2019 CO 38
Colo.2019Background
- Colorado School of Mines (Mines) required on-campus residents to buy meal plans; students paid Mines under Residence Hall Contracts and used BlasterCards to access meals.
- Sodexo contracted with Mines to operate dining facilities, prepare and serve food, and invoice Mines monthly based on student participation; Mines set meal-plan prices and retained the difference between what students paid and what it paid Sodexo.
- Students using cash paid Sodexo at the register (Sodexo collected sales tax); students using meal plans did not pay Sodexo directly and Sodexo did not collect tax on those swipes.
- Golden audited Sodexo and assessed sales tax on meal-plan meals (based on amounts Sodexo charged Mines); Sodexo protested, lost in district court, and won on appeal (court of appeals held two transactions occurred and Sodexo sold at wholesale to Mines).
- The Colorado Supreme Court granted certiorari and affirmed the court of appeals: it held that the sale to Mines was wholesale and therefore tax-exempt under Golden’s Municipal Code.
Issues
| Issue | Plaintiff's Argument (Golden) | Defendant's Argument (Sodexo) | Held |
|---|---|---|---|
| Whether the meal-plan transactions were retail sales by Sodexo directly to students or wholesale sales to Mines | Sodexo sold meals at the point students swiped cards (students received meals from Sodexo), so Sodexo engaged in taxable retail sales to students | Students paid Mines for meal plans; Sodexo received no consideration from students and invoiced Mines — there were two transactions and Sodexo sold wholesale to Mines | Held: Two transactions occurred; students paid Mines when purchasing meal plans, and Sodexo sold to Mines at wholesale (tax-exempt) |
| Whether the sale from Sodexo to Mines qualifies as a wholesale "sale for resale" under Golden’s Code | Mines was merely a collection agent and did not resell in a manner qualifying for a wholesale exemption | Mines purchased Sodexo’s prepared food/services to resell to students at a higher price and had contractual control over prices and menus — primary purpose was resale | Held: Sale from Sodexo to Mines is a sale for resale (wholesale) and thus exempt under §3.03.040(13) |
Key Cases Cited
- A.B. Hirschfeld Press, Inc. v. City & County of Denver, 806 P.2d 917 (Colo. 1991) (articulates primary-purpose test for determining purchases "for resale" and wholesale status)
- Slater Corp. v. S.C. Tax Comm'n, 242 S.E.2d 439 (S.C. 1978) (university meals found purchased for resale; vendor’s sales treated as wholesale)
- City of Golden v. Aramark Educ. Servs., LLC, 310 P.3d 262 (Colo. App. 2013) (conflicting court of appeals division concluding vendor could not claim wholesale exemption)
- Hodgson v. Prophet Co., 472 F.2d 196 (10th Cir. 1973) (FLSA case treating college as collection agent for vendor; discussed by parties but distinguished by court)