Ivory Homes, Ltd. V. Utah State Tax Comm’n, 2011 UT 54 (September 2011)
http://www.utcourts.gov/opinions/supopin/Ivory092711.pdf
Business Law Topics:
Sales Tax on Delivery Charges, Tax Credits
Continue reading to view a summary of the relevant facts, rules and case holding...
Facts:
Over the course of approximately three years, Ivory Homes purchased concrete products from Jack B. Parson companies (Parson). With each each delivery, Parson provided an invoice charging a single amount without designating any separate delivery charges, and calculating sales tax on the entire amount. Eventually, Ivory Homes discovered that if it had asked Parson to separately designate the delivery charges in each invoice, sales tax would not have to be paid on such delivery charges. So, Ivory Homes asked Parson to calculate the delivery charge component of those invoices and then applied for a tax refund to the Utah Taxpayer Services Division. The Division denied the request, Ivory Homes requested a hearing with the State Tax Commission, and the Tax Commission also denied the request.
Procedural Posture:
The Utah State Tax Commission denied Ivory Homes’ tax refund application, and Ivory Homes appealed directly to the Utah Supreme Court.
Good Business Law Rules:
1. “Delivery charges are not taxable under Utah law if separately stated on an invoice, bill of sale, or similar document provided to the purchaser.” ¶ 3 (citing Utah Code Ann. § 59-12-102(87)(c)(ii)(B) Supp. 2011).
2. “When a statute that provides a tax concession is unclear, the ambiguity is construed against the taxpayer until the legislature indicates a contrary intention.” ¶ 10.
3. “If the language of the contract is ambiguous such that the intentions of the parties cannot be determined by the plain language of the agreement, extrinsic evidence must be looked to in order to determine the intentions of the parties.” ¶ 12, fn.11
Holding:
The Tax Commission’s denial of the refund request was affirmed because there were no delivery charges in the original transaction. The Commission was also justified in denying the refund because the Commission did not erroneously receive the taxes paid by Ivory Homes, as required by statute to justify the refund. Note that Justice Durrant (joined by Justice Lee) has a relatively lengthy dissent to the opinion.