CAPITAL ONE, N.A., Plaintiff-Appellant, v. COLORADO DEPARTMENT OF REVENUE, Defendant-Appellee.
No. 20CA0818
Colorado Court of Appeals, Division V.
February 10, 2022
509 P.3d 1078, 2022 COA 16
Opinion by JUDGE HARRIS
Id. Colorado: VLEX-908176329
Philip J. Weiser, Attorney General, Benjamin Kapnik, Senior Assistant Attorney General, Anne Mangiardi, Senior Assistant Attorney General, for Defendant-Appellee
Opinion by JUDGE HARRIS
¶ 1 Under Colorado law, if a retailer pays sales tax on a credit sale and later writes off the debt as uncollectible, the amount of sales tax remitted may be credited against the retailer‘s subsequent tax obligation. Plaintiff, Capital One, N.A., financed purchases, including the sales tax, made with various retailers’ private label credit cards. When some of those purchasers defaulted, Capital One filed claims with defendant, Colorado Department of Revenue (DOR), seeking a refund of the sales tax remitted by the retailers. The DOR denied the claims, and Capital One appealed the denial to the district court. The district court dismissed Capital One‘s petition for failure to state a claim on which relief could be granted.
¶ 2 On appeal, Capital One contends that its petition states a cognizable claim: in financing certain sales, it acts as a “unit” with the retailers and therefore qualifies as a “taxpayer” entitled to a refund of the sales tax paid on behalf of the defaulting purchasers. We disagree and therefore affirm.
I. Factual and Legal Background
¶ 3 Some retailers offer a private label credit card for customers to use at the retailer‘s store. Purchases made with those credit cards are financed by the retailers themselves (generally through a wholly owned subsidiary) or, more commonly, by an outside financing company.
¶ 4 Capital One acts as one such outside financing company. It has entered into contracts with numerous retailers to issue private label credit cards to consumers and to finance the purchases made with those cards.
¶ 5 Consumers must pay sales tax on the purchase of tangible personal property, whether the consumer pays for the property with cash or charges the purchase to a credit card. See
¶ 6 Under the terms of the contracts with the retailers, Capital One paid the retailers the purchase price plus the sales tax and bore the loss if customers failed to repay the loan. Some of the credit card purchasers did fail to repay Capital One, and some of those accounts were charged off as bad debts by Capital One or HSBC Bank, N.A. (a credit card business acquired by Capital One) for federal income tax purposes.
¶ 7 Under section
Taxes paid on gross sales represented by accounts found to be worthless and actually
charged off for income tax purposes may be credited upon a subsequent payment of the tax provided in this article, but if any such accounts are thereafter collected by the taxpayer, a tax shall be paid upon the amounts so collected.
A “taxpayer” is “any person obligated to account to the executive director of the [DOR] for taxes collected or to be collected” under the sales tax statutes.
¶ 8 After it charged off some of the credit card loans as bad debts, Capital One filed a series of claims under
¶ 9 In the final determination, the director found and concluded that
- Capital One had submitted only one contract with a retailer in support of its claims;
- the contract expressly provides that Capital One and the retailer are independent contractors and are not in a relationship of principal and agent, partners, joint venturers, or an association for profit;
- as independent contractors, Capital One and the retailer “are not constituents of a whole” and “are not a unit“; and
- in any event,
section 39-26-102(5) does not provide for a tax refund and therefore Capital One would be limited to a tax credit.
¶ 10 Capital One appealed the final determination to the district court, asserting the same grounds for relief — that it is a “taxpayer” within the meaning of section
¶ 11 The DOR moved to dismiss the petition for failure to state a claim, primarily on the ground that Capital One could not meet the definition of a “taxpayer” entitled to a credit under
II. Discussion
¶ 12 On appeal, the central issue is whether Capital One is a “taxpayer” — i.e., a “person” obligated to collect and pay sales tax to the DOR. If Capital One is not a taxpayer, everyone agrees that it is not entitled to any credit for (or refund of) sales tax paid by the retailers. Because we conclude that it is not a taxpayer, we need not determine whether the petition was properly dismissed on other grounds as well. See Carbajal v. Wells Fargo Bank, N.A., 2020 COA 49, ¶ 13, 467 P.3d 1262 (when the district court dismisses a complaint on several grounds, the court of appeals may affirm on any single ground).
A. Standard of Review
¶ 13 We review de novo an order granting a
¶ 14 The district court‘s order turned on the interpretation of
¶ 15 The primary goal of statutory interpretation is to ascertain and give effect to the legislature‘s intent. Lewis v. Taylor, 2016 CO 48, ¶ 20, 375 P.3d 1205. To do so, we look to the plain and ordinary meaning of the statutory language, and if that language is clear and unambiguous, we enforce the statute as written. Nowak v. Suthers, 2014 CO 14, ¶ 20, 320 P.3d 340.
B. Capital One Is Not a “Taxpayer” Entitled to a Credit or Refund
¶ 16 Capital One contends that it is a “taxpayer” for purposes of
¶ 17 We turn first, as Capital One urges, to the plain language of the statute. The statute does not define “unit,” so we may look to the dictionary definitions of that term to ascertain its plain and ordinary meaning. See Roalstad v. City of Lafayette, 2015 COA 146, ¶ 34, 363 P.3d 790.
¶ 18 A “unit” is “a single thing ... that constitutes an undivided whole,” or “a single thing ... that is a constituent and isolable member of some more inclusive whole” or “aggregate.” Webster‘s Third New International Dictionary 2500 (2002); see also Merriam-Webster Dictionary, https://perma.cc/2KJE-H7NQ (A “unit” is “a single thing, person, or group.“) Thus, giving the statutory words their plain meaning, a “group or combination” of entities is a “person” when the entities act as one — that is, when they join together to form an “inclusive whole” or an “aggregate” entity.1
¶ 19 Reading the language in context supports this interpretation. Under the principle of construction known as ejusdem generis, when a general term follows a list of specific things, the general term applies only to things of the same general class as those specifically mentioned. See Creager Mercantile Co. v. Colo. Dep‘t of Revenue, 2015 COA 10, ¶ 15, 415 P.3d 825, rev‘d on other grounds, 2017 CO 41M, 395 P.3d 741. The term “group or combination acting as a unit” appears in subsection 102(6.3) at the end of a list of single entities, including “firm,” “joint venture,” “partnership,” and “corporation.” The phrase “group or combination acting as a unit,” therefore, is best understood as a catchall term for other organizations that do not fit the legal definition of those listed but which, like those listed, operate as a single organization.2 See
¶ 20 To “act as a unit,” the constituent members must act as a unit for all purposes. Capital One cannot enjoy the benefits of its separate corporate identity for all other purposes and then declare itself a “unit” with various unrelated retailers for the sole purpose of obtaining a tax refund from the DOR. See, e.g., Pemco, 907 P.2d at 867 (“We find no reason why [the corporation seeking tax relief under a similar statute] should be able to deny the corporate structure it has chosen in order to gain a tax advantage.“); S. States Coop., Inc. v. Dailey, 167 W.Va. 920, 280 S.E.2d 821, 827 (1981) (“Having taken advantage of the benefits of incorporation, a corporation cannot decline to accept the liabilities of the corporate form in order to reduce the incidence of taxation.“).
¶ 21 At a minimum, though, the constituent members must act as a “unit” for purposes of paying sales tax. To be a taxpayer, the “person” — whether an individual, a single entity, or a combination of entities “acting as a unit” — must be obligated to “account to” the DOR “for taxes collected” under the sales tax statute.
¶ 22 Our interpretation is supported by Montgomery Ward, a case in which our supreme court rejected an argument nearly identical to the one advanced by Capital One. In that case, Montgomery Ward argued that its obligation to pay accrued sales tax on credit purchases was not triggered by its sale of the accounts receivable to its wholly owned subsidiary because the two corporations were a single “person” under
¶ 23 True, as Capital One highlights in its briefing, the supreme court also noted that the wholly owned subsidiary was not the exclusive purchaser of Montgomery Ward‘s accounts receivable. According to Capital One, Montgomery Ward is therefore distinguishable: because it is the exclusive financer of the various retailers’ private label credit cards, Capital One argues, its relationship to each of the retailers is more significant than the relationship between Montgomery Ward and its wholly owned subsidiary.
¶ 24 But to the extent a lack of exclusivity was a factor contributing to the court‘s holding, that same factor is present here. Capital One has only one-sided exclusivity with the other member of the supposed “unit.” Though the retailers may not have contractual
¶ 25 Taking our lead from the supreme court in Montgomery Ward, we conclude that Capital One and the retailers, as entirely separate and distinct entities, are not “acting as a unit” and are therefore not “one ‘person’ as defined by section
¶ 26 Because Capital One is not a “person” for purposes of
III. Conclusion
¶ 27 The judgment is affirmed.
Gomez and Vogt*, JJ., concur
* Sitting by assignment of the Chief Justice under provisions of