Opinion ID: 2387176
Heading Depth: 1
Heading Rank: 3

Heading: Nursing Homes as Residential Apartments

Text: The nursing home operators argue that the commission erred when it ruled that the nursing homes were not residential apartments under section 144.030.2(23)(a) and, consequently, not entitled to the domestic use exemption. Section 144.030.2(23) was amended effective August 28, 1994, providing a sales tax exemption for: all sales of metered water service, electricity, electrical current, natural, artificial or propane gas, wood, coal or home heating oil for domestic use and in any city not within a county, all sales of metered or unmetered water service for domestic use; (a) Domestic Use means that portion of metered water service, electricity, electrical current, natural, artificial or propane gas, wood, coal or home heating oil for domestic use and in any city not within a county, metered or unmetered water service, which an individual occupant of a residential premise uses for nonbusiness, noncommercial or nonindustrial purposes. Utility service through a single or master meter for residential apartments or condominiums, including service for common areas and facilities and vacant units, shall be deemed to be for domestic use. Each seller shall establish and maintain a system whereby individual purchases are determined as exempt or nonexempt;.... Section 144.030.2(23)(c) provides that individuals making purchases on behalf of occupants of residential apartments or condominiums shall have standing to apply to the director of revenue for credit or refund. The commission correctly decided that the nursing homes are residential facilities but erred in ruling that the nursing homes are not residential apartments. The statute does not define residential apartments. The rules on construing revenue laws are in equipoise in this case. Statutes imposing taxes are to be construed against the taxing authority and in favor of the taxpayer. Columbia Athletic Club v. Director of Revenue, 961 S.W.2d 806, 809 (Mo. banc 1998). However, statutes creating exemptions from taxation are strictly construed against the taxpayer. Hyde Park Housing Partnership v. Director of Revenue, 850 S.W.2d 82, 84 (Mo. banc 1993). In Hyde Park this Court stated: [t]he primary rule of statutory construction is to ascertain the intent of the lawmakers by construing words used in the statute in their plain and ordinary meaning. Id. Absent statutory definition, words used in statutes are given their plain and ordinary meaning with help, as needed, from the dictionary. Columbia Athletic Club, supra at 809. Webster's Third New International Dictionary (1993) defines an apartment as a room or a set of rooms used as a dwelling and located in a private house, a hotel, or a building containing only such rooms or suites with necessary passageways and hallways, or more simply, a building made up of individual dwelling units. An apartment building or apartment house is [a] building containing a number of units and usually having conveniences (as heat and elevators) in common. Id. Nursing homes are residential facilities and are apartments under the common dictionary definition. These nursing homes have a number of dwelling units, and they usually have common conveniences, including heat and elevators. The nursing home residents, like those in apartments or condominiums, live in these units and use these utilities for domestic purposes. Likewise, the commission's decision granted a sales tax exemption to those portions of a complex designed for senior citizens that was residential only and denied the exemption for those areas of the facility where residents receive some level of nursing care. The economic reality is that sales taxes on utilities are ultimately passed on to the residents. It hardly makes sense to impose the tax burden on those who are receiving some level of direct care while reserving the exemption for those who are less in need of care. We do not think that the legislature intended this result. Nursing homes are special homes for their residents. The residents could have leased regular apartments but, due to their special needs, they have found themselves in these specialized facilities to have health and other care services provided by these nursing homes. Similarly these residents could have opted to stay in their homes and receive home health care services, without having their utilities subject to sales tax. Nothing about the care that is provided detracts from the notion that these nursing homes are residential apartments. As such, they are entitled to the sales tax exemption. Moreover, as noted above, the current method of imposing and exempting nursing homes from payments of sales taxes on various utilities is inconsistent. The Gatesworth pays sales tax on its gas and water services but it is exempt on its electrical service. Oak Forest North and Avalon Garden pay sales taxes on their electrical and water services but they are exempt on their gas services. The Heritage Care Center pays sales tax on its electrical and gas services but it is exempt on its water service. The record is devoid of any legitimate explanation for these inconsistencies, other than the differing policies of their utility providers. Hence, exempting these nursing homes from sales tax on utilities under the domestic use exemption will help solve this inconsistent treatment. The respondent director argues that the nursing homes, regardless of whether or not they are residential apartments, are not entitled to the exemption. The director contends that to claim a refund, a person must make a nondomestic purchase of a utility service and then the same person must put the purchase to a domestic use. Because the nursing homes are the purchasers, according to the director, the inquiry must be whether the purchasers put the utility purchase to a domestic use. We do not agree with the director's construction of the statute. In Bert v. Director of Revenue, 935 S.W.2d 319, 322 (Mo. banc 1996), the Court stated: [T]he statute's refund provision rationally assumes that nondomestic purchasers may purchase some utility service for domestic use and permits nondomestic purchasers to recover sales tax paid for that portion of their purchases that are tax exempt because the purchases are for domestic use. Furthermore, section 144.030.2(23)(c) provides, in part: [E]ach person making domestic purchases on behalf of occupants of residential apartments or condominiums through a single or master meter, including service for common areas and facilities and vacant units, under a nonresidential utility service rate classification may ... apply for credit or refund to the director of revenue.... The person making such purchases on behalf of occupants of residential apartments or condominiums shall have standing to apply to the director of revenue for such credit or refund. Thus, the purchasers (nursing homes) may purchase utility services for their residents for domestic use, and the law allows the nursing homes to recover the sales tax paid for that portion for which they are exempt because of the domestic use.