Montana Department of Revenue v. Priceline.Com, Inc.

JUSTICE McKINNON,

concurring and dissenting.

¶27 I concur with the Court’s conclusion that the OTCs are not responsible for collecting and remitting taxes under the Lodging Facility Use Tax, §§ 15-65-101 through 131, MCA, because they are not “owners” or “operators” of the “facility” as required by the statute. However, the statutory language of the Sales Tax, §§ 15-68-101 through 820, MCA, is ambiguous as to whether an OTC performs a “service for consideration,” and reference to legislative history is therefore required. Because the legislative history clearly establishes that OTCs were not intended to be part of the tax base, I would not apply the Sales Tax to OTCs. Finally, where two constructions of a tax statute are possible, the question of whether a particular tax applies should be resolved in favor of the taxpayer.

¶28 It is well established that “when the terms of a statute are plain, unambiguous, direct and certain, the statute speaks for itself and there is nothing for this Court to construe.” Cherry Lane Farms v. Carter, 153 Mont. 240, 249, 456 P.2d 296 (1969); In re Kesl’s Estate, 117 Mont. 377, 161 P.2d 641 (1945). This Court “must read and construe each statute as a whole so as to avoid an absurd result ‘and to give effect to the purpose of the statute.’ ” Skinner Enters., Inc. v. Lewis & Clark Cnty. Bd. of Health, 286 Mont. 256, 271-72, 950 P.2d 733, 742 (1998) (quoting Christenot v. State, 272 Mont. 396, 401, 901 P.2d 545, 548 (1995)). Statutes “do not exist in a vacuum. They must be read in relationship to one another to effectuate the intent of the statutes as a whole.” Marsh v. Overland, 274 Mont. 21, 28, 905 P.2d 1088, 1092 (1995). When more than one statute applies to a given situation, such construction, if possible, is to be adopted as will give effect to all. Schuman v. Bestrom, 214 Mont. 410, 415, 693 P.2d 536, 538 (1985). ¶29 The primary operative language of the Sales Tax statute states that a “sales tax is imposed on the purchaser and must be collected by the seller” and “applied to the sales price.” Section 15-68-102(2), MCA. The tax is imposed on “sales of the following property or services: (a) 3% on accommodations and campgrounds; (b) 4% on the base rental charge for rental vehicles.” Section 15-68-102(1), MCA. In order to ascertain exactly what the legislature intended to be taxed, we must resort to the definitions of the terms in these two sections.

¶30 “ ‘Sale’ or ‘selling’ means the transfer of property for consideration or the performance of a service for consideration.” Section 15-68-101(13), MCA (emphasis added). The OTCs are not alleged to be the ones actually maintaining the accommodation and transferring *363possession or control of the hotel rooms, but they do perform a service related to the transfer of property. The OTCs act as intermediaries to assist hotels and rental car companies in the transferring of property by way of booking leases, rentals, and sales. We must therefore also look to the definition of “service” in order to ascertain whether the OTCs are performing a service that comes within the definition of a “sale.”

¶31 “ ‘Service’ means an activity that is engaged in for another person for consideration and that is distinguished from the sale or lease of property” Section 15-68-101(17)(a), MCA (emphasis added). Within this definition of “service,” the word “sale,” again, directs us back to “service for consideration” contained in § 15-68-101(13), MCA. “Lease,” “leasing,” or “rental” “means any transfer of possession or control of tangible personal property for a fixed or indeterminate term of consideration.” Section 15-68-101(6)(a), MCA. Although the OTCs, because of their third-party intermediary position relating to the sale or lease of property, may be excepted from the service definition by way of being “distinguished,” such a construction is not entirely clear upon the face of the statute. Whether the legislature intended OTCs to be part of the tax base is further obscured by other language in the Sales Tax statute, such as the definition of “sales price,” which may not include a deduction for “charges by the seller for any services necessary to complete the sale, other than delivery and installation charges,” § 15-68-101(14)(a), MCA, and the definition of “seller,” which “means a person that makes sales, leases, or rentals of personal property or services,” § 15-68-101(16), MCA.

¶32 Moreover, both chapters 65 and 68 apply to the same subject matter — accommodations and campgrounds — and must be read in relationship to one another. Skinner Enters., 286 Mont. at 272, 950 P.2d at 742. For example, the definitions of “accommodations” in the Sales Tax and “facility” in the Lodging Facility Use Tax are nearly identical. Compare §§ 15-68-101(1), and -102(l)(a)-(b), with §§ 15-65-101(1), (4)(a), and -111(1), MCA. Additionally, the tax base for the Sales Tax, as set forth in § 15-68-102(1), MCA, applies to “accommodations,” which overlaps with the “accommodation charge” and “facility” definitions of the Lodging Facility Use Tax. As both the Lodging Facility Use Tax and Sales Tax statutes have the same subject matter, they must be construed consistently together and with a construction, if possible, which gives effect to each statute. In light of our conclusion in Issue One that OTCs are not required to collect and remit the Lodging Tax, and given that the Sales Tax is far from clear as to whether OTCs provide a “service,” I would conclude that the Sales *364Tax statute is ambiguous and the Court must resort to legislative histoiy in order to ascertain legislative intent.

¶33 Montana’s Lodging Facility Use Tax was established in 1987 to impose upon hotel users a tax to be collected by “[t]he owner or operator of [the] facility ....” Section 15-65-112(1), MCA; 1987 Mont. Laws 1557. In 2003, the Sales Tax was enacted as part of the Montana Economic Development Tax Act (Act) introduced by Senate Bill 407. 2003 Mont. Laws 2196. The Act was aimed at reducing individual income tax rates and providing for a “limited” sales tax on “certain property and services.” 2003 Mont. Laws 2196. During the 2003 session, the Legislature narrowed the scope of the sales tax provision initially proposed and, ultimately, the Sales Tax covered only accommodations, campgrounds, and rental cars. S.B. 407, 58th Leg., Reg. Sess. (Mont. 2003). We observed in State v. Montgomery, 2010 MT 193, ¶ 15, 357 Mont. 348, 239 P.3d 929, that amendments made during a bill’s consideration can be analyzed to determine the intent of the legislature. “ ‘One of the most readily available extrinsic aids to the interpretation of statutes is the action of the legislature on amendments which are proposed to be made during the course of consideration in the legislature.’ ” Montgomery, ¶ 15 (quoting 2A Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction § 48:18 (7th ed. 2007)). The Fiscal Note to Senate Bill 407 described the Sales Tax as a “bill [that] would impose a 3% tax on accommodations and campgrounds in addition to the existing accommodations tax[.]” Fiscal Note, S.B. 407, 58th Leg., Reg. Sess. (Mont. 2003). The legislative history of Senate Bill407thus establishes that the Montana Legislature did not intend to create a general sales tax, but rather to create a new sales tax on rental cars and increase the tax on accommodations.

¶34 In 2007, by request of the Department of Revenue, House Bill 147 was introduced with a proposal to add intermediaries, like the OTCs, to both the Lodging Facility Use Tax and the Sales Tax and make them subject to filing, collection, and reporting responsibilities. H.B. 147, 60th Leg., Reg. Sess. (Mont. 2007). Specifically, the Department sought to amend both statutes because of its long-standing interpretation that the two taxes should be enforced as one. See Admin. R. Mont. 42.14.101(6). House Bill 147 would have substantially revised the existing Lodging Facility Use Tax and Sales Tax to include the services of intermediaries like the OTCs. H.B. 147,60th Leg., Reg. Sess. (Mont. 2007). However, the Legislature rejected House Bill 147 and the Department’s attempt to expand taxes to the OTCs. In my view, the legislative histories of Senate Bill 407 and House Bill 147 demonstrate *365the intent of the Montana Legislature to create and preserve a limited sales tax in Montana which does not include intermediaries such as the OTCs.

¶35 Even if the legislative history were not determinative, it has long been the settled rule that, in considering a tax statute that is susceptible to two constructions, any reasonable doubt as to the persons or property intended to be subject to a particular tax should be resolved in favor of the taxpayer and against the taxing authority. Cherry Lane Farms, 153 Mont. at 249, 456 P.2d at 301. It is impermissible for courts to expand a tax by implication. In re Estate of Armstrong, 133 Mont. 328, 331-32, 323 P.2d 595,597 (1958); see also § 1-2-101, MCA (office of a judge is “not to insert what has been omitted or to omit what has been inserted.”).

¶36 For the foregoing reasons, both the Lodging Facility Use Tax and Sales Tax are inapplicable to third-party intermediaries like the OTCs. I would therefore affirm the judgment of the District Court in its entirety.

JUSTICE RICE joins the concurrence and dissent.