State Tax Commission of Missouri
STE. GENEVIEVE HARDWARE, INC,)
)
Complainant,)
)
v.)Appeal Number 10-84500
)
LINDA WAGNER, ASSESSOR,)
STE. GENEVIEVE COUNTY, MISSOURI,)
)
Respondent.)
DECISION AND ORDER
HOLDING
Decision of the Ste. Genevieve County Board of Equalization affirming the assessment made by the Assessor is SUSTAINED.
Complainant appeared by Counsel, Lance R. Drury.Respondent appeared by counsel, Terry Rottler.Case heard and decided by Hearing Officer Maureen Monaghan.
ISSUE
The Commission takes this appeal to determine whether certain items of Complainant’s property are non-taxable as inventory.
SUMMARY
Complainant filed an appeal with the State Tax Commission asserting that a portion of their personal property was exempt as inventory.
The Assessor determined an assessed value of $14,011.The Complainant appealed to the Board of Equalization.The Board of Equalization determined an assessed value of $14,011, as personal property. The Complainant appealed to the State Tax Commission.A hearing was conducted on July 6, 2011, at the Ste. Genevieve County Courthouse, Ste. Genevieve, Missouri.
The Hearing Officer, having considered all of the competent evidence upon the whole record and arguments and discussion presented in Briefs and Response, enters the following Decision and Order.
Complainant’s Evidence
Complainant filed the following exhibits:
|
EXHIBIT |
DESCRIPTION |
|
A |
Gas Trash Pump sign |
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B |
Super Vee Sewer Cleaner sign |
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C |
Gas Jack Hammer sign |
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D |
Contract for Sale or Rental |
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E |
Sign “All Rental Equipment is Available for Sale After Rent is Paid” |
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F |
Sign “All Rental Equipment is Available for Sale After Rent is Paid” |
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G |
Complainant’s Merchandise List |
|
H |
Contract for Concrete Saw |
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I |
Contract for Carpet Cleaner |
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J |
Decision Erb Equipment v. Holman, STC 07-34108 |
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K |
Notice of Assessment |
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L |
|
|
M |
Answers to Interrogatories |
|
N |
Answer and Motion for Summary Judgment |
|
O |
Personal Property Declaration |
The Written Direct Testimony of Alan Koenig was submitted.
Exhibits were received into evidence.
Alan Koenig tendered for cross-examination.
Respondent’s Evidence
Respondent filed the following exhibits.
|
EXHIBIT |
DESCRIPTION |
|
1 |
Assessment Appeal |
|
2 |
Complaint for Review of Assessment |
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3 |
Personal Property List |
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4 |
Contract Forms |
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5 |
Letter dated 7/19/2010 to BOE |
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6 |
Answers to Interrogatories |
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7 |
Answers to Interrogatories |
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8 |
Minutes of BOE |
The Written Direct Testimony of Linda Wagner was submitted.
Exhibits were received into evidence.
Linda Wagner tendered for cross-examination.
FINDINGS OF FACT
1.Jurisdiction over this appeal is proper.Complainant timely appealed to the State Tax Commission from the decision of the Ste. Genevieve County Board of Equalization.
2.Complainant’s property, for tax purposes, is located at 601 Ste. Genevieve Drive, Ste. Genevieve, and Missouri.It is identified by Assessor’s Account Number 4720.
3.Complainant’s business is the leasing and selling of machinery and equipment.
4.Complainant possessed personal property that is not leased or available for sale.The property includes computers, shelving, tools, equipment, vehicles and trailers.
5.On January 1, 2010, Complainant possessed personal property that was undergoing maintenance and was not available for sale or rent.
6.On January 1, 2010, Complainant possessed personal property that was for sale or rent.
7.Complainant does not contest the value of the property.
8.Complainant posts signs listing the sale and rental price of property.
9.Complainant posts signs that property is “for sale after rent is paid.”
10.The rental agreement contains the following language “Rented and/or sold to.” The rental agreement does not provide for the Complainant being allowed to substitute property if the property being rented is sold.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.[1]
Presumptions In Appeals
There is a presumption of validity, good faith and correctness of assessment by the CountyBoardof Equalization.[2]The presumption in favor of the Board is not evidence.A presumption simply accepts something as true without any substantial proof to the contrary.
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.[3]The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances.
Complainant’s Burden of Proof
The taxpayer in a Commission appeal bears the burden of proof.The taxpayer is the moving party seeking affirmative relief.Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”[4]
Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[5]Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.[6]
Tax Exemptions
Tax exemptions are not favored in law, and claims therefore must be strictly but reasonable construed against the party claiming exemption.
Inventory Exempt from Taxation
The Missouri Constitution (Article X, Section 6) exempts from ad valorem property tax a merchant’s goods, wares and merchandise held for sale; distinguishing between merchandise held for sale and rental or leased can be difficult.
In Beagle’s Rental Center v. Quick[7], the State Tax Commission decided that an exemption should not be allowed for rental property which might be sold sometime in the future as it is not immediately available for sale to the general public.The term “inventory” denotes availability for sale in the ordinary course of business.” [8] Property should not be exempt solely because the owner expresses a willingness to sell it.Property cannot be held for resale if the right to possession is lost through rental.Property, which is both rented and held for sale, should be exempt from taxation only if the following criteria are met:
1. The owner posts conspicuous signs on the premises indicating that the property is for sale, and the purchase price of any particular piece of equipment is available;
2. A list of reasonable purchase prices is available at all time;
3. Rental contracts and agreements contain language that the rental property may be purchased.
Complainant complied with the ruling in Beagle’s in that he posted conspicuous signs on the premises indicating that the property was for sale and provided the purchase price of all the property.Complainant failed to comply with Beagle’s by not stating in their rental agreement that the property may be purchased.
Dean Machinery Company v. Quick[9], Dean Machinery would rent property as part of their marketing strategy for sales.While the property was being rented to the purchaser, all income generated by the rental was designated by Dean Machinery as income from a sale.Further, at all times when the property was rented by the ultimate purchaser, it was held out for immediate sale to any other interested party.In that case, the State Tax Commission held that rental property which is subsequently sold to the renter does not lose its characteristic as inventory.
In this case, Complainant does not designate the rental income as income from a sale.Complainant requires all rent be paid before the property may be purchased.Complainant does not hold the property out for immediate sale when the property is being rented.
In Midwest Aerials & Equipment, Inc v. King[10], Midwest Aerials maintained a sign on its premise which stated that all of the equipment was for sale.However Midwest Aerials, due to the terms of the lease, could not sell property that was leased to another.The Commission ruled that the owner cannot hold property for sale in the ordinary course of business when possession has been lost due to the item being leased.Midwest Aerials’ property was not immediately available for sale and therefore was not inventory.
In Erb Equipment v. Holman,[11] Erb Equipment stated in their rental agreement that the lessee may purchase the property and apply the rental payments to the purchase price.The agreement also stated that the equipment was available for sale and the lessee had the first right of refusal.Erb Equipment further presented evidence of their substituting property when property was purchased while it was out on lease.The company would notify the lessee that the property was sold.The lessee could exercise their right to first refusal.If the lessee chose not to purchase the property, the company provided the lessee with another piece of equipment.
In this case, Complainant cannot sell the property that is leased to another.There is nothing in the lease that allows the Complainant to sell the property when the property is leased to another.The Complainant will not sell the property if rent is owed on the agreement.
Conclusion
The Complainant failed to present persuasive and substantial evidence that a portion of its personal property was exempt from ad valorem taxes as inventory.
ORDER
The assessed valuation for the subject property as determined by the Board of Equalization for Ste. Genevieve County for the subject tax day is AFFIRMED.
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service.The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the appeal is based will result in summary denial. [12]
The Collector of Ste. Genevieve County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED November 1, 2011.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
Maureen Monaghan
Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid this 1st day of November, 2011, to:Lance Drury, 234 Market Street, Ste. Genevieve, MO 63670, Attorney for Complainant; Terry Rottler, 296 Market Street, P.O. Box 506, Ste. Genevieve, MO 63670,Attorney for Respondent; Linda Wagner, Assessor, 55 S. Third, P.O. Box 26, Ste. Genevieve, MO 63670; Kay Basler, Clerk, 55 S. Third, Ste. Genevieve, MO 63670; Phyllis Vessell, Collector, 55 S. Third, Ste. Genevieve, MO 63670.
______________________________
Barbara Heller
Legal Coordinator
[2] Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).
[3] St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
[4] See, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).