morrison-Knudson Co., this court cited with approval the reasoning utilized by the United States Supreme Court in Superior Oil Co. v. Mississippi, 280 U.S. 390, 50 S.Ct. 169, 74 L.Ed. 504 (1930), wherein the United States Supreme Court applied an intent of the vendor analysis and held that a taxable event had occurred. In Morrison-Knudson Co., at 935, we stated: In [ Superior Oil Co. v. Mississippi ], the seller, in Mississippi, sold gasoline to the purchaser at Biloxi in that state. The purchaser loaded it on boats at their wharves, and shipped it to fishermen in Louisiana through transactions which in the long run were equivalent to sales. No consignee in Louisiana, nor a place of destination, were designated at the time of the sale. It was held that the sale was a sale in Mississippi, and that a tax to be paid by the seller did not interfere with interstate commerce. (Emphasis added.) [¶ 24] This court in Morrison-Knudson Co., at 935, further cited as support for its determination the case of Department of Treasury v. Wood Preserving Corp., 313 U.S. 62, 61 S.Ct. 885, 85 L.Ed. 1188 (1941). The facts in the Wood Preserving Corporation case were, so far as relevant here, about as follows: The corporation sold ties to the Baltimore and Ohio Railroad Company through a contract entered into in Ohio. The corporation did not itself produce any ties, but when a sale to the railroad company was made the corporation procured the ties sold from local producers in Indiana who delivered them to the railroad company in Indiana. At that point the corporation was represented by an agent, and the railroad company by an inspector. The ties were then examined, and those found by the inspector to be in accordance with specifications were accepted at that place. Indiana laid a tax on the receipts which the corporation derived from the sale of these ties. The court held the transaction to be intrastate and upheld the tax against the contention that it was a burden on interstate commerce. Thus, the United States Supreme Court in Wood Preserving Corp. having found that the vendor had agreed to deliver the ties to Indiana and that the actual transfer of ownership and possession of the goods occurred in Indiana, upheld the tax levied by the state of Indiana. [¶ 25] Our determination in this case is also in accord with the reasoning and conclusion reached by this court in Hercules Powder Co. v. State Bd. of Equalization, 66 Wyo. 268, 208 P.2d 1096 (1949), wherein this court reversed the assessment of sales tax based on a lengthy and comprehensive analysis of the intention of the parties to that transaction. In that case, this court reasoned that ownership and possession of the property involved did not transfer because the vendor intended that ownership and possession of the property would not transfer until delivered to the purchaser. This court in Cooley v. Frank, 68 Wyo. 436, 235 P.2d 446 (1951), utilized a similar analysis in determining when delivery and acceptance of the goods involved in that case had occurred. Given the established case history expressed through this court's past opinions with respect to the issue at hand and our review of both existing statutory law and administrative rule in this area, we perceive absolutely no absurd, illogical, unjust or unreasonable consequence occurs as a result of the SBOE's ruling with respect to construction ballast in this case. [¶ 26] Additionally, DOR complains that SBOE's decision allows purchasers who are common carriers to avoid sales tax liability by assuming the role of common carrier in all purchases. However, this is not the case. Again, a seller or vendor must intend that ownership or possession of the goods not transfer to the purchaser until delivery is made in another state with the goods involved being designated for use outside of Wyoming at the time of sale. If these conditions are not met, the transaction simply cannot be categorized as a destination sale and Wyoming sales tax imposed. [¶ 27] Finally, DOR grieves a determination that the purchase of construction ballast under the given circumstances is not subject to sales tax creates a sales tax exemption not found in the Wyoming sales tax statutes. In support of this argument, DOR argues that when interpreting taxation statutes, there is a presumption against granting exceptions or exemptions and in favor of taxation citing as authority the cases of General Chemical Corp. v. State Bd. of Equalization, 819 P.2d 418, 422 (Wyo.1991) and Commissioners of Cambria Park v. Bd. of County Comm'rs of Weston County, 62 Wyo. 446, 174 P.2d 402 (1946). However, this court has enunciated that there must be recognized a distinction between what is actually taxed under the operative taxing language as opposed to what falls within such taxing authority and is thereafter exempted from taxation. In Walgreen Co. v. State Bd. of Equalization, 62 Wyo. 288, 166 P.2d 960, 977 (1946), we stated upon review of the statutory language at issue in that case: It is as plain, as clear, as unequivocal as the English language can make it. There cannot be the slightest doubt as to its meaning. It does not require any one educated in the law to read it and understand it perfectly. The term `taxable' was doubtless inserted in this place for the reason that not all sales are taxable. Some sales are specifically exempted under Sec. 2 of the Sales Tax Act. But in the case under Sec. 4 of the Act all sales made by the appellant herein are taxable, some at 2%, others at 1%. That is clear. Likewise, it is absolutely apparent in this case that destination sales, as particularly defined, were intended to be outside the realm of Wyoming sales taxation. Accordingly, no exemption with respect to such transactions is involved.