Consolidated Freightways Corp. v. State, Department of Revenue & Taxation

652 non-settling should be tortfeasors reduced 735 P.2d 963 by by settling amount paid tort FREIGHTWAYS CONSOLIDATED v. feasor release. Woodard Holli DELAWARE, CORPORATION OF 744, (1962); 235 Ark. 744 day, 361 S.W.2d Plaintiff-Appellant, Co., v. 8

Raughley Terry Delaware Coach 343, 343, (1952); v. 47 Del. Mary 91 A.2d 245 White, 205 Md. land Lumber Co. v. Idaho, DEPARTMENT OF STATE (1954); Langlais, A.2d 73 v. Augustine 107 TAXATION, AND REVENUE (1979); Daugh 121 R.I. 402 A.2d 1187 Defendant-Respondent. 367, 126 erty Hershberger, v. 386 Pa. A.2d (1956); Degen Baymen, 730 90 S.D. v. No. 16198. (1976); 703 241 N.W.2d Shantz v. Rich cf. view, Inc., (Minn.1980), N.W.2d Supreme Idaho. Court of holding settling that when defendant Feb. 1987. judgment non-negligent found to be should not be reduced the amount Rehearing April 1987. Denied settlement. We note the somewhat anomalous prompted set forth has

result above on

National Conference of Commissioners change Laws to 5 of

Uniform § Contribu-

Act. See comment Uniform Act, Among Tortfeasors Handbook of

the National Conference of Commissioners (1955). Neverthe-

on Uniform State Laws

less, Idaho 6-805 to continues I.C. § the 1939 version language

maintain Act, hence we

of the Uniform are

persuaded by construction of the 1939 of the Uniform Act the courts of

version

Arkansas, Maryland. See Delaware Company

M.F.A. Mutual Insurance v.

Mullin, Eakin, supra; supra; Brown v. Welk, Swigert supra.

The orders the trial court affirmed pro- further

and the cause remanded for Rodenbough

ceedings which the negligence, any, if will be deter-

Schmidt judgment ultimately

mined. the event against Rodenbough,

entered it will re- in accord 6-805

duced with I.C. § by McGintys and

consideration received

Tucker for their covenants sue

Schmidt. respondent. attorney No fees

Costs appeal.

DONALDSON, BAKES, BISTLINE HUNTLEY, JJ. concur.

transportation services within continen- tal United States and Alaska. Consolidat- operates ed Boise rate center which com- charges putes transportation for the servic- performs, es that it both on its own and in conjunction with other common carriers ship- with which interlines its customers’ charges transportation ments. These for and services are in tariff related found required schedules which are to be filed regulatory agencies. various order business, to conduct Consolidated ac- quires compa- tariff schedules from various throughout country. nies These sched- mass-produced by ules are tariff bureaus specialize compiling preparing which addition, compiled tariff schedules. tar- provided iff are schedules to carriers who to the service. subscribe The tariff published schedules and loose- bound form, they may leaf updated daily. acquired information tariff computers. schedules entered into Con- acquires computer tapes solidated also which contain rate information. periodic billings received Consolidated Upon paying from the tariff bureaus. due, itemized amounts charged payment to two different Con- expense portion solidated accounts. A paid charged was amount account 4627-10, number entitled Tariffs Schedules, which was intended include charges publications sup- made A plements. larger portion billing 4627-20, charged to account number payments which was account to which charged for services that were in were providing the and tariff addition to later schedules. This account included charges participation, dues provided by monthly general services Strother, Boise, Jeffrey plaintiff- A. in- monthly These services bureaus. appellant. sampling, costing, and clude rate revenue analysis justifying to be used in services Jones, Atty. Gen., Span- Jim Theodore V. general rate increases and restructures be- Gen., gler (argued), Deputy Atty. for de- fore the ICC. fendant-respondent. charges The tax commission held

HUNTLEY, Justice. number made to account 4627-10 tax, Freightways Corporation use because account reflected the (Consolidated) publications is a corporation paid Delaware amount performs shipped intrastate and interstate and used in the Boise rate cen- charged

ter. The amounts to account num- Knudson Company, Inc. v. State Board ber 4627-20 were treated Equalization, as excluded from Wyo. tax, charges (1943). Further, because the were for legislative intent that were separate pro- language distinct and is evident of the statute. viding the tariff Trading Com., schedules. General v.Co. State Tax 322 U.S. 64 S.Ct. 88 L.Ed. 1309 question The first we address is whether (1944). the use tax under applica- I.C. 63-3621 is § The imposes Sales Tax Act acquisition ble to Consolidated’s an excise tax of the tar- price” on the every iff “sale rate schedules. “sale at retail” The use tax statute tangible personal provides: property. I.C. 63- § Tangible 3621. personal property is de- Imposition 63-3621. and rate of the “personal fined as property may which be use tax.—An excise hereby tax is im- seen, weighed, measured, touched, felt or use, posed storage, on the or other con- or which is in any perceptible manner sumption tangible in this person- state of the senses. The term “tangible personal property acquired al July on or after property” any includes computer software use, storage, consump- or other which is not a custom computer program.” in tion this state at the per four 63-3616(a),(b). I.C. § (4%) cent of the value of property, price and a recent sales pre- shall be Although statutory definition of sumptive evidence of the “tangible value of the personal property” does not in- property. services, clude in services are not all as- taxation, pects exempt from as is evidenced “Storage” and “use” are defined in I.C. price”: the definition of “sales 63-3615(a) (b): price. (a) 63-3613. Sales The term Storage Use.—(a) 63-3615. The term — — price” “sales means the total amount for “storage” any keeping includes or reten- tangible personal property, includ- any purpose tion in this except state for ing agreed to be rendered as a regular sale in the course of business or sale, sold, leased, part of the rented or subsequent use outside this state solely in money paid money valued in property purchased otherwise, or any without deduction on from a retailer. any following: account of (b) The term “use” includes the exercise any right power or tangible per- over used, 2. The cost of materials labor or property sonal ownership incident to the cost, losses, any other ex- leasing or the property of that or the pense. any right exercise of power over

tangible personal property by any person appropriately apply To the use tax contract, performance of a or to subject statutes to the sale of the tariff fulfill contract or subcontract obli- schedules, requirements three must be ful gations, proper- whether the title of such First, filled: it must be established that ty subcontractor, contractor, be in the printed tangible per tariff schedules are contractee, subcontractee, any other second, property; sonal the tariff schedules person, or whether the titleholder of such through must have been obtained a retail property would be to the sales or sale; third, it must be shown that the tax, use unless such would be printed tariffs were under the control and exempt to the titleholder under section ownership Freightways of Consolidated 63-3622(d), Code, except Idaho that the Realty, Idaho. Old West Inc. v. Idaho term “use” does not include the sale of Com., 546, 548, 110 Idaho State Tax regular (1986). course of P.2d business. requirement is The first met that the interpreting language easily of a use tax tariffs fit within the statute’s defini- statute, legislative tangible personal property the court should use “which measured, seen, primary guide. may weighed, intent as a be felt or Morrison- touched, purchase or which is in other manner of tariff To reach perceptible to the senses.” The a conclusion as to whether ais sale of fact, physical tariffs are product. services or a retail sale of provides description record detailed property, balancing test established in physical tariff schedule’s characteris- Regulations, the Idaho Sales and Use Tax tics: 9, l.b.i, Reg. applied. should be publish- tariff schedules are pur- The test to determine whether ed bound and in loose-leaf form and chase the tariff schedules was retail updated frequently daily. as sale is to real establish the schedules, receiving After approach judicial transaction. This in- some of information the is entered into terpretation use of taxation was used in computers, and thereafter Consolidated Bros., Kosydar, Lindner Inc. v. 46 Ohio may printed, not have to refer to the 162, (1976), St.2d N.E.2d 346 690 where the published schedules. Consolidated also court print- viewed sale of cards and acquires computer tapes which contain of processing outs data results as a trans- tapes rate information and uses the tangible fer property object of and the real store information future reference. In Miami Citizens of the transaction. pivotal controversy issue in this is Lindley, Natl. Bank Trust v. & Co. pur- whether the tariff schedules were 249, (1977), Ohio St.2d 364 N.E.2d 25 part of tangible chased as a retail sale of providing printouts court viewed the of personal property. The sales tax does not tangible bank transactions as a transfer of apply rendering to transactions where the object property and the real of the transac- transaction, of a service the object is of the Citizens v. Corp. Kosy- Financial In tion. though tangible personal even property is dar, 43 Ohio St.2d 331 N.E.2d 435 exchanged incidentally; but to state that (1975), the court viewed the providing light truism does not proper shed on the printouts daily banking Hence, resolution of this transactions case.1 the issue is tangible further defined as object property to whether the the transfer of is purchase transaction object of services or real of the In transaction. other transaction, dealing 1. merely Here we are awith mixed sale a transfer incidental to a ser- is, transaction, part proper that one which is in a sale of vice test is to deter- tangible mine sequential personal whether transaction involves a con- property, services and inconsequential professional regulations provide classifying a method of personal service. If the service rendered is consistently legis- those mixed transactions inconsequential, then the entire transaction is lative intent: consequential taxable. If a service is ren- b. RETAIL SALES OF TANGIBLE PERSON- dered, then must be ascertained whether AL PROPERTY TOGETHER WITH SERVICES: tangible personal property the transfer of the i. applies The sales tax to retail sales of inconsequential anwas element of the trans- tangible personal property. It does not —ex- so, then action. none the consideration cept apply to the extent stated above— paid is taxable. However, sale of services. a sale of when (b) determining In whether a mixed trans- tangible personal property includes incidental consequential action constitutes a services, the measure of the is the total transaction, a distinction must be made as to charged including amount amount i.e., object object of the is transaction — services, charged except incidental sought by buyer per the service se or the separately transportation stated and installa- property produced by the service. charges. The fact that the (c) Where a is transaction mixed such a tangible personal property principally sold is tangible personal property manner that creativity derived from labor and/or transferred and the service rendered are dis- property maker of the does not transform having consequential tinct elements a fixed tangible personal property sale of into a sale relationship and ascertainable between the any commodity of services. The cost in- value and the value of the cludes labor and skill or manufacture. In sepa- service rendered so that both rately be determining transaction a retail stated, separate there exists two trans- tangible personal property sale of or a sale actions and the one attributable tangible sale of services, following applied: tests are to personal property to sales (a)In determining whether a transfer taxation while the other is not. I.D.A.P.A. tangible 35.02.09, personal property is a taxable retail l.b.i. cases, Supreme information, Ohio State Court the court provid- the tariff bureau is tangible ing held that the transfer of Freightways with the inconsequential sought-after information, anwas element of real underlying object of the transaction. object sought true was a service. Industries, In Columbia Pictures Inc. v. Comr., 176 Conn. 410 A.2d Services, Computer Accountants Inc. (1979), the court concluded that when Kosydar, 35 Ohio St.2d 298 N.E.2d consequential services are intertwined with gave example the court tangible personal property the critical of an indicator that the determining buyer factor in- whether the property which was transferred was an buy tended to an individual’s skills or the inconsequential element of the transaction. product end of those skills is the There, separate charge the fact buyer’s tangible product. end use of the tangible property was made for the ob- Columbia, it was clear that the exhibi- tained was held to be an indication that the possession tor’s was to obtain transfer incidental to the service ob- Therefore, product, case, salable end the film. tained. In the instant the court concluded the li- Freightways charged separate in a rental or was picture cense to the variety account for a of In anoth- exhibit motion was a services. Further, account, separate Freight- taxable sale. since the film er Consolidated was ways charged product, was for the salable end service Therefore, separate exemption inapplicable. was held to be tariff schedules is clear The facts of instant action show similar tangible personal proper- parallels presented that the in evidence to the facts Colum- service, ty was not incidental to the but bia. Consolidated exercised control and addition, object power was the real of the transaction. over the tariff In books. supplements tariffs and tariff were ac- In Tabulating Bullock v. Statistical quired many It is on different occasions. Corp., 549 S.W.2d (Tex.1977), evident that Consolidated was not interest- Supreme Texas noted that: Court information, just ed in the rate but the rate The true this is not of displayed information in a format. processing by the data card as contended step analysis in this is The third and last comptroller, purchase but the of cod- by whether the use of the tariffs Consol- data, processed intangible. ed or in Boise is to use tax. When idated brings The customer in raw data which is purchased tangible personal property is by parties conceded to be an intan- Idaho, Idaho for use in an excise outside item, gible perceptible but to humans. imposed consumption tax is on its use or buys capa- The customer then Plaintiff’s 63-3621. It has been state. I.C. § effecting a translation of the bilities the tariff schedules are established that perceptible data such that it to a becomes Further, it tangible personal property. computer. The essence of the transac- Freightways ex- that Consolidated evident intangible tion for the customer is an power control over the tariff ercised product, capa- coded data and Plaintiff’s ownership their of the schedules incident to making the translation or cod- bilities The tariff schedules were used tariffs. ing. Freightways in Idaho to fur- recognized that the element of The court Therefore, promote their business. ther the essence of the transaction. was applicable. the use tax is case, the had the In the Bullet customer of the data, processed next address issue needed to have it We raw but penalty. computer appropriateness and translated into a format. negligent not

However, action, argues that it was because the custom- instant data, pay to the contested taxes was in its failure er did not have the raw but was Therefore, with its tax account in ad- based on consultation of the information. need therefore, ant, penalty no should be printout of providing physical dition record, however, tionary part imposed. provides on the tax commission. as when the consultation took penalty indication The court held that the would also i.e., place, present before after tax was due. only if were be reversed evidence Therefore, correctly trial court held taxpayer negligent. ed that presented Consolidated had not evidence Rowe-Genereux, Dept. Inc. Vermont negli- sufficient to refute the inference of Taxes, 138 Vt. 411 A.2d 1345 gence. imposed penalties the court held that purely statute on tax deficiencies were dis 63-3046(a), incorporated into the I.C. § cretionary not be and would overturned 63-3634, Sales Tax Act I.C. states: Here, of discretion. absent abuse the tax in case 63-3046. Additions to finding record the trial sustains court’s deficiency. (a) any part any — negligence appellant has not demon deficiency negligence due or dis- strated abuse of discretion. regard regulations with- rules but defraud, (5%) per out intent five cent addition, $49,379 total defi (in deficiency total amount of the $6,069 ciency, was attributable to tax deficiency) be as- addition to such shall use of due fixed assets other than sessed, paid collected and same dispute the tariffs. Consolidated did not except deficiency manner as if were a pro on those assets. The statute that no shall accrue upon interest any part any deficiency vides that “if (5%) per hereby five cent amount im- disregard,” negligence per due to a five posed. cent penalty attaches total amount interpreting Courts statutes similar to deficiency. Since Consolidated has 63-3046(a) upheld penalties I.C. have im- § $6,069 challenge attempted not to the defi posed despite for deficiencies in sales taxes ciency, penalty appro the would have been taxpayer’s deficiency the claim the priate total deficiency on the amount of the good the of a controversy was result faith negligence had as even there been no to the particular exemption. as to a to entitlement $42,310 portion contested of the assess Brown, 373, In Conn.Supp. Duval v. 31 333 ment. (1974), upheld 63 the penalty A.2d court a Accordingly, judgment the is affirmed. imposed upon taxpayer though the even respondent, attorney no fees Costs taxpayer completely upon the had relied awarded. professional the advice of accountant. DC & Trailer Sales v. Taxation and BISTLINE, JJ., DONALDSON and 697, 93 Dept., Revenue N.M. 604 835 P.2d concur. (1979), the court held that a taxpayer’s BAKES, Justice, concurring specially: mere belief that was not liable for taxes negligence, is tantamount im- and the case, appealed posed penalty appropriate. was In Inde- from an adverse decision of district court Works, pendent Iron v. Inc. State Board regarding sales-use the tax commission 318, Equalization, Cal.App.2d 167 334 liability of P.2d 236 for the tariff schedules more (1959), taxpayer argued that a majority opin- particularly described negligence penalty unjustified because statute, appeal, I.C. ion. On such dispute legali- there was an honest over the 63-3812, requires appeal be heard court, however, ty such a The tax. did After novo in the district court. de taxpayer not find that the had a reasonable filed, parties pleadings were both initial Therefore, for basis belief. summary judgment in the dis- moved for knew, taxpayer court held that This Court has held that where trict court. known, should have the contested parties summary judgment move both transaction was taxable. issue, legal jury on the same where requested, may been the district court Hinckley, In Robert Inc. v. Tax has H. State Com., conflicting inferences from 17 Utah 2d 404 P.2d 662 resolve support penalty that a and evidence submitted in the court held was discre- record 658 and, summary judgment accordingly, motion record judgment

may Develop- regarding render a decision. Riverside the district court the tax should Ritchie, appeal. ment v. Co. Idaho 650 be sustained on (1982); P.2d 657 Realty West Old Idaho SHEPARD, Justice, dissenting. Chief Comm’n, State Idaho (1986); P.2d 1318 Kromrei v. AID Insur- agree For I several reasons cannot Co., ance 110 Idaho 716 P.2d 1321 majority opinion. The facts are (1986); Idaho, Inc., & G. Jones v. E.G. 109 disputed essentially and are as stated (1985). Idaho the majority opinion, glaring with a omis- disposition sion which I is crucial to the feel support All of affidavits of this case. summary judgment motion for were sub- Consolidated, mitted by with none sub- business, In order to conduct its Consol- mitted the state. Nevertheless the acquires idated tariff schedules vari- applies. same rule The trial court reviewed throughout country. ous companies and, the entire in a record memorandum mass-produced by These are tar- schedules opinion, findings made of fact several specialize iff compiling bureaus which conclusions of law. The conclusions of law preparing providing them and them to upon were based the sales and use tax subscribing carriers. These tariff bureaus regulation 9,l.b.i, essentially which estab- non-profit organizations totally subsi- determining proper lished that the test subscribing dized carriers. involving whether a published in tariff schedules are personal sale may bound and in form and looseleaf personal depends service to tax is updated frequently daily. as After re- upon or not schedules, ceiving the tariff some consequential inconsequential element and, computers into information is entered transaction. service rendered thereafter, not have inconsequential, then entire transac- published refer to the consequen- is taxable. If the service is acquires computer tapes Consolidated also tial rate information and uses contain inconsequential, the entire then tapes the to store information for future exempt. elements are conse- reference. mixed, quential, then it is public state service commissions Various prorated. should be require Commerce Act the Interstate law, upon Based the those conclusions statutorily its sanctioned Consolidated or findings court made certain in its trial bureau, provide copy agent, a tariff to a memorandum decision which found to the tariff rate schedules the Interstate “the involved are inconse- that as This is Commerce Commission. known quential object of the transaction “publishing” requirement. Act the ...,” court found to the the pub- reads: “A common carrier shall motor personal property.” “transfer of the lish and file with Commission tariffs findings, upon court Based those trial transportation it containing the rates for judgment subtitle____” the tax commission. entered for may provide under 10762(a)(1). U.S.C. § As in K previously Corp. stated Mart Comm’n, 111 Idaho Idaho State regulations, its ICC has further there “[If] to required agent, or its either Consolidated sufficient facts from which inferences provide request shipper to a or member on support be made which the trial could tariff general public copy a summary judgment court’s decision ... charge rate schedules. Consolidated appeal.” not on be disturbed should schedule, at for the but a much reduced rate. The ICC stated: upon record Based the entire before that, friv- It is conceivable because of court the factual inferences drawn district copies olous demands of tariffs which by the district court are sustainable would purpose serve reasonable or be whether another carrier carriers, (“interlining”). benefit to the the manda- “posting” This is the re- tory furnishing of tariffs to persons, quirement of the Interstate Commerce Act. not, subscribers at a acquires the tariffs from post- to exceed the cost of first-class greater tariff bureaus at cost that is far age, unduly could increase cost Thus, than the their preparation. cost of publishers. While we hold that the obli- Consolidated subsidizes the bureau gation of the carriers to distribute tariffs providing losses incurred timely, nondiscriminatory basis shippers schedules to for less than cost to fundamental the tenets of the Inter- required by the Interstate Commerce Com- Act, state Commerce recognize we also mission. that it is important to the economic sta- At a trial de novo before the district bility planning carriers that court, Consolidated offered two affidavits there be a balancing the resultant cost manager from the of the tariff bureau due to the mutual benefits derived there- Denver. The in support affidavits of its both carriers and tariff users. summary judgment cross-motion for stated Making charge, some however incidental paid by that the cost Consolidated for to purpose, the sole would also tend to greater tariff schedules was far than the requests limit for tariff matter to price charged shippers, indicating thus in, genuine those who have a interest service nature of the transaction. The Tax for, matter, need doing, and in so nothing support Commission offered would serve reduce the financial bur- summary cross-motion for judgment. den on the earners. Carriers and question The first pro- address agents, all, “fairly after should be enti- priety granting the Tax Commission’s know, approximate tled to accuracy, summary motion judgment. I.C. 63- copies number extra that will be requires when taxpayer appeals desired.” decision, appeal adverse is to be Balancing obligations and the bene- heard in in a the district court trial de accruing, fits we have modified the rules 83(u)(2)requires novo. I.R.C.P. anon to require each carrier agent and each appeal governmental from a agency or copy one publication furnish of each involving novo, board a trial de the district person subscriber other interested court shall render decision as if the mat- charge which, case, without in no is more initially brought ter were in the district than one-half of the demonstrable cost of paper repeatedly court. This Court has held that printing repro- or other summary judgment granted process only duction should be employed pro- which is genuine if of assignable issue material portionately copy fact found part pleadings, depositions, to exist publication copies of after the multiple filing, distribution, admissions, for normal and stock- affidavits have been con- ing. light or in publishing agent Carrier in- strued a most favorable to the house only party opposing summary judgment. cost factors related physical Brown, material reproduction op- v. Farmer’s Insurance Co. 97 Ida- eration, compiling, overhead, 380, (1976); such as for ho 544 P.2d 1150 Salmon Riv- equipment, depreciation, handling, Sportsman sort- Camps, ers Inc. v. Cessna Air- etc., ing, 348, not in may Co., be included the base 97 Idaho 544 P.2d 306 craft calculation, (1975). but the actual cost of postal or other authorized means However, on summary cross-motions for of may transmission be added thereto. judgment, evidentiary on the same facts 349 ICC at 133-134. issues, on the same theories and addition, parties effectively stipulate post Consolidated must at its that there nois genuine Boise copy any rate center a issue of material fact. written of Where the tariff schedule that it in evidentiary disputed use calculat- facts are not ing particular shipment fact, for a trial court will be the trier summa-

660

ry appropriate despite pos “storage” judgment is The terms “use” and are de- (b): 63-3615(a) conflicting inferences, fined in I.C. sibility of because § responsible will for re Storage Use.—(a) the court alone “storage” The term — solving any inferenc in keeping the conflict between those includes or retention this Ritchie, any except in Development purpose state sale es. Riverside Co. v. subsequent 515, (1982). regular course of or business 103 Idaho 650 P.2d 657 Justice solely tangible use outside this state of recently noted in a dissent that Bakes “[If] personal property purchased from re- sufficient infer there are facts from which tailer. support made ences could be (b) The term includes the decision, “use” exercise summary judg trial court’s ... tangible any right power per- over appeal.” should not be ment disturbed property to the ownership sonal incident K Corporation Mart v. Idaho State Tax ..., leasing property of that ex-

Commission, 111 Idaho 727 P.2d 1147 cept the term “use” does not include the (Bakes, J., (1986) dissenting). Ar See also regular of that in the property sale Slemaker, gyle 107 691 P.2d v. Idaho business____ course of (Ct.App.1984). 63-3609, in effect I.C. which was dur- § only In this case the evidence before question, part in ing period pertinent in support court was two affidavits district defines a retail follows: sale as petition and a tariff rate Consolidated’s Retail sale—Sale at retail.—The terms presented schedule. The Commission “retail sale” or retail” means “sale at at trial. The Tax Commis- no evidence property sale presump- are sion’s decisions entitled to a purpose other than resale County of correctness. Ada v. Red tion regular course busi- Nevada, Inc., 101 Idaho Steer Drive Ins of ness or lease rental of that (1980); Ada Merris v. regular course of business where (1979). 100 Idaho P.2d 394 County, rental or is taxable under sec- lease However, disappears as presumption 63-3612(h) act. of this taxpayer evidence soon as introduces apply The sales tax does not to transac- prima make out facie case. sufficient to rendering of a tions where service is support offered affidavits transaction, though object of the even position. presumption, of its Absent the exchanged tangible personal property is in- nothing court had in evidence the district cidentally. The use taxes sales and inferences be drawn to from which could complimentary so that if a transaction is Therefore, summary support judgment. subject to a it is not sales tax summary judgment improper. Quotron Systems Comp- tax. the use Next, I the question address of whether 287 Md. Treasury, troller of applica- the use tax under I.C. 63-3621 is (Md.1980). A.2d 439 To determine whether the tar- acquisition ble to Consolidated’s is a sale object of iff use tax states requires a or a sale retail bal- pertinent part: set in the Idaho ancing test as forth Sales Regulation Tax and Idaho Sales and Use

Imposition tax.—An and of the use (I.D.A.P.A. Act, 9,l.b.i Regulation 35.- hereby on the stor- imposed excise tax is 02.09,l.b.i.). use, consumption or other in this age, OF TANGIBLE b. RETAIL SALES personal ac- tangible property state of TOGETHER PERSONAL PROPERTY July after for the quired on or SERVICES: WITH use, in storage, consumption or this other (4%) per applies rate of cent of The sales to retail sales state at the four i. personal property. It tangible a recent does property, value of except to the extent stated above— price presumptive shall be evidence sales not— However, apply to the sale of services. property.1 of the value During period question the rate was 3%. 1. the time tangible personal proper- a sale of describing

when majority, proper its services, test, four, ty page includes incidental the mea- require- sets out on three sure the tax is the amount ments: total

charged including charged the amount [Fjirst, it must be established that the any services, except sepa- incidental tangible per- tariff schedules are rately transportation stated installa- second, property; sonal the tariff sched- charges. tion The fact that the through ules must been obtained have a tangible personal property sold is third, sale; retail must be shown principally derived from and/or labor that the tariffs were under the creativity of the property maker of ownership control and of Consolidated tangible (Citations does not transform Freightways a sale of in Idaho. omit- ted). personal property into a sale of services.

The cost of commodity includes labor No disputes one that the tariff schedules skill of manufacture. In determin- tangible personal property and that ing whether a transaction is retail sale a they were under Consolidated’s control. tangible personal property or a sale of The majority’s requirement, second how- services, following tests are to be ever, requires retail majority a sale. The applied: conveniently then cites cases from other jurisdictions supporting position, ignor- its (a) In determining transfer whether a ing the fact Idaho has tangible statutory a personal property is a taxable definition of sale. I retail submit that Con- retail sale a transfer incidental merely solidated’s use the tariff schedules oc- transaction, to a service test proper regular curs in the course of business and is to determine whether the transaction to neither the use tax nor the consequential inconsequen- involves position supported by sales tax. This professional personal tial service. If crucial fact required inconsequential, the service rendered is to sell federal law the tariff schedules then the entire If transaction is taxable. anyone at a loss to who wants I one. can consequential rendered, service is then example think of no clearer a sale in the it must be ascertained whether the trans- regular course business. fer of the property was inconsequential element of the trans- Further, case strong there is a so, action. then none of the considera- inference of a service transaction. The af- paid is taxable. fidavits offered Consolidated show that anyone purchase could the tariffs for (b) In determining whether a mixed price fraction of the that Consolidated consequential transaction constitutes a apply Regu- could. To test outlined in transaction, must distinction above, 9,1 lation much more information is object made as to the of the transaction —i.e., needed. much of the cost to How Consol- is the sought buyer by the idated was for volumes themselves? per produc- the service se or acquisition, cost How much ed service. paid belong how much consisted of dues (c) Where a transaction is mixed organization shippers that form a manner that What tariff bureaus? other benefits or property transferred and ren- the service services did receive for are distinct consequential dered elements questions money? need These answers to having a fixed and relation- ascertainable object determine the the transaction. ship between the value of value of Recently, Realty, the service rendered so in Old West Inc. v. stated, Commission, separately that there be Idaho State Tax 110 Idaho separate exists two 716 P.2d 1318 the Court transactions dealt involving one to but attributable the sale of with a similar case the sales personal property is tax- tax. and use taxes are compli- to sales Since sales reasoning of the mentary, applica- ation while other is much not. Second, as to genuine question exists Realty, supra, here. ble Old West provided the sched- dispute weekly by-weekly Consolidated centered on books) (MLS much of multiple listing used ules incidental to a service. How booklets in addition to by paid real estate salesmen. Old West was the fee is for services Multiple Listing County Ada tariffs? member of the actual costs of the received, (Ada MLS). belong to Service Old West much consisted of dues to How fee, monthly of MLS books as shippers a number form the organization that These books listed as other services. well other benefits tariff bureaus? What County properties for sale in Ada all receive? Unlike services did Consolidated In the con- pictures and other information. Realty, supra, Consolidated Old West service, required Ada MLS tract for the appears paid have far more for the confidential and that that the remain worth, books giving schedules than their actual non- could not be shown the books implication the transaction was a that that The Tax Commission held member. service. (1) tangible personal prop- were books I claim Finally, turn to Consolidated’s (2) provid- erty, any incidental services penalty negligence assessed that along transfer were inconse- ed with the 63- against pursuant to I.C. quential. appealed West to this Court Old 3046(a) uncon- process due and is violates was inci- claiming the MLS books transfer claims that stitutional. Consolidated provided to the Ada dental $49,379.00 by the Tax penalty assessed MLS. Commission, affirmed the dis- and later This Court stated that: court, $6,069.00 only amount trict prevail in the Tax Commission to than the tariff relates to assets other [F]or case, it must clear from the facts this offered a substan- schedules. Consolidated tangi- (1) constitute the MLS books support posi- of its legal argument in tial (2) personal property, the transfer ble that to hold Con- They tion. further assert involving the transfer of the books penalty for the entire with- solidated liable West constitutes impo- Ada MLS Old negligence results proof out tangible personal property “at violating “sale” of liability, thereby strict sition of retail,” (3) price” the “sales is the penalty was assessed process. due monthly $49,379.00 fee. Old entire amount deficiency of when the entire 110 Idaho 546 at Realty, $6,069.00 arguably West only deficiency P.2d 1318 at 1320. This negligence under the statute. due to repeatedly held that it will has Court books then held that the MLS The Court unless validity of a statute pass upon property, that there were disposition of the case. Er- to the essential since Old West had a “sale at retail” was Amoth, 99 Idaho ickson and, in reselling the books no intention Child, (1978); 95 Idaho Curtis v. fact, doing so prohibited from (1972). decide We need not P.2d 1374 MLS, the entire the Ada and that bylaws of time. question present at the this price” because monthly fee was the “sales allege separate from summary granting West failed Old I that the submit properly amounts monthly fee those The decision of improper. judgment was monthly summary judg- fees. granting attributable district court remanded for reversed and ment should be distinguished on case can be The instant opin- not inconsistent with proceedings First, above, grounds. as stated two ion. prohibited from dis- West was where Old books, tributing copies of the MLS Consol- by the ICC to resell required

idated Clearly, Consolidat-

tariff rate regular the schedules

ed resells so, of business.

course subject to the use tax. not be

would

Case Details

Case Name: Consolidated Freightways Corp. v. State, Department of Revenue & Taxation

Court Name: Idaho Supreme Court

Date Published: Feb 19, 1987

Citation: 735 P.2d 963

Docket Number: 16198

Court Abbreviation: Idaho