In the Matter of the Appeal of Budget Rent-A-Car of Kansas, Inc Docket No. 3180-87-DT
Kansas Retailers' Sales Tax
Establishment of a facility in a location prior to enterprise designation.
BEFORE THE BOARD OF TAX APPEALS OF THE STATE OF KANSAS
IN THE MATTER OF THE APPEAL OF
BUDGET RENT A CAR OF KANSAS, INC.
FROM AN ORDER OF THE DIRECTOR OF
TAXATION ON SALES TAX.
Docket No. 3180-87-DT
Now, on this 23rd day of March, 1988, the above captioned matter comes on for consideration and decision by the Board of Tax Appeals of the State of Kansas.
This Board conducted a hearing in this matter on November 20, 1987. After considering all of the evidence presented thereat, and being fully advised in the premises, the Board finds and concludes as follows:
1. The Board had jurisdiction of the subject matter and of the parties, a property and timely appeal having been filed, pursuant to K.S.A. 74-2438.
2. The subject of this application is a sales tax refund of $6,659.52.
3. The Director's order states the operative facts. We need not restate them here, other than to apply them to the statutes.
4. Budget's position is their facility was not "established" until it commenced operations. As such, Budget argues it is entitled to a refund of all sales tax paid for materials or services used in constructing the facility. See K.S.A. 79-3641.
5. The Department argues that a business is "established" form the date construction commences, and, as such, Budget "established" its business prior to designation of the enterprise zone.
6. It is clear that Budget acquired the use of real estate near the airport in Wichita. Budget testified that they acquired an option on the property as early as 1979 so Budget could "be there first." The site is apparently a choice location for Budget's business.
7. Budget expended some effort and purchased materials prior to the designation as an enterprise zone. The business was not operational until after designation (March 8, 1983).
8. The Director's order properly cites certain rules of statutory construction. We agree that the issue turns upon whether the business was "established" in an enterprise zone as required by K.S.A. 79-3641. However, we would concede that each party makes a logical argument for their respective positions.
9. When faced with more than one possible construction of a statute, the judicial body is first required to give effect to the Legislature's intent
. Kansas Power and Light Co. v. State Corporation Commission
, 237 Kan. 394, 699 P.2d 53 (1985),
Farmer's Co-op v. Kansas Board of Tax Appeals
, 236 Kan. 632, 694 P.2d 462 (1985),
Harris Enterprises v. Moore
, 241 Kan 59, 734 P.2d 1083 (1987). In this case, the Legislature stated the purpose of enterprise zone benefits at K.S.A. 12-17,108:
Enterprise zones; purpose of act. The purpose of this act is to expand and renew the local economy and improve the social and economic welfare of residents in economically distressed zone areas located within the cities of the state of Kansas,
by providing incentives
for business and industry to develop new business and expand existing business within economically distressed areas and thereby create new jobs and sources of income, particularly for disadvantaged workers. (emphasis supplied)
10. Budget stated that they relied upon oral representations of city and airport officials that the area would be designated an enterprise zone. These facts are supported only by Budget's testimony. At hearing, Budget also stated that location of the property and the absence of property taxes (this is IRB-financed project) were of at least equal importance in choosing the site. The Board notes that Budgets reliance upon oral representations is risky at best.
11. The Board is of the opinion that Budget's actions speak louder than their words. Budget effectively locked-out competitors from this site as early as 1979. A substantial investment had already been made prior to designation. We believe it unlikely that Budget would have abandoned their investment even if the designation failed to materialize. As such, we are compelled to find that a refund in this case fails to satisfy the public purpose enunciated in K.S.A. 12-17,108. The refund simply represents a windfall if the statues is interpreted in Budget's favor.
12. One file rule of construction should be considered. K.S.A. 79-3641 effectively grants a deferred exemption of personal property from sales tax. Tax exemptions are to be construed narrowly, in favor of taxation.
Director of Taxation, Dept. of Revenue v. Kansas Krude Oil Reclaiming Co.
, 236 Kan. 450, 691 P.2d 1303 (1984).
13. The Board concludes that Budget's request for refund should be denied and the Director's order sustained in its entirety.
IT IS, THEREFORE, BY THE BOARD OF TAX APPEALS OF THE STATE OF KANSAS, CONSIDERED AND ORDERED that for the reasons more fully set forth herein, the above described application must be, and is hereby, denied.
If any party to this appeal feels aggrieved by this decision, they may file a written request for rehearing with this Board. The written request for rehearing shall set forth specifically and in adequate detail the particular and specific respects in which it is alleged that the Board's order is unlawful, unreasonable, capricious, improper or unfair. A copy of the request, together with all documents submitted therewith, shall be mailed to the opposing party at the same time the request is mailed to the Board. Failure to notify the opposing party shall render any subsequent order voidable. The written request must be received by the Board within thirty (30) days of the certification date of this order. If, at the end of thirty days the Board has not received a written request for rehearing, this order will become a final order from which no further appeal is available.
IT IS SO ORDERED
KEITH FARRAR, CHAIRMAN
ROBERT C. HENRY, MEMBER
FRED L. WEAVER, MEMBER
DAVID C. CUNNINGHAM, SECRETARY VICTOR ELLIOTT, MEMBER
JAMES P. DAVIDSON, ATTORNEY CONRAD MILLER, JR., MEMBER
OFFICE OF THE BOARD OF TAX APPEALS OF THE STATE OF KANSAS
I., David C. Cunningham, Secretary of the Board of Tax Appeals of the State of Kansas, do hereby certify that a true and correct copy of Order No. 3180-87-DT made by said Board, as the same appears and is a matter of record in my office.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the official seal of the Board of Tax Appeals at Topeka, Kansas, this 1st day of April, 1988.
David C. Cunningham, Secretary
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