Brattleboro Tennis Club, Inc. v. VT Dept. of Taxes

Brattleboro Tennis Club, Inc. v. VT Dept. of Taxes (96-116); 166 Vt. 604; 
691 A.2d 1062

[Filed 21-Feb-1997]


                               ENTRY ORDER

                      SUPREME COURT DOCKET NO. 96-116

                             JANUARY TERM, 1997


Brattleboro Tennis Club, Inc.        }     APPEALED FROM:
                                     }
                                     }
     v.                              }     Windham Superior Court
                                     }
Vermont Department of Taxes          }
                                     }     DOCKET NO. 379-10-95Wmcv


       In the above-entitled cause, the Clerk will enter:

       Brattleboro Tennis Club (BTC) appeals from a superior court decision
  upholding the determination of the Commissioner of Taxes that BTC is liable
  for sales and use taxes on the annual membership dues and guest fees it
  receives from its members.  The court agreed with the Commissioner that the
  membership dues and guest fees are amusement charges under 32 V.S.A. §
  9771(4) and that BTC is not exempt under 32 V.S.A. § 9743(5).  We affirm.

       The relevant facts are undisputed, so this case turns solely on the
  proper interpretation of the relevant tax statutes.  As the trial court
  recognized, in reviewing such questions we accord some deference to the
  Commissioner's interpretation of tax statutes.  "`[A]bsent compelling
  indication of error, the interpretation of a statute by the administrative
  body responsible for its execution will be sustained on appeal.'" 
  Burlington Elec. Dep't v. Vermont Dep't of Taxes, 154 Vt. 332, 337, 576 A.2d 450, 453 (1990) (quoting In re R. S. Audley, Inc., 151 Vt. 513, 517,
  562 A.2d 1046, 1049 (1989)).

       BTC's first claim is that the annual dues are not amusement charges
  subject to taxation under 32 V.S.A. § 9771(4).(FN1)  Amusement charges are
  defined by statute as "the admission charge (including any subsidiary,
  service or cover charge) to, and any charge for the use of any place of
  recreation or amusement including athletic events and facilities."  32
  V.S.A. § 9701(10) (emphasis added).  According to BTC, its dues should not
  be considered admission charges because it is the purchase of a membership
  that entitles a person to use the facilities.  BTC further argues that,
  because the amount of annual dues is based upon costs to maintain the
  facility rather than the amount of facility usage, the dues are not
  admission charges.

       Despite BTC's claim that membership, not the payment of annual dues,
  entitles a person to use the facilities, its bylaws state that if annual
  dues are not paid by certain dates, playing rights may be suspended and
  sold to another.  The bylaws further state that the purpose of the BTC is
  to provide an opportunity to play tennis.  A BTC member who has paid the
  annual dues may also transfer playing rights for the season to a non
  member.   While it is true that non-dues-paying members retain their right
  to vote, members are not allowed to use the facilities unless their dues
  are paid in a timely fashion.  Based on these facts, there was no error in
  the Commissioner's conclusion that the annual dues are charges for the use
  of the facility and thus taxable amusement charges.

 


       BTC also argues that 32 V.S.A. § 9743(5) exempts it from tax on its
  annual dues and guest fees.  That statute reads:

     (5) Organizations which qualify for exempt status under the
     provisions of section 501(c)(4)-(13) . . . shall be exempt from the
     sales and use tax upon amusement charges as defined in section
     9701, in the case of not more than four special events (not
     including usual or continuing activities of the organization) held in
     any calendar year, and which, in the aggregate, are not held on
     more than four days in such year, and which are open to the
     general public.

       BTC's tortured reading of the statute, that a qualified organization
  is exempt from the tax for four special events per year and for its usual
  or continuing activities, is simply wrong. While the language is not a
  model of clarity, the reasonable interpretation is that these entities have
  an exemption for up to four special events not lasting longer than a total
  of four days, as long as those special events are not usual or continuing
  activities of the organization.  Nothing in the statute indicates that the
  Legislature meant to create a blanket exclusion from the sales and use tax
  for these entities.  See Burlington Elec. Dep't , 154 Vt. at 335, 576 A.2d 
  at 452 (presumption that Legislature intended statute's language to carry
  plain, ordinary meaning); see also In re Middlebury College Sales & Use
  Tax, 137 Vt. 28, 31, 400 A.2d 965, 967 (1979) (exemptions to tax code are
  strictly construed).  Although BTC argues otherwise, the legislative
  history of this provision also contradicts BTC's proposed interpretation. 
  Subdivision (5) was originally added in 1983.  1983, No. 62, § 1.  The next
  year it was amended to provide for the four-day/four-event exception
  precisely because the Legislature realized it had created a blanket
  exemption and wanted to correct that.  1983, No. 206 (Adj. Sess.), § 1;
  Hearings on H. 732 before Senate Finance Committee, March 29, 1984, at
  48-54.  The Commissioner correctly construed the statute to include BTC.

       Affirmed.


     BY THE COURT:


     _______________________________________
     Ernest W. Gibson III, Associate Justice

     _______________________________________
     John A. Dooley, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice

     _______________________________________
     Denise R. Johnson, Associate Justice

     _______________________________________
     Frederic W. Allen, Chief Justice (Ret.)
     Specially Assigned




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                                  Footnotes


FN1.  BTC concedes that the guest fees are amusement charges because
  they are assessed based on court usage and thus subject to sales and use
  tax unless exempt under 32 V.S.A. § 9743(5).