EAN Holdings, LLC v. Dept. of Rev. ( 2020 )

200 August 12, 2020 No. 11
IN THE OREGON TAX COURT
REGULAR DIVISION
EAN HOLDINGS, LLC,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant.
(TC 5337)
On cross-motions for summary judgment, Plaintiff (taxpayer), a provider of
rental car services and Defendant disagreed as to whether Plaintiff purchased
its vehicles “at retail” or “at wholesale.” Taxpayer argued that, due to the volume
and indiscriminate nature of its vehicle purchases, it should not have been con-
sidered a retail buyer. The court, after considering the text, similar statutes, and
the legislative history of the Use Tax, concluded that the phrase “vehicles pur-
chased at retail” means vehicles purchased by a purchaser other than for resale.
The court determined that the Use Tax applied to taxpayer’s purchases.
Oral argument on cross-motions for summary judgment
was held on August 13, 2019, in the courtroom of the Oregon
Tax Court, Salem.
Eric J. Kodesch, Lane Powell PC, Portland, filed the
motion and argued the cause for Plaintiff.
James C. Strong, Assistant Attorney General, Depart-
ment of Justice, Salem, filed the cross-motion and argued
the cause for Defendant Department of Revenue.
Decision for Defendant rendered August 12, 2020.
ROBERT T. MANICKE, Judge.
I. INTRODUCTION
Plaintiff (taxpayer) and Defendant (the department)
cross-move for summary judgment regarding applicability
to taxpayer of the vehicle use tax (Use Tax) imposed by ORS
320.410.1 The period at issue is the first quarter of 2018.
Taxpayer appealed to the Magistrate Division from the
department’s denial of a refund, and this division hears the
appeal by special designation.
1
All references to the Oregon Revised Statutes (ORS) are to the 2017 edition
unless otherwise indicated.
Cite as 24 OTR 200 (2020) 201
Taxpayer offers car rental services in Oregon and
elsewhere under the trade names “Enterprise Rent-A-Car,”
“Alamo Rent a Car,” and “National Car Rental.” Taxpayer
buys vehicles for the purpose of renting them to custom-
ers for temporary possession, and not for the purpose of
transferring title to a customer. Taxpayer is one of a num-
ber of subsidiaries of Enterprise Holdings, Inc. (Enterprise
Holdings), which negotiates with manufacturers for large
numbers of vehicles to be delivered periodically to each sub-
sidiary. Taxpayer and each other subsidiary, however, buy
these vehicles from a small number of “central” dealers.2 The
negotiations by Enterprise Holdings, and the purchases by
taxpayer and other subsidiaries, are for vehicles of a certain
“class” (economy, intermediate, etc.), without regard to make
or model. The vehicles are “drop shipped,” meaning that the
selling dealer causes the manufacturer to ship them directly
from the manufacturer’s location to the subsidiary’s speci-
fied locations, including in this case taxpayer’s locations in
Oregon. All central dealers are outside Oregon. In the quar-
ter at issue, taxpayer acquired 2,717 vehicles at its Oregon
locations, out of approximately 250,000 that taxpayer and
the other subsidiaries of Enterprise Holdings acquired
nationwide.
The tax at issue is relatively new. The 2017 legis-
lature adopted a wide-ranging transportation bill compris-
ing nearly 100 pages. See Or Laws 2017, ch 750, §§ 89 - 111
(HB 2017). Some seven pages contain a set of new taxes on
transactions involving certain motor vehicles (and certain
bicycles), codified primarily at ORS 320.400 to 320.490. ORS
320.405(1) imposes a tax “on each vehicle dealer for the priv-
ilege of engaging in the business of selling taxable motor
vehicles at retail in this state” (the “Privilege Tax”). The tax
rate is 0.5 percent of a taxable vehicle’s “retail sales price,”
and the vehicle dealer may collect the privilege tax from the
purchaser. ORS 320.405(2) - (3).
ORS 320.410 imposes the Use Tax at the same rate
and upon the same tax base (the “retail sales price”), stating
in subsection (1):
2
Taxpayer explains that state franchise law prohibits manufacturers from
selling vehicles directly to taxpayer. See ORS 650.130(12).
202 EAN Holdings, LLC v. Dept. of Rev.
“A use tax is imposed on the storage, use or other con-
sumption in this state of taxable motor vehicles purchased
at retail from any seller.”
ORS 320.410(1) (emphasis added). Subsection (4) provides:
“The use tax shall be reduced, but not below zero, by the
amount of any privilege, excise, sales or use tax imposed by
any jurisdiction on the sale, or on the storage, use or other
consumption, of the taxable motor vehicle. The reduction
under this subsection shall be made only upon a showing
by the purchaser that a privilege, excise, sales or use tax
has been paid.”
ORS 320.410(4) reduces the Use Tax by the amount of any
Oregon Privilege Tax (or any listed tax of another jurisdic-
tion) that the seller pays on the same sale of the same vehicle.
The Use Tax thus complements the Privilege Tax, ensuring
that the “privilege tax can be imposed on in-state vehicle
dealers without placing them at a competitive disadvantage
to out-of-state vehicle dealers * * *.” AAA Oregon/Idaho Auto
Source v. Dept. of Rev., 363 Or 411, 425, 423 P3d 71 (2018).
In many circumstances, the seller is responsible for collect-
ing and remitting the Use Tax. See ORS 320.420(1); ORS
320.445. However, if the seller does not collect the Use Tax
from a purchaser, the purchaser must report and remit the
Use Tax to the department. ORS 320.455. In this case, tax-
payer was the purchaser, and neither party asserts that any
of the central dealers, or any other person, collected or paid
any amount of tax on the transactions at issue.
II. ISSUE
The sole issue is whether the Use Tax applies to
taxpayer’s purchases.
III. ANALYSIS
Taxpayer’s sole argument is that the Use Tax does
not apply because taxpayer did not purchase its vehicles “at
retail,” as required by ORS 320.410(1). Because the mean-
ing of that statutory phrase is at issue, the court applies
the analytical steps in State v. Gaines, 346 Or 160, 171-72,
206 P3d 1042 (2009), starting with the text and context
of the statute, proceeding to the legislative history to the
extent useful, and consulting general maxims of statutory
Cite as 24 OTR 200 (2020) 203
construction to the extent the legislature’s intent remains
unclear.
A. Text
The legislature has not defined “at retail” or “retail”
in ORS 320.400 to 320.490. Applying the Oregon Supreme
Court’s approach, this court will first examine the “plain
meaning” of the term, on the assumption that the legisla-
ture intended a term left undefined to have its meaning in
ordinary use. The court will next determine whether the
term has a specialized, or “technical” meaning, which may
be a specialized “legal” meaning or a specialized meaning
from some other field. If the court discovers a technical
meaning that differs from the plain meaning, the court will
examine usage in context to determine whether the legis-
lature intended to use the term in that different, technical
sense. See DCBS v. Muliro, 359 Or 736, 745-46, 380 P3d
270 (2016) (examining competing plain and technical legal
meanings of phrase “receives * * * notice”); State v. McNally,
361 Or 314, 321-22, 392 P3d 721 (2017) (examining plain
and technical legal meanings of “passive resistance”; find-
ing same meaning in both contexts); Comcast Corp. v. Dept.
of Rev., 356 Or 282, 296, 337 P3d 768 (2014) (rejecting reli-
ance on plain meaning of “data transmission services”; look-
ing to contemporaneous publications and other examples
of usage in telecommunications field to arrive at technical
meaning).
Starting with the plain meaning, both parties cite
the same dictionary, each relying on different portions.
Taxpayer cites the definition of “retail”:3
“the sale of commodities or goods in small quantities to
ultimate consumers — opposed to wholesale
“—at retail adverb
“: at a price customarily asked by a retailer : retail
“<sold at retail>”
3
Taxpayer cites the definition of “retail” as a noun, while the department
emphasizes the adverbial phrase “at retail.” The court finds no material differ-
ence based on usage of “retail,” derivative forms such as “retailer,” or the usage
as a particular part of speech.
204 EAN Holdings, LLC v. Dept. of Rev.
Webster’s Third New Int’l Dictionary at 1938 (unabridged ed
2002) (italics in original). Taxpayer also cites the definition
of “wholesale,” referred to above:
“1 : the sale of goods or commodities in quantity usually for
resale (as by a retail merchant)
“2 : a large scale or indiscriminate transaction or maneu-
ver—used especially in the phrase by wholesale”
Id. at 2611 (italics in original). Taxpayer emphasizes the
references in both definitions to the quantity of goods sold:
“small quantities” are associated with “retail,” while whole-
sale sales are “in quantity usually for resale.” Taxpayer
argues that these references support its position because
taxpayer buys vehicles in quantities that clearly are large
(2,717 vehicles in a single calendar quarter). Furthermore,
there are good grounds for taxpayer’s assertion that it buys
vehicles “indiscriminately,” as it selects them by vehicle
class rather than with a focus on specific preferences such
as color, or even the precise model.
The department, on the other hand, points out that
the phrase “at retail” is defined by reference to a price cus-
tomarily asked by a “retailer.” Webster’s defines “retailer”
as:
“a merchant middleman who sells goods mainly to ulti-
mate consumers[.]”
Id. at 1938. The department, therefore, asks the court to
focus not on the quantity of items but on whether taxpayer
is the “ultimate consumer” of the vehicles. Because taxpayer
buys the vehicles with no intention of reselling them, the
department argues that taxpayer buys its vehicles “at retail.”
The department cites sales and use tax statutes from other
states as context, asserting that those statutes, and cases
interpreting them, confirm that taxpayer overemphasizes
the references to quantity in Webster’s.
The court concludes that the plain meaning of a
purchase “at retail” could refer either to a purchase of a
small number of vehicles or to a purchase of any number of
vehicles if the purchaser buys them for the purpose of con-
sumption and not for resale.
Cite as 24 OTR 200 (2020) 205
The court now tests whether technical definitions
of “at retail” exist, and whether those differ from the defini-
tions the parties cite. The court turns first to a legal dictio-
nary to determine whether it defines the term. See Norden
v. Water Resources Dept., 329 Or 641, 645-47, 996 P2d 958(2000) (“Words that have a well-defined legal meaning are
given that meaning.”) (looking to Black’s Law Dictionary for
legal meaning of “finding of fact”); see also, e.g., Dept. of Rev.
v. Croslin, 345 Or 620, 628, 201 P3d 900 (2009) (looking to
Black’s Law Dictionary for meaning of “damages”). In this
case, Black’s Law Dictionary (Black’s) defines “retail”4 as
follows:
“The sale of goods or commodities to ultimate consum-
ers, as opposed to the sale for further distribution or pro-
cessing. Cf. WHOLESALE. — retail, adj. — retail, vb.”
Black’s at 1509 (10th ed 2014) (underscoring and boldface in
original). And Black’s defines the noun “wholesale” as:
“The sale of goods or commodities usu. to a retailer for
resale, and not to the ultimate consumer.”
Id. at 1832.5 The terms “retail” and “wholesale” thus
have established legal meanings, each of which supports
the department’s interpretation, referring exclusively to
whether the transaction is a sale to an “ultimate consumer,”
as opposed to a sale “for resale” or “for further distribution
or processing,” and with no mention of the quantity of goods
sold.
The court briefly considers whether “retail” has
a widely accepted technical definition other than its gen-
eral legal definition. See Comcast, 356 Or at 296-315 (court
potentially considers use of terms in specialized disci-
plines, trades, professions, industries, looking to technical
and industry dictionaries, articles and other publications).
Although it may be possible to identify discrete “fields” in
which the term is used, such as the vehicle industry, nei-
ther party has provided any such information to the court.
4
Black’s contains no separate definition of “at retail” or “at wholesale.”
5
The court notes that the definitions of both terms in the most recent edition
of Black’s are identical to those in the 2014 edition, which would have been avail-
able to the 2017 legislature. See Black’s at 1573, 1914 (11th ed 2019).
206 EAN Holdings, LLC v. Dept. of Rev.
Assuming “taxation” were recognized as its own field for this
purpose, the court is not aware of any dictionary or glossary
widely recognized as authoritative.6
The court proceeds to analyze the context of the
legislature’s use of “retail,” as well as any legislative his-
tory, to determine whether the legislature intended (a) the
quantity-based plain meaning for which taxpayer contends;
(b) the consumption-not-resale-based meaning for which the
department contends, which is based on the alternate plain
meaning and overlaps with the technical legal meaning; or
(c) another meaning that might emerge. See DCBS v. Muliro,
359 Or at 745-46.
B. Context
The court looks first for any relevant context within
the remaining provisions that impose the Privilege Tax and
the Use Tax, ORS 320.400 to 320.490. Nothing in those pro-
visions refers to large or small numbers of vehicles. On the
other hand, a provision exempting a seller from both the
Privilege Tax and the Use Tax states:7
“Notwithstanding ORS 320.405 to 320.420, a resale cer-
tificate taken from a purchaser ordinarily engaged in the
business of selling taxable vehicles relieves the seller from
the obligation to collect and remit transportation project
taxes. A resale certificate must be substantially in the form
prescribed by the Department of Revenue by rule.”
ORS 320.425(3) (emphases added). The requirements that
the purchaser deliver a resale certificate and be “ordinarily
engaged in the business of selling” vehicles in order for the
exemption to apply appear to exempt the same transactions
that are excluded under the technical legal definitions of
“retail” and “wholesale,” as well as the alternate plain mean-
ing on which the department relies. The department argues
6
The parties cite Jerome R. Hellerstein and Walter Hellerstein, State
Taxation (3rd ed 2016), a leading treatise on state taxation, to which the court
also refers below. Neither party cites the treatise as a source of definitions, and
the court views the treatise as seeking to explain the state of the law, as opposed
to defining terms.
7
The court here uses the term “exempt” as shorthand, to denote that
ORS 320.425(3) purports to eliminate the duty to collect and remit Use Tax
“[n]otwithstanding” the remaining provisions of the Privilege and Use Tax law.
ORS 320.425(3) nowhere uses the term “exempt.”
Cite as 24 OTR 200 (2020) 207
that this consistency proves its point, while taxpayer argues
that the overlap proves that the legislature could not have
intended a narrow definition of “retail.” In other words, tax-
payer argues that the legislature would not have needed to
add an exemption for sales for resale if the definition of a tax-
able “retail” transaction already excluded a sale for resale.
Testing taxpayer’s argument, the court finds in the
Privilege and Use Tax statutes one additional instance in
which the legislature appears to have addressed a single
point in multiple provisions. ORS 320.425(2) provides:
“Notwithstanding ORS 320.405, a seller is not liable
for the privilege tax with respect to an otherwise taxable
motor vehicle that is sold at an event that lasts less than
seven consecutive days, for which the public is charged
admission and at which otherwise taxable motor vehicles
are sold at auction.”
The exemption applies to a “seller,” a term defined to mean a
“vehicle dealer.” See ORS 320.400(4)(a) (defining “seller” for
purposes of Privilege and Use Taxes as a “vehicle dealer”).
However, this exemption appears to be fully replicated in
an exclusion from the definition of “vehicle dealer” in ORS
320.400(9)(b), which states:
“Notwithstanding [the definition of “vehicle dealer” in]
paragraph (a) of this subsection, a person is not a vehicle
dealer for purposes of ORS 320.400 to 320.490 and 803.203
to the extent the person:
“(A) Conducts an event that lasts less than seven con-
secutive days, for which the public is charged admission
and at which otherwise taxable motor vehicles are sold at
auction; or
“(B) Sells an otherwise taxable motor vehicle at auc-
tion at an event described in this paragraph.”
Therefore, the exemption in ORS 320.425(2) appears to
apply to transactions at short-term, admission-only auc-
tion events already excluded under the definition in ORS
320.400(9). This context cautions against accepting taxpay-
er’s argument that the legislature could not have intended
to repeat itself by covering the same ground in two separate
provisions.
208 EAN Holdings, LLC v. Dept. of Rev.
The court finds it more plausible that the legisla-
ture intended the resale exemption in ORS 320.425(3), with
its specific requirement of a resale certificate, to serve as a
mechanism to implement the narrower of the two competing
definitions of “retail.” Under this view, a purchase or sale “at
retail” is any purchase or sale not for resale, and a seller uses
the resale certificate to prove that the sale is not “at retail,”
keeping that proof on file for the department to inspect. See
ORS 320.460(1) (five-year record retention requirement). By
this same mechanism, the seller also forestalls the statutory
presumption that a vehicle found to have been delivered in
Oregon was sold for “storage, use or other consumption” in
Oregon. See ORS 320.420(3)(b)(B).8 The presumption exists
to “ensure the proper administration of [the Use Tax] and to
prevent evasion * * *.” ORS 320.420(3).
The court contrasts this tentative view—a defini-
tion of “retail” that excludes all sales for resale, seamlessly
coupled with an exemption statute that requires a paper
trail of all resale transactions for the department to check
on audit—with taxpayer’s position at oral argument. There,
taxpayer argued that the legislature intended to leave unde-
fined both (1) the absolute number of vehicles that a pur-
chaser would have to buy to achieve tax-free wholesale sta-
tus; and (2) the time period over which those sales would have
to occur.9 Taxpayer asserted that the legislature intended
that the department adopt rules to define these terms, but
taxpayer acknowledged that the legislature nowhere said
so expressly. See ORS 320.480(2) (department “may” adopt
rules “that the department considers necessary or appro-
priate” to implement, administer and enforce Privilege and
Use Taxes). From the context supplied by ORS 320.425(3)
and ORS 320.420(3), the court concludes that a legislature
concerned with “proper administration” of the Privilege and
Use Taxes is unlikely to have left these critical numbers and
time periods to interpretation by either the department or
this court.
8
The resale certificate is similar to the proof a seller collects and retains
when it sells a vehicle for storage, use or other consumption outside Oregon. See
ORS 320.420(3)(c). Both documents identify the purchaser and thus enable the
department to seek further verification that the purchaser actually resold the
vehicle or exported it for use outside the state.
9
E.g., six sales per day, 50 sales per month, 25 sales per quarter, etc.
Cite as 24 OTR 200 (2020) 209
Taxpayer points to Oregon alcoholic beverage license
law as a source of relevant context, as that law too uses
the terms “retail” and “wholesale” without defining them.
Taxpayer’s argument is based on ORS 471.175(1) and (7)
and ORS 471.178(1) and (3), which allow holders of a “full
on-premises sales license” or a “limited on-premises sales
license,” respectively, to sell “by the drink at retail” on the
premises and “not more than two gallons” for off-site con-
sumption. Taxpayer contrasts these provisions with ORS
471.235(1), which allows the holder of a “wholesale malt
beverage and wine license” to sell “in quantities of not less
than four gallons” to consumers for consumption not on the
licensed premises or to certain unlicensed organizations.
Taxpayer argues that these provisions show that it is quan-
tity that differentiates between “retail” and “wholesale”
when the legislature has not defined those terms. This argu-
ment, however, ignores the fact that each of these statutes
also is fully consistent with a meaning of “retail” as “not
for resale.” Each states that “all alcoholic beverages sold
under [the respective type of on-premises license] must be
consumed on the licensed premises.” ORS 471.175(1); ORS
471.178(1). Meanwhile, a wholesale wine and malt beverage
licensee “may not sell any alcoholic liquor for consumption
upon the licensed premises.” ORS 471.235(1). As to malt bev-
erages, the statute expressly states: “A wholesale malt bev-
erage and wine license shall permit the licensee also to sell
malt beverages at wholesale only, to persons holding licenses
authorizing the persons to resell such beverages at retail.”
Id. (emphasis added). Far from persuading the court that
the legislature generally intends “retail” and “wholesale” to
refer to small and large quantities of goods sold, these stat-
utes indicate that the legislature intended “retail” to mean a
sale to a consumer and “wholesale” to mean a sale for resale.
Taxpayer also cites cannabis sales tax provisions
that differentiate between a “marijuana retailer” and a
“marijuana wholesaler.” The definitions themselves are
fully consistent with the department’s position in this case.
See ORS 475B.015(23) (“ ‘Marijuana retailer’ means a person
that sells marijuana items to a consumer in this state.”);
ORS 475B.015(25) (“ ‘Marijuana wholesaler’ means a person
that purchases marijuana items in this state for resale to a
210 EAN Holdings, LLC v. Dept. of Rev.
person other than a consumer.”) Taxpayer, relying solely on
the primary Webster’s definition, argues that the cannabis
tax provisions show that the legislature found it necessary
to craft express definitions in order to “deviate from the
Webster’s distinction” based on small vs. large quantities of
goods sold. The court observes, however, that the legislature
has enacted express definitions consistent with the depart-
ment’s position in the tobacco tax statutes as well. See ORS
323.010(17) (cigarette tax) (defining “wholesaler” as “any
dealer who engages in the sale of cigarettes to any other
dealer for purposes other than use or consumption”); ORS
323.500(11) (other tobacco products tax) (defining “retail
dealer” as “any person who is engaged in the business of
selling or otherwise dispensing tobacco products to consum-
ers”); see also ORS 323.085(2) (stating legislative intention
to impose cigarette taxes on the “retail consumer”). In addi-
tion, as discussed at oral argument, the corporate activity
tax, also enacted in 2017, defines “retailer” in a manner con-
sistent with the department’s position, excluding a person
who sells for resale.10 In short, there are multiple examples
of the legislature expressly distinguishing for excise tax
purposes between a sale for consumption or use and a sale
for resale.
By contrast, taxpayer cites only one example in
which the legislature seems to have defined a relevant term
(“nonretail”) solely in terms of quantity of goods sold and
not also by whether the transaction is a sale for resale. The
example is a nontax statute, ORS 480.345, which allows cer-
tain persons to pump their own gasoline or certain other
fuels. The statute refers to those persons as “nonretail cus-
tomers,” which generally include certain purchasers of “at
least 900 gallons” of the specified fuel “during a 12-month
period,” but also include 14 listed categories of persons
10
The corporate activity tax definition also excludes two variants of a sale for
resale: the sale for use as an ingredient in real or personal property or for incor-
poration into a new article of tangible personal property. See ORS 317A.100(15)
(“ ‘Retailer’ means a person doing business by selling tangible personal prop-
erty to a purchaser for a purpose other than: (a) Resale by the purchaser of
the property as tangible personal property in the regular course of business;
(b) Incorporation by the purchaser of the property in the course of regular business
as an ingredient or component of real or personal property; or (c) Consumption by
the purchaser of the property in the production for sale of a new article of tangible
personal property.”).
Cite as 24 OTR 200 (2020) 211
who qualify without having to make such minimum pur-
chases, including farmers, government emergency service
providers, and certain other local government entities. ORS
480.345(2). The court finds it significant that the legislature
took pains to define the quantity, within a specified time,
that constituted “nonretail” purchases. Overall, the court
concludes from the context supplied by the four other excise
tax statutes that the legislature regularly treats “retail”
transactions as the opposite of transactions “for resale.” And
taxpayer’s reference to the gas pumping statute reinforces
the court’s conclusion that when the legislature uses “retail”
in the quantity-based sense, it specifies the quantity, and
the time period over which that quantity must be reached,
so as to avoid ambiguity. The court concludes that the statu-
tory context supports the view that the legislature intended
“at retail” to refer to a sale other than a sale for resale.
Taxpayer also asserts that, even under a definition
of “at retail” that disregards the quantity of goods sold, tax-
payer is not the “ultimate consumer” of the vehicles it pur-
chased.11 Taxpayer does not seriously contend that it is not
a “consumer” of the vehicles, a term that it acknowledges
means one who “utilizes” or “uses” something. (Quoting
Webster’s definition of “consume” as to “utilize (an economic
good) in satisfaction of wants or the process of production.”
(Internal quotations omitted.)).12 Rather, taxpayer contends
that it is not the “ultimate” consumer because it buys the
vehicles for the purpose of allowing others to use them.
However, the legislature did not use the word “ultimate”;
that word appears only in the dictionary definitions. In
the same sentence as the phrase “at retail,” the legislature
used the words “consumption” and “use” without the modi-
fier “ultimate.” See ORS 320.410(1). The court has concluded
above that the legislature’s intent in using the term “at
retail” was to distinguish purchases “for resale.” The court
sees no need to determine the “ultimate” user or consumer
of the vehicles, as among taxpayer as licensor to customers,
11
The department, too, states its version of the test in terms of sales to the
“ultimate consumer.”
12
Although neither party cited a legal definition, the court finds that the
established legal definitions of “consume,” “consumption,” and “consumption tax”
do not materially differ from the definitions in Webster’s on which taxpayer relies.
See Black’s at 382, 384, 1685 (10th ed); 395, 396, 1759 (11th ed).
212 EAN Holdings, LLC v. Dept. of Rev.
the rental customers as drivers, the secondary purchasers
once taxpayer decides to replace them, or the steel recycler
at the end of their life.13 It is sufficient that taxpayer uses
the vehicles and does not buy them for resale in the ordinary
course of its business. (Taxpayer “does not acquire vehicles
for the purpose of engaging in transactions in which it trans-
fers title to the vehicles to a customer.”) The parties’ focus on
the “ultimate” consumer adds no relevant context and does
not change the court’s conclusion that taxpayer’s purchases
were at retail because they were not for resale.
C. Legislative History
Neither party relies extensively on legislative his-
tory. Taxpayer cites a 2017 revenue impact report on HB
2017, pointing out that the amount of anticipated revenue
stated in that report ($1.8 million for 2017-19 biennium) later
proved far less than the actual revenues received ($4.45 mil-
lion actual collections as of August 31, 2018). Those numbers
alone are simply insufficient to help the court. Taxpayer
points to no testimony, committee dialogue, or other narra-
tive that would trace the difference in collections to a leg-
islative intention to not impose the Privilege or Use Taxes
on fleet purchases by car rental companies, as opposed to a
forecasting error or events occurring after the bill passed.
IV. CONCLUSION
Based on the text and context, the court concludes
that the legislature intended the phrase “vehicles pur-
chased at retail” to mean vehicles purchased by a purchaser
other than for resale. Taxpayer does not argue that its pur-
chases were for resale. Accordingly, the Use Tax applies to
taxpayer’s purchases for the taxable quarter at issue. Now,
therefore,
13
For a discussion of line-drawing problems in the imposition of sales and
use taxes within the chain of consumption, see Hellerstein & Hellerstein ¶ 12.01
(“[A] theoretically ideal retail sales tax would exclude business inputs from the
tax base. In fact, however, the American sales tax deviates substantially from
this norm: Roughly 40 percent of state sales tax revenues are attributable to
business purchases.”); ¶ 12.04 (“Despite the theory that a retail sales tax should
apply only to final sales for household consumption, in practice the sales tax is
not confined to transfers to the ultimate consumer of the final product produced
in the economic process.”).
Cite as 24 OTR 200 (2020) 213
IT IS ORDERED that Plaintiff’s Motion for
Summary Judgment is denied; and
IT IS FURTHER ORDERED that Defendant’s
Cross-Motion for Summary Judgment is granted.