Appeal from the District Court of Laramie County The Honorable Michael K. Davis, Judge
The opinion of the court was delivered by: Park, District Judge.
Before KITE, C.J., and GOLDEN, HILL, VOIGT, JJ., and PARK, D.J.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.
[¶1] This is a case about whether a Wyoming dealer must pay sales tax on sales of recreational vehicles to out-of-state buyers. The Appellant, Maverick Motorsports Group, LLC (hereinafter "Maverick"), challenges a decision of the State Board of Equalization (hereinafter "SBOE") that certain sales by Maverick were subject to Wyoming sales tax. Maverick petitioned for judicial review, and the District Court affirmed the SBOE's decision. In this appeal, Maverick challenges the SBOE's decision which held that sales by Maverick were subject to Wyoming sales tax and that imposition of Wyoming sales tax did not violate Art. 1, § 8, of the United States Constitution (the Commerce Clause).
[¶2] We affirm the SBOE's decision.
[¶3] The following issues are presented on appeal:
I. Whether sales of recreational vehicles were taxable in Wyoming because possession was transferred in Wyoming.
II. Whether enforcement and collection of Wyoming sales taxes violate the Commerce Clause, Art. 1, § 8, of the United States Constitution.
[¶4] Maverick was formed in 2005 to purchase the assets of an existing business. Justin Johnson (hereinafter "Johnson") is the company president. Maverick operates stores in Cheyenne and Laramie, Wyoming. Both stores had sales tax licenses and both sold motorcycles, all-terrain vehicles (ATVs), snowmobiles, and various accessories. The parties agree that many of Maverick's customers lived in other states. Johnson had been informed by the previous owner that no Wyoming sales tax would be due for sales to nonresidents if the invoices were marked "delivered out of state"; so Maverick marked invoices in that manner and did not collect Wyoming sales tax. The Department of Revenue (hereinafter "Department") conducted audits of both stores for the period including June 2005 through September 2006. The Department concluded that sales tax was due from both stores. Maverick objected to both audits, and these objections were consolidated into one hearing before the SBOE. Maverick and the Department continued to work together up to the date of the hearing and came to an agreement on several issues. By the time of the hearing, the only issues were whether Wyoming could collect sales tax on sales of recreational vehicles to nonresidents; and, if so, did this tax violate the Commerce Clause.
[¶5] The vehicles were transferred in three ways: most were picked up by the purchaser at one of the stores, some were delivered by a common carrier selected by the purchaser, and some were delivered by Maverick. Maverick would mail any documents necessary to title or register the vehicle to the buyer a few weeks after the sale. These documents were retained, in part, to ensure that the buyer's check would clear the bank. In some cases, the documents were mailed to the buyer's financier.
[¶6] The SBOE's primary concern about vehicles delivered by Maverick was a lack of documentation. The SBOE, although critical of Maverick's recordkeeping, agreed that Maverick had provided adequate proof and ruled that most of these sales were "destination sales" where transfer of title or possession took place outside Wyoming and no sales tax was due. The Department did not appeal this ruling. In addition, there were some instances where Maverick had no documentation to prove how the vehicle was delivered, and the SBOE affirmed the Department's finding. Maverick did not appeal from this part of the SBOE's decision.
[¶7] The majority of the sales involved customers who came to one of the stores, picked up the vehicle and then returned to their home state with the purchase. Maverick refers to these as "self-deliveries." Maverick asserted that the parties intended to transfer possession in the buyer's home state; the Department countered that the record did not support this assertion.
[¶8] In some sales, Johnson testified that Maverick would recommend a common carrier to the buyer, and then the buyer would contract directly with the carrier. The SBOE found that delivery to the carrier was the equivalent of delivery to the buyer and that there was no contract or other evidence that the parties intended that Maverick would be responsible for the goods until delivery was complete.
[¶9] Maverick and the Department entered into a stipulation that Maverick did not have to contact any of its customers to obtain documentation that the customer had paid sales or use tax in another state. The Department agreed to this because it asserted that its only contention was that the State of Wyoming was entitled to the tax.
[¶10] The SBOE found that possession of the vehicles was transferred to the buyer in Wyoming; therefore, Wyoming sales tax was due. In general terms, the question before the Court is whether the SBOE's decision is supported by substantial evidence and not arbitrary or capricious, or otherwise contrary to law.
[¶11] Our standard of review is well-established. We give "no special deference to the district court's decision" in considering appeals from district court reviews of administrative actions, but instead review the case as if it had come directly from the administrative agency. Dale v. S & S Builders, LLC, 2008 WY 84, ¶ 8, 188 P.3d 554, 557 (Wyo. 2008). Reviews of an administrative agency's action are governed by the Wyoming Administrative Procedure Act, which provides in pertinent part that the reviewing court shall:
(i) Compel agency action unlawfully withheld or unreasonably delayed; and
(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:
(A) Arbitrary, capricious, an abuse of discretion or otherwise not in ...