Court Opinion

ID: 7880471
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:22:21.6789+00
Date Added: 2024-06-11T16:31:34.096294
License: Public Domain

SACKETT, Judge
(dissenting).
I dissent.
I would find the penalty imposed by the Department unreasonable, arbitrary, and capricious. I would remand to the Department to order such penalty as will assure the Department collection of sales tax from Empire, but will not punish its subscribers in the process.
The majority has failed to address or consider the impact of its decision on Empire’s subscribers and has laid down a precedent that allows the Department to suspend the sales tax permit of a privately owned utility without consideration of the subscribers.
The sole question before us is whether the Department’s revocation of Empire’s retail sales tax permit was unreasonable, arbitrary, or capricious under the facts present in this case. No person is allowed to transact any retail business in this state without holding a valid retail sales tax permit issued by the Department. Empire operates a cable television business located in Bellevue, Iowa, and was issued a retail sales tax permit by the Department pursuant to Iowa Code section 422.53. The sale of taxable cable television services without a valid retail sales tax permit constitutes a serious misdemeanor under Iowa Code section 422.58(2)(b).
At the revocation hearing, the Department presented evidence Empire had remitted its retail sales tax on an untimely basis for several months during 1990. However, the tax for all but three of these months had been paid, including penalty and interest. The evidence submitted by Empire indicates the difficulty in filing timely sales tax returns was due to its inability to retain a reliable bookkeeper. Accordingly, Empire indicated it had recently engaged a C.P.A. firm to take over and handle the preparation and submission of its sales tax returns.
Under Iowa Code section 422.53(5), the Department is authorized to revoke the sales tax permit of a retailer who fails to comply with the sales tax statutes and regulations thereunder. In addition, the Department is authorized to impose monetary penalties and to require a permit holder to post a surety bond to guarantee the collection of sales taxes. Iowa Code § 422.52(3). Notwithstanding the Department’s authority to impose monetary penalties and to require a surety bond, the Department determined the appropriate sanction to be imposed on Empire would be the revocation of its sales tax permit. However, by revoking Empire’s sales tax permit, the Department was seeking to punish Empire rather than to insure the collection of sales tax.
The purposes underlying the Iowa retail sales tax statute, Iowa Code section 422.42, et seq. are to provide for the collection of retail sales tax from retailers selling taxable goods or services within the State of Iowa. The penalty and revocation provisions of the statute are enacted solely for the purpose of providing enforcement powers to the Department in order to insure the collection of all tax due to the State of Iowa. The sales tax statute is not penal in nature. The Department’s sole function is to collect taxes. See Iowa Code § 421.17.
The revocation of Empire’s sales tax permit would require it to cease operation of its cable television business in Bellevue, Iowa, pursuant to Iowa Code section 422.58(2)(b). Not only would Empire be deprived of the revenue from the operation of its business, more importantly, the cable television subscribers of Empire in Bellevue would be unable to watch any cable television. There is no suggestion in the record to indicate the Department considered the impact of its decision on the public or it considered an alternative to revocation.
A five-day suspension does nothing to assure payment of future taxes. The Department has other remedies; for example, post*709ing of a bond would assure payment of the tax in the future, thereby serving the state’s interest in collecting sales tax, preserving Empire’s business, and, probably most importantly, preserving the cable service of innocent subscribers.
I would find the Department abused its discretion. See Meads v. Iowa Dep’t of Social Servs., 366 N.W.2d 555 (Iowa 1985).
SCHLEGEL, J., joins this dissent.