Hillside Country Club Partnership, Inc. v. Commissioner of Revenue (April 4, 2011)

COMMONWEALTH OF MASSACHUSETTS

		      APPELLATE TAX BOARD


HILLSIDE COUNTRY CLUB       v.	 COMMISSIONER OF REVENUE
PARTNERSHIP, INC. 
 							 		   
Docket No. C304547				 Promulgated:
							 April 4, 2011
 
	This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the appellee, Commissioner of Revenue ("Commissioner"), to abate sales taxes assessed against the appellant, Hillside Country Club Partnership, Inc. ("Hillside" or "appellant") for the monthly tax periods ending December, 2004 through and including December, 2006 ("tax periods at issue").
	Chairman Hammond heard this appeal and was joined by Commissioners Scharaffa, Egan, Rose, and Mulhern in a decision for the appellee.  
These findings of fact and report are made pursuant to requests by the appellant and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

	Albert H. Thornton, Jr., Esq. for the appellant.

David T. Mazzuchelli, Esq. and Timothy R. Stille, Esq. for the appellee.  

FINDINGS OF FACT AND REPORT
On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board ("Board") made the following findings of fact.
At all times relevant to this appeal, Hillside was a Massachusetts entity in the business of operating a country club.  The appellant timely filed Massachusetts sales/use tax returns for each of the tax periods at issue and paid in full the taxes due as reflected on those returns.  During calendar year 2007, the Massachusetts Department of Revenue ("DOR") audited Hillside for unpaid sales tax on meals from the monthly tax periods January, 2004 through February, 2007.  The DOR subsequently expanded its audit to include other sales and use taxes.  At the time of the audit, George Cardono, President of Hillside, had sold the business and was no longer involved with Hillside.  At the conclusion of the audit, the Commissioner determined that there was a deficiency for meals taxes for the months of December, 2006 and January, 2007, which the appellant does not contest.  The Commissioner determined that sales taxes were due on the rentals of golf carts by Hillside to its customers during the tax periods at issue.  
On November 11, 2008, the Commissioner assessed against the appellant $5,943.12 in sales taxes, which she claimed should have been collected on the rental of golf carts to Hillside's customers, plus interest and penalties.  The appellant filed its abatement application with the Commissioner on March 30, 2009.  By Notice of Abatement Determination dated June 2, 2009, the Commissioner notified the appellant that she had denied the appellant's abatement application.  On July 29, 2009, the appellant timely filed its Petition Under Formal Procedure with the Board.  On the basis of these facts, the Board found and ruled that it had jurisdiction over the instant appeal.
The appellant does not dispute that it did not collect and remit any sales taxes on the rentals of golf carts to Hillside customers during the periods at issue.  Instead, the appellant advances equity arguments, claiming that the duty to collect and remit sales tax on the rental of golf carts "has not been adequately publicized" to country club taxpayers, that the DOR is "responsible for educating taxpayers as to their tax obligations," that the DOR failed in its duty to educate as evidenced by the fact that other Massachusetts country club taxpayers known by Mr. Cardono "are also unaware that they are required to charge sales/use tax on golf cart rentals," and that Mr. Cardono was "ambushed" after his sale of the business by the liability for "a tax he had no knowledge existed, even after 20 years in business."  Mr. Cardono claims that, when he first became owner of the appellant, he went to the DOR office in Fall River "to be advised and instructed as to his tax reporting requirements" but at no time did the DOR inform him of a sales tax liability on golf cart rentals.  Finally, the appellant claims that, by accepting its returns as filed for an almost-20-year period, and by not assessing other country club taxpayers, the DOR has failed to enforce uniformly the sales tax on golf cart rentals.  
Regardless of whether the DOR adequately educated the appellant or other taxpayers on their tax obligations or whether other Massachusetts country club taxpayers collected and remitted sales taxes on golf cart rentals during the tax periods at issue, the Board, for the reasons explained in the following Opinion, found and ruled that the appellant was liable for the contested sales taxes as assessed based on the plain meaning of the statute.  The Board accordingly issued a decision for the appellee.

OPINION
The rental of a golf cart is subject to the sales tax under G.L. c. 64H, § 1, defining "sale" for purposes of the tax as "any transfer of title or possession or both" for a consideration. (emphasis added).  The appellant did not argue that golf cart rentals are not subject to the sales tax; instead, it contended that "DOR is responsible for educating taxpayers as to their tax obligations."  The appellant points out that the Commissioner made no specific statement to the appellant regarding the appellant's obligation to collect and remit sales taxes on the rental of golf carts, even after the DOR processed the appellant's sales/use tax returns for nearly twenty years.  In essence, the appellant is contending that the Commissioner's silence should be interpreted as acquiescence with the appellant's noncompliance with its tax obligations.  
There is no precedent to support the appellant's assertion.  The duty to collect and remit sales tax on golf cart rentals falls within the explicit language of the tax statutes.  "Statutory authority (like an easement in land) is not subject to atrophy or abandonment merely from nonuse."  Polaroid Corp. v. Commissioner of Revenue, 393 Mass. 490, 496 (1984).  The Commissioner's past failure to assess a tax against the appellant thus does not forever bar future assessment where the item is subject to tax under the applicable statutory provision.  See, e.g., Bell Atlantic Mobile of Massachusetts Corporation, LTD. D/B/A Verizon Wireless v. Assessors of Boston, Newton, Springfield and Westborough, Mass. ATB Findings of Fact and Reports 2010-897 (ruling that, contrary to long-standing erroneous practice, corporate cell-phone providers were not entitled to corporate utility exemption).  
The appellant further contends that, since it was unaware of its tax obligation, an unfair burden has now been laid upon Mr. Cardono, because with his business closed, the tax obligation now falls upon him personally.  In Commissioner of Revenue v. Marr Scaffolding, 414 Mass. 489 (1993), the Supreme Judicial Court ruled that the Board lacks the authority to grant an abatement based on principles of equitable estoppel.  In its decision, the Court noted that, "[a]n administrative agency has no inherent or common law authority to do anything.  An administrative board may act only to the extent that it has express or implied statutory authority to do so."  Marr Scaffolding, 414 Mass. at 493.  Thus, the "board may act only to the extent it has express or implied statutory authority to do so" and may grant an abatement "only if 'the person making the appeal was entitled to an abatement.'"  Id. at 493-94 (quoting G.L. c. 62C, § 39 (c)).  In the instant appeal, the Board ruled that it has no express or implied statutory authority to grant an abatement of sales tax on golf cart rentals based on any unfairness or burden imposed on the appellant or on Mr. Cardono.  Instead, the Board must uphold the law as written.  The duty to collect and remit sales tax on golf cart rentals is imposed by statute, and the Board thus found and ruled that the Commissioner's assessment was proper.
The Board accordingly issued a decision for the appellee, upholding the assessment.


					 APPELLATE TAX BOARD			


By: __________________________undefinedundefinedundefinedundefinedundefinedundefined_______
     Thomas W. Hammond, Jr., Chairman
A true copy,

Attest: ________________________
	     Clerk of the Board

ATB 2011-192