BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
ETHELYN A.B. BOAK AND JOHN PIPPINGER ) Docket No. 99-135
FROM A DENIAL OF A USE TAX REFUND )
DECISION BY THE DEPARTMENT OF REVENUE )
FINDINGS OF FACT
CONCLUSIONS OF LAW
DECISION AND ORDER
Ethelyn A.B. Boak, Attorney at Law, pro se and on behalf of John Pippinger,
Monique B. DuPont Armijo, Assistant Attorney General, for the Department of
This matter was considered by the State Board of Equalization (SBOE)
consisting of Edmund J. Schmidt, Chairman, Roberta A. Coates, Vice-Chairman, and
Ron Arnold, Member, on written information and argument presented pursuant to a
Briefing Order (Expedited Docket) dated December 2, 1999. It arises from a
decision by the Department of Revenue (DOR) denying Petitioners a use tax refund
related to Petitioners' purchase and trade in of a leased vehicle and purchase
of a new vehicle.
Upon application of any person adversely affected, the SBOE is mandated to
review final DOR actions concerning state excise taxes. Wyo. Stat.
The SBOE 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, in accordance with the rules, regulations, orders and instructions
prescribed by the department." Wyo. Stat. 39-11-102.1(c)(iv).
Petitioner, Ethelyn A.B. Boak, leased a 1997 Infiniti J30 (1997 vehicle) from
Infiniti Financial Services on August 3, 1996. The Petitioner paid initial
sales/use tax of $97.50 at the execution of the lease and was obligated by the
terms of the lease to pay all fees and taxes related to the leased vehicle and
the lease during its term. The 1997 vehicle was registered in Wyoming in the
name of Petitioner Boak. On or about June 18, 1999, Petitioners traded in the
Infiniti J30 as part of their purchase of an Infiniti QX4 (1999 vehicle) from
Infiniti of Denver, Inc. The purchase contract for the 1999 vehicle reflected a
payoff of $22,891 on the 1997 vehicle and a trade-in allowance of $19,000 for
the 1997 vehicle. Petitioners paid Wyoming use tax on full purchase price of the
1999 vehicle prior to its first registration in Wyoming. Petitioners requested a
refund from the DOR of a portion of the use tax charged. Petitioners claimed
they were entitled to have the 1997 vehicle trade-in allowance deducted from the
purchase price of the 1999 vehicle prior to calculation of the use tax. The DOR
denied Petitioners' refund request.
FINDINGS OF FACT
1. Petitioners were at all times relevant hereto residents of the State of
2. On August 3, 1996, Petitioner Boak leased the 1997 vehicle from Infiniti
Financial Services. The closed end motor vehicle lease agreement reflects
Petitioner Boak paid sales tax/rental/use tax of $97.50 at the signing of the
lease and was obligated to pay $21.66 rental/use tax as part of each monthly
lease payment. [Affidavit of Boak, Exhibit A-1.]
3. During the term of the 1997 vehicle lease, Petitioners paid a total use
tax of $833.94 to Infiniti Financial Services. ($97.50 at execution of lease and
34 payments of $21.66.) [Affidavit of Boak, 2, 4.]
4. If Petitioners had purchased the 1997 vehicle instead of leasing it, they
would have paid Wyoming use tax in the range from $1,631 to $1,715 in 1996.
[Petitioners' Brief, p. 7.]
5. A Wyoming Certificate of Title was issued for the 1997 vehicle in the name
of Infiniti Financial Services. [Affidavit of Boak, Exhibit A-3.]
6. The 1997 vehicle was registered in Petitioner Boak's name in Laramie
County, Wyoming. [Affidavit of Tompkins, Exhibit B.]
7. On June 18, 1999, Petitioners purchased the 1999 vehicle from Infiniti of
Denver, Inc. [Affidavit of Boak, Exhibit A-4.]
8. As part of the purchase of the 1999 vehicle, Petitioners exercised the
purchase option contained in the 1997 vehicle lease, purchased the 1997 vehicle
and immediately traded it in on the 1999 vehicle. [Affidavit of Boak,
9. The June 18, 1999, "Retail Order for a Motor Vehicle" for the 1999 vehicle
reflects a sales price of $34,799 for the 1999 vehicle, a payoff of $22,891 for
the 1997 vehicle, and a trade-in allowance of $19,000 for the 1997 vehicle.
[Affidavit of Boak, Exhibit A-4.]
10. On July 23, 1999, Petitioners paid Wyoming use tax of $1,739.95 on the
1999 vehicle purchase, calculated on the full purchase price of the 1999
vehicle. The Laramie County Treasurer did not deduct the 1997 vehicle trade-in
allowance from the sales price of the 1999 vehicle prior to calculating the use
tax due. [Affidavit of Boak, Exhibit A-5.]
11. If the 1997 vehicle trade-in allowance had been deducted from the 1999
vehicle's purchase price, Petitioners' use tax liability would have been $950
12. Petitioners submitted a request for a use tax refund to the DOR on or
about July 28, 1999. [Affidavit of Boak, 6.]
13. The DOR denied Petitioners' refund request by letter dated September 24,
1999. The DOR concluded that no deduction from the purchase price of
Petitioners' new vehicle would be allowed for the trade-in because no tax was
paid on the purchase option and the lease and purchase transactions were two
14. There is no evidence in the record indicating whether or not sales or use
tax was paid in Wyoming or elsewhere on Petitioners' purchase of the 1997
vehicle pursuant to the terms of the lease. If use tax was included in the
payoff of the 1997 vehicle, Petitioners paid $1090.05. If it was not included in
the payoff, use tax of $1,144.05 would be due.
15. Petitioners appealed the DOR decision to the SBOE on October 13, 1999.
16. 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
17. Petitioners' Notice of Appeal was timely filed and the SBOE has
jurisdiction to determine this matter. Rules, Chapter 2, Section 5, State
Board of Equalization.
18. On appeal, the Petitioners have the burden of going forward and the
burden of persuasion. If there is a question of whether or not there was a
taxable event, the DOR has the burden of persuasion. Rules, Chapter 2,
Section 19, State Board of Equalization.
19. It is undisputed that Petitioner Boak's lease of the 1997 vehicle for use
in the State of Wyoming was subject to use tax pursuant to Wyo. Stat.
39-16-101(a)(iii) and39-16-103 (a)(i), and that Petitioner Boak
paid use tax to the leasing company at the inception of the lease and on each
monthly payment as permitted by the DOR's rules. Rules, Chapter 2, Section
13(bb), Department of Revenue (Feb 24, 1997).
Exclusion of Trade-in Value
20. Wyo. Stat. 39-16-101(a)(iv) defines the sales price upon which
use tax is imposed.
"Sales price" means the consideration paid by the purchaser of tangible personal property excluding the actual trade-in value allowed on tangible personal property and manufacturer rebates for motor vehicles exchanged at the time of the transaction; [Emphasis added.]
21. Petitioners argue the purchase of the 1997 vehicle pursuant to the
lease's purchase option and its contemporaneous trade-in entitled Petitioners to
a credit for the trade-in allowance against the 1999 vehicle's sale price and a
resulting decrease in use tax of $950. In the alternative, Petitioners argue
they are entitled to a refund of a portion of the use tax paid on the 1997
vehicle lease because they paid use tax on the full price of the 1999 vehicle.
22. The DOR argues the trade-in allowance is available only if sales tax had
been paid to another state on the trade-in, the trade-in had been registered in
another state by a non-resident owner prior to being brought into Wyoming, or
sales/use tax on the purchase had been remitted to the State of Wyoming. The DOR
further argues the denial of the trade-in allowance may be substituted as a more
productive means of collecting the use tax due on the exercise of the lease
23. We agree with Petitioners. Wyo. Stat. 39-16-101(a)(iv) places no condition on the deduction of the trade-in allowance from the purchase price. Pursuant to the clear language of Wyo. Stat. 39-16-101(a)(iv), the sales price of Petitioners' 1999 vehicle must be reduced by the actual trade-in value allowed for the 1997 vehicle and the sales tax computed and collected on the net sales price.
24. The DOR's argument that the disallowance of the trade-in deduction may be
substituted for the collection of use tax that may be due on Petitioners'
exercise of the lease purchase option is without merit. The DOR is required to
enforce the tax statutes as they have been passed by the legislature. Rock
Springs Ford Nissan v. State Board of Equalization, 890 P.2d 1100, 1103
(Wyo. 1995). The DOR may not deny the trade-in allowance as a substitute for the
collection of any use tax that may be owing related to the lease of the 1997
25. Because of our conclusion that Petitioners were entitled to the deduction
for the trade in allowance, we find it unnecessary to address Petitioners'
argument that they are entitled to a refund of a portion of the use tax paid on
the 1997 vehicle lease because they paid use tax on full purchase price of the
Use Tax on Exercise of Option to Purchase Leased
26. A more difficult question is raised by Petitioners' argument that their
exercise of the lease option and purchase of the 1997 vehicle was not a taxable
27. Petitioners argue the exercise of the lease option and purchase of the
1997 vehicle was not a "sale" as defined by Wyo. Stat. 39-16-101(a)(iii)
because the purchase took place in Colorado and the vehicle was not brought back
to Wyoming prior to being traded in on the 1999 vehicle. They further argue that
no tax was owing because the trade in occurred prior to the expiration of the 45
day registration grace period.
28. The DOR argues the purchase option was an integral part of the lease and
that Petitioners' taxable use continued through the exercise of the lease
29. We cannot agree with Petitioners' position that the exercise of the lease
option and purchase of the 1997 vehicle after using it in Wyoming for
approximately 34 months constituted a first use, separate and distinct from
Petitioner Boak's lease of the 1997 vehicle.
30. Wyo. Stat. 39-16-101(a) defines "sale" as:
(iii) "Sale" means the transfer of title or possession of tangible personal property from a vendor for a consideration for storage, use or other consumption in Wyoming . . . ;
and defines "use" as:
(ix) "Use" means the exercise of any right or power over tangible personal property incident to ownership or by any transaction where possession is given by lease or contract;
31. In addition, the DOR's rules provide:
(i) Transactions Subject to the Use Tax. The purchase or lease of all tangible personal property outside this state for use, storage, or other consumption within this state is subject to the use tax, providing the same transaction would be subject to the sales tax if the transaction had occurred wholly within Wyoming.
Rules, Chapter 2, Section 4(f)(i), Department of Revenue.
32. Because of the wide variation in leasing arrangements and attendant
difficulty in determining the total amount that will ultimately be paid pursuant
to a lease, Wyoming law and the DOR's rules permit the vendor to charge, collect
and remit the applicable sales or use tax on each rental or lease payment rather
than on the total lease amount at the inception of the lease. The tax due is
based on the gross rental paid which is defined as ". . . the total
consideration paid to enjoy and maintain temporary possession of tangible
personal property." Rules, Chapter 2, Sections 3(j) and 13(bb),
Department of Revenue. See: Wyo. Stat. 39-15-103(a)(i)(B).
33. We find Petitioner Boak's lease of the 1997 vehicle for use in Wyoming
the taxable event from which Petitioners tax liability must be determined. The
lease was a "transfer of . . . possession" to Petitioner Boak and gave her "use"
of the 1997 vehicle. A "sale" occurred when possession was transferred by the
lease to Petitioner Boak with the right or power to use the 1997 vehicle
pursuant to the terms of the lease. Wyo. Stat 39-16-101(a)(iii) and
(ix); Rules, Chapter 2, Section 4(f)(i), Department of Revenue.
34. We further find Petitioners' "exercise of any right or power over
tangible personal property incident to ownership" granted by the lease agreement
continued through the exercise of the option to purchase the 1997 vehicle
granted in the lease. Petitioners' "use" of the 1997 vehicle began when the
vehicle was leased and brought into Wyoming. The subsequent purchase of the 1997
vehicle was a continuation of the use which began with the lease of the 1997
vehicle for use in Wyoming and was taxable just as each monthly lease payment
was taxable. The purchase price constituted part of the "total consideration"
paid by Petitioners pursuant to the 1996 lease agreement. Wyo. Stat.
35. Petitioners' argument is incorrect that Wyo. Stat. 39-16-107(b)(ii),
which provides for the collection of the tax on vehicle purchases by the
county treasurer prior to first registration, affords a 45 day period where a
transfer or disposition of a vehicle may be made without taxation.
36. Wyo. Stat. 39-16-107 provides in pertinent part:
(a) Returns, reports and preservation of records. The following shall apply:
(i) Every vendor shall collect the tax imposed by this article and is liable for the entire amount of taxes imposed.
* * *
(ii) Every person storing, using or consuming tangible personal property purchased from a vendor who does not maintain a place of business in this state is liable for the tax imposed by this article and shall on or before the last day of each month file a return showing the total sales price of tangible personal property purchased subject to the tax imposed by this article during the preceding month and remit all taxes due to the department.
* * *
(v) Taxes collected under paragraphs (b)(ii) and (iii) of this section shall be remitted in full by the county treasurer to the department monthly or as required by the department together with reports as required by the department;
(vi) Any out-of-state vendor not otherwise subject to this article may voluntarily register with the department and if registered, shall collect and remit the state use tax imposed by W.S. 39-16-104(a).
(b) Payment. The following shall apply:
(i) Except as otherwise provided, there is levied and shall be paid by the purchaser an excise tax at the same rate applied under W.S. 39-15-104 upon sales in Wyoming. The vendor shall collect the tax and give the purchaser a receipt therefor displaying the tax paid separately;
(ii) Except as provided by paragraph (iv) of this subsection, no vendor shall collect the taxes imposed by this article upon the sale of motor vehicles, house trailers, trailer coaches, trailers or semitrailers as defined by W.S. 31-1-101. The taxes imposed shall be collected by the county treasurer prior to the first registration in Wyoming and not upon subsequent registration by the same owner. The tax shall not be collected if previously registered by the same nonresident owner in another state. The county treasurer may also collect the tax due and any interest, penalties or costs of collection through the use of a collection agency or by the filing of a civil action;
* * *
37. Wyo. Stat. 39-16-107(b)(ii) does not eliminate the liability of the parties to the transaction for the payment of the tax. That subsection merely sets out an alternate method for the collection of the use tax on the sale of certain vehicles.
38. Both the vendor and user are liable for the payment of the use tax.
Wyo. Stat. 39-16-107(a)(i) and (ii); See: Rock Springs Ford
Nissan v. State Board of Equalization, 890 P.2d 1100, 1103 (Wyo. 1995).
39. Unless use tax was collected and remitted to the DOR on the purchase
price of the 1997 vehicle, both Infiniti Financial Services and the Petitioners
remain liable for payment of the use tax and the DOR can proceed to collect the
unpaid tax from one or the other.
40. We conclude that Petitioners were entitled to have the trade-in allowance
for the 1997 vehicle deducted from the purchase price of the 1999 vehicle and
the use tax calculated on the net purchase price after the deduction.
41. Further, we conclude that the exercise of the option to purchase the 1997
vehicle was a continuation of Petitioners' use of the 1997 vehicle pursuant to
the 1996 lease of the vehicle and, therefore, taxable.
42. We are unable to determine from the record before us whether or not the
payoff on the 1997 vehicle included the applicable use tax related to the
exercise of the lease option and purchase of the 1997 vehicle. No receipt
showing the tax payment to either the county treasurer or the DOR has been
provided. Wyo. Stat. 39-16-107(b)(i).
THIS SPACE INTENTIONALLY LEFT BLANK
IT IS THEREFORE HEREBY ORDERED:
A. The decision of the DOR is reversed and remanded.
B. The DOR is directed to determine whether or not use tax was paid on
Petitioners' purchase of the 1997 vehicle and to either refund the use tax paid
in the amount of $950.00 to Petitioners or credit Petitioners for the $950.00
paid against any outstanding use tax due and unpaid related to their purchase of
the 1997 vehicle pursuant to the terms of the lease.
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 7th day of April, 1999.
STATE BOARD OF EQUALIZATION
Edmund J. Schmidt, Chairman
Roberta A. Coates, Vice-Chairman
Ron Arnold, Member
Kathleen A. Lewis, Executive Secretary