Opinion ID: 2446936
Heading Depth: 1
Heading Rank: 2

Heading: An Expected or Unexpected Decision

Text: Sneary contends in the alternative that, if the sales at issue constitute sales of tangible personal property subject to the sales tax, the result is unexpected under § 143.903, RSMo Supp.1993; therefore, the director cannot assess sales tax. Section 143.903(1) provides that an unexpected decision by a court or by the administrative hearing commission that imposes a tax credit, refund, or additional assessment shall apply only prospectively, beginning after the most recent tax period. Section 143.903(2) defines unexpected to mean that a reasonable person would not have expected the decision or order based on prior law, previous policy or regulation of the department of revenue. This Court recently interpreted the statute in Lloyd v. Director of Revenue, 851 S.W.2d 519 (Mo. banc 1993): The legislature did not intend to declare every decision unexpected merely because the director of revenue, an administrative law judge or a court construed a statute less favorably to the taxpayer than the taxpayer anticipated. Implicit in the statute is that a decision is unexpected if the decision overrules a prior case or invalidates a previous statute, regulation or policy of the director of revenue and the decision was not reasonably foreseeable. Id. at 523. The statute does not, therefore, preclude assessment of sales tax based upon a reasonable extension of the law or a reasonable application of the law to areas not previously specifically addressed. The assessment of sales tax to Sneary's architectural illustrations is not unexpected. Assessing sales tax on these transactions does not overrule a prior case or invalidate a previous statute or regulation. Sneary argues that it was the previous policy of the director not to assess tax on architectural services. Sales tax in this case, however, is assessed on Sneary's sale of tangible personal property. The director established its policy regarding architectural illustrations in 1985 when it assessed sales tax on their sale. Mellenbruch Studio v. Director of Revenue, Case No. RS-85-0079. The assessment was upheld by the administrative hearing commission in 1987. Id. Far from invalidating the director's tax policy, the Court's decision today merely affirms it. Sneary asserts that he was unaware of the director's policy regarding architectural illustrations. At the hearing, Sneary presented evidence that the Mellenbruch decision was not widely disseminated to Missouri's architectural community. Sneary misunderstands the purpose of § 143.903. Its purpose is to prevent application of tax decisions that change the law against those taxpayers who reasonably relied on the prior law. Lloyd, 851 S.W.2d at 523. The statute is not intended to impose a notice requirement on the director of revenue. Since our decision affirming the assessment of sales tax on transactions involving the sale of architectural illustrations does not overrule a prior case or invalidate a previous statute, regulation, or policy, the decision is not unexpected under § 143.903.