*1 DEN OF ARCHDIOCESE CATHOLIC corpora
VER, non-profit a Colorado Sys
tion; Hill Information McGraw Division, Co./Dodge a New York
tems Leader, Inc.,
corporation; the Colorado corporation; the Colorado
a Colorado Press, Inc., corpo a Colorado
Political
ration; Rosenberg, J. Ivanhoe d/b/a Herald-Dispatch; Intermountain News, Inc., corpora a Colorado
Jewish Inc.,
tion; Publishing, a Colora Denver Peterson; corporation;
do Warren Leiso; Lerma; Stan
Hans Rosendo Weston; Koseba;
Boxter; Justin Janet Zachman, Zachman;
Mary and Earnest
Plaintiffs-Appellants,
v. DENVER, a Mu AND OF
CITY COUNTY
nicipal corporation; H. Gus Carl Revenue,
tafson, Manager City and Denver,
County Defendants-Appel
lees. CORPORATION, a
The DENVER POST corporation; Denver and the
Colorado
Publishing Company, Rocky d/b/a News, Plaintiffs-Appellants,
Mountain DENVER; AND
CITY COUNTY OF Gustafson, Manager H. of Revenue
Carl County De
fendants-Appellees.
No. 85SA172. Colorado,
Supreme Court of
En Banc.
July
I. 1982, Prior to retail newspapers sales of exempt from the Denver retail sales Denver, tax. Colo. Municipal Revised (1950) (Code), Code 1981, 166.2-11. In § the Denver repealed Council and reen- article, acted the and, retail sales tax so, doing repealed the exemption for news- papers January Denver, effective 1982. (December 7, Colo. Ordinance 1981) 81-666 (City Article).1 Retail Sales Tax According- ly, newspapers were treated as all other personal property under the retail sales tax ordinance. P.C., Cooper Kelley, & Thomas Kelley, B. provided The ordinance that “there is plaintiffs-appellants. levied and there shall paid be collected and Smith, Eiberger, Stacy Rodney & L. article, the amount stated in this Smith, Denver, Corp. for The Denver Post purchase ... on price paid charged or Hostetler, Clark, Baker & James A. upon all purchases sales and tangible Pringle, Denver, Bruce D. for The Denver personal property at retail.” Code Pub. Co. 166.4 and 166.4-1. §§ Stephen Kaplan, City H. Atty., Donald E. “Retail sale” was defined as sale Wilson, City Atty., Denver, Asst. for de- other than one at wholesale. Code 166.- fendants-appellees. 2-6. “Wholesale sale” was defined as “a
sale merchants, wholesalers to retail jobbers, dealers or other wholesalers for ROVIRA, Justice. resale....” 166.2-4. “Wholesal- Appellants, retailers, publishers, carriers, er” person was defined as doing regu- “a newspapers consumers of various larly organized jobbing wholesale or busi- area, appeal Denver judgment from a ness, such, and known to the trade as of the district court upheld which the Den- selling merchants, jobbers, deal- ver retail applied sales tax ordinance as ers, wholesalers, or other purpose them, upheld regulations promulgated of resale.” Code 166.2-3. thereunder, and affirmed an assessment 22, 1982, February On the Denver De- against Corp. (Post) the Denver Post partment of promulgated regula- Revenue Publishing the Denver Co. Rocky d/b/a the tions entitled Regarding “Rules the Assess- (News). Mountain News Appellants con- ment and Collection of Sales and Use Taxes tend that the trial court misread the ordi- on the Sales Newspapers and Use of regulations nance and and that the ordi- (Regulations) Other Publications.” They nance and are unconstitutional provided, part: applied as judg- them. We affirm the ment of the trial court on the issue of the publica- 1. Sales-for-resale of such constitutionality ordinance, (a) but we tions to vendors who licensed as agree appellants that the trial court pursuant retailers to said Sales and Use interpretation erred in its Tax Licensing Articles and General Pro- accordingly part reverse that of visions of Municipal the Denver Revised judgment. Code, (b) publications who sell such 1. September The entire Code language was recodified on anee of the of ordinance 81-666 in the Apparently because that exhaustive Code was in the 1982 version. We use the imminent, recodification was the section num- 81-666, section numbers from ordinance organization bers and of the retail sales tax arose, prior existed at the time this case article found in ordinance 81-666 were never 1982 recodification. incorporated into appear- the Code. The first locations, University sor at the from commercial Denver Business purchasers School). or vend- places of retail business
such as machines, considered shall be testimony of the two circulation di- by pub- All other sales sales. wholesale . substantially rectors was the same. Each publication of such or vendors lishers testified distribution methods retail sales on presumed to be shall be respective newspapers, used their vendor must col- *3 especially relationship between the Tax ... the remit the Sales lect and publishers and the news carriers. Both by such presumption be rebutted testified that carriers entered into a con- Manager the deems proof as reasonable buy papers publishers tract to from the and adequate. to deliver them to the consumers on their by publishers newspapers of 2. Sales month, route. At the end of each the carri- independent news retailers to or licensed billed, retail, er a rate for the was at below similarly to be presumed carriers shall be papers purchased. newspaper he had Each retail and taxable transactions. sales at independent also sold to distributors who measured in cases shall be The tax such wholesalers, functioned as intermediate purchase price paid by the news by the buying publishers selling from the and to publisher or licensed retail- carrier who, turn, public. carriers in resold to the carrier” as used The term “News er. Generally, the carriers collected from the hawking newspa- shall mean those herein consumers, the differential between or at pers regularly established routes paid price price the the consumers and the locations. random being profit. paid carrier the carriers’ the publishers accept payments The would through vended vend- 6. Publications payments to from customers and credit the ing located machines within paper the carriers. If a the accounts of Tax and the vendor subject to the Sales consumer, con- by the was not received must, publi- regardless of the calling option the carrier sumer had Manager pay over to the of Reve- cation. If the calling publisher. equivalent to nue an amount 3% called, employee sent a was was salaried vending through made machines. sales carri- replacement paper and the out with a 1982, a In March the Post was assessed charged. was er’s account $1,200, penalty, tax in the amount of a 10% that were Both directors testified penalty for a total of and a interest 6% trade, newspaper and familiar with the $1,360, covering period February from recognized as were the Post and News 12, through February April 28. On trade and that within the wholesalers received an identical assessment.2 News the carriers was to sale from papers peti- filed of both sale. a wholesale cancel the assessment. On June tions to McNeill, marketing Ph.D. in a Professor evidentiary hearing was held be- field, also expert in the accepted and as an acting hear- Deputy fore the Treasurer and News were the Post testified that both Manager of on behalf of the officer He recognized in the trade wholesalers. Revenue. publish- sales further testified that the hear- There were four witnesses at respective carriers was whole- ers to their Greenberg Myatt ing: and Ronnie Howard nature, not retail. and sale (circulation directors for Post partici- had that he (a testified News, Guttenstein respectively), Donald Guttenstein it drafting regulations and was Department pated supervisor for the field audit ordinance and (a job his to administer Revenue), profes- Dennis McNeill vending through directly ma- to consumers papers a the News sell 2. Both the Post and estimate was an The assessment variety ways: independent chine sales. to news carriers carriers, consumers, to news covered the sales independent who resell them to distributors, carriers, independent to li- distributors who resell them consumers, censed retailers who resell them to regulations. regula- He testified and independent distributors were “retail” with efficient tax tions were drafted collec- purposes and, accord- mind, despite tion in the fact that sales ingly, the Post and News owed retail tax on to their news carriers However, those the hearing sales. officer line, Along this he were wholesale. noted independent determined that dis- together that since Post News had papers tributors resold the who to licensed 2,000 1,500 approximately carriers and exempt. hearing retailers officer approximately there a annual was also concluded that sales to retail- licensed rate, impractical turnover it would ers, newsstands, such as were wholesale require license news carriers and re- no therefore retail tax was due on turns to be filed them. them. many He also circum- testified hearing officer also found marketing product stances where the capacity Post and News in the acted was unusual —door-to-door cosmetic sales *4 retail selling papers merchant when cookies, example girl and scout for deal—a through vending Accordingly, usually was struck with the to wholesaler must, he publishers regard- ruled that the facilitate collection. He also testified that newspaper, pay less of the for than items sold less were included 19<f equal amount to of sales. 3% taxable calculating the of the merchant in sales determining the he amount of tax owed. In November both the News and complaint pursuant the filed a to Post C.R. hearing findings The officer issued of 106(a)(4)alleging C.P. the decision was ar- fact and conclusions of law which were bitrary, capricious, discretion, an abuse of adopted by Manager the of Revenue. He law, contrary juris- to and in excess of the found that the carriers em- news were not diction the Manager of of ployees of either Revenue. a the the sub- scribers, separate independent but were action filed several months earli- contractors. er, He also found the appellants sought declaratory judg- that transactions be- all tween and (1) regulations the the carriers were ment that the conflicted lexicon, “wholesale” the trade ordinance, that with the tax the sales the to resale the subscribers a “retail” was regulations ordinance and were unconstitu- sale. applied by tional on their face the city. two for The suits were consolidated hearing regu- officer found that the summary judg- trial and for cross-motions presumption lations created a rebuttable parties. by ment were filed all that a sale to an unlicensed carrier or news independent distributor was not a whole- Manager The decision of the of Revenue In determining sale sale. that the Post and court, by was affirmed the trial held presumption, News had not overcome the regulations ordinance and were not un- he that stated constitutional. The trial court also held proof no was offered whatsoever that implicit that in the of definition “wholesal- independent news carrier or distribu- er” in the ordinance that was limitation during period tor the audited was the only sales to retailers were cover- licensed holder Retail Sales License. ed, separate because required code all retailers obtain licens- not, course, hearing officer does Therefore, es. the sales to the unlicensed him proper foreclose case before news carriers were not wholesale sales and coming
news carrier forward to demon- accordingly must be retail sales. The court indeed, he, strate that does hold a Retail by concluded that the tax was owed purchases Sales License his “retailer,” i.e., the Post and News. exempt under should court carri- also determined that the news “sales resale” standard. agents ers were of the Post and News overcome, Since the that the were therefore retailers presumption was not sales the unlicensed carriers the tax. news owed alternative, In the the court ruled that This reasoning circular turned the rebut- even if the independent news carriers were presumption table into an irrebuttable retailers, the Post and News should none- one—the only way to overcome the pre- theless collect and sumption because established the lack of a retail expected otherwise monies the sales produce license was to a retail sales collect “lost.” would be The court also license. This destroys the meaning of the ruled Post News owed a tax on term “rebuttable” found in paragraph 1. machine sales in an amount The trial court instead read the “license” taxable sales. requirement into the ordinance itself. It ruled that since appeal, argue provision another appellants
On the trial retail sales ordinance, required ordinance court misread the all it made license, merchants to findings have a erroneous and conclusions sales as to “licensed retailers” fell within agents whether news carriers are the defini- tion of “wholesale.” publishers, disagree We regulations and that interpretation. scope or, exceed the if not, they do the ordinance and First, the ordinance is clear on its are unconstitutional. Because of the con- face. It exempts from retail sales tax questions raised, appeal stitutional was “wholesalers to retailers ... referred to this court. Section 13-4- resale.” The Post and News are both rec 110(l)(a), (1973). 6 C.R.S. ognized in the trade as wholesalers of
newspapers. The sales were made not to
*5
consumers, but to news carriers for resale.
II.
Thus,
clearly
the sales
fall within the letter
of the ordinance. When an ordinance is
THE ASSESSMENT
facially unambiguous,
plain
its
meaning
should
by judicial
not be altered
construc
A.
People Mascarenas,
tion.
v.
wholesaler
because it is less cost
*6
dispute. Section 166.6 also states that it is
efficient to collect it from the retailer.4
a violation of the article “for
vendor to
difficulty
justi-
Administrative
cannot be a
collect,
fail to
any purchaser
or for
to fail
fication
judicially rewriting
for
a clear and
pay,
by
the tax levied
this article.”
unambiguous ordinance.5
Subsection 166.8-2 states that the “re-
Having
concluded
the ordinance can-
collecting agent
tailer shall be entitled as
interpreted
not be
to limit the definition of
city
of the
certain
Subsection
[to
credits].”
retailers,
wholesale sales to licensed
it is
provides
may
166.8-6
that a retailer
not
apparent that the
sales from the
paid
advertise that the tax is assumed or
such,
to the carriers were wholesale. As
him,
by
or that the tax will not be added to
appellant publishers
Denver cannot hold
or,
added,
selling price,
if
that the tax
responsible
collecting
for
the sales tax.
any part
or
thereof will be refunded.
(retailer
See Code
166.7
liable and re-
sponsible for collection of tax from
provisions
con-
These
are sufficient to con
sumer).
vince us that Denver intended the consum
Apparently,
difficulty
collecting
the administrative
ers to obtain a retail license or
the tax
collecting
primary
from the news carriers is the
from them.
city’s attempts
reason for the
tax from the wholesaler.
the drafters of the
to collect the sales
Guttenstein,
one of
began,
5. Since the time this case
the ordinance
regulations,
testified that he
has been amended to include
sales to “li-
recognized that
the transaction between the
censed” retailers in the definition of "wholesale
wholesale,
publishers and the news carriers was
Municipal
sale.” See
Colo. Revised
but the
were nonetheless written
(1982)
53-24(17) (effective
Dec.
with collection from the
in mind.
1984).
any provision
We Eire unaware of
of law that
prevents
city
requiring
the news carri-
responsible
payment
er
the retailer to
the tax.
for the
of an
and not
amount
Brothers,
Compare
v. Hartman
percent
to three
tax-
Bedford
Inc.,
(sales
plicable fractional of a dollar price.” amounts to be included in such sales price. such Code 166.8. summarized as These can be responsible for a tax response, relies on the follow- follows. A retailer is ing provision of the tax article: equal to of his taxable sales. “no shall, 166.8 states that there shall be
Amount. Every irrespec- Section retailer However, article, provisions of tax” on sales of less than tive of other 19c. *7 through vending responsible for the made a liable when sales are percent machine, an amount to three included in the by him of taxable sales made price and the schedule “shall be used” specified in this commodities or services price. A setting in vendor retailer article.... through vending machine of articles determining in “must” use the schedule Code 166.7. in the of tax to be included amounts section, argues by its city that this vending ma- charged coin-operated terms, 166.8, express controls over section chines. in 166.8 is and that the schedule section in for the convenience of the merchant ambiguous contains The ordinance is approximating on the tax to be collected the retailer. contradictory instructions to each isolated sale. ap- provisions require the retailer to Some in 166.8. ply the tax and schedule section construction of the sales article retailer liable for Another holds the simple, is not so however. 166.7 Section regardless the amount collected under the retailer is “liable and 340 apparent agree
the schedule. To resolve these with We the United States Su- conflicts, preme that a apply statutory Court tax ordinance we usual rules of newspapers goods treats as all other is not construction. Here, facially invalid. under our construc- specific provi It is well established taxing ordinance, newspapers tion of the sions of an ordinance or statute control differently are no goods treated than other general provisions. Bowman v. El over and so the ordinance is not unconstitutional dher, (1962); P.2d 149 Colo. II, under article section 10 of the Colorado Statutory Singer, Sutherland 2A A. Constitution. (1984). case, Construction In this Our resolution of the other in issues only apply sections 166.8-3 and 166.8-5 case the need to obviates reach the other vending Both those issues appel- constitutional raised (“shall” mandatory language use lants. “must”) regarding the use of the schedule judgment of the trial court is af- that, collecting appears tax. It thus firmed to the constitutionality sales, vending regard to machine portion judgment ordinance. That segment of the schedule controls “no tax” affirming the assessment is reversed. general language found else over the Additionally, where. the ordi because LOHR, J., part concurs in placed in irreconcil nance an part. dissents in position invalidly we hold that the able MULLARKEY, J., joins in the publishers’ assessed retail tax on the concurrence and dissent. vending 15$ newspapers. machine sales of
LOHR, Justice, concurring part dissenting part: III. I concur in Parts II-A and III of the THE DECLARATORY JUDGMENT dissent, however, majority opinion. I from Appellants raise three constitutional opinion, Part II-B of that challenges validity of the ordinance majority invalidates sales tax assessment regulations. Because these claims at vending machine sales of fifteen-cent validity
tack the facial of the ordinance and daily newspapers. I believe that Denver’s regulations brought and because clearly retail sales tax ordinance contem- by parties party assessments, we plates newspaper publishers will be despite must address these issues our de gross receipts assessed a tax on the from relating termination that the assessments sales, including all retail those sales of carriers, independent to the news distribu daily newspapers vending fifteen-cent tors, machines must be can- machines.
celled. I.
Appellants
argue
first
that the ordinance
are unconstitutional as a
A.
knowledge”
“tax on
in violation of the first
principles
statutory
Basic
construction
and fourteenth amendments to the United
guide
inquiry
presented
into the issues
II,
States Constitution and article
section
enactment,
legislative
A
this case.
10 of the Colorado Constitution. This claim
ordinance,
whether it be a statute or an
merit;
long
newspapers
is without
so
“should be construed in a manner that ren
*8
subjected
are
to no different burden than
pur
in accomplishing
ders it effective
the
goods,
all other
the ordinance
not
does
enacted,
poses for
it
and the
which was
...
violate the federal Constitution.
Ar
See
meaning
gath
of
one section must be
Project,
kansas
Ragland,
Writers’
Inc. v.
ered from a consideration of the entire
—
scheme_”
U.S. —,
1722,
107
95
S.Ct.
L.Ed.2d legislative
Depart
State
(1987);
Minneapolis
209
Adolph
Co.,
Star & Tribune ment Revenue v.
Coors
724
of
Minnesota,
Co. v.
575,
1341,
(Colo.1986)(Quinn, J.,
460 U.S.
103 S.Ct.
1348
dis
P.2d
(citations omitted). Accord,
1365,
e.g.,
(1983).
senting)
341 Stores, Smith, P.2d ordinance’s Safeway Inc. v. 658 definition of wholesale sales as 255, (Colo.1983); F in Enterprises, 259 R & contained Code 166.2-4. Such sales § Comm’rs, County and, 199 Inc. v. Board are therefore “retail sales” because of (1980). 137, P.2d 64 Colo. 606 Further not exempt are classified as from the more, 166.5, we must construe enactment so tax under Code the retailer is lia- § give as to and harmonious effect consistent percent ble for three of the total amounts People to all of its terms. v. District received from such sales. 918, (Colo.1986); Court, P.2d 921 Pax 713 however, The majority, relies on the “tax Co., 206, Mining son v. Colo. Cresson schedule” set in forth Code 166.8 to con- § (1913). 139 P. With these clude that a is not liable for a retailer tax mind, in I turn to what I principles believe eighteen on retail less, sales of cents or construction of Denver’s proper be the including vending machine sales of fifteen- respect tax ordinance with sales daily newspapers. cent This result is not daily newspapers sales fifteen-cent from of required by 166.8 and in fact Code flies § vending machines. plain language in the face of the of those ordinance previously, sections set forth B. specifically levy which and determine the 166.41 levies the retail sales tax Code § amount of the tax. provides: at in case. That section issue this whole, When ordinance is viewed as a There is Items. levied and there Taxable apparent it is schedule set paid a in shall collected and tax specifica- in merely forth Code 166.8 is § article, in this follows: amount stated charged by tion of amount of tax to be purchase price paid On purchasers particu- retailers to for sales at purchases charged upon all sales and of prices lar does not alter the retailer’s —it personal property at tangible retail. Indeed, liability. tax the tax schedule’s added.) (Emphasis Some services com- apparent of is purpose assisting the retailer explicitly exempted this modities are from from the face ordinance. The sched- 166.5, and all of ex- by tax Code these § “round down” ule directs the retailer to emptions by subject described mat- charged tax to the nearest whole number ter, amount, sale. rather than percent application of the three tax when by taxation rate is established Code plus of cents given rate results in a number 166.7, "[ejvery retail- § than .55. Con- a fractional cent of less shall, irrespective er other up” of versely, the must “round retailer article, responsible this be liable yields a fractional .55 tax when tax rate of an amount example, a retailer is cents or more. For (3%) percent three sales taxable a sale charge a of one cent on tax made him of commodities or services yields $.51, percent tax rate when the three specified (Emphasis article....” actual tax cents. The schedule of 1.53 added.) is “Gross taxable sales” defined charge a tax two directs retailer total re- Code 166.2-12 as “the amount $.52, tax rate cents on a sale of when the purchases sales and at ceived ... from 1.56 cents. yields an actual tax of retail....” case, rounded down to former the tax is case, cent; tax is Therefore, one the latter plain it is clear from the lan- up cents. schedule rounded to two guage that a is retailer charged sales of is on states no tax percent three liable in the amount of cents, eighteen because actual less than sales received all retail amount cents. Consistent with is .54 property exempted $.18 tangible personal not by the Coun- the formula established “Retail sales” are de- Code 166.5. cil, the nearest the tax is down to rounded fined all that are “wholesale” number, of 0. The resulting a tax whole disputed It is not sales. Code 166.2-6. system of represents a schedule therefore sales of machine fifteen-cent averaging purchasers re- daily and relieves newspapers do not fall within (Code), Municipal § 166.4. Colo. Revised *9 paying remitting tailors from fraction-
al cents. COMPANY, INC., MID-STATES SALES Plaintiff-Appellant Cross-Appellee,
Code 166.8 cannot be read to insulate § the retailers from the assessment of a gross percent three tax on sales of items MOUNTAIN EMPIRE DAIRYMEN’S AS-
priced eighteen under cents. The section SOCIATION, INC., that, Defendant-Appellee simply establishing states when pur- Cross-Appellant. amount of tax be collected chaser, must comply a retailer with the tax No. 85CA1261. schedule of Code 166.8. It does not alter § sales, liability the retailer’s for tax on those Appeals, Colorado Court of explicitly since Code 166.7 states that the § Div. III. percent retailer is liable for three sales, meaning taxable the total amount of June exempted all retail sales Code 166.5, “irrespective other § article_” added.) (Emphasis If retailer, acting City’s as the collection agent pursuant to the tax schedule 166.8,
contained in Code collects more § percent,
than three it must the excess city. If,
over to the Code 166.8-2. how- § ever, percent, it collects less than three it is percent
still for that pursuant liable three Thus, irrespective Code 166.7. of the 166.8,
tax schedule set forth in Code publishers in this case are liable for three
percent of the amount of all
machine sales of daily newspa- fifteen-cent
pers.
II. light legisla- clear intent all retail sales not body
tive to tax specifi- cally exempted by 166.5, I would
hold that the in this case are percent
liable for three of the total amount
received from all sales of daily fifteen-cent
newspapers. Any ambiguities in ordi-
nance readily can be resolved harmoniz-
ing the various give sections to effect to
the entire ordinance pur- consistent with its
pose. Accordingly, uphold I would the as- against
sessment for vend-
ing machine sales of daily fifteen-cent
newspapers.
MULLARKEY, J., joins in this
partial partial concurrence and dissent.