Graceland College Center for Professional Development & Lifelong Learning, Inc. v. South Dakota Department of RevenueGraceland College Center for Professional Development & Lifelong Learning, Inc. v. South Dakota Department of Revenue
[¶ 1.] The South Dakota Department of Revenue (Department) assessed taxes against SkillPath, a division of Graceland College Center for Professional Development and Lifelong Learning, Inc. (Skill-Path), for seminars and services provided by the corporation in South Dakota. Skill-Path contested the certificate of assessment with the Secretary of Revenue, alleging it should be exempt from certain taxes. The Department upheld the certificate. SkillPath appealed the Department’s decision to circuit court, and the decision was affirmed. SkillPath appeals, and we affirm.
FACTS
[¶ 2.] SkillPath is a not-for-profit corporation that presents business seminars on computer training, secretarial skills and other business-related topics. The vast majority of SkillPath’s seminars are presented to employees whose fees are paid by their employers. These programs are presented by independent contractors, and are generally held in hotel meeting rooms.
[¶ 3.] In September of 1999, SkillPath underwent a sales and use tax audit, covering January 1996 through December 1998. On December 7, 1999, the Department issued a certificate of assessment in the amount of $31,989.19, plus interest, to SkillPath.
1
SkillPath contested the certificate. On April 14, 2000, a hearing was held before a hearing examiner. Evidence was presented regarding SkillPath’s marketing, the types of seminars it provides, and to whom the seminars are provided. The hearing examiner found that SkillPath’s seminars were entitled to a tax exemption. The hearing examiner found SkillPath’s courses qualified for tax exemption under
[¶ 4.] SkillPath appealed the Secretary of Revenue’s final decision, and the circuit court affirmed. SkillPath appeals raising the following issue:
*782 Whether services offered by SkillPath are exempt from South Dakota sales tax pursuant toSDCL 10-45-12 .1.
STANDARD OF REVIEW
[¶ 5.] This Court clarified the standard of review for administrative appeals in
Sopko v. C & R Transfer Co., Inc.,
Our standard of review, delineated inSDCL 1-26-36 , requires us to give great weight to the findings and inferences made by the Department on factual questions. Helms v. Lynn’s, Inc.,1996 SD 8 , ¶¶ 9-10,542 N.W.2d 764 , 766; Finch v. Northwest Sch. Dist. No. 52-3,417 N.W.2d 875 , 878 (S.D.1988). We examine agenсy findings in the same manner as the circuit court to decide whether they were clearly erroneous in light of all the evidence. In Matter of Northwestern Bell Tel. Co.,382 N.W.2d 413 , 415 (S.D.1986). If after careful review of the entire record we are definitely and firmly convinced a mistake has been committed, only then will we reverse. Spitzack v. Berg Corp.,532 N.W.2d 72 , 75 (S.D.1995) (citing Day v. John Morrell & Co.,490 N.W.2d 720 , 723 (S.D.1992)); see also United States v. U.S. Gypsum Co.,333 U.S. 364 , 395,68 S.Ct. 525 , 541,92 L.Ed. 746 (1948)(or-igin of definition). Questions of law, of course, are fully reviewable. Caldwell v. John Morrell & Co.489 N.W.2d 353 , 357 (S.D.1992); Egemo v. Flores,470 N.W.2d 817 , 820 (S.D.1991).
When reviewing statutes that impose taxes we have stated:
The question of whether a statute imposes a tax under a given factual situation is a question of law. Statutes which impose taxes are to be construed liberally in favor of the taxpayer and strictly against the taxing body. Statutes exempting property from taxation should be strictly construed in favor of the taxing power. The words in suсh statutes should be given a reasonable, natural, and practical meaning to effectuate the purpose of the exemption. Nat’l Food Corp. v. Aurora Cty. Bd. of Comm’rs,537 N.W.2d 564 , 566 (S.D.1995) (citing Thermoset Plastics, Inc. v. Dep’t of Revenue,473 N.W.2d 136 , 138-39 (S.D.1991)); see also Estate of He Crow v. Jensen,494 N.W.2d 186 ,191 (S.D.1992) ( [stating] “[w]e construe administrative rules according to their intent as determined from the rule as a whole and other rules relating to the same subject.”)
Matter of Sales and Use Tax Refund Request of Media One, Inc.,
DECISION
[¶ 6.] SkillPath argues it should be exempt from taxation under our laws because it is either a “vocational school” or a “continuing education program.” Skill-Path contends that SDCL KM5-12.1 provides two sales tax exemptions for its seminars, “educational services” or “continuing education program.”
The following services enumerated in the Standard Industrial Classification Manuel, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President are exempt from the provisions of this chapter: ... education services (major group 82) except schools and educational services not elsewhere classified (industry no. 8299); ... The following arе also specifically exempt from the provision of this chapter: ... continuing education programs; tutoring; vocational counseling, except rehabilitation counseling ....
*783 Educational Services
[¶ 7.]' SMllPath claims its services qualify as a vocational school exempt from tax under Major Group 82 “educational services.”
[¶ 8.] SMllPath claims it falls under “vocational school” of the SIC Manual Industry Group 824. This Court has said, “[w]ords used by the legislature are presumed to convey their ordinary, popular meaning, unless the context or the legislature’s apparent intention justifies departure.”
Meyerink v. Northwestern Public Service,
[¶ 9.] The SIC Manual provides the following examples of “vocational schools:” “data processing schools,” “computer repair training,” “secretarial schools,” “court reporting school,” and “truck driving schools.” It is clear from the plain meaning of vocational school and the examples provided in the SIC Manual that such programs are intended to teach one the skills necessary to work in a particular occupation or vocation. SkillPath’s seminars are not aimed at providing one with the necessary skills to enter into a specific vocation or occupation. SMllPath is not a degree granting institution nor does Skill-Path have a formal course of study. Skill-Path offers seminars ranging in length from one to two days covering a variety of topics. SkillPath does not market its seminars to those interested in learning a vocation but targets those already working in a-business. Ninety-five percent of Skill-Path’s attendees have their fees рaid by their employers.
[¶ 10.] SMllPath does offer different computer related seminars such as “Computer Repair Training” and “CompuMas-ter-PC Troubleshooting” in which the attendees actually take a computer apart. However, attending one of SMllPath’s seminars will not qualify one to become a computer repairman or а computer consultant. These courses are directed more towards being able to solve problems with one’s own computer, not for the purpose of teaching a vocation.
[¶ 11] SkillPath’s seminars are not aimed at teaching one a new vocation or specific occupation and cannot be classified as a “vocational school.” We held in
Matter of the State Sales and Use Tax Liability of Pam Oil, Inc.,
Continuing Education
[¶ 12.] SkillPath next argues it is exempt from taxation as a “cоntinuing education” program. In
[¶ 13.] SkillPath argues that this Court should apply the International Association for Continuing Education and Training’s (Association) definition of “continuing education.” This definition of “continuing education” in the settled record reads as follows: “a structured educational and training experiences for- personal or professional development in which participants are assumed to have previously attained a basic level of education, trаining or experience.” The Department argues the term “continuing education programs” refers to updating the skills necessary to perform a specific occupation.
[¶ 14.] Both this Court and the legislature have linked “continuing education” with updating one’s skills in relation to a particular occupation. In
Brown v. State Board of Examiners in Optometry,
All registered optometrists whenever licensed in the state of South Dakota are and shall be required to take courses of study in subjects relating to the practice of the profession of optometry to the end that the utilization and appliсation of new techniques, scientific and clinical advances, and the achievements of research will assure expansive and comprehensive care to the public.
“Whenever the meaning of a word or phrase is defined in any statute such definition is applicable to the same word or phrase wherever it оccurs except where a contrary intention plainly appears..”
[¶ 15.] SkillPath’s seminars are not such that would qualify as “continuing education” for the purpose of updating an individual as to the newest development in one’s specific field. Although SkillPath provides a few seminars targeted at specific occupations thеse seminars cannot be classified as “continuing education.” Skill-Path argues that a number of its seminars are directly related to “office procedures” and “secretarial skills.” However, Skill-Path has offered no proof that any of its seminars provide up-to-date information related to a specific occupation. SkillPath seminars are more of a “self-help” type seminar useful to one engaged in an occupation or not. For example, SkillPath offers a course called The Essentials of Credibility, Composure, and Confidence, which was described by SkillPath’s vice-president of faculty and curricula, Ms. Mayorga, as a seminar to “teach [women] how not to cry, how to maintain their comрosure even when they’re very upset or very angry.” Clearly such a seminar would not be considered “continuing education.” Teaching women not to cry is not a course necessary for a specific occupation but is merely a so-called “self-help” type of seminar useful to one whether at work, home, or elsewhеre. 4
[¶ 16.] SkillPath has failed to provide any evidence that its seminars are intended to up-to-date a person’s knowledge about their occupation. In addition, Skill-Path’s seminars do not require anything more than a general education. SkillPath teaches basic introductory skills that anyone could understand. There is no indication that a formal education of any kind is required before attending a SkillPath seminar.
[¶ 17.] The trial court held SkillPath is more properly classified in SIC 8299 (Schools and Educational Services, Not Elsewhere Classified). Some of Skill-Path’s courses are consistent with the courses listed in SIC 8299. SkillPath’s courses, The Essentials of Credibility, Composure, and Confidence, How to Be *786 come a Better Communicator, and Assertive Communication Skills for Women, fall undеr “personal development schools” within SIC 8299. For example, Ms. Mayor-ga described the Assertive Communication Skills for Women seminar as a course to teach women “how to negotiate to get what you need in the office ... and how to be calm and know the difference between aggressive and assertive and passive.” This course would clearly fit into the “personal development schools” within SIC 8299.
[¶ 18.] Alternatively, the trial court found SkillPath’s seminars could be classified in SIC 7389 (Lecture Bureaus), Major Group 73. Major Group 73 of the SIC Manual “includes establishments primarily engaged in rendering services, not elsewhere classified, to business establishments on a contract or fee basis ...” Under
[¶ 19.] SkillPath is a business primarily engaged in providing services to other businessеs. SkillPath markets directly to other businesses and ninety-five percent of its attendees fees are paid by employers. In addition, SkillPath’s seminars are presented by independent contractors and are generally held in hotel rooms.
[¶ 20.] SkillPath does not fit under “vocational school” or “continuing education” and is more properly classified under SIC 8299 or in the alternative SIC 7389 and thus not exempt from tax.
[¶ 21.] SkillPath has not carried its burden of proving entitlement to the exemption under
Notes
. This amount included $687.98 for catalog sales, which is nоt contested by SkillPath.
. The Standard Industrial Classification Manual was prepared in 1987 by the Statistical Policy Division of the Office of Management and Budget, Office of the president. The SIC Manual is dividfed into two-digit major groups and three-digit industry groups or four-digit industry codes.
. A list of these statutes are as follows: interpreters (1-36A-12), librarians (14-1-44(3)), *785 family court mediators (25-4-58.1(3)), mental health professionals (27A-1-9), physician assistants (36-4A-32), respiratory care practitioners (36-4C-14), chiropractors (36-5-15.3), dentists (36-6A-55), podiatrists (36-8-23), dieticians (36-10B-9), pharmacist (36-11-23.1), veterinarians (36-12-19.1), electricians (36-16-12), public accountant (36-20A-36), real estate professionals (36-21A-62), real estate appraisers (36-21B-3), licensing home inspectors (36-21C-6), hearing aid dispensers (36-24-12.1(15)), social workers (36-26-26), psychologists (36-27A-26), nursing facility administrators (36-28-21.1), athletic trainers (36-29-14), family therapists (36-33-14), and insurance producers and solicitors (58-30-116).
. In addition, the record reflects that Skill-Path’s seminars covered a wide array of topics, mostly dealing with personal self-improvement. For example, they included seminars on organizational skills (Mаnaging Multiple Projects, Objectives and Deadlines; First Things First; and Fundamentals of Successful Project Management); seminars on communication skills (How to Design Attention Grabbing Brochures, Catalogues, Ads, Newsletters, and Reports; Assertive Communication Skills for Women; and How to Become a Better Communicator); seminars on creative thinking (How to Think Outside the Box); seminars on image (The Essentials of Credibility, Composure and Confidence); seminars marketed to women (The Women's Conference; and Conflict Management Skills for Women); seminars on inter-office and public relations skills (The Indispensable Assistant; The Essentials of Excellent Customer Service; and Coaching and Teambuilding Skills for Managers and Supervisors); and, seminars on computer programs and computer tasks (PC Troubleshooting; Using the Internet; Mastering Adobe Photoshop; and Conference for Windows Users).