BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
RANGER CREEK GUEST RANCH FROM A )
DENIAL OF FILING EXTENSION DECISION ) Docket No. 2001-133
OF THE EXCISE DIVISION OF THE )
DEPARTMENT OF REVENUE )
FINDINGS OF FACT
CONCLUSIONS OF LAW
DECISION AND ORDER
Ranger Creek Guest Ranch (Petitioner), by Bill and Sue Comisford, owners, appearing pro-se.
Department of Revenue (Department), Cathleen D. Parker, Assistant Attorney General.
This matter was considered by the State Board of Equalization (Board) consisting of Edmund J. Schmidt, Chairman, Roberta A. Coates, Vice-Chairman, and Sylvia Lee Hackl, Member, after a hearing held on April 30, 2002, pursuant to a Hearing Order dated November 26, 2001. This appeal arises from a decision of the Department assessing sales tax, penalty and interest against Petitioner for the 2000 tax year. Since the parties have entered into a Payment Plan Agreement for the delinquent sales taxes owed by Petitioner, the sole issue on appeal is whether the Department erred in refusing to waive the penalty and interest assessments.
Upon application of any person adversely affected, the State Board of Equalization is required to [d]ecide all questions that may arise with reference to the construction of any statute affecting the assessment, levy and collection of taxes, Wyo. Stat. §39-11-102.1(c)(iv), review final Department actions concerning state excise taxes, and "[h]old hearings after due notice in the manner and form provided in the Wyoming Administrative Procedure Act [Wyo. Stat. §§ 16-3-101 through 16-3-115] and its own rules and regulations of practice and procedure. Wyo. Stat. §39-11-102.1(c)(viii); see also Rules, Wyoming State Board of Equalization, Chapter 2. An appeal must be filed with the Board within thirty (30) days of the final administrative decision at issue. Rules, Wyoming State Board of Equalization, Chapter 2, §5(e).
The Department issued its final decision on July 4, 2001. Petitioner timely filed its appeal via a letter dated July 13, 2001, and received by the Board on July 24, 2001.
Petitioner operates a guest ranch in the Big Horn Mountains, near Shell, Wyoming. Due to Petitioners failure to timely file its sales tax return for the 2000 tax year, the Department issued a delinquency notice. Petitioner sought to enter into a payment plan for the taxes due, and asked for relief from any penalty or interest assessment. The Department denied Petitioners request for relief from the penalty and interest assessments, which decision Petitioner appealed to the Board. The sole issue on appeal concerns the Departments decision to not waive the penalty and interest assessments.
FINDINGS OF FACT
1. Bill and Sue Comisford purchased the Ranger Creek Guest Ranch in October 1998. From October through May 1999, they sought to restore the property to an operable condition, repairing and upgrading the facilities. In June 1999, Ranger Creek Guest Ranch opened for business. The guest ranch operates as a dude ranch in the summer, and caters primarily to snowmobilers in the winter. [Notice of Appeal; Petitioners Preliminary Statement; Exhibit 104; Board Hearing, Testimony of Bill Comisford].
2. On June 23, 2000, Petitioner applied for, and was issued, a Sales/Use Tax License. [Exhibit 102]. On July 23, 2000, Petitioner filed its Sales/Use tax return for the period ending December 31, 1999. Petitioner paid a total of $1,477.60, including tax, interest and penalty. [Exhibit 103].
3. During the winter of 2000/2001, very little snow fell in the Big Horn Mountains. As a result, business at the guest ranch was minimal. Most snowmobilers either canceled their reservations or left early due to the lack of snow. [Notice of Appeal; Petitioners Preliminary Statement; Exhibit 101].
4. Due to cash flow problems resulting from the poor winter business, Petitioner failed to timely file its sales tax return for 2000 and pay the tax due. Relevant dates, and the sequence of events, were as follows:
January 31, 2001: Petitioners sales tax return due to Department
March 15, 2001: Department sends notice that return is overdue and balance due on the account
March 22, 2001: Petitioner files return, but no payment made
March 26, 2001: Department sends notice that adverse action would begin in 10 days if payment not received
April 4, 2001: Department sends notice that account is more than 30 days delinquent and collection actions begun
May 10, 2001: Department notifies Petitioner that account is 60 days delinquent and tax lien has been filed
June 8, 2001: Department sends notice that failure to pay will result in account being turned over for collection
June 20, 2001: Petitioner contacts Department seeking to enter into payment plan; Petitioner also requests relief from paying any interest or penalty
July 4, 2001: Department denies request for filing extension
July 23, 2001: Petitioner signs payment plan agreement
[Stipulated Updated Summary of Uncontroverted Facts, Paragraphs 1- 6; Exhibits 503 - 507; Board Hearing, Testimony of Bill Comisford, Testimony of Richard Reynders].
5. Petitioner admits it collected sales tax from customers, but then used those funds for other purposes due to cash flow problems. [Board Hearing, Testimony of Bill Comisford].
6. Petitioner, along with other businesses in the mountains, sought disaster assistance from the Small Business Administration, through the Governors Office. On July 3, 2001, Governor Geringer certified to the Area Director of the SBA that the businesses suffered substantial economic injury as a result of the lack of snowfall. [Exhibit 101]. Although the SBA denied the requested assistance, Petitioner contends that the lack of snowfall and resultant impact on its business constitutes an extenuating circumstance justifying relief from the imposition of penalty and tax, pursuant to Sections 39-15-108(b)(iii) and 39-15-108(c)(xv) of the Wyoming Statutes. [Petitioners Preliminary Statement; Board Hearing, Testimony and Argument of Bill Comisford].
7. Richard Reynders, Western District Manager for the Departments Excise Tax Division, testified about the multiple notices sent to Petitioner regarding its overdue sales tax liability. Petitioners request for a waiver of the interest and penalty assessments was denied for two reasons: (1) the Department had to file numerous delinquency notices in order to obtain Petitioners compliance with the filing requirements; and (2) Petitioner had the use of the sales tax monies but made no effort to pay its tax obligation until collection action was threatened. [Board Hearing, Testimony of Richard Reynders].
8. The purpose of assessing penalty and interest on an overdue sales tax obligation is two-fold: (1) to prevent a vendor who is not paying the tax when it is due from having a competitive advantage - by virtue of augmenting its cash flow with tax revenues - over a vendor who is timely paying its tax; and (2) to keep the recipients of the tax revenues - the local governments - whole. [Board Hearing, Testimony of Richard Reynders].
9. Any Discussion above or Conclusion of Law below which includes a finding of fact may also be considered a Finding of Fact and, therefore, is incorporated herein by this reference.
CONCLUSIONS OF LAW
10. The letter of appeal by Petitioner was timely filed and the Board has jurisdiction to determine this matter.
11. The legislature has provided for the imposition and collection of sales tax in the State of Wyoming through the Selective Sales Tax Act of 1937. Wyo. Stat. §39-15-102(a). Administration of the act is vested in the Department of Revenue. Wyo. Stat. §39-15-102(b).
12. State law requires every vendor to obtain a sales tax license. Wyo. Stat. §39-15-106(a). In addition, the law sets forth certain requirements for filing a return and for paying the tax due. Wyo. Stat. §§ 39-15-107(a), (b)(v). Statutes also set forth enforcement provisions, including, among other things, the imposition of interest and penalties. Section 39-15-108(b)(i) of the statutes requires interest to be assessed from the time the return was due. Section 39-15-108(c)(i) permits the imposition of a penalty of ten percent [i]f any part of the deficiency is due to negligence or intentional disregard of rules and regulations but without intent to defraud.
13. The Board has repeatedly held, consistent with decisions of the Wyoming Supreme Court, that the Department cannot waive the statutorily prescribed interest. In the Matter of the Appeal of Rebecca Painter, M.D., 1998 WL 727617 (Wyo. St. Bd. Eq.), ¶ 14; In the Matter of the Appeal of Mark VII Equipment, Inc., 1998 WL 749154 (Wyo. St. Bd. Eq.), ¶ 15 and cases cited therein; Morrison-Knudson Co. v. State Board of Equalization, 58 Wyo. 500, 135 P.2d 927, 936 (1943). This was indeed the rule under the original excise tax statutes. In 1999, however, the Legislature enacted amendments to the statutes, specifically permitting the Department to waive or credit both interest and penalties. 1999 Wyo. Sess. Laws Ch. 58. Section 39-15-108(b)(iii) of the Wyoming Statutes now provides, The department may credit or waive interest imposed by this subsection as part of a settlement or for any other good cause. A comparable provision, Wyoming Statute Section 39-15-108(c)(xv), permits the department to credit or waive penalties. See also Wyo. Stat. §§ 39-16-108(b)(ii), (c)(xvii) (parallel provisions for use tax).
14. The Department has promulgated rules as part of its administration of the Act. Rules and Regulations, Wyoming Department of Revenue, Chapter 2 (eff. 10/18/00). These rules parallel and complement the statutory provisions regarding licensing of vendors, report filing, and payment of taxes. Rules and Regulations, Wyoming Department of Revenue, Chapter 2, §§5(a), 6, and 10. Specific sections also deal with extensions of time for filing, payment plans, and assessment of interest for untimely filing. Rules and Regulations, Wyoming Department of Revenue, Chapter 2, §§6(d), 10(a) and 10(d). Section 10(b) provides that penalties may be waived if the taxpayer can demonstrate...
that other extenuating circumstances existed to cause delinquency. The Department has not, however, promulgated any rule relative to the waiver of interest.
15. As a guest ranch providing lodging, meals and other amenities to its guests, Petitioner was required to obtain a sales/use tax license, to collect sales tax, and to timely file returns and remit sales tax revenues to the Department. Wyo. Stat. §§ 39-15-103(a)(i)(G), 39-15-106(a), 39-15-107(a), (b)(v); Rules and Regulations, Wyoming Department of Revenue, Chapter 2, §§ 5(a), 6, 10, 14(dd). The burden was on Petitioner to know and comply with applicable tax statutes and regulations. Morrison-Knudson Co., Inc. v. State Board of Equalization, 135 P.2d at 938; In the Matter of the Appeal of Natural Progression Builders, Inc., 1998 WL 727606 (Wyo. St. Bd. Eq.), ¶ 12.
16. Petitioners tax return for the 2000 tax year was due to the Department, along with the necessary payment, by January 31, 2001. Wyo. Stat. §39-15-107(a)(i); Rules and Regulations, Wyoming Department of Revenue, Chapter 2, §6(c). Petitioners failure to timely file its tax return, or to remit the tax due, justified the Departments assessment of interest and penalty. Wyo. Stat. §§ 39-15-108(b), (c); Rules and Regulations, Wyoming Department of Revenue, Chapter 2, §10(a).
17. Under the Boards Rules, the burden is on Petitioner to demonstrate, by a preponderance of the evidence, that the Departments decision to not waive the interest and penalty assessments is incorrect. Rules, Wyoming State Board of Equalization, Chapter 2, § 20. Petitioner acknowledges that it failed to timely file its return, and to remit the tax due. Petitioner further admits that it used the taxes collected for its own purposes. Petitioner argues that the circumstances surrounding its business difficulties - the lack of snowfall in the winter of 2000/2001 and the resulting decrease in ranch guests - constitute good cause justifying a waiver of interest and penalty. Petitioners evidence and argument are not sufficient to carry its burden of demonstrating error in the Departments imposition of, and refusal to waive, interest and penalty.
18. The Board has stated, Administrative tax penalties exist for the purpose of encouraging voluntary compliance and not for other purposes, such as the raising of revenues. For penalties to be effective, similarly situated taxpayers should be treated similarly. Penalties should be sufficient to deter noncompliance before it happens and to encourage noncompliant taxpayers to correct noncompliance. In the Matter of the Appeal of Exxon Company, U.S.A., 1999 WL 225754 (Wyo. St. Bd. Eq.), ¶ 12. The imposition of interest and penalty in this case was consistent with this purpose, and will be affirmed.
IT IS THEREFORE HEREBY ORDERED:
That the Department of Revenues denial of Petitioners request for waiver of the interest and penalty assessments is hereby AFFIRMED.
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Pursuant to Wyo. Stat. § 16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in the appropriate district court by filing a petition for review within 30 days of the date of this decision.
Dated this 10th day of June, 2002.
Edmund J. Schmidt, Chairman
Roberta A. Coates, Vice-Chairman
Sylvia Lee Hackl, Member
Wendy Soto, Executive Secretary
 Petitioners letter of June 20 [Exhibit 504] expresses Petitioners desire to enter into a payment plan and obtain any relief on the penalty and interest. In response, the Department issued a form entitled Filing Extension Request Denied. [Exhibit 505]. At the time the Department sent that form, Petitioner had already filed its return; it had not, however, made any payments. Section 39-15-107(a)(i) of the Wyoming Statutes permits the Department to allow an extension for filing a return and paying any tax due . . .. (Emphasis added). The Departments form letter thus must have been intended in this case as a denial of an extension of time for payment.