Opinion ID: 2819364
Heading Depth: 1
Heading Rank: 4

Heading: The OTCs’ Liability for Sales Tax

Text: The rules of statutory construction are well established in the District of Columbia. See District of Columbia v. Place, 892 A.2d 1108, 1111 (D.C. 2006). “The first step in construing a statute is to read the language of the statute and construe its words according to their ordinary sense and plain meaning.” Hospitality Temps Corp. v. District of Columbia, 926 A.2d 131, 136 (D.C. 2007) (citation and internal quotation marks omitted)). The court must give effect to a 13 statute’s plain meaning when its words are clear and unambiguous. See District of Columbia v. Bender, 906 A.2d 277, 281-82 (D.C. 2006). Generally, “[w]hen the plain meaning of the statutory language is unambiguous, the intent of the legislature is clear, and judicial inquiry need go no further.” District of Columbia v. Gallagher, 734 A.2d 1087, 1091 (D.C. 1999). “The literal words of a statute, however, are not the sole index to legislative intent, but rather are to be read in the light of the purpose of the statute taken as a whole, and are to be given a sensible construction.” Id. (internal quotation marks and citations omitted). Courts must not “‘make a fortress out of the dictionary,’” Place, 892 A.2d at 1111 (D.C. 2006) (quoting Cabell v. Markham, 148 F.2d 737, 739 (2d Cir. 1945) (Learned Hand, J.)), which is to say that “even where the words of a statute have a ‘superficial clarity,’ a review of the legislative history or an in-depth consideration of alternative constructions that could be ascribed to statutory language may reveal ambiguities that the court must resolve.” Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 754 (D.C. 1983) (citations omitted). “Because the legislature must be presumed to have acted rationally and reasonably, with an awareness of the goals of the statutory scheme as a whole, the courts eschew interpretations that lead to unreasonable results, that create obvious injustice, or that produce results at variance with the policies intended to be furthered by the legislation.” In re C.L.M., 766 A.2d 992, 996-97 (D.C. 2001) (internal citations 14 omitted). A special rule of construction applies to tax statutes, which under certain circumstances can tip the balance in favor of the taxpayer. In District of Columbia v. Acme Reporting Co., this court made clear that “‘the settled rule [is] that tax laws are to be strictly construed against the state and in favor of the taxpayer,’ if the statute in controversy is unclear and ambiguous.” 530 A.2d 708, 712 (D.C. 1987) (quoting 3A Sutherland, Statutes and Statutory Construction § 66.01 (C. Sands, 4th ed. 1986)). The Acme court tempered that presumption in the next three sentences, however, clarifying that: At the same time, we are mindful of the maxim that “tax laws ought to be given a reasonable construction, without bias or prejudice against either the taxpayer or the state, in order to carry out the intention of the legislature and further the important public interests which such statutes subserve.” [Sutherland] § 66.02. Further, “[s]ince the obligation to pay taxes arises only by force of legislative action, the nature and extent of that liability is determined by the legislative meaning. Therefore, all the rules of statutory construction are relevant in the interpretation of revenue measures.” Id. § 66.03. Acme, 530 A.2d at 712. In essence, then, interpreting tax laws is a three-step process: if the court is confronted with ambiguity on the face of the statute, step two is to turn to the legislative history and the other tools of reasonable statutory construction, and—if the ambiguity persists—step three is to construe the statute 15 strictly against the state and in favor of the taxpayer, in accordance with the Acme rule. As the trial court explained: “Only if the statute remains ambiguous after resorting to all of the normal tools of statutory construction should the Court construe any remaining reasonable ambiguity against the District and in favor of the taxpayers.” Following the rules of statutory construction in general and Acme in particular, the first step in resolving the OTCs’ contested sales tax liability is to determine whether the statutory language is plain and unambiguous. We begin our inquiry by considering the statutory text as it existed prior to the 2011 amendment, and then turn to the amendments to the extent necessary. “A statute is ambiguous when it is capable of being understood in two or more different senses by reasonably well-informed persons.” Sutherland, supra, § 66.03. We hold that the statute is, on its face, ambiguous. As noted above, both the OTCs and the District read the pivotal text from D.C. Code § 47-2001 (n)(1)(C)—defining the retail sale at issue as “[t]he sale or charge for any room . . . furnished to transients by any hotel”—in a way that has facial plausibility. The OTCs are correct that the only verb in the definition is “furnish[ed],” and therefore it does not seem absurd to read the provision as a tax on the furnishing of rooms, which is arguably the service that the hotels, not the 16 OTCs, provide. It is thus plausible to read the “sale or charge,” as the OTCs do, to refer to the result rather than the taxable service. On this reading, the “sale or charge” is merely that which occurs when the hotels exercise the taxable privilege of furnishing rooms. The District, on the other hand, reads the statute as imposing tax directly on the sale or charge for any room that is ultimately furnished by a hotel, which sounds exactly like the service that the OTCs provide. This reading is also plausible, because nowhere does the statute specify that the party responsible for the “sale or charge” needs to be the same party responsible for the “furnishing” and because the presence of the words “sale or charge” at the beginning of § 47-2001 (n)(1)(C) suggests that the provision is aimed at the sales transaction whereby one “sells or charges” for the room, rather than the physical act of furnishing it. Given the reasonableness of the District’s reading—“the tax is a sales tax, not an operator’s tax; it applies to the ‘privilege of selling selected services,’ not to the services themselves” (emphasis in original)—we agree with the trial court’s finding that [b]oth the Defendant and the District read the statute in the manner a well-informed person might. Because the plain meaning of the statute is open to two reasonable, yet opposing, interpretations, it is necessary under Acme to turn to other tools of reasonable statutory 17 interpretation in order to discern the purpose of the statute and avoid absurd results. Turning to an analysis of the statute’s structure, purpose, and legislative history, we conclude that these considerations decisively favor the District’s position. First, while the text of § 47-2001 (n)(1)(C) leaves considerable ambiguity about which service exactly is subject to tax under the provision, an examination of the District’s sales tax provisions as a whole lends support to the District’s contention—and the well-reasoned conclusion of the trial court—that the tax is levied on the “sale or charge” for the service, rather than on the provision of the service itself. As an initial matter, it is significant that the sales tax is imposed upon vendors for “the privilege of selling certain selected services,” rather than rendering or providing them. See D.C. Code § 47-2002. The mention of both the “selling” in § 47-2002 and the “sale or charge” in § 47-2001 (n)(1)(C) suggests that the sale is the subject of the tax, and the OTCs’ arguments to the contrary— while plausible on their face—ultimately fail to withstand close scrutiny. For one, the sales tax is imposed on the “gross receipts” of a retail sale under the statute. The “gross receipts” include the entirety of the “sales price” and, here too, the statutory language is notably inclusive in reaching the ancillary services that are part of the taxable transaction: “‘Sales price’ means the total amount paid by a 18 purchaser to a vendor as consideration for a retail sale . . . the total amount of the sales price includes . . . any services that are a part of the sale[.]” D.C. Code § 472001 (p)(1). This language, and the emphasis it places on taxing the sales transaction in its entirety, is instructive. While it could be consistent with the OTCs’ reading, if one views the “retail sale” as solely that part of the sales transaction whereby a hotel physically furnishes a room to a transient, several problems with that reading emerge when one views the sales tax statute as a whole. First, the OTCs contend that “the sale or charge” that appears at the beginning of § 47-2001 (n)(1)(C) cannot be the subject of the tax because, since “sale” is defined in § 47-2001 (q) as a “transaction whereby services subject to tax under this chapter are rendered for consideration,” the word “sale” must therefore be a reference to a taxable service—here the furnishing of hotels rooms—rather than a taxable service in itself. Yet the OTCs’ argument—that “[s]ale and charge are used as nouns; they are what results when a hotel has performed the specified activity, i.e., furnished a room for consideration”—cannot be reconciled with the other goods and services enumerated in § 47-2001 (n)(1). Despite the admittedly confusing definition of “sale” found in § 47-2001 (q), it is clear that the term “sale” is being used in its everyday sense in § 47-2001 (n)(1) and that it is precisely the “sale” that is the focus of § 47-2001 (n)(1)(C), just 19 as a sale is the focus of every other provision of § 47-2001 (n)(1). For context, it is helpful to consider § 47-2001 (n)(1)(C) in relation to its neighboring provisions: (1) “Retail sale” and “sale at retail” mean the sale in any quantity or quantities of any tangible personal property or service . . . taxable under the terms of this chapter. . . . For the purpose of the tax imposed by this chapter, these terms shall include, but not be limited to, the following: (A) (i) Sales of food or drink prepared for immediate consumption . . . ; and (ii) Sales of food or drink when sold from vending machines; ... (B) Any production, fabrication, or printing of tangible personal property on special order for a consideration; (C) The sale or charge . . . for any room . . . furnished to transients by any hotel . . . (D) The sale of natural or artificial gas, oil, electricity, solid fuel, or steam; § 47-2001 (n)(1). Semantic wrangling aside, the clear purpose of § 47-2001 (n)(1) is to enumerate certain transactions for the purpose of bringing them within the ambit of the District’s sales tax law. Unsurprisingly for a chapter entitled “Gross Sales Tax,” all of these provisions focus on a sale, and all of them focus on the sale from the customer’s perspective. For example, § 47-2001 (n)(1)(A)(i) taxes the “[s]ales of food or drink prepared for immediate consumption[.]” One could not 20 fairly argue that this is a tax only on the service of “preparing.” One could not seize on the only participle in the provision, extract the active tense of the underlying verb, and then hold out that verb as the taxable activity. Rather, § 472001 (n)(1)(A)(i) is plainly a tax on the “sale” of food, and the rest of the provision merely describes the food that is to be taxed, that is, food “prepared for immediate consumption[.]” In arguing that “one is a ‘vendor’ only if one exercises the taxable privilege of ‘furnishing’ rooms to transients for consideration,” the OTCs are following just that methodology: they are seizing on the only verb (or more precisely, participle) in § 47-2001 (n)(1)(C), extracting the active tense of that verb, and then holding out that verb as the taxable activity. But that maneuver is no more correct in the context of furnished rooms than in the context of prepared foods. Rather § 47-2001 (n)(1)(C) plainly taxes “[t]he sale or charge . . . for any room,” and the rest of the provision describes the rooms that are to be taxed; it is those rooms “furnished to transients by any hotel[.]”3 The noun “sale”—and not “prepare,” the verb (or, again, participle) that appears later in the provision—is the taxable activity in § 47-2001 (n)(1)(A)(i). 3 Myriad middlemen, not unlike the OTCs, undoubtedly play a role in many transactions involving the sale of prepared food. Yet that fact does not make the tax anything other than a conventional sales tax on the amount the purchaser pays for the food. 21 But in arguing that “sale” cannot similarly be the taxable activity in § 47-2001 (n)(1)(C), the OTCs rely on a “property” versus “services” distinction. They appear to acknowledge that the word “sale” can be the subject of the tax for the transfer of a good, but not for the provision of a service, claiming that “[t]he Statute’s use of passive voice in defining another type of retail sale, ‘sales of food or drink prepared for immediate consumption,’ does not help the District [because] [t]he tax is imposed on the ‘sale’ of that specific type of property, not on the service of preparing it” (citations omitted) (emphasis in original). This argument relies on a very strained reading of the statute: while the definition of “sale” in § 47-2001 (q) appears to offer different definitions for the transfer of property versus the provision of services—for property, a “sale” is “any transaction whereby title or possession . . . is or is to be transferred” and for services, a “sale” is “any transaction whereby services subject to tax . . . are rendered for consideration,” see § 47-2001 (q)—we are not inclined to read these definitions as substantively different, much less to assume that Congress was knowingly weaving back and forth between these definitions when it was enumerating the transactions that qualify as “retail sales” in § 47-2001 (n)(1). The OTCs appear to contend that the difference between § 47-2001 (n)(1)(A)(i)’s “sale of food or drink prepared for immediate consumption” and § 47-2001 (n)(1)(C)’s “sale or charge . . . for any room . . . furnished to transients by any hotel” is that the former must be construed 22 under the definition of “sale” that applies to the transfer of property and the latter under the definition of “sale” that applies to the provision of services. But that seems backwards. Instead of having to go through each provision and classify it as a “property” or a “service”—which itself might raise difficult interpretive questions—the more natural reading of the statute is much simpler; it is just a tax on the sales transactions that are enumerated within it. Viewed this way, the dual definition of “sale” in § 47-2001 (q) seems merely to emphasize that some of those transactions will deal in goods, like § 47-2001 (n)(1)(A)(i), and others will deal in services, like § 47-2001 (n)(1)(C). Thus, the amount that the purchaser pays for prepared food is taxed under § 47-2001 (n)(1)(A)(i), and the amount the purchaser pays for furnished rooms under § 47-2001 (n)(1)(C). The purpose of the sales tax statute—which is simply to tax the enumerated transactions, and to tax them in their entirety—overshadows fine points like the tense of the words. D.C. Code § 47-2001 (n)(1)(B), taxing “[a]ny production, fabrication, or printing of tangible personal property on special order for a consideration,” is illustrative. The provision does not include the word “sale” at all, but could easily be phrased as “the sale of tangible personal property produced, fabricated, or printed on special order for a consideration.” That semantic change would not change the substance, and the provision could probably even be 23 rewritten to sound more like a tax on a service than a good. Similarly, much ink has been spilled in this case over the meaning of “[t]he sale or charge . . . for any room . . . furnished to transients by any hotel,” with the OTCs intimating that the District is pretending that the statute says “selling” instead of “sale,” and the District intimating that the OTCs are pretending that the statute says “furnishing” instead of “furnished.” Yet at the end of the day, the provision appears to be just one way of imposing a tax on the amount of money that people pay to stay in hotel rooms in the District of Columbia. The statute could just as easily have placed a tax on “sales of hotel rooms” or “the selling of hotel rooms” or, perhaps even something like “hotel stays booked.” In the context of a sales tax statute that taxes transactions at the point of sale—in that it imposes tax on the “sales price” that the purchaser pays in certain transactions, with “sales price” being defined to include “[a]ny services that are a part of the sale,” D.C. Code § 47-2001 (p)(1)(i)—the meaning of the statute is clear: by imposing tax on the “sale or charge . . . for any room . . . furnished to transients by any hotel,” the sales tax statute is taxing the sales transaction by which a customer purchases a hotel room in the District of Columbia. The OTCs’ retail margins are a part of that sale.4 4 The OTCs argue at length that the retail margins should not be part of the taxable sale because the margins are earned not for “furnishing rooms” but for “facilitating reservations.” We do not take issue with the OTCs’ characterization of what they do. Because the District’s statute imposes tax not on the furnishing of (continued…) 24 Not only do the structure and purpose of the District’s sales tax law evince Congress’s intent to tax the full amount that customers pay for hotel rooms in the District of Columbia, but the legislative history confirms this result. Congress aimed to tax the amount that the purchaser pays for the enumerated service, and— in targeting the sale—sought to include ancillary or intermediary transactions. While Congress in the year 1949 did not contemplate online travel companies matching customers with hotels using sophisticated information technology, it did know what a middleman was and did address the issue. We draw the same conclusion as the trial court, which reasoned: The structure of the statute is clear: it is designed to tax the transaction by which the room is sold to the transient, not to a third party intermediary. The legislative history further supports that transactions where one party purchases an item and sells it virtually unchanged to the final purchaser, are taxable. In the Senate report on H.R. 3704, the Committee on the District of Columbia noted that the initial purchase was not intended to be included in the statutory definition of retail sales. S. Rep. No. 81260, at 8 (1949) (“[Retail sales is] defined as to be (…continued) rooms but on the “sale or charge . . . for any room . . . furnished,” however, that characterization does the OTCs no good. Ultimately, “facilitating reservations” appears to be another way of saying “selling rooms.” And in fact, “selling rooms” appears to be just how the OTCs themselves described the service they provide before the onset of this sort of sales tax litigation. See Travelocity.com LP v. Wyo. Dep’t of Revenue, 329 P.3d 131, 142 (Wyo. 2014) (“Before the OTC sales tax cases arose around the nation, the OTC/hotel contracts used language indicating that OTCs sold rooms.”). 25 inapplicable to sales where the purpose of the purchaser is to resell the property so transferred in the form in which bought by him.”)[.] This lends support to the Court’s holding that . . . it is the . . . sale to the ultimate purchaser [that is taxable under § 47-2001 (n)(1)(C)]. In response, the OTCs make a legislative history argument that dates back not to the origins of the sales tax law, which is the District of Columbia Revenue Act of 1949, Pub. L. No. 81-76, § 114 (a)(3), 63 Stat. 112, 113 (1949), but to an amendment passed in the 1990s. In 1998, the D.C. Council both repealed the Hotel Occupancy Tax—which imposed tax on the “occupancy of each room . . . in a hotel” and applied only to persons “operating a hotel in the District of Columbia,” see D.C. Code § 47-3202 (1981)—and also increased the tax imposed on “the sale or charges for any room . . . furnished to a transient by any hotel” under § 47-2002.02 (1). Washington Convention Center Authority Financing Amendment Act of 1998, D.C. Law 12-142 (1998). Because these two amendments both occurred in 1998, the OTCs conclude that “the Council viewed the Hotel Occupancy Tax—imposed on ‘operators’—and the sales tax—imposed on ‘vendors’ that furnish rooms—as being imposed on the same persons—hotels that possess rooms[.]” As the District points out, however, the OTCs cite no legislative history to suggest that the D.C. Council intended the amended § 472002.02 (1) to have the same meaning as the repealed Hotel Occupancy Tax. To the contrary, it seems more reasonable to conclude the opposite, because if the 26 Council intended the newly amended § 47-2002.02 (1) to be coextensive with the repealed Hotel Occupancy Tax, it would presumably have used the same word, “operator.” The most important point to be gleaned is that the District used to have an occupancy tax imposed on the hotel operator, but that tax has long been repealed in favor of an increased sales tax. That history weighs in favor of the District’s position—and the trial court’s conclusion—that it is the entire sales transaction that is taxable under § 47-2001 (n)(1)(C). Because we agree with the trial court’s determination that § 47-2001 (n)(1)(C) has always extended to reach the OTCs’ retail margins, the 2011 amendments to the statute whereby the D.C. Council sought to clarify the reach of the provision are not critical to the outcome of this case. To the extent that they shed light on the meaning of § 47-2001 (n)(1)(C), however, the amendments favor the District and exacerbate the problems with the OTCs’ strained reading of the statute. As the trial court concluded, the legislative history of the 2011 amendments is very clear about the Council’s purpose. The preamble for the amendment inserting “room remarketer” into D.C. Code § 47-2002 and § 472002.02 confirmed its purpose “to amend Title 47 of the District of Columbia Official Code to clarify and mandate that online travel companies pay the full amount of tax on the amount paid by the occupant,” Payment of Full Hotel Taxes 27 by Online Vendors Clarification Act of 2010, D.C. Law 18-364 (2011), and the fiscal impact statement explained that the amendment would clarify that District sales taxes “appl[y] to the total amount charged to the consumer by the room remarketer, instead of to the amount charged to the room remarketer by the hotel[.]” District of Columbia Office of the Chief Financial Officer, Fiscal Impact Statement—“Payment of Full Hotel Taxes by Online Vendors Clarification Act of 2010” (Dec. 2, 2010). The Council certainly intended to clarify that the OTCs’ retail margins are taxable under § 47-2001 (n)(1)(C), but it saw no need to overhaul the provision to achieve that result. Rather, it addressed the issue by clarifying that when “room remarketers” sell hotel rooms in the District, the retail margins are part of the transaction and subject to tax. The OTCs’ response to the amendment exposes the snag in their reading: the OTCs contend that, because the amendment merely makes a new category of actors—“room remarketers”—subject to the tax but does not change the underlying taxable privilege—purportedly the “furnishing of rooms”—the amendment only applies to OTCs that “(i) purchase a block of room nights; (ii) obtain the risk of loss for any room nights that go unsold; (iii) mark-up the price of a room night and resell it to individual transients, and (iv) thereby actually ‘furnish’ rooms[.]” This is an unfounded interpretation of the amendment, however, because steps (i) through (iv) outlined above are not how OTCs behave, and, as the amendment’s legislative history makes plain, the point of 28 the amendment was to clarify that § 47-2001 (n)(1)(C) does apply to OTCs when they operate under the merchant model. Moreover, the OTCs’ reading of the statute would leave many provisions of the District’s sales tax law vulnerable to potential loopholes and, as the trial court recognized, could lead to the absurd result in which nobody would be liable for sales tax: Nobody would be responsible for the retail sales tax under the OTCs’ model. The hotel has no contract with the purchaser until check-in. No monetary transaction ever occurs between the hotels and the ultimate purchaser and thus there is no sale, by the statutory definition, to tax. No tax would ever be due on either of the transactions, a result plainly at odds with the structure and history of the act. In response, the OTCs point out that—as even the District concedes—the hotels have been remitting sales tax on the “net rates” they receive on the transactions. Thus, the hypothetical in which the hotels and the OTCs both dodge the sales tax has not been occurring, and it is not clear how it would work. There is no allegation that the OTCs are conspiring with or are somehow controlled by the hotels and if, for example, a hotel tried to evade the sales tax by transacting with itself and then remitting tax based only on a “net rate” that it calculated by removing some “convenience” or “booking” fee, then that would constitute a sham transaction that could be ignored under existing tax principles. See Black & 29 Decker Corp. v. United States, 436 F.3d 431, 441 (4th Cir. 2006). While the loophole that troubled the trial court does not appear to be gaping, we are unpersuaded by the OTCs’ contention that “[e]ven if the Superior Court’s perceived loophole were nonetheless a viable concern, that loophole must be filled by the District Council, the legislative branch, not the courts.” Rather, as the District argues, the rules of statutory interpretation in general and Acme in particular require consideration of practical consequences when determining a reasonable construction of the District’s sales tax law. Acme, 530 A.2d at 715 (stating that the “‘reasonableness of a construction can often be tested by considering the consequences of a different one’”) (citation omitted). Regardless of the ease with which the OTCs and the hotels might conspire to lessen or eliminate the tax consequences of these sales, then, the OTCs’ interpretation— inserting a middleman between vendor and purchaser—would result in the District receiving sales tax on only part of transactions that Congress intended to tax in their entirety. We therefore agree with the District that “[w]hile the OTCs’ interpretation would allow retailers to avoid paying tax on some retail transactions—a result Congress surely did not intend—the District’s interpretation avoids this problem: the tax is imposed on the charge to the customer.” While there is no case law that controls this dispute, this court’s precedents 30 also favor the District’s contention that the OTCs owe sales tax on their retail margins pursuant to § 47-2001 (n)(1)(C). The OTCs cite two of this court’s decisions in support of their argument that, in order to be a “vendor” liable for sales tax, the seller must provide the underlying service in addition to merely selling or charging for it. Neither case that the OTCs cite squarely supports that proposition: both Acme, 530 A.2d at 712-16 (discussing the scope of “public stenographic services”), and Hospitality Temps, 926 A.2d at 134-38 (discussing the scope of “real property maintenance services”), addressed whether a service being offered falls within one of the categories enumerated in the sales tax law. These cases do not hold that, to be a “vendor,” a taxpayer must both sell or charge for an enumerated service and personally provide it as well. The parties also draw starkly different conclusions from this court’s decision in Square 345 Ltd. P’ship v. District of Columbia. In Square 345, this court addressed the question whether a hotel’s so-called “attrition fees” are subject to sales tax as a retail sale of a hotel room. 927 A.2d at 1022. “Attrition fees” result when a group contracts with a hotel to make available a block of rooms at a given price until a certain date, typically so that the group’s members can attend some event. Id. If the group’s members do not reserve some agreed-upon minimum number of rooms, the group is responsible for the difference between the number 31 of room nights actually used and the number of room nights guaranteed; that amount is called an attrition fee. Id. This court in Square 345—after observing that “the statute permits the District to tax the hotel ‘for the privilege of selling certain selected services,’ including the ‘sale of or charges for any room or rooms . . . furnished to a transient by any hotel’”—held that the attrition fee was subject to sales tax because the hotel “provides a [taxable] ‘service’ when it sets aside a room block for a group and its participants at a discounted rate for a specified period of time.” Id. at 1024. The OTCs claim that the Square 345 opinion is inconsistent with the reading of the statute that this court announces today because Square 345 placed the tax burden on the hotel and did not turn the intermediary group into a “vendor” responsible for sales tax. We disagree. In Square 345, the hotel was, in a meaningful sense, “selling” the block of rooms to the group in exchange for receiving the guaranteed attrition fee. The Square 345 court explained this explicitly: Once the group contracts for the room block, the group’s participants obtain the right to reserve a room at the favorable rate. During the contractually specified period, no persons other than the group’s participants are permitted to reserve the rooms set aside in the room block. This exclusive right to occupy the rooms, upon reservation, thereby renders the group’s participants plainly within the definition of transients as provided by 32 the Code. The statute does not require the transient to actually exercise his or her right to occupy in order for the service to be taxable; therefore, the attrition fee falls within the category of taxable events covered by D.C. Code § 47-2002. Id. at 1024 (internal citations omitted). While both the OTCs here and the group that guaranteed the attrition fee there can be characterized as “intermediaries” in some sense, the reasoning from Square 345 does not apply to the OTCs operating pursuant to the merchant model. The District’s argument in Square 345 highlights the differences between the two cases. There the District argued, in the alternative, that “the group who enters into the contract with a hotel should be considered the transient because it makes the block reservation on behalf of its participants and pays the total contracted costs of the rooms should the participants fail to do so.” Id. at 1023. The same dynamic is not at work in this case, and it would make no sense to view the OTCs as “transients” under the tax code. To the extent that Square 345 dealt with a travel intermediary and did not make that intermediary a “vendor” liable for sales tax, however, we acknowledge that Square 345 lends some support to the OTCs’ argument. But it is scant support, both because these two intermediaries appear eminently distinguishable, and because other parts of the Square 345 reasoning contradict the OTCs’ position here. In Square 345, the hotel argued that collecting an attrition fee did not fall within the taxable service because no physical furnishing occurred. See id. at 1023. The Square 345 court rightly 33 rejected that argument because it was the setting aside of rooms—rather than any actual furnishing—that incurred sales tax liability. See id. at 1024. The same reasoning applies in this case. Whether or not the OTCs actually “furnish,” they sell or charge for hotel rooms in the District of Columbia. They are therefore “vendors” liable for sales tax, and neither Square 345 nor any other precedent forecloses that result.5 Finally, the OTCs argue that the imposition of back sales taxes is unfair and foreclosed by the four affirmative defenses of laches, waiver, equal protection, and the statute of limitations. We disagree. “Laches is the principle that equity will not aid a plaintiff whose unexcused delay, if the suit were allowed, would be prejudicial to the defendant.” Fed. Mktg. 5 While both parties cite a slew of case law from other jurisdictions in support of their arguments, today’s holding is consistent with the way most other courts have dealt with the issue. The OTCs cite many cases holding that they do not “furnish rooms.” For the reasons discussed, however, the OTCs need not furnish rooms to be liable for the District sales tax. The District cites cases in which courts applying tax statutes aimed at taxing the economic activity of selling or charging for hotel rooms have interpreted those statutes as applying to the entirety of the OTCs’ merchant model sales. The OTCs attempt to distinguish these cases by arguing that none of them dealt with a statute with the District’s definition of “sale.” But this court has already rejected the OTCs’ argument that the definition of “sale” in § 47-2001 (q) somehow turns § 47-2001 (n)(1)(C) from a sales tax into an operator’s tax. 34 Co. v. Va. Impression Prods. Co., 823 A.2d 513, 525 (D.C. 2003). This jurisdiction, however, has accepted the principle of nullum tempus occurrit reipubliciae (“no time runs against the state”), by which neither laches nor statutes of limitations will constitute a defense to suit by the sovereign in the enforcement of a public right. See New 3145 Deauville, L.L.C. v. First Am. Title Ins. Co., 881 A.2d 624, 629 (D.C. 2005). The OTCs do point to a case in the District that has not followed the doctrine, but that exception is limited to zoning enforcement actions and the doctrine squarely applies in the tax collection context. See Stonewall Constr. Co. v. McLaughlin, 151 A.2d 535, 536 (D.C. 1959). And even assuming that laches were an available defense, the equitable remedy would not be appropriate here because “if the party interposing the defense of laches substantially contributes to the delay he is precluded from taking advantage of the defense.” Evans v. United States Fid. & Guar. Co., 127 A.2d 842, 848 (D.C. 1956). While the OTCs claim that the District has known about the alleged noncompliance for nine years and taken no action whatsoever, prejudicing the OTCs because they will not be able to seek reimbursement from past customers, the OTCs’ fairness argument is ultimately unavailing. It is clear from looking at the OTCs’ statements to investors and to the SEC that the OTCs understood, since at least 2002, that they might owe sales tax on the full amount of their merchant model sales. Any laches argument the OTCs might have is severely undermined 35 by the OTCs’ own failure to seek guidance from the District concerning their potential sales tax obligations for more than ten years. Waiver is the unilateral, voluntary, and intentional relinquishment of a known right. In re Thomas, 740 A.2d 538, 547 (D.C. 1999). The OTCs’ waiver argument is closely related to their laches argument. In support of waiver, the OTCs point to the District’s delay in bringing this case, its practice of accepting sales tax from the hotels based only on the “net rates,” and a quotation from an article in the Washington Business Journal in which a former Attorney General suggested that litigation against the OTCs would be a “waste of time.” Yet none of these three fairly evinces waiver. Allowing a defense of waiver based on the District’s mere failure to bring the action earlier would eviscerate the principle of nullum tempus occurrit reipubliciae discussed above. And the fact that the District accepted sales tax indisputably owed to it on one part of a transaction in no way suggests waiver of a prospective claim for sales tax on another part of the transaction. And finally, the quotation from former Attorney General Peter Nickles was taken out of context. When considered in full, that statement makes clear that the District was keeping its options open: [D.C. Attorney General] Nickles, however, said he is monitoring [similar sales tax] cases in other jurisdictions but would not take any action until a court delivers a “definitive decision.” Until then, he said, action is a 36 waste of time. “This litigation is going to go on a very long time,” he said. “When it becomes clear there is a case we will decide whether to take action.” Jonathan O’Connell, D.C. Could Be Losing Hotel Taxes to Online Companies, Wash. Bus. J. (May 29, 2009). The equal protection guarantees contained in the United States Constitution are violated when a law is not applied evenhandedly. Smith v. United States, 460 A.2d 576, 578, n.3 (D.C. 1983). The OTCs cite a number of cases that point to a “duty of consistency” that applies when the government is interpreting and applying tax laws to similarly situated taxpayers. These “duty of consistency” cases stand for the proposition that the government may not interpret a tax statute to apply to one taxpayer and not to a similarly situated one. As the trial court explained, however, there is no evidence that the District has ever found that its sales tax law does not apply to other OTCs’ merchant model transactions, and so this case does not really involve a claim of inconsistent application of a tax law. Rather, in identifying a small OTC that the District has not also sued for failure to pay sales taxes, the OTCs are effectively making a selective enforcement claim. “To support a defense of selective enforcement or discriminatory prosecution, appellant must show that the government’s selection of it for prosecution has been based upon some form of invidious or otherwise impermissible form of discrimination, or is arbitrary and capricious.” Hospitality Temps, 926 A.2d at 37 140. No such improper motivation is alleged here. It does not violate equal protection principles for the District to make enforcement decisions based on whether successful litigation will yield sufficient revenue to make legal action worthwhile, which is what appears to have happened in this case. Finally, the Superior Court properly rejected the OTCs’ statute of limitations argument, which is based on D.C. Code § 47-4301 (a)’s requirement that “tax imposed under this title shall be assessed within three years after the return was filed.” While the trial court suggested that this action might be taken out of the statute of limitations by the nullum tempus occurrit reipublicae doctrine, reliance on that doctrine is unnecessary here because the statute provides a clear exception to the three-year limitation for a vendor who fails to file the required monthly and annual sales tax returns. See id. §§ 47-2015 (a), -2017, -4301 (d)(1)(C). Indeed, § 47-4301 (d)(1)(C) provides that, in the case of a vendor’s failure to file a tax return, “the tax may be assessed, or a proceeding in court for the collection of the tax may begin without assessment, at any time.” As we have held here, the OTCs are vendors responsible for sales tax on the entirety of their merchant model transactions, and—by their own admission—did not file sales tax returns on these sales. While the OTCs attempt to rely on the tax returns filed by the hotels to trigger the three-year statute of limitations, there is no provision in the District’s 38 tax code that would allow one taxpayer to bootstrap off of another’s tax return in this way. Because the OTCs failed to file tax returns on what were taxable sales in the District, this case falls squarely within the “failure to file” exclusion of § 474301 (d)(1). The statute of limitation does not bar this action. Like the trial court, we conclude that an analysis of the sales tax law’s structure, purpose, and legislative history is sufficient to resolve the ambiguity that existed on the face of the law. Because ambiguity does not remain after the normal tools of statutory of construction have done their work, the Acme ambiguity rule does not come into play. We hold that the OTCs, in their merchant model transactions, were engaging in “the sale or charge for any room . . . furnished to transients by any hotel” within the meaning of D.C. Code § 47-2001 (n)(1)(C), and are therefore vendors liable for the District sales tax.