Worlds of Fun Resp to Mo MSJ and Reply

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ADMINISTRATIVE HEARING COMMISSIONSTATE OF MISSOURI

JUNI01/2011/WED 10:33 AM OLIVER WALKER WILSON

WORLDS OF FUN/OCEANS OF FUN, ))Petitioner, ))))DillECTOROFREVENUE, )STATE OF MISSOURl, )).Respondent. )

FAX No. 5734426323

Case No. 0 8 - 1 9 3 ~ RS

P. 003/007

PETITIONER'S RESPONSE TO RESPONDENT'S MOTION FOR SUMMARYDECISION AND REPLY TO RESPONDENT'S RESPONSE TO PETITIONER'S

MOTION FOR SUMMARYDECISIONP e t i t i ~ n e r , through counsel, files this response to the Director's Motion for

Smnmary Decision. Petitioner also replies to the Director's Response to Petitioner'sMotion for Suinmal'yDecision.

INTRODUCTIONiThis case concems a claim for refund of use tax paid on the purchase of tangible

personal property, including furniture, appliances and linens, that are included for use ofPetitioner's cllstOlners in cottages and cabins. The issue before the Commission isw4ether the various items of tangible personal property qualify for an exemption of stateuse tax under section 144.615, RSMo.

ARGUMENTThe Director argues that Brinker, Missouri, Inc. v. Director of Revenue, 319

S:W.3d 433 (Mo. bane 2010), is "directly on point" and precludes Petitioner's renmdclaim. As demollSb:ated more nllly below, Brinker does not apply and Petitioner isentitled to its reftmd.

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FAX No, 5734426323 P. 004/007

In Brinker, the court rejected a refimd claim from a restaurant for the purchase offuxniture usecl. by customers and tableware used by cust01uers to eat. While the courtac1mowledgeC/. that the customers "do acquire temporary use in the sense that the rellSableitems are used as a mechanism to facilitate use of their food and drink, this degree ofcontrol is de tninimis and does not rise to the level of an actual transfer of a right to use."319 S.W.3d ~ 439. Thus, in Brinker, the use of the tangible personal property wasincidental to 1;1).e sale of food and drink.

Petitioner's customers, however, do not rent empty cabins and empty cottages.Petitioner's customers enter into a rental transaction in which they receive the exclusiveright to rent cabin or cottage with specific fiunish.illgs, for a specific period of time.Petitioner's c ~ b i l 1 . s and cottages contain specific items of tangible personal property, suchas bedS to sleep up to six guests, televisions, microwaves, mini refrigerators and otherfmnishings. Complaint; see also Exhibit 2.

It is dOllsense to argue that Petitioner's customers would enter into a rentaltransaction hlvvhich they only receive an empty room with none of the tangible personalproperty provided. Peti tioner's advertising materials provide a list ing of ta,llgiblepersonal property that is included with the cabin or cottage rental. Exhibi t 2. UnlikeBrinker, the ~ r o v i s i o l l of tangible personal property is not de minimis but is an integral

.'part of the rel1'tal transaction. And, Ultlike Brinker, Petitioner's customers rent cabi11s andcottages for W:l extended period of time, not jus t the brief period needed to c o n s ~ u n e ameal.

" ,

The ~ ' h ' e c t o r ' s argument defmes 'sale" too narrowly and m conflict with, : legislative intent. Section 144.605(7) defines a "sale" as:

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any transfer, blllter or exchange of the title or ownership of tangiblepersonal prope1ty or the right to use1 store or COnSl.Ulle the same1 for a consideration paidor to be p a i ~ and any transaction whether called leases1 rentals, bailments, loans,conditional sales or otherwise, and notwithstanding that title or possession of the pl-opertyor both is retained for security. (emphasis added).""The 1egislanJe clearly intended that 'the exclusion applies to tangible personal prope;1iy

where the customer receives only a "right to use" during the rental period.The Director also argues that there must be a "permanent transfer" or that the

customer must "take title to the item'). The Director cites Kansas City Power & Light v.Director ofRevenue, 83 S.W. 3d 548 (Mo. bane 2002). The D:U.-ector misreads KansasCity Power Light and ignores the plain language of the statute. There is nothing in

,Isection 144.61'5 or section 144.605(7) that requires "title" to transfer for the ~ x c l u s i o n to.!.'apply. Indeeq, by using the words "right to use'\ the legislauu-e rejected the Director's

i n t e r p r e t a t i o n ~ . 'Kansas City Power & Light actually supports Petitioner's position. There, the

court ruled that an exemption was proper for sales of electricity used to heat, cool andprovide power in hotel rooms and other customer space. 83 S.W.3d at 552-53. The hoteltransfetred t h right to use or consume electricity in its occupied custolner space and the

l.customer haq control over its use. The Director argues that, unlike electricity,,.,?Petitioner's i\trnishings and appliances are not completely constuned by Petitioner'sJcustomers. Jliowever, Petitioner's tangible personal property is subject to depreciation.:\:"Petitioner utilizes widely recognized depreciation guidelines to aCCOl.mt for the

consl.unption ~ the tangible perSOllal property by Petitioner's customers over a period oftime. See Petitioner's Exhi.bit 1, (Exhibit B attached tl1ereto).

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JUN/01/2011/WED 10:33 AM OLIVER WALKER WILSON FAX No. 5734426323 P. 006/007

The ~ ~ e c t o r ' s m:glUllent requires the Commission to ignore the general andinclusive lang!.1age of section 144.615. The statutory language does not require a separatecharge for use of tangible personal property. It generally applies to "any" "right to use"tangible persc:mal property in "rentals." There is no requirement that tax payers gothrough accQ"lUlting mechanisms to list charges separately. In addition, the Dilector'sargluuent ignores that the legislature did not require actual transfer of title. Thelegislature cle


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PROOJi' 0:11' SERVlCE

FAX No. 5734426323 P. 007/007

The under3igned. c ~ e s that a cOJlY of th e forego41g instru.ment was served upon the following by enclosingthe same in an c.nvelope with postage fully prepaid an d by depositing said envelope in 'l. U.S. Post Officemailbox in Columbia. Missouri on th" 1s t da y of June, 20 1L Christopher Feh:(Legal Counsel ,.Mis6011n Department ofRevenueP.O. Box 47 5 .':Jefferson City, MO 65105-0475

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JUN/OI/2011/WED 10:33 AM OLIVER WALKER WILSON FAX No. 5734426323 P. 002/007

DAVIDARTllUR OLIVER"BETTYK. WILSON .l\'lAJJlAMDECKER, R.N.BRUCEFARMERROn1tRT J. B U C K L E Y " ~

OLIVERWALKERWaSON LLCATTORNEYSAT LAWFLAT BRANCH CENTER401 LOCUST STREET - SUITE 4061'0 BOX 977COLUMBlAMO 65205-0977(573) 4 4 3 ~ 3 1 3 4(573) 442-6323 - FAXE-mail: wIVw.owwlaw.comJune 1,2011

JULIA S. GRUSROLAND P.WALKER1934-2005'orcQunSCIA1so ~ d m l ~ d III [Can!a!

Via FascimileRobin E. BaucomAdministrative Hearing CommissionTruman State Office Building, Room 640301 West High streetP.O. Box 1557Jefferson City, MO 65102RE: Worlds QfFun/Oceans ofFun v. Director ofRevenueCase No. 08-1935RS

Dear Ms. Baucom:Enclosed please find petitioner's response to respondent's motion forsummary decision and reply to respondent 's response to petitioner's motion forsummary decision for filing in the above referenced case.Thank you for your ass is tance. P lease call should you have any

questions.

s ~ c = -Bruce Farmer

;"t

BF/mjEnclosureCC: Christophel: Fehr

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JUN/Ol/2011/WED 10:32 AM OLIVER WALKER WILSON FAX No. 5734426323 P. 001/007

OLIVERWALKERWILSONLLCATTORNEYS AT LAW

VAVIP ARTHUR ~ L I V E R "DETTY 1( .WILSONlHARJAMD;ECIill)1, R.N.DRUCE FARMERROBERT J. nUClq,EYu

FLATBRANca CENTER401 LOCUST STREET - SUITE 406PO BOX 977COLUMBIAMO 65205-0977(573) 443-3134

(573) 442-6323 - FAXE-mail: [email protected]

JULIA S. CRUSROLANDP. WALKER19342005"oecounscl""Also odmitted in l

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