BEFORE THE STATE BOARD OF EQUALIZATION

FOR THE STATE OF WYOMING

IN THE MATTER OF THE APPEAL OF )

SAM’S AUTO SALES & PARTS FROM A ) Docket No. 2004-61

DENIAL OF REFUND REQUEST BY THE )

EXCISE DIVISION OF THE DEPARTMENT )

OF REVENUE )

CORRECTED FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

This Corrected Findings of Fact, Conclusions of Law, and Order, is issued to correct typographical errors discovered after the Findings of Fact, Conclusions of Law, and Order was issued on December 22, 2004.

APPEARANCES

Thomas L. Lee for Sam’s Auto Sales & Parts (“Petitioner”).

William F. Russell, Assistant Attorney General, for the Department of Revenue (“Department”).

Steven F. Freudenthal, of Freudenthal, Salzburg & Bonds, P.C., filed an amicus brief on behalf of the Wyoming Automobile Dealers Association.

STATEMENT OF THE CASE

A used vehicle dealer, Petitioner purchased two vehicles from Cowboy Dodge, a new vehicle dealer. The new vehicle dealer transferred title on both vehicles to the used vehicle dealer with a manufacturer’s certificate of origin. When the used vehicle dealer registered the vehicles, it was obliged to pay sales tax. The used vehicle dealer sought a refund of the sales tax, claiming that sales tax did not apply to the transaction. The Department denied the request for refund. The Department relied on an exception to the sales tax relief available to all motor vehicle dealers for vehicles held in inventory. The parties agree that the case turns on the interpretation of the words, “properly licensed dealer.”

We will find for the Department.

ISSUE

Under Wyo. Stat. Ann. §39-15-107(b)(iii), must a licensed used vehicle dealer pay sales tax when it purchases a vehicle from a licensed new vehicle dealer, and title is transferred to the used vehicle dealer with a manufacturer’s certificate of origin?

Yes.

FINDINGS OF FACT

1. At all times pertinent to this matter, Petitioner was and is a used auto dealer properly licensed in the State of Wyoming, as a Used Vehicle Dealer. [Stipulated Facts ¶1].

2. On June 27, 2003, Petitioner purchased from Cowboy Dodge a 2003 Dodge Neon. [Stipulated Facts ¶2].

3. On July 10, 2003, Petitioner purchased from Cowboy Dodge a 2004 Chrysler Crossfire. [Stipulated Facts ¶3].

4. Cowboy Dodge is a new vehicle dealer. [Taped record of hearing].

5. The 2003 Dodge Neon and 2004 Chrysler Crossfire were held in inventory by Petitioner for resale. [Stipulated Facts ¶4].

6. Both the Dodge Neon and the Chrysler Crossfire were transferred by Cowboy Dodge to Petitioner with a manufacturer’s certificate of origin. [Stipulated Facts ¶5].

7. The title issued for the Chrysler Crossfire on October 6, 2004, states it had actual mileage of 22. [Exhibit 103]. The title issued for the Dodge Neon on October 6, 2004, states it had actual mileage of 24. [Exhibit 104].

8. In November of 2004, Petitioner paid $3772.90 in taxes and interest for the two automobiles. [Stipulated Facts ¶6]. (The Department did not seek penalties. [Taped record of hearing].)

9. The $3,772.90 paid for taxes and interest is the amount in controversy in this matter. [Stipulated Facts ¶7].

10. On January 8, 2004, Petitioner timely filed a request for a refund, which was denied. Subsequently, an appeal of that decision was properly perfected. [Stipulated Facts ¶8].

11. The parties agree that Petitioner would not have been obliged to pay sales tax on the transactions at issue under Wyoming statutes prior to 2000. [Taped record of hearing].

12. Petitioner must pay sales tax, if at all, due to statutory amendments that created an exception to Wyo. Stat. Ann. §39-15-107(b)(iii). This subsection addresses the obligation of motor vehicle dealers to pay sales tax on vehicles purchased and held in inventory.

13. The amendments to section 107(b)(iii) originated in the Wyoming House of Representatives. The Engrossed Bill which emerged from the Wyoming House HB 0015 included this element in the exception: “(B) Vendor does not hold a valid sales and service agreement from the manufacturer for the vehicle purchased.” [Taped record of hearing;

Petitioner’s Pre-Hearing Memorandum, Exhibit A]. This element did not survive in the final version of the exception to Wyo. Stat. Ann. §39-15-107(b)(iii).

14. Petitioner, Sam’s Auto Sales & Parts d/b/a Wyoming Auto Auction sells 400 to 600 cars a year. [Taped record of hearing].

15. Under the circumstances of this case, the Department interprets the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii) to require a used car dealer to pay sales tax when title is transferred from the manufacturer’s certificate of origin. [Taped record of hearing].

16. The Department’s interpretation of the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii) rests generally on a reading of the entire exception, and more specifically on an express reference to the manufacturer’s certificate of origin. [Taped record of hearing].

17. The Department interprets the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii) to be limited to a transfer with a manufacturer’s statement of origin or manufacturer’s certificate of origin. If the new vehicle dealer had transferred title to the vehicle into its own name before transferring title to the used vehicle dealer, the Department concedes that there would be no sales tax due. [Taped record of hearing]. In the Department’s informal view, if the new vehicle dealer transferred title to itself from the manufacturer’s certificate of origin, the vehicle would no longer be a new vehicle, but there would be no sale because there would be no consideration paid. [Taped record of hearing]. If the new vehicle dealer then sold the vehicle to a used vehicle dealer, even with mileage less than 1000 miles, the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii) would not apply. [Taped record of hearing].

18. Any Conclusion of Law set forth below which includes a Finding of Fact may also be considered a finding of fact and is therefore incorporated herein by reference.

PRINCIPLES OF LAW

19. Upon application of any person adversely affected, the Board must 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 and its own rules and regulations of practice and procedure.” Wyo. Stat. Ann. §39-11-102.1(c)(viii). The Board must “[d]ecide all questions that may arise with reference to the construction of any statute affecting the assessment, levy and collection of taxes, in accordance with the rules, regulations, orders and instructions prescribed by the department.” Wyo. Stat. Ann. §39-11-102.1(c)(iv).

20. The Board’s Rules provide that:

Except as specifically provided by law or in this section, the Petitioner shall have the burden of going forward and the ultimate burden of persuasion, which burden shall be met by a preponderance of the evidence. If Petitioner provides sufficient evidence to suggest the Department determination is incorrect, the burden shifts to the Department to defend its action. For all cases involving a claim for exemption, the Petitioner shall clearly establish the facts supporting an exemption.

Rules, Wyoming State Board of Equalization, Chapter 2, §20.

21. Except as exempted by statute, the State of Wyoming levies an excise tax upon:

(M) The sales price paid for motor vehicles...as defined by W.S. 31-1-101...

Wyo. Stat. Ann. §39-15-103(a)(I). “Vehicle” means a device in, upon or by which any person or property may be transported or drawn upon a highway.... Wyo. Stat. Ann. §31-1-101(a)(xxvi); Wyo. Stat. Ann. §31-16-101(xxv). “Motor vehicle” means every vehicle which is self-propelled.... Wyo. Stat. Ann. §31-1-101(a)(xv).

22. Wyoming Statute Annotated §39-15-107(b)(iii) provides that:

Motor vehicle vendors...shall not be required to pay sales taxes on motor vehicles...if they are registered in the vendor’s name, are included as a part of the vendor’s inventory and are held principally in the conduct of the vendor’s business for sale, demonstration or delivery prior to sale and use, except a motor vehicle vendor shall be liable for payment of sales and use tax on the transfer of a motor vehicle with less than one thousand (1,000) miles on the odometer he purchases if:

(A) The vendor is not a properly licensed dealer under W. S. 31-16-101 et seq.;

(B) The vehicle he purchased was transferred with a manufacturer’s statement of origin or manufacturer’s certificate of origin from a properly licensed dealer; and

(Emphasis supplied). The exception language was added by the Legislature in 2000. Wyo. Session Laws 2000, Ch. 82, §1.

23. “Sale” means any transfer of title or possession in Wyoming for a consideration. Wyo. Stat. Ann. §39-15-101(a)(vii).

24. “Retail sale” means any sale...for any purpose other than for resale.... Wyo. Stat. Ann. §39-15-101(a)(vi).

25. “Wholesale sale” means a sale of tangible personal property...to a vendor for subsequent sale. Wyo. Stat. Ann. §39-15-101(a)(xvi). For the purpose of exempting sales of services and tangible personal property consumed in production, wholesale sales are exempt from the Wyoming State Sales Tax. Wyo. Stat. Ann. §39-15-105(a)(iii)(F).

26. “Vendor” means any person engaged in the business of selling at retail or wholesale tangible personal property which is subject to taxation under the Wyoming State Sales Tax. “Vendor” includes a vehicle dealer as defined by Wyo. Stat. Ann. §31-16-101(a)(xviii). Wyo. Stat. Ann. §39-15-101(a)(xv).

27. “Vehicle dealer” or “dealer” means any person engaged in the business of selling or exchanging vehicles who buys and sells, or exchanges retail (3) or more vehicles or six (6) or more new vehicles with a gross vehicle weight rating over twenty-six thousand (26,000) pounds in any one (1) calendar year.... Vehicle dealers are classified as follows:

(A) A “new vehicle dealer” means a vehicle dealer that deals solely in new vehicles or in new and used vehicles. It also includes a person who in the ordinary course of business is engaged in the business of selling new motor vehicles to consumers or other end users and who holds a valid sales and service agreement, franchise or contract, granted by a manufacturer, distributor or wholesaler for the sale of its motor vehicles.

(B) A “used vehicle dealer” means a vehicle dealer that deals solely in used vehicles.

Wyo. Stat. Ann. §31-16-101(a)(xviii).

28. “Franchise or dealer’s selling agreement,” or the “sales and services agreement,” means a contract or agreement between a vehicle dealer and a manufacturer or its distributor or factory branch by which the dealer is authorized to engage in the business of selling any specified make of new vehicles. Wyo. Stat. Ann. §31-16-101(a)(x).

29. “New vehicle” means a motor vehicle which is in the possession of a manufacturer or has been sold by a manufacturer for distribution in the United States to holders of a valid sales and service agreement, franchise or contract granted by the manufacturer for sale of the new motor vehicle and which is in fact new on which the original motor vehicle title has not been issued from the franchised dealer. Wyo. Stat. Ann. §31-16-101(a)(xii).

30. “Used vehicle” means any vehicle other than a new vehicle. Wyo. Stat. Ann. §31-16-101(a)(xvi).

31. No person shall hold himself out as being in the business of a retail seller of vehicles, or act as retail vehicle dealer...without a valid license issued by the [Wyoming Department of Transportation]. Wyo. Stat. Ann. §31-16-102.

32. No vehicle dealer shall:

(vi) Engage in a type of business respecting the sale or exchange of new or new and used vehicles for which he is not licensed;

(x) Display for sale, exchange or sell any new motor vehicle for which the vehicle dealer does not hold a valid franchise.

(xii) Advertise, display, demonstrate, exchange or sell any vehicle with less than one thousand (1,000) miles on the odometer, unless the person is a properly licensed dealer, or the person has obtained a valid Wyoming title in his name or business name and has paid the applicable sales or use tax on the vehicle in his name before advertising, displaying, demonstrating, exchanging or selling the vehicle.

Wyo. Stat. Ann. §31-16-108(a)(vi),(x),(xii). The legislature enacted subsection 108(a)(xii) in 2000, along with the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii). Wyo. Session Laws 2000, Ch.82, §1.

33. No person shall transfer ownership of a vehicle from a manufacturer’s statement of origin or a manufacturer’s certificate of origin unless the person is the manufacturer of the vehicle or a properly licensed dealer. Wyo. Stat. Ann. §31-2-104(g). The legislature enacted subsection 104(g) in 2000, along with the exception language of Wyo. Stat. Ann. §39-15-107(b)(iii). Wyo. Session Laws 2000, Ch.82, §1.

34. Upon receipt of an application and payment of fees any county clerk shall, if satisfied that the applicant is the owner of the vehicle for which the application for certificate of title is made, issue a certificate of title.... The county clerk shall not deliver a certificate of title issued under this section until presentation of a receipt for payment of sales...tax pursuant to Wyo. Stat. Ann. §39-15-107(b).... Wyo. Stat. Ann. §31-2-103(d).

35. Words and phrases shall be taken in their ordinary and usual sense, but technical words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical import. Wyo. Stat. Ann. §8-1-103(a)(I).

36. The initial step in arriving at a correct interpretation of a statute is an enquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection. A statute must be construed as a whole in order to ascertain its intent and general purpose and also the meaning of each part. We give effect to every word, clause and sentence and construe all components of a statute in pari materia. Parker Land & Cattle Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1042 (Wyo. 1993).

37. A special provision that has been promulgated by statute prevails over general provisions. Matter of Lyles, 957 P.2d 843, 846 (Wyo. 1998).

38. To address an apparent ambiguity, we may resort to extrinsic aids to interpretation to confirm plain meaning. Parker Land & Cattle Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1043 (Wyo. 1993). We will give deference to the statutory interpretation of an agency charged with administration of a statute, unless that interpretation is clearly erroneous. Parker Land & Cattle Company v. Wyoming Game and Fish Commission, 845 P.2d 1040, 1045 (Wyo. 1993).

CONCLUSIONS OF LAW

39. The Board has jurisdiction to hear this matter.

40. Prior to 2000, Wyoming law relieved motor vehicle vendors from paying sales tax on vehicles that were (1) registered in the vendor’s name, (2) included as a part of the vendor’s inventory, and (3) held principally in the conduct of the vendor’s business. In 2000, the legislature created an exception to this relief. In this case, Petitioner is a motor vehicle vendor affected by the change.

41. The exception depends on four elements. One element is that the motor vehicle must have less than one thousand (1,000) miles on its odometer. The parties agree that the each vehicle had less than 1,000 miles on its odometer at the time of sale, and at the time title was transferred. A second element is that the vendor must transfer the vehicle into his inventory. The parties agree that Petitioner did so.

42. A third element is that the purchased vehicle was transferred to the vendor with a manufacturer’s statement of origin or manufacturer’s certificate origin “from a properly licensed dealer.” The parties agree that the vehicle was transferred to Petitioner with a manufacturer’s certificate of origin. The parties do not agree on the meaning of “properly licensed dealer.”

43. The last element is that the vendor itself, Petitioner, is not a properly licensed dealer “under W. S. 31-16-101 et seq.” The parties agree that Wyo. Stat. Ann. §31-16-101(a)(xviii) defines two types of dealers, (1) a new vehicle dealer and (2) a used vehicle dealer, and that both must be licensed under Wyo. Stat. Ann. §31-16-101.

44. The parties disagree about the meaning of the phrase “properly licensed,” and the word “properly.” From a reading of the complete exception, the Department concludes that a used vehicle dealer cannot be a properly licensed dealer within the meaning of the statute. Petitioner focuses on the plain meaning of the words “properly licensed dealer,” and concludes that a properly licensed dealer is simply one that conforms to the accepted statutory standard for licensing. See “proper,” Webster’s New World College Dictionary (4^th Edition), 1150 (2001).

45. We conclude that Petitioner has failed to take into account all of the components of the statute. “Properly licensed dealer” is a phrase that appears twice in the exception, once in subsection (A) and once in subsection (B). The same phrase appears in Wyo. Stat. Ann. §31-2-104(g) and Wyo. Stat. Ann. §31-16-108(a)(xii). All of these statutory provisions were enacted by Chapter 82 of the Session Laws, in 2000.

46. Subsection (B) of the exception to Wyo. Stat. Ann. §39-15-107(b)(iii) reads, “The vehicle he purchased was transferred with a manufacturer’s statement of origin or manufacturer’s certificate of origin from a properly licensed dealer....” The transfer from a manufacturer’s certificate of origin takes on a specific meaning in the context of Wyo. Stat. Ann. §31-16-101 et seq. The manufacturer’s certificate of origin is associated only with new vehicles, Wyo. Stat. Ann. §31-16-101(a)(xii), and only a new vehicle dealer may deal in new vehicles. Wyo. Stat. Ann. §31-16-101(a)(xviii). By necessary implication, only a new vehicle dealer may transfer a new vehicle to another person from a manufacturer’s certificate of origin.

47. We observe the same sense in legislation passed along with the exception to Wyo. Stat. Ann. §39-15-107(b)(iii). A provision pertaining to title transfer provides, “No person shall transfer ownership of a vehicle from a manufacturer’s statement of origin or a manufacturer’s certificate of origin unless the person is the manufacturer of the vehicle or a properly licensed dealer.” Wyo. Stat. Ann. §31-2-104(g). Again, the correct sense of this provision is that the transferor must either be the manufacturer or someone that has a direct relationship with the manufacturer, i.e., a new vehicle dealer.

48. The phase, “properly licensed dealer,” must be interpreted consistently in all four places. It follows that the Department’s interpretation is correct. As a used vehicle dealer, Petitioner cannot act as a transferor of title from a manufacturer’s certificate of origin. That power is reserved to manufacturers and, among dealers, to new vehicle dealers.

49. Once we have interpreted the words “properly licensed dealer,” we can further conclude that the statute directly addresses the question of whether a used auto dealer, such as Petitioner, must pay sales tax on a vehicle with fewer than 1000 miles on its odometer. The used auto dealer is a “person,” and must obtain a valid Wyoming title in his name or business name, and pay the applicable sales or use tax on the vehicle in his name before advertising, displaying, demonstrating, exchanging or selling the vehicle. Wyo. Stat. Ann. §31-16-108(a)(xii). Petitioner complied with the statute when it did so.

50. Petitioner also raises the objection that if the legislature meant to refer to either new vehicles or new vehicle dealers, it could have done so. However, on closer reading of the exception to Wyo. Stat. Ann. §39-15-107(b)(iii) and Wyo. Stat. Ann. §31-16-101 et seq., we conclude the legislature did not intend to have the exception apply to all new vehicles.

51. A new vehicle does not become a used vehicle only by transfer of title from a manufacturer’s certificate of origin, since a new vehicle dealer may transfer title to itself. If we focus exclusively on the title-related portion of the definition of new vehicle, we see that it is one “on which the original motor vehicle title has not been issued from the franchised dealer.” Wyo. Stat. Ann. §31-16-101(a)(xii)(emphasis supplied). Under this statute, a vehicle is a new vehicle until the franchised dealer transfer titles directly to a third party. However, if the new vehicle dealer first transfers title to itself, the vehicle is still a new vehicle until the new vehicle dealer thereafter transfers title to a third party. The distinction may be of commercial significance. For example, a lending institution may prefer to have a security interest in vehicles that are titled in the name of the new vehicle dealer, rather than rely on the manufacturer’s statement of origin or a manufacturer’s certificate of origin in the name of the manufacturer.

52. We conclude that the legislature did not attempt to create an exception to Wyo. Stat. Ann. §39-15-107(b)(iii) that embraced all new vehicles, but only vehicles that met the specific criteria of the statute, including the mileage threshold and the means of transfer. We note that the same mileage threshold appears in Wyo. Stat. Ann. §31-16-108(a)(xii), also enacted in 2000. The use of a mileage threshold in two statutory sections lends support to our conclusion that the legislature’s choice of words was deliberate.

53. Our conclusion also supports the Department’s view that Petitioner would not have been liable for the tax if Cowboy Dodge had first transferred title to itself, rather than transferring title to Petitioner from the manufacturer’s certificate of origin. If Cowboy Dodge had transferred title to itself without payment, the same alternative facts likewise suggest that Cowboy Dodge would have incurred no sales tax, because the transfer of title to itself would not be “for a consideration.” Wyo. Stat. Ann. §39-15-101(a)(vii). We do not rule on this precise question, however. The point is rather that the Department’s position is consistent and coherent in the context of all the statutory provisions that we have considered.

54. Because we have reached a conclusion regarding the plain meaning of the statute by reference to its wording as a whole, we have no reason to resort to the statutory history of Chapter 82 of the Session Laws. Mathewson v. City of Cheyenne, 2003 WY 10, 61 P.3d 1229 (2003). We nonetheless address Petitioner’s statutory history argument. Petitioner points out that language originally adopted by the House of Representatives would have clearly required payment of tax from a “vendor who does not hold a valid sales and service agreement from the manufacturer for the vehicle purchased.” This language can only describe a used vehicle dealer. Petitioner reasons that when the legislature deleted this subsection from the House version, it removed a restriction. Petitioner reasons that a used car dealer can therefore be a properly licensed dealer. We believe the better inference is that the restriction was surplusage, because the legislature had already settled on a meaning for “properly licensed dealer.” The surplusage would have created the potential for confusion if “properly licensed dealer” occurred in two sections passed as part of Chapter 82 of the 2002 Session Laws, i.e., Wyo. Stat. Ann. §31-2-104(g) and Wyo. Stat. Ann. §31-16-108(a)(xii), and only a third section included the additional language.

55. We do not agree that this transaction was subject to exemption as a wholesale sale pursuant to Wyo. Stat. Ann. §39-15-105(a)(iii)(F). Wyoming Statute Annotated §39-15-107(b)(iii) is a special provision that prevails over the general exemption for wholesale sales.

56. Petitioner had the burden of going forward and the ultimate burden of persuasion in this case. Petitioner failed to meet its burden of persuasion.

IT IS THEREFORE HEREBY ORDERED: The Department’s decision to deny Petitioner’s request for a refund is affirmed.

Pursuant to Wyo. Stat. Ann. §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 _____ day of January, 2005.

STATE BOARD OF EQUALIZATION

_____________________________________

Alan B. Minier, Chairman

_______________________________________

Thomas R. Satterfield, Vice-Chairman

______________________________________

Thomas D. Roberts, Board Member

ATTEST:

_____________________________

Wendy J. Soto, Executive Secretary