UIdaho Law Digital Commons @ UIdaho Law Idaho Supreme Court Records & Briefs, All Idaho Supreme Court Records & Briefs 10-11-2016 Chandler's-Boise v. Idaho State Tax Com'n Appellant's Brief Dckt. 44211 Follow this and additional works at: https://digitalcommons.law.uidaho.edu/ idaho_supreme_court_record_briefs Recommended Citation "Chandler's-Boise v. Idaho State Tax Com'n Appellant's Brief Dckt. 44211" (2016). Idaho Supreme Court Records & Briefs, All. 6447. https://digitalcommons.law.uidaho.edu/idaho_supreme_court_record_briefs/6447 This Court Document is brought to you for free and open access by the Idaho Supreme Court Records & Briefs at Digital Commons @ UIdaho Law. It has been accepted for inclusion in Idaho Supreme Court Records & Briefs, All by an authorized administrator of Digital Commons @ UIdaho Law. For more information, please contact [email protected]. IN THE SUPREME COURT OF THE STATE OF IDAHO CHANDLER'S-BOISE, LLC, Supreme Court Docket No: 44211 Plaintiff-Appellant, Ada Cow.1.ty No.: CV-OC-15-17617 v. IDAHO STATE TAX COMMISSION, Defendant-Respondent. OPENING BRIEF OF PLAINTIFF/APPELLANT CHANDLER'S-BOISE, LLC Appeal from the District Court of the Fourth Judicial District of the State of Idaho In and For the County of Ada Honorable Melissa Moody Presiding Thomas E. Dvorak, ISB No. 5043 Erick M. Shaner Clint R. Bolinder, ISB No. 5667 David B. Young Melodie A. McQuade, ISB No. 9433 Deputy Attorneys General GIVENS PURSLEY LLP IDAHO ST ATE TAX COMMISSION 601 W. Bannock Street P.O. Box 36 P.O. Box 2720 Boise, ID 83722-0410 Boise, ID 83701 Attorneys for Defendant/Respondent Attorneys for Plaintiff/Appellant OCT 11 2016 L 1 A. Nature of the 1 B. Statement of Facts ................................................................................................... I C. Course of Proceedings Below ................................................................................. 2 II. ISSUES PRESENTED ON APPEAL. ................................................................................ 3 III. ARGUMENT ...................................................................................................................... 3 A. Standard of Review ................................................................................................. 3 B. The District Court erred in determining that the Gratuities are subject to the sales tax because the plain meaning of the applicable statutes illustrates that the Gratuities are not subject to the sales tax .................................. 4 1. Because the plain language of the term "sales price" does not include the cost of services, and because the Gratuities reflect services rendered as part of the sale, the Gratuities are not subject to sales tax .................................................................................................... 5 2. The Commission Rules impermissibly treat the Gratuities as goods sold by expanding the statutory definition of "sales price" in a way that conflicts with the statute and other provisions of the Commission Rules ....................................................................................... 8 3. The District Court erred in failing to find that Commission Rule 43.04(c) is arbitrary and umeasonable because it does not conform to Idaho Code Section 63-3613 and is not reasonably directed to the accomplishment of the principles of that law ..................................... .11 C. The District Court erred in determining that the 2011 amendment to Idaho Code Section 63-3613 did not clarify the meaning of the statute as it existed all along .................................................................................................... 13 1. The legislative history of the Amendment reflects intent to clarify the statute as a result of a discrepancy that arose from the Commission's Rules .................................................................................. 14 2. Idaho courts have applied the substance of a clarificatory statutory amendment to circumstances predating the amendment's effective date ............................................................................................................. 15 3. The District Court failed to consider the clarification argument and instead focused on the retro activity date, which is a separate issue ......... .23 IV. CONCLUSION ................................................................................................................. 25 TABLE AUTHORITIES LLC v. Idaho State Tax Comm 'n, 149 Idaho 570,237 P.3d 1196 (2010) ..................... 3, 4 JR. Simplot Co. v. Tax Comm 'n, 120 Idaho 849, 820 P.2d 1206 (1991) ......................... 11, 12, 13 Kennedy v. Schneider, 151 Idaho 440,259 P.3d 586 (2011) .......................................................... 4 Mason v. Donnelly Club, 135 Idaho 581, 21 P.3d 903 (2001) ..................................................... 11 PacifiCorp v. Idaho State Tax Comm 'n, 153 Idaho 759,291 P.3d 442 (2012) .............................. 4 Paterson v. State, 128 Idaho 494, 915 P .2d 724 (1996) ............................................................... 18 Pearl v. Board ofProfessional Discipline ofIdaho State Board ofMedicine, 13 7 Idaho 107, 44 P.3d 1162 (2002) .............................................................................................. 18, 19, 23 State v. Barnes, 133 Idaho 378,987 P.2d 290 (1999) ...................................................... 20, 21, 23 State v. Gillespie, 155 Idaho 714,316 P.3d 126 (Ct. App. 2013) ........................................... 22, 23 Stonecipher v. Stonecipher, 131 Idaho 735, 963 P .2d 1172 (1998) .......... 15, 16, 17, 19, 21, 22, 23 Statutes: 1995 Sess. Laws, Ch. 264, Sec. 1 ................................................................................................. 16 1999 Idaho Sess. Laws Ch. 359 (House Bill 55, effective July 1, 1999) ..................................... 20 2000 Sess. Laws, Ch. 322 (eff. July 1, 2000) ............................................................................... 19 2011 Idaho Sess. Laws 628 ........................................................................................................... 13 2012 Sess. Laws, Ch. 269, Sec. 2 (eff. July 1, 2012) .................................................................... 22 House Bill No. 213 ........................................................................................................... 10, 13, 23 Idaho Code § 15-1507A ................................................................................................................ 22 Idaho Code§ 18-1507(2)(k) ......................................................................................................... 22 Idaho Code§ 18-8004 ............................................................................................................. 20, 21 Idaho Code§ 5-245 ................................................................................................................. 16, 17 Idaho Code § 54-1806 ............................................................................................................. 18, 19 Idaho Code § 54-l 806A( 6) ........................................................................................................... 18 Idaho Code§ 63-3049 ..................................................................................................................... 3 Idaho Code§ 63-3609 ..................................................................................................................... 5 Idaho Code§ 63-3612 ..................................................................................................................... 7 Idaho Code§ 63-3612(2)(b) 3, 5, 7 Idaho Code§ 63-3613 ............................................... 3, 9, 10, 11, 12, 13, 15, 19, 20, 21, 23, 24, 25 § 12 § 5 § Idaho Code§ 63-3613(b)(4) ......................................................................... 3, 6, 8, 10, 21, 23 Idaho Code§ 63-3613(b)(6) ....................................................................... 3, 4, 6, 7, 10, 12, 21, 23 Idaho Code§ 63-3613(f) ............................................................................................................... 23 Idaho Code§ 63-3619 ........................................................................................................... 5, 7, 25 Idaho Code§ 63-3619(b)(4) ........................................................................................................... 9 Idaho Code§ 63-3619(b)(6) ........................................................................................................... 9 Idaho Code§ 67-7110 ................................................................................................................... 20 Rules and Regulations: Commission Rule 1 l.02 ................................................................................................................ 10 Commission Rule 11.02(c) ............................................................................................................. 9 Commission Rule 43.04 ............................................................................................ 8, 9, 10, 14, 20 Commission Rule 43.04(c) ............................................................................... 9, 10, 11, 12, 13, 15 Commission Rule 43.05 ........................................................................................................ 8, 9, 10 I.A.R. 35(f) ...................................................................................................................................