*1 404 P.2d HINCKLEY, INC.,

ROBERT H. Plaintiff, corporation,

v. Utah, COMMISSION

STATE TAX Defendant, al.,

Knico, Inc., et Amici Curiae.

No. 10260.

Supreme Court of Utah.

Aug.

Young, Glasmann, Thatcher & Paul Thatcher, Ogden, plaintiff. Hansen, Atty. Utah, Phil L. Gen. pf Joseph Romney, Atty. B. Asst. Gen. Utah, for defendant. Richards, Alsup, A. Daniel and A. Jack curia;.

Ogden, amici WADE, Justice. Inc., Hinckley, plaintiff H.

Robert a decision of herein seeks review of sustaining Tax Commission assess- with deficiencies of sales and use tax ments shall penalties thereon. We and interest Hinckley. as plaintiff hereinafter refer to vehicles Hinckley is a in motor dealer op- years has also a but for number n erated business under the accounting a name of “Kwik payment and the vendor of Kafe,” drinks, retailing candy cold correct sales hot and and use taxes without the use through operated stamps tokens, adopted and other coin foods or a bracket system operate whereby machines. These the vendor is upon multiples depending upon fixed of' five cents and do certain amounts purchase change. Only price. system make one item can- be The bracket is so portion vended at devised that one time and combined or mul- sales in the lower given tiple slightly sales of two or more units are not bracket are overtaxed while possible. upper portion those salfes herein were involved that bracket undertaxed, slightly at a sold or ten so that either five cents. a vendor in During period averaging total involved herein the Tax sales will have collected approximately Commission has not authorized or made correct amount of tax re- quired example to be available tax tokens or other means to col- For remitted. per sales or lect correct sales tax on sales of five use tax three or cent the following cents. system ten Under such circumstances the schedule in bracket is to be least the vendor collect on a used could five or determining sale, amount of cent he to collect at all ten if were tax to be collected: realm, from the vendee in coin of the would Amount of Sale Tax collect, one did cent. re- $0.01 None $0.14 any port any remit tax on -.15to .42 $0.01 ten cents. Hinck- sales of five or is to be noted that the schedule fails to re- also, inadvertence, ley failed quire the collection of amount on sales pay collect and sales taxes on certain sales of less than 15 Under sys- cents. such a report of over cents and failed collection, Hinckley tem of sought legal pay bought use taxes and used advice was paid told no tax need be in the course of its ad- business. on sales of less than 15 cents. liability use mitted taxes paid sales taxes on 14 cents and sales over 59-15-4, U.C.A.1953, of the Sales plus interest, per them six cent but not the Act levied, that there be col per penalty and additional interest six paid lected purchase a tax *4 assessed the Commission. price every consideration retail sale personal Hinckley report specifically failed to collect and ex vending empted 59-15-5, five cent machine its and ten cent from such tax. Sec. U. C.A.1953, responsible Tax sales because the Utah Commis- makes the vendor State collection, in sion. order to facilitate the collection and remittance of the amount .74 - pro- (without imposed -regard part's the sale.- It also tlie tax on to fractional

óf of one cent) in computed shall collect the excess ‘of the tax vides 'at the “[T]he vendee, prescribed,” in no case shall he rates impossible tax froto the but makes it un- regard Regulations der (without an Tax implementing collfect as tax amount provisions parts' cent) in these to fractional of one excess collect'on its five cent computed prescrib- ten at the tax transactions .rates .made * jt .* vending for the machines. ed further filing quarterly return the vendor Hinckley argues that the Tax' Commis tax the amount of the remittance of regulation requiring report sion’s it to required sales to be based total collected pay the receipts tax on its total from period.- made'during reported vending imposition machines is in effect an of the tax on the vendor rather than herein, periods 'During the involved placed vendee on whom the has Regulation Sales Tax Tax-Commission’s regu the tax. contends that such it “unlawful for the vendor No. declared against lation vending discriminates ma any way waive the- collec- to absorb inor chine transactions in which items sold consider imposition or to tion or cents, opposed under as IS to' businesses as collected that the tax is included and collecting systein” “bracket price.” The Tax Commission of the sales practically applied, can be so that the ven in effect Regulation Tax also Had a Sales personal sales, dor in averaging total sales which, receipts from total provided that the approximately the will be able to collect as be considered vending machines would paid, correct to be where amount prop- personal the total in ma as it is so to do through these erty distributed ’ operations. further con chine reported amount as and must regulation' tends that' .such" denies to tax. subject operators selling’ under employment Hinckley contends that equal protection" cents the- of'the "laws “bracket Commission by the Tax Constitution, I, Art. violation of Utah" provide its failure system” and 2, Constitution, Amend States United collection for the correct means other XIV, Sec. 1. ment. provision-'of Sec. tax under the sales v. Candy Co. In W. F. 'that" U.C.A.1953, requires S9-15-5, which- Jensen Commission,1 answering Tax State but collect from' th.e v^nde'e statutory requirement contention as ah he shall ‘.‘inrib cásé 629, Commission, P.2d A.L.R. Candy Utah v. Co. F. Jensen W.

75 himself, absorbing in no case the tax if shall a vendor collect an the vendee or (without regard parts fit, change the he not nature of fractional saw did tax, imposed cent) prescribed of one on the excess rate the which is still one impossible mandatory made it for the collect the tax on sales transaction. It is still cents, of less than responsibility SO and for the therefore the tax vendor to assume the involving collection, accounting remitting eliminated on sales fractional and parts cents; pointed of SO this court out the transact amounts' due the State imposed that the tax by is a on a transac tax ions.3 The is owed consumer tion, exemption and responsible unless there is an to the for its vendor who is there still imposed due the the rate State collection.

on such transaction whether it be a cent That has chosen a or one-fifth of a cent. The fact that method doing business less than cents the collection of SO machines which makes it for it may the tax change does difficult not sys the tax under the “bracket responsibility of the vendor for the col tem” deprive equal protec does not it of accounting lection to the tion of deprived the laws is it nor of its imposed. by the tax The elimination process. without due The tax provision of the imposed transaction, and its could, fit, if he saw collect the tax payment dependent upon to the State is not vendee, provision from the was in whether is collected or whether the con the Act at Candy the time the case Jensen pays sumer it. The rate remains constant decided, change was not did the nature of applies every alike to vendor. Because responsibility the tax nor the of the vendor a vendor only chooses to sell articles at a accounting for its collection to the price on which no tax can be un collected 59-15-5, U.C.A.1953, provides State. Sec. system” der the “bracket does make now, always very incep itas has from the system discriminatory arbitrary. nor tion Tax Act that Sales may It be that the “bracket should responsible “shall be for the collection of apply to such a vendor if he can devise imposed” the amount of the tax on sales collecting means of the correct amount personal property. tangible legisla tax, but that does not mean that if provision eliminating ture he cannot devise such means that as to option collecting vendor had the from him the tax is unlawful. In White v. Chapters 111, 112, Ralph Session Laws of Utah 3. Child Construction Co. v. State Commission, P. Utah 2d 2d 422. application, every general In arguments presented seller. same State4 imposes hardship. . no presented herein were only items chooses to sell Washington when a seller Supreme of the State Court priced point at a which are by operators of less than the full than those schedule where a consideration less items for forced to un- is to be collected that he is commenced the tax collection at which tax, this all of the *6 system.” The of absorb or der the “bracket State the rule.” exception rather than Utah, aban- is the tried and Washington, like had collecting on of token method doned the Hinckley has The fact that the fractional sales for /which costing less than 15 chosen to sell items place adopted in its had would be due and vending machines thus its system” In an- similar to ours. a “bracket making impossible use the “bracket it to vending ma- swering the contention of the system” col designed enable sellers to to system” is operator that the “bracket chine of the realm so lect sufficient coins Washington inequitable the as to it because they averaging total amounts collect in required he who failed Tax Act that Sales approximately correct sales will be the pay it himself re- the tax shall not required be remitted does amount to de- gardless fault and therefore he was of equal protection deprive of the laws it of equal protection the law prived the of of process. property without due nor of property deprived of his without and was transaction, upon imposed the The tax law, court process due that said: depend payment and its to the State is “ * * * rate is it is collected. The no at- ent how But the law makes sellers, every applies seller. tempt among alike to to constant and discriminate remit the amount classify It is true it them. seller does nor purpose If he to sell total sales. chooses it classifies sales for the due on priced point the at a rate, applying but the rate re- which be tax can throughout the sched- where less than full constant schedule mains collected, complain that applies he cannot ule, alike to the schedule making adopted 716, State, it P. has been White v. 49 Wash.2d operators p. for See also Piedmont 230 on 2d Service, Johnson, an amount less than for 256 N. for items Inc. v. Canteen system provides 582, 155, the bracket A.L.R.2d 1127 that at which 123 S.E.2d C. collection, 1138; held that have Co courts v. Canteen and notes Calvert operators . 556; have (Tex.) Enter Stevens 371 S.W.2d equal protection Tax., deprived prises of the been of Rev. & v. State Comm. they deprived of been the laws nor have under P.2d 326 where Kan. process due regulations without their similar to ours or statutes collecting system” taxes law. “bracket any pro- be- not been called to discriminatory as to him attention has schedule Tax Act forbids in our Sales made vision provision has been cause no whereby correct amount the correct the collection due Tax Commission purchaser fact regardless his from a of the purchaser under from the amount due that there that the consideration is so small can collected. doing method of business every of the realm that can be used. seller is no coin applies alike to The schedule doing called Nor has our attention been method and aids those whose provision of our Sales Tax Act which application practical business makes its prohibits makes it or a vendor correct unlawful facilitating the collection ' himself, absorbing paying the tax from be remitted required by the seller to necessarily if he so chooses. It does not on its total sales. from the fact that the 1937 amend- follow U.C.A.1953, 59-15-20, provision that vendor ment deleted the right grants the Tax Commission option collecting from the ven- pre- administering Tax Act to the Sales absorbing dee or the tax himself Act, scribe, conformity forms such with prohibit intended to or make the ascertain- regulations for and rules and pay to absorb or unlawful for a vendor ment, of the taxes and collection assessment the tax himself. The Act still as the provided therein. Insofar that the tax shall be collected and that the possible for a “bracket makes responsible for its collection and *7 averaging to system of vendor a remit amount due from must the correct approximately the correct amount collect remitting period. total sales for the We sales, the “bracket on his total of tax due intent the an cannot ascribe to by system” the Tax Commission devised con- it a to to make for vendor Act. to the is reasonable and conforms requirements. form with its say However, to that the “brack- that is not In Co. v. Industrial system” exclusive Utah Hotel is or should be an et plain this court it that determining to be Commission made the amount method of interpretation agency’s of depending the an administrative each collected on sale be in applied the Act which it administers must purchase price to all and must be legal intent of the meth- conformance with the regardless of whether their vendors interpretation possible Act such which it for and doing business makes od of harmony contrary the ap- out of with and to by collect them of the schedule to use beyond they express provisions Act of the are proximately amount are the correct powers granted it. It follows from required the remit on their total sales. Our to Commission, al., 24, 467, P.2d et 153 A.L.R. 107 Utah Utah Hotel Co. v. Industrial After the from the vendee. to as to businesses said what we have system” only than the amount all, for less a device all sales are “bracket the provides for system” for possible the “bracket it vendors in which would make which vendee, the of tax from the the the correct amount approximately collection to collect by Tax system” provided they the required to “bracket re of the tax which Act to the not conform does Where the Commission mit their transactions. the transaction imposes impractical the which be device is “bracket the tax requires purpose, to collect a a cause it cannot serve such businesses, As to such using the vendee. from precluded 'from not be should vendor by the promulgated system,” means, the “bracket intent since the clear of other some by Commission, collecting the taxes approximately Tax the the collection of law is only the device not be the need and the vendees the correct from by Tax a vendor. The which can be due on to used vendors the tax remittance Regulation No. 5 Tax Commission’s Sales tal transactions. value of for the vendor it unlawful which declares As to the Tax Commission’s it the as absorb tax or Regulation No. which any pro price supported by the sales is not by vending receipts” of items “total sales of has been the Tax Act which vision in Sales be as the total machines "will considered regulation our If called to attention. this personal prop tangible impos binding make were would erty with their distributed connection operators for sible operations reported must as the be than selling articles for less tax,” subject we are of amount of sales in the ab a collect the tax devise means to beyond opinion regulation that such pur for such sence of device furnished authority statutory to the granted which pose itself Tax Commission 59-15-5, Commission. The that Sec. fact applied operations. to such Such could be U.C.A.1953, provides tax return that in the harmony obviously not in regulation required the remittance vendor with requires Act collection with amount of tax collect tax, yet impossible for a makes it computed ed as return “tax parts charge vendor to fractional upon the in all cases be total shall based instance, sold; %o give sales” does Commission right selling price for the sale cents as consideration to determine the *8 tax, thereby making receipts” are not cent for sales sold. “Total 3/io device, price.” possible, selling if he use The synonymous desires to that with “total report given in- the reason for the sale failure collected on a total amount could and remit over which the on sales of cents and consideration for clude taxes, item, plus though perhaps an and for use the Com- willing to sell seller mission could have found be inad- postage or taxes. The charged for vertent, require finding; does not such a postage taxes are no sales or require finding nor does evidence transaction, they part of the total a but are receipts on such transaction. negligent was not or that it vendor, Act, in the thing intentionally disregarded not authorized on his total amount due remit the that he rules regulations failing receipts. sales, on his total prescribed period. and remit within the time Under imposition such circumstances the Hinckley’s contention that penalty is within the sound discretion in penalty' additional o.f assessment of the Tax Commission. report and -remit for its failure to terest sales machine sales taxes The order of the Commission is affirmed 15 cents for than selling less except-as penalties-and additional inter- 59- provisions justified under items, est on penalties and authorizes such 15-8, which consideration for which was less than pay the failure to interest additional : ... cents. due, is due if failure such tax when disregard of au or intentional negligence McDonough crockett, JJ., well taken. regulations, is rules and thorized concur. regulations the Tax Commission’s Under apparent under its “bracket HENRIOD, (dissenting). Chief Justice on items of tax ly required no collection Respectfully reg and its I dissent. The statute less than 15 enough. requires clear absorption tax It the vendor to prohibiting of such ulations “every vendor, reasonably be collect a This tax. on retail sale.” it cannot es singular. say is in the negligent in does not was found aggre thousands sales in tentionally disregarded authorized rules and of individual gate. in the and remittance the statute the merchant can’t regulations collection Under However, imposed by going Act. than the base.1 Un- more state, completely involved, Except turn it surd. tlie ab over to where fractions require pen which would ny him to collect gum, penny piece on a of ball *9 404 P.2d 670 can’t regulation he der the Commission’s reg- another tax himself. Under absorb the CORPORATION, a cor- F. M. A. FINANCIAL Respondent, poration, Plaintiff and by paying has absorb ulation he v. he can’t aggregate sales. So INC., al., BUILD, corporation, et pay- pay anyway. His pay can’t but has to Appellants. Defendants absorption, aggregate ment No. 10292. impossi- o-stensibly illegal. The under bility collecting taxes on sales Supreme Court of Utah. pay refusal to together with Aug. 10, 1965. taxpayer himself, illegal. is in a He also cul de sac. jus- syllogistic reasoning can kind of

tify logic, and the bracket this carousel in difficulty.

system seems to be system regulation

bracket is a that flies subordinate to

the teeth of the statute and clear, latter, mer- which is “every retail

chant must collect a tax on

sale,” aggregate of sales on an —not and 10” man sells

the “5 charge the token

which such is made. If

system could be col- in effect the tax were unrealistic

lected. It was abolished. abolition, say the merchant that after its his

automatically reduce the must by including tax in the former

article

price.

CALLISTER, J., the views concurs opinion dissenting

expressed in the

HENRIOD, C. J.