*2 paid, celled including and that the taxes NEWMAN, Before NEBEKER and interest, any penalties and be refunded to PAIR, Judges, Associate Senior Acme.4 Judge. Acme, presently corporation, a Delaware PAIR, Judge: Senior was, during periods question, the tax Maryland engaged Corporation in the busi- appeal This is from an order of the Tax providing reporting ness of court services Superior Division of the Court which held Maryland and the District of Columbia. the court appel- services of is, been, Acme the official has court lee, Reporting Company (Acme), Acme reporter Board, for the Aeronautics Civil were improperly by appellant, taxed Board, the National Labor Relations (the District).1 District of Columbia The Exchange Commission, Securities and $45,- court ordered the refund to Acme of Defense, Department interest, plus which amount Labor, Representatives, U.S. House court improperly found had been assessed Senate, the U.S. the U.S. Claims Court and by and collected the District. We affirm. majority U.S. Tax Court. of its provided are pur- I govern- suant to the federal contracts with pertinent which, facts for the most ment. Acme does no court part undisputed, may be summarized as Superior either the of the District of Court follows. After an of Acme audit and other Columbia or this court. companies providing servic- es, District, July provided assessed The services Acme’s court Acme for sales tax and use deficiencies in include attendance at and the re- $47,454.60. cording legal proceed- amount of The tax transcription authori- $47,454.60, Although opinion The trial court's this matter is re- the assessment was for ported Reporting in Acme Co. v. District Co- reply admitted in its District lumbia, Wash.L.Rptr. Daily (July petition, Columbia's answer Acme’s 1985). $1,762.13, represented por- the use tax tion, controversy and that it did not was not 2. The measure of the was the sale of tran- part of that intend to seek cancellation scripts litigants by private ordered and did not $45,692.47 dispute is in assessment. receipts by from the sale of tran- appeal. scripts to the District of Columbia or federal governments, exempt who from statute 47-2005(1), imposition penalty 4. The and interest was such tax. See D.C.Code of Columbia. waived ings judicial trials hearings transcripts prepared by em- agencies. before administrative ployed by Each re- the District of Columbia courts. porter responsible producing an accu- The memorandum concluded that the Dis- recording rate and full legal proceed- trict’s sales and use apply taxes did not protect attended so as to tribunal complete Acting record. the District of except Columbia courts *3 as an official the court or purchased administrative when non-party pro- a tribunal, the ceeding being recorded, administer oaths to newspa- such as a witnesses, responsibility bear for all per reporter. exhib- The memorandum directed its, testify as to the accuracy questions of the to Andy, employee James record. Department the of Finance and Revenue (the Department). Relying opinion on the product The final report- of Acme’s court accounting its firm and the memoran- ing services is a verbatim transcript Malech, dum from Mr. Acme determined proceeding engaged Acme was report. that the District’s sales and use taxes did prepared All transcripts are furnished to apply not to monies received for its court government either the court or agency reporting services. holding proceeding or to the proceeding. A certain tangi- amount of In Department November of personal ble property, paper registered bind- sent a notice to all sales and use covers, ing and is used produce Acme to taxpayers concerning the 1969 amendments transcripts reported proceedings. imposing sales and use taxes on The cost of these items constitutes less notice, services. This how- percent than four ever, the amount Acme did not define the term steno- charges its customers for reporting court graphic Department services.” When the services and no charge promulgated is made to regulation to define the customers for such services,” materials. “public stenographic term regulation simply stated that “the term When Acme opera- commenced business typ- services includes tions sought District of it ing services.” 9 DCMR 468.3 § accounting advice from its respect- firm ing applicability of the District’s sales Many, Manag- Mr. M. Edward and use taxes to its court reporting servic- er Liability of the Tax Audit and Division es. accounting advised, letter, firm Department the District of Columbia recording the services involved Revenue, tes- Finance and testified at trial that timony printing it for customers Department were always posi- has taken the subject not to the District’s sales and "public stenographic tion that the term ser- copies and that additional services, sales of reporting vices” includes court resulting par- documents to an “interested but did specifically any refer to written ty” proceeding were not interpretation or oral Department the taxes. which included court within the “public stenographies services.”
Subsequently, Acme received from its ac- counting firm copy of a memorandum In Department when the initiated prepared Malech, by Mr. Arnold M. firms, then sales and use tax audits law it the Executive Officer of the District of being observed firms were not courts, Columbia addressed to court charged paid sales or use tax on amounts employed by ers the District of reporting Columbia for court Depart services. The provided guid- courts. This memorandum ment then conducted audits of several com concerning ance applicability panies engaged the Dis- provid in the business of trict’s sales and use taxes to the sales of services.5 Department The record reveals that the has Reporter note that District of Columbia Court never formally conducted a sales and use tax audit of a promulgated Rule which was reporter employed by a District of Colum- provides became effective March fact, conjunction bia court. with this we that sales of
7H first learned that personal service transactions which involve interpreted the term inconsequential sales as elements for which services” to include court servic- separate charges no are made. Acme ar- during Department’s es sales and use gues that its court services are tax audit of Acme in 1982. Acme immedi- exempt pursu- from sales and use taxation ately began collecting sales and use taxes ant receipts from its servic- 2201(a)(2)(B) “personal services transac- es, including the transcripts. As a tions.” District counters that since audit, result of the the District sent the provides “public stenographic servic- July notice dated which assessed es,” its sales are taxable under the tax deficiencies contested in ap- 2001(n)(l)(H) 47-2201(a)(l)(G). and § peal. Ill
II
*4
principal argument
ap-
District’s
on
Initially, a brief review of the tax scheme
peal is that the tax
ruling
court erred in
throughout
in effect
period
of the defi-
that Acme’s court
services do not
(December
ciency
assessment
fall
meaning
within the
“pub-
attributed to
through
30, 1982)
November
necessary.
services” in D.C. Code
The Gross Sales
Compensat-
Tax and the
47-2001 and 47-2201. The District
ing-Use Tax laws of the District are sub-
ambiguous
maintains that the term is not
stantially similar in relation to the issues
and that Acme’s
clearly
activities
fall with-
today.
we address
Under D.C. Code 47-
§
in
plain meaning
statutory provi-
of the
(1981),
imposed
a sales tax is
on the
dispute. Moreover,
sions in
the District
(de-
retail sale of “certain selected services
argues
interpretation
its
fined as ‘retail sale’ and ‘sale at
retail’
long-standing
is a
one to which substantial
chapter).”
this
See also D.C. Code 47-
§
paid.
deference must be
(1981) (similar
provision
use tax
purchased
“service
sale”).
sold or
at retail
Acme, however, counters that its court
47-2001(n)(l)(H) (1981)
D.C. Code
in-
§
equated
services cannot be
with
cludes within the definition of “retail sale”
“public stenographic services” within the
and “sale at retail”
meaning
application
of the statutes. An
any
the sale
tangible personal
...
construction,
statutory
the rules of
Acme
property or
contends,
service taxable under the
compels the conclusion that the
chapter....
terms of this
pur-
For the
encompass
term does not
pose
imposed
of the tax
chapter,
Moreover,
complains
services.
Acme
these terms shall include but shall not
notice,
put
it has never
been
either
limited to
...
the sale of or
through
statutory language,
clear
or other-
public stenographic
...
wise,
necessity
to collect the contest-
services[.]
that,
Finally,
ed
taxes.
asserts
be-
47-2201(a)(l)(G)
See also D.C. Code §
cause it has never had reason to be aware
(1981) (identical
provision).
use tax
statutory
of the District’s ostensible
inter-
it is clear that
stenographic servic-
pretation, any
long-standing
claimed
admin-
es” are taxable under the Code.
interpretation by
istrative
However, exempt from the definition of
little,
any, weight.
should be accorded
retail,”
“retail sale” or “sale at
and there-
47-2001(n)(2)(B)
fore not taxable under
begin
analysis
our
of the issue
We
§
47-2201(a)(2)(B)
presented by recognizing
scope
§
ently
falling
to District of Columbia sales and use
views such sales as
outside the
except
transcript
when a
is sold to a non-
exemption
§
§
recorded,
party
proceedings being
2201(a)(2)(B),
irrespective of how one defines
newspaper reporter.
a
sary
We do not find it neces-
"public stenographic
exceptions
services"
pass upon
validity
of Rule 17.
event,
any
thereto.
Acme claims that
during
period
Acme does not
made
time
take issue with the taxation of
sales it has
non-parties.
appar-
dispute
parties
proceeding.
were to
our
is controlled
review
D.C. Code of
services? At the
47-3304(a) (1981).
onset,
“Decisions of the Su-
we stress that
there is no rational
perior Court in
cases are
civil tax
reviewa-
distinguish
basis on which to
Acme’s court
ble
the same manner as other decisions
system’s
from the court
of the court in civil cases tried without a
application
ers in
of the term
steno-
Id.;
17-305(a)
jury.”
Code
see also D.C.
graphic
services” contained in the relevant
(1981). This
not set
means we will
aside
provisions.
wording
of the rele-
judgment, except
the tax court’s
for errors
requires
vant tax code sections
that sale of
Co.,
of law.
Riggs
v. Aetna Insurance
transcripts to
interested
by Acme
(D.C. 1983).
454 A.2d
We must must be treated in a manner identical to
accept
findings
the court’s
of fact unless
fashion
which sales
local and
they
erroneous,
clearly
see District
system
federal D.C. court
reporters are
Washington
Corp.,
Columbia
Sheraton
treated.
(D.C. 1985);
499 A.2d
Rock Creek
issue,
In resolving this
we focus on the
Partnership
Ltd.
v. Dis
Plaza-Woodner
“settled rule that tax
strictly
laws are to be
(D.C.
trict
against
construed
the state and in favor of
1983),
upset
and we will not
the ultimate
taxpayer,”
if the statute in controversy
legal conclusion of the tax court when its
ambiguous.
is unclear and
3A Suther-
necessarily
outcome
from
follows
its find
Statutory
land, Statutes
Construc-
ings
bound,
of fact
which we are
Dis
(C. Sands,
1986);
4th ed.
see
tion
trict
Columbia v. National Bank
Gould,
also
Gould v.
U.S.
*5
(D.C.
1,
1981).
Washington, 431 A.2d
3
53,
(1917).
S.Ct.
IV
People’s Counsel v. Public Service Com
determine, mission,
(D.C.1984).
today
task before us
is to
law,
statutory
reading
47-2001(n)(1)(H)
as a
matter
what Con- Our
and 47-
§§
gress
2201(a)(1)(G)
“pub-
intended
its use of the term
does
leave us with a clear
unambiguous understanding
services”
the District’s
and
services,”
provisions.
phrase “public stenographic
sales and use tax
so
other
words,
Congress
persuade
plain
did
intend to
local
as to
us to conclude that
system reporters meaning
and federal D.C. court
inclusion
necessitates
and Acme’s
its definition
of all court
in the District. Nei-
itself,
implementing
ther the statute
nor its
particular significance
We find of
regulation,
simply
(1)
which
states that
Congress
facts that
qualify
chose to
typing services,
term includes
9 DCMR
services,”
term proposed, “stenographic
(1986),
ascertaining
assist in
by adding
phrase
“public,”
the word
plain meaning
of the term
steno-
chose to
include the
within
graphic services.”
paragraph
reads,
adopted,
“The
copying, photo-
sale of or
for
Having determined that we are consider
copying, reproducing, duplicating,
address-
statutory
term that on its face is
ing,
mailing
ambiguous
unclear,
services and for
we turn next to an
legislative history
examination of the
sur
services.” D.C.Code
rounding
2001(n)(l)(H)
47-2201(a)(l)(G).
enactment of the statutes in
We also
question for assistance.
Peo
H.R.Rep.
Cong.,
note that
No.
91st
1st
Office of
ple’s Counsel v. Public Service Commis
(1969)provides
imposition
Sess. 13
sion, supra,
definition with other “public” clauses, services” as it renders the word may reasonably and obviously meaningless superfluous.7 and comparison be drawn.... If the of one clause with the rest of the statute makes previously, Additionally, indicated as we proposition a certain clear and impose and undoubted provisions at issue sales charges the act must be construed accordingly use taxes on the sale of or reproducing, dupli- copying, photocopying, ought and so construed to make it a services, mailing cating, addressing and consistent whole. stenographic well as services.” supra, 2A at 46.06 (quoting Sutherland, 47-2001(n)(l)(H) D.C.Code §§ Sillem, Attorney General v. Eng.Rptr. 2201(a)(1)(G). When the sections are read (1864)). whole, apparent as a it is the other Application of this rule to the task at taxed, addressing copying, services support hand results further for our etc., mailing, generally are ones associ- today. resolution Section ated services and not with of the Gross Sales Tax Statute and Dictionary services. See 2001(a)(2)(B) Titles, Occupational supra at Compensating Use Tax 202.- §§ statute, provide that specifically Statute enu- 362-014 202.362-010. A unless whole, statute, passed professional per- as a should be construed as a merated whole, meaning and the to be attached to a involving sonal service transactions sales particular term is to from the be ascribed tangible personal property as inconse- surrounding context words quential elements for which no supra, phrases. 2A at made, specifically exempt are SUTHERLAND, 46.05. from the sales and taxes. Acme’s satisfy services all of the
We are also mindful of the rule that determining requirements exemption. This determi- spe- the true construction of a statutory cific one must consider nation follows from the fact that Acme’s personal services the connection of the clause with other statute, services,8 (2) clauses in the the sale of same and the con- involve inconse- transcribed, i.e., litigation occupations. newspaper, See id. at 202.362-014 distinct opposed transcripts to those sold to the interest- and 202.362-010. (As parties litigation. ed to the we stated in Further, proposed the District’s definition at- supra, note 4 we do not have at issue here the tempts distinguish between ser- sales of litigation.) to uninterested large at and services vices offered interpretation logically This flows provides employer. Again, stenographer to an premise from that court "public” to make this the word is not needed generally public, are not offered to the but rath- which, of the District’s sales distinction in the context litigation, er to those involved in all too *7 Stenographers providing ser- and use tax law. frequently, Additionally, is not choice. subject situation, only employer would not be vices to reporting Acme's performed pursuant its court services are apply only contracts, to to the taxes because the to federal and in situations, make certain sales at retail or vendors who reporters directly other court work that if the word retail sales. We also note precludes for the courts. This one who is a distinction, "public” to make this party litigation was needed having from the available consistent, "public" be the word should opportunity then to provide to choose who is to the taxed, le., prior to each service have been added pro- court service that transcribes the photocopying, words, public copying, public etc. See ceeding. In other Acme’s services are 47-2001(n)(l)(H) and 47- sought D.C.Code 2201(a)(1)(G). general public. not out the may “Public” have been added so as to distin- guish public stenographers court from hotels, jurisdiction generally buildings, Although who work in there is no law in this office 8. organizations specifically characterization and for addresses the such as secretarial servic- es, services, holding reporter general public courts and adminis- themselves out to of court the perform stenographic different states to bodies in at least five services. This inter- trative pretation supported directly of whether is the issue the of have considered (4th professional Dictionary Occupational Labor’s services constitute Titles court of 1977), report- personal All of these ed. which service transactions. lists and defines court or (which agree stenographers desig- sale of a court ers and authorities includes the services, transcripts. including stenographers) nation the sale of of and er’s
715
quential
tangible personal
(1948)).
amounts of
prop-
jurisdiction,
N.W.2d
this
“rea-
a
made,9
sonableness of
construction can
erty
separate charge
for which no
often be
is
by considering
consequences
tested
the
of
(3)
and
are not specifically enumerated as a
a different one.” District
Columbia v.
exempt
taxable service.
because
un-
of
Seven-Up Washington, supra,
U.S.App.
der
and
§§
276,
at
F.2d
If
D.C.
at 201. we were to
2201(a)(2)(B), Congress
in-
could not have
that,
urges, Congress
hold
as the District
to
tended
tax Acme’s
ser-
court
“public stenographic
intended the term
ser-
47-2001(n)(l)(H)
vices under
and
§§
transcripts
to
the
of
vices”
sales
2201(a)(1)(G).
par-
Acme’s
interested
today
Crucial
our
the
determination
is
ties,
by necessity
it would
follow that
the
earlier,
rule,
ought
stated
“tax laws
transcripts
parties by
to interested
given be
reasonable construction
...
all District,
including
in the
carry
order
out
the
intention of
systems,
the local and federal court
would
legislature
important
and
pub-
further
be
likewise
to the sales and use
such
interests which
statutes subserve.”
chilling
tax.10 This
have
on
would
effect
SUTHERLAND,
3A
at
66.02 judicial proceedings
within the District—
Brandt,
State
345,
v.
(quoting
future,
225 Minn.
retroactively.11
not
but
personal
tangible personal
constitutes the sale of
property
sale
9. The
of
in con-
tangible personal
rather
than
sale of
personal
professional or
nection with
transac-
See,
Bell,
property.
e.g., Askew v.
So.2d
"inconsequential
tions is an
of
element"
York,
(Fla.D.Ct.App.1971);
City
Booth v.
New
tangible
price
transaction
"the
sale
(1946);
296 N.Y.
undertake such dissent.
Therefore, why I I offer a short version of reverse the trial court on the ulti-
would question
mate of law.
The relevant statute taxes “sale of or for ... servic- 47-2001(n)(l)(H) (1981).1
es.” D.C.Code §
statutory interpreta-
acquisition
already costly transcripts
agencys
make
to be accorded an
Comm’n v. Democratic
even more of a financial burden on future liti-
tion. Federal Election
Comm.,
gants.
Campaign
U.S.
Senatorial