Court Opinion

ID: 9538787
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:41:39.072994+00
Date Added: 2024-06-11T14:58:09.759128
License: Public Domain

Abbott, J.,
dissenting: I base my dissent on the issue of legislative intent in adopting K.S.A. 1994 Supp. 79-3602.
As I understand the way the Kansas Department of Revenue (KDR) interprets the statute, if a single corporation purchases vehicles (for example) and plans to lease the vehicles out, the corporation pays no sales tax on the purchase but collects sales tax on each lease agreement. Here, Pemco apparently paid sales tax on the equipment when it was purchased. That fact is not an issue in this case and has no bearing on the dissent.
What is important is the language found in 79-3602(a) defining “persons” as meaning “any . . . corporation ... or any group or combination acting as a unit.”
In commenting on that language, the trial judge said:
“Since the statute does not say ‘other’ group or combination and simply says ‘any group or combination,’ this Court finds that the words of the statute do not preclude two corporations from acting as a unit for the purposes of this sales tax statute. Therefore, because the regulation at issue, K.A.R. 92-19-72, taxes two legally separate corporations, regardless of whether they act as a unit or as an affiliated business, the regulation exceeds its statutory authority and is therefore invalid.”
K.S.A. 1994 Supp. 79-3602, which has remained virtually unchanged since 1937, does not refer to any other group, as other statutes do. Nor has the Kansas Legislature specifically addressed the corporate relationships at issue herein. The trial court found that the legislative history gave no indication that the legislature *725had even considered related-company transactions. This position is echoed in a thoughtful, recently published analysis of the subject. See Comment, The Application of Kansas Sales Tax to Transactions Between Affiliated Companies, 42 Kan. L. Rev. 461, 469 (1994).
The trial court found that the meaning of the phrase “any group or combination acting as a unit” is ambiguous. KDR acknowledges “that inclusion of the word ‘other’ in K.S.A. 79-3602(a) might make the statute less ambiguous and that, in retrospect, more precise language and phrasing could have been used.” While I am mindful of die great weight to be accorded to KDR’s interpretation of 79-3602(a), through K.A.R. 92-19-72, see State ex rel. Stephan v. Kansas Racing Comm’n, 246 Kan. 708, 720, 792 P.2d 971 (1990), I am nevertheless persuaded that the Kansas Legislature understood the meaning of the words it used and used the words in their common and ordinary meaning. See Bank of Kansas v. Davison, 253 Kan. 780, 788, 861 P.2d 806 (1993).
If the legislature intended that the phrase in question was meant to merely embrace unincorporated corporations, as KDR asserts, it could have easily made such a distinction. It did not. Instead, by writing the phrase in a broad sweep, and by failing to address elsewhere within the Act’s penumbra the status of related or affiliated companies or corporations, I would conclude that the phrase in question includes a corporation and its wholly owned subsidiary. I would affirm the trial court.
Davis, J., joins the foregoing dissenting opinion.