*1 Dakota, Plaintiff of South STATE Appellant, DORHOUT, Appellee. Defendant
Ivan 18249.
No.
Supreme Court
Argued 1993. Nov. 9, 1994.
Decided March
Rehearing April Denied
formed that he needed to file back tax re- turns. Dorhout filed a sales tax return for January through August, peri- 1989 time began filing od and bi-monthly then sales tax Department returns. After the received nu- sales, merous indicating gross returns zero Department investigation. commenced an Department The T audited & C for the period 1,1988 January from through Decem- 31, ber 1990. audit alleged The identified 36 sales and equipment deliveries farm buyers South Dakota and the sale within South Dakota of one trade-in. Barnett, Gen., Wiest, Atty. Mark David D. charged by Dorhout was indictment with Gen., Pierre, Atty. plaintiff Asst. for and one count of failure to file a sales tax return appellant. (SDCL 10-45-48.1(4)), one count of failure to Miller, Falls, Todd C. Sioux for defendant (SDCL pay 10-45-48.1(2)), sales tax and six appellee. and filing counts of a false or fraudulent return in attempting to defeat or evade sales tax SABERS, Justice. (SDCL 10-45-48.1(1)). Dorhout filed a Mo- appeals the State dismissal of sales tax tion for Dismissal of the Indictment as a charges against Defendant. We reverse. violation of the Commerce Clause United States Constitution. Dorhout’s mo- Facts granted. Department tion was filed a Mo- Defendant Dorhout owns Town and Coun- for Rehearing tion on Dorhout’s Motion to (T C), try Implement implement & a farm Dismiss, granted. which was After the re- dealership Valley, in Rock Iowa. On March hearing, the trial court denied Dorhout’s Mo- 10, 5,1989, Department and June of Revenue tion Dismiss. Dorhout filed a Renewal of (Department) sent letters to Dorhout inform- Motion for Dismissal of the Indictment on ing him that engage he must be licensed to grounds. granted. new His motion was De- business in South Dakota and remit sales tax partment appeals. respond to the State. Dorhout did not alleged Dorhout in his Renewal of Motion letter, either letter. A third known as the that, for Dismissal Depart- liable to was letter,” “last chance August was sent on tax, tax, ment for it awas use not a sales It informed Dorhout that the matter Department proceeding and that was being assigned Department’s Ac- under a new law. The trial court counts Receivable Division failure to agreed granted Dorhout’s Motion to Dis- comply Felony could him to Class 6 miss because charges. responded Dorhout and acknowl- warning Dorhout did have fair that his edged receipt previous of the two letters. criminal; addition, conduct even if Jury testimony Grand indicates that at this by correct, position chance the State’s time, Deputy Dorhout told Director Alan Dorhout could not have ascertained the thought paying Morris that he he could avoid legal applicable standards to his conduct. including South Dakota sales tax de- Therefore, proceeding a criminal is not the livery charges on the invoice. proper proceed forum to with this case as October, 1989, charged. applied for a part Dakota sales tax license. As provides SDCL 23A-8-2 nine Department procedure, routine it was ex- grounds under which an indictment be plained to Dorhout that he was liable for dismissed on motion of defendant.1 State v. sales tax on deliveries made Schladweiler, (S.D. into the state 436 N.W.2d rule). 1989). (point possession He was in- statutory grounds also These are exclu- (1), (2) (3) 23A-8-3, 1. SDCL 23A-8-2 § to subdivision Upon pursuant motion of a defendant made whatsoever, Hoekstra, a consider- means
sive,
286 N.W.2d
v.
State
(S.D.1979);
Bingen,
generally State
see
ation.
(S.D.1982)
(grounds for
Department
stated in
Reve
As this court
forth in
are set
dismissing an indictment
Coop.,
a stat
“[w]hether
nue v. Sanborn Tel.
23A-8-2),
cannot
“the trial court
*3
given
a
factual situa
imposes
ute
a tax under
sufficiency
legality or
of the
inquire into the
no
question
an indictment is based
a
of law and thus
defer
upon which
tion is
evidence
under
considering a dismissal
SDCL
when
any
reached
given
is
conclusion
ence
Schladweiler, 436
at 854
N.W.2d
23A-8-2.”
the circuit
Department of Revenue or
the
127).
Hoekstra,
trial
The
(citing
(S.D.1990).
223, 225
court.” 455 N.W.2d
Motion to
granting Dorhout’s
court’s letter
Supreme Court dis-
The United States
ground upon
specify the
fails to
Dismiss
granted. Because
the motion was
a sales tax and
which
cussed the difference between
exclusive, and
statutory grounds are
these
tax in McLeod v. J.E. Dilworth Co.
a use
appear
question
does not
indictment
“[t]he
many
a
tax in
instanc-
A sales tax and use
any
grounds
the
con-
vulnerable
But
may bring about the same result.
es
statute,” Bingen, 326 N.W.2d at
in the
tained
conception,
they
[and]
different in
are
are
dismissing
order
the
the trial court’s
upon
transactions[.]
different
assessments
for this reason
could be reversed
indictment
continue, however,
We,
to the merits.
a tax on the freedom of
alone.
A sales tax is
A
tax is a tax on the
purchase^]
use
provides:
10-45-2
enjoyment
pur-
that which
hereby imposed
upon
a tax
the
There is
Though sales and use taxes
chased....
engaging in
as a re-
privilege of
business
tailer,
upon
gross
percent
tax of four
the
a
revenues and serve
secure the same
tangible personal
receipts of all sales of
are,
purposes, they
as we
complementary
wares,
consisting
goods,
or
property
indicated,
on
transac-
have
taxes
different
merchandise,
by §
except as taxed
10-45-3
opportunities afford-
tions and for different
except
provided in this
as otherwise
by a
ed
State.
chapter,
at retail in the state of South
sold
1025-26,
327, 330-31,
64 S.Ct.
322 U.S.
Dakota to consumers or users.2
(1944).
also, Karen R.
In a manufacturer of modular passes buyer title the before merchan homes was held liable for Wisconsin Iowa dise enters the state and the sales tax because the sales to a wholesale seller is not liable for distributor Iowa consummated when sales tax. See SDCL 57A-2-401. were Conversely, the manufacturer delivered the homes on if its the out-of-state retailer deliv support holding, state, trucks to the site. In of its ers the merchandise into the title Supreme the Iowa Court relied Iowa passes when completes delivery the retailer 554.2401(2)(b). 57A-2-401(2) § Code SDCL in the state and the seller is liable for sales provides: is identical and 57A-2-401; Sturtz, tax. SDCL 373 N.W.2d explicitly agreed words, Unless otherwise title at 134. other the determination of passes buyer at the the time and whether the sale is taxable for sales tax completes perfor- at which the seller his purposes complete, is made when the sale is physical mance with reference to the deliv- McLeod, or “consummated.” 322 U.S. Cf. ery goods, despite any reservation of 327, (Tennessee 64 S.Ct. L.Ed. security though interest and even a docu- vendors not liable for Arkansas sales tax ment of title is to be delivered at a differ- because “we are here concerned with sales place; particular ent time or and in by made Tennessee vendors that are con despite security reservation of a inter- delivery summated in Tennessee for the of by lading est the bill of Arkansas.”). goods in (a) requires If the contract or authorizes Sturtz, As in sales T & to goods
the seller to send the C its the buyer require but does not him to South Dakota customers were consummated destination, deliver them at title when T & tracks C’s delivered the farm Imposition Duty 3. As stated pur- Twitchell in the would have been to sales tax if of to Collect State Use Taxes: pur- chased within the state. The incentive to imposed upon privilege A use tax is using, storing, paying chase out-of-state and avoid local sales personal consuming prop- purpose tax is removed. The second is to erty taxing impose within the state. States prevent a drain on the revenues available to purchaser, duty tax on the not the seller. The purchaser's state. The state receives collecting placed the tax is on the out-of- regardless property same revenue of where the purposes, state seller. tax The use has two purchased locally through is the sales tax or — equalize first ers. The in-state and out-of-state sell- .is through out-of-state the use tax. compensatory use tax is levied on Id. property property used within the state if that agree- or tion in this state. Contracts customers South machinery to the shipment Delivery purporting require Dako South ments 373 N.W.2d which, property event Dakota do the taxable outside South ta constituted 10-45-1(8), 45—2, SDCL tax would other- exempt sellers SDCL 10— 57A-2-401, triggered Dakota regardless apply. applies wise Sales especially one so when tax. This sales through made solici- whether the sales are s admonition considers Schladweiler1 tation, mail, through catalogs. direct inquire legali into the cannot “the trial court together, the statutes and administra Read ... sufficiency of the evidence when ty or liability clearly impose a sales tax on tive rule 23A-8- considering a dismissal under SDCL Administrative rules have the Dorhout. (cita Schladweiler, at 854 436 N.W.2d 2.” presumed Hope force of law and are valid. omitted). tion Dept. Evangelical Lutheran Church v. Iowa Additionally note that ARSD we (Iowa 1990) Revenue, 76, 84 463 N.W.2d 64:06:01:25 Revenue, (citing Dept. Richards v. Iowa Originating in other Interstate 1985)). sales — (Iowa also, See Duf states. (S.D. Mortenson, 437, 439 fy v. liability when a sale is incurred Sales 1993) (citations omitted) (administrative rules consumption in for use or at retail is made adopted by Board of Elections are the State *5 paid tax must be even this state. Sales law). And, binding have the force of as and transported is though property sold below, presumed to know noted Dorhout is buyer from a outside directly to the 797, Opp, 801 the law. Hieb v. engaged in the if the seller is this state (S.D.1990) (citing Graff, Johnson S.D. tangible personal prop- selling business of (1942)). applies “This law possession erty in and this state (cit by departments.” Id. adopted to rules buyer residing to a property is transferred 1-1-23(8)). 1-1-22, ing SDCL in this state. or located argues that if he is liable for Dorhout may purchase or contract either The tax, any 10-46-20 it is a use tax under SDCL shipment. precede or follow interstate imposition liability is and that the of sales tax transaction wheth- applies to the Sales tax point of law for which he cannot be a new shipment is made free on board er the imposes 10-46-204 liabili held liable. SDCL (f.o.b.), origin or f.o.b. destination point of ty tax a retailer for the collection of use goods trans- how the are and no matter maintaining place in this state a of business ported. exempted retailer is under the unless the doing in this state All retailers business to 10-46-15. provisions of SDCL 10-46-6 maintaining a business office this and liability exempts from for SDCL KM6-65 maintaining agents or or solicitors state or in this gross receipts from the sale use through independent order doing business property or servic tangible personal state of tax on subject to the retail sales takers are subject tax. Because es which are to sales at retail when all sales of merchandise by consummated deliv- consump- Dorhout’s sales were made for use and such sales are amended, part: substi- provides In SDCL 10-46-20 SDCL 10-46-20 tuting in the "10-46-17.5” for “10-46-15” maintaining Any a of business retailer state, tangible per- making sentence. sales of first in this and storage, property use or or services for sonal state, exempted consumption other in this 5. SDCL 10-46-6 provisions §§ to 10-46- 10-46-6 tangible personal use in this state of The 15, inclusive, shall, making the time of such services, gross receipts property from state, sale, col- whether within or without included in the the sale of which are to be by chapter imposed from the lect the tax purchaser, this 10-45, imposed by chapter measure of the tax purchaser receipt give and may or which amendments made prescribed by therefor in the manner and form thereto, hereby specifical- be made revenue, hereafter secretary secretary the revenue, shall, if the imposed by chap- ly exempted this from the tax promulgated pursuant by rule 1-26, chapter require receipt. ter. such to subject to T ery in Dakota and sales sales tax. & C delivered the beanhead apply. 10-46-20 does not according signed by to the retail order Uher- ka, paid sales tax in the amount of $66.75 argues Dorhout also that the law is delivery and a fee of The sales tax $25.00. ambiguous and the determination of whether by return filed Dorhout September- for the
he is liable for sales or use tax should not be
October,
however,
period,
reports
time
proceeding.
sup
in criminal
addressed
(or
tax)
zero sales
to sales
for
use
Harris,
port, Dorhout cites United States v.
period.
that time
(7th Cir.1991).
(cid:127) ally observed in Dakota with a red Valley, approximately South Iowa Rock Fairview, Country Implement pickup Town and straight South east
miles truck. operates a farm Dorhout Dakota where (cid:127) ap- extensively advertised his busi- dealership with sales of Dorhout
implement through newspa- ness in Dakota per year. South million proximately $4 radio, pers, As a result and television. (cid:127) Complaints were filed with the South investigation thorough of a of Dorhout’s officials, taxing that Dorhout was Dakota Dakota, doc- business activities South Dako- making substantial sales South by specific sold such as a umented items paying and was not sales ta residents cultivator, mower, tractors, disc tax. taxing fit planter, the authorities saw to (cid:127) investigation conducted the De- An charges against bring criminal Dorhout. of Revenue of this state deter- partment granted the trial court its Motion for When Dorhout had sold farm ma- mined that Dismissal, grand jury the trial court had a farmers, chinery these to South Dakota available, transcript together with exhibits being principally Dakota farmers South jury. presented grand Let there be along the located South Dakota/Iowa no that the trial court had an exten- mistake border. background when the decision sive factual (cid:127) by telephone informed Dorhout was Essentially, was made to dismiss this case. correspondence that he was liable for 21,1993, January trial court’s decision on equipment. of farm sales tax (1) subject held that Dorhout was to use tax (cid:127) Notwithstanding attempt an to educate (2) tax and a new of law and not sales responsibility, both Dorhout as to his being lodged against Dorhout. correspondence of by phone calls and 10-45-1(6), certainly there is Under authorities, taxing the South Dakota jury question as to whether Dorhout is a paid no sales tax. Dorhout retailer. (cid:127) fact, testily told the taxation 10-45-1(8), jury there is a authorities of South Dakota that there Under SDCL question way as to whether Dorhout made no that South Dakota could Dakota. sales within State South into trace the sales made (cid:127) Dorhout, evidence, when confronted with allegation Each criminal of an avoidance of $30,000 admitted to a sale South Da- below, jury tax must tried in a a sales be
kota. case, jury if Dorhout demands a trial. One *7 (cid:127) key questions in Did Having secured a sales tax license this therein will be: file,
state, delivery place in Dakota? This is began to in take South South possession” as “the of rule. Dakota, returns, also known reflecting that he zero Plastics, 582, Royal 471 See In re N.W.2d no sales in Dakota. Further had South (S.D.1991). 585-86 place. investigation took Dorhout ad- Revenue, having mitted to three customers Reviewing Dept. Sturtz v. Iowa South Dakota. (Iowa 131, 1985), 132 it N. W.2d (cid:127) investigation, further numerous After appears that in Iowa is the definition sale other delivered sales to South Dakota of sale in South identical the definition Sturtz, 133-134, were uncovered. In at Dakota. 373 N.W.2d Supreme of Iowa discussed sale (cid:127) Court to a Numerous exhibits were submitted Iowa, delivery delivery. In 15, 16, 17, 13, 14, grand jury; Exhibits key determining where the sale is the 19, *, 18, and 21 all reflected sales to and sales tax to be This applied. occurred residents, pre South Dakota which were this appears to be the same focus as Court grand jury. sented Royal had Plastics. (cid:127) produced reflected Dorhout’s Evidence being salesmen in the state of South Dorhout’s contention that he was not sub- Dorhout, himself, person- ject to sales tax but was to use was * 20, example, Wagner, Dakota. The invoice also reflects an invoice for a South Exhibit as an $2,200 charge delivery. $25.00 bean head sold to Norman Uherka be, 10-46, appears to ch. provisions SDCL cited a mistake law. aboye, Dakota,
under the facts
STATE of South
Plaintiff
Labor,
Dept.
Explicitly, the trial court ruled that “Dorh- warning fair that his con-
out’ did have and, also, that “Dorhout
duct was criminal” legal stan-
could not have ascertained the (Emphasis applicable to his conduct.”
dards mine.)
supplied all, essentially arguing
First of he is and, vague are and uncertain
the statutes
therefore, statutorily a crime has been certainty.
defined with definiteness and filing charged with a false or
Dorhout was attempting escape
fraudulent return 10-45-48.1(1).
evade sales tax under SDCL in mind that this defendant was ex-
Bear
plained the Dakota sales tax law on trying to us
several occasions. He is now tell legitimate
that he has a defense because ignorant made to of the law. Reference is (S.D.1989). Dale,
State v.
Therein, 107, citing page State v. (1971), ex- we S.D.
pressed: that it incum-
The court determined *8 defendant, if he does not
bent law, to learn its content
understand the meaning. charges every man The law pre- knowledge of the standards
with the (Emphasis supplied
scribed the law.
mine.)
Thus, join reversing I the trial court’s
granting for the Dorhout’s Motion to Dismiss writing. forth in this
rationale set