REVENUE CABINET, COMMONWEALTH OF KENTUCKY v. ERIKA HUBBARD, Administrator of the Estate of Andy H. Hubbard, d/b/a Stone Age Dental Laboratory, and JOHN W. BIANCHI, D.M.D. AND ERIKA HUBBARD, Administrator of the Estate of Andy H. Hubbard, d/b/a Stone Age Dental Laboratory, and JOHN W. BIANCHI, D.M.D. ON REVIEW V. REVENUE CABINET, COMMONWEALTH OF KENTUCKY
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RENDERED: DECEMBER 21,2000
TO BE PUBLISHED
Bupremo Qhrt af Kmtusk
1999-SC-O
171 -DG
REVENUE CABINET,
COMMONWEALTH OF KENTUCKY
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1997-CA-09 14
HARLAN CIRCUIT COURT NO. 93-Xx-04
ERIKA HUBBARD, Administrator of the
Estate of Andy H. Hubbard, d/b/a Stone Age
Dental Laboratory, and JOHN W. BIANCHI,
D.M.D.
APFELLEES
AND
1999-SC-0992-DG
ERIKA HUBBARD, Administrator of the
Estate of Andy H. Hubbard, d/b/a Stone
Age Dental Laboratory, and JOHN W.
BIANCHI, D.M.D.
V.
CROSS-APPELLANTS
ON CROSS-REVIEW FROM COURT OF APPEALS
1997-CA-09 14
HARLAN CIRCUIT COURT NO. 93-xX-04
REVENUE CABINET,
COMMONWEALTH OF KENTUCKY
CROSS-APPELLEE
OPINION OF THE COURT BY JUSTICE JOHNSTONE
REVERSING AND REMANDING
Appellee, John W. Bianchi, D.M.D., purchased dental items, ed, dentures,
crowns, bridges, braces, etc., from Appellee, Stone Age Dental Laboratories. Bianchi
paid sales taxes on these items. Bianchi requested a tax refund from the Revenue
Cabinet (hereinafter “the Cabinet”) for taxes paid on these items on grounds that these
items are exempt from sales and use taxes pursuant to KRS 139.472. The Cabinet
denied the request. The matter was appealed to the Kentucky Board of Tax Appeals,
which affirmed the Cabinets denial of the refund. Bianchi and Stone Age appealed to
the Harlan Circuit Court, which reversed the Kentucky Board of Tax Appeals. The
Cabinet appealed to the Court of Appeals which affirmed in part and reversed in part.
We granted discretionary review. We reverse and remand.
There are no facts in dispute in this case. The issue presented, statutory
construction of KRS 139.472, is purely a matter of law and is subject to de novo review
by this Court. Bob Hook Chevrolet lsuzu v. Commonwealth. Transportation Cabinet,
Ky., 983 S.W.2d 488, 490-91 (1999).
We begin with the basic rule of statutory construction that tax exemptions are
narrowly construed, and the party seeking the exemption has the burden to show that
he, she, or it is entitled to the exemption. Delta Air Lines. Inc. v. Commonwealth.
Revenue Cabinet, Ky., 689 S.W.2d 14, 17 (1985); see also KRS 139.260, which
codifies this rule of construction.
Bianchi and Stone Age argue that KRS 139.472(2)
exempts the dental items in
question from Kentucky’s sales and use tax. KRS 139.472(2)
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provides:
“Prosthetic devices and physical aids” for the purpose of this section shall
mean and include artificial devices prescribed by a licensed physician, or
individually designed, constructed or altered solely for the use of a
particular crippled person so as to become a brace, support, supplement,
correction or substitute for the bodily structure including the extremities of
the individual; artificial limbs, artificial eyes, hearing aids prescribed by a
licensed physician, or individually designed, constructed or altered solely
for the use of a particular disabled person; crutches, walkers, hospital
beds, wheelchairs and wheelchair lifting devices for the use of invalids
and crippled persons; colostomy supplies, insulin and diabetic supplies,
such as hypodermic syringes and needles, and sugar (urine and blood)
testing materials purchased for use by diabetics.
Dentists are not licensed physicians within the meaning of the statute, thus we
focus on the second part of the statute in order to determine whether the dental items in
question qualify as “prosthetic devises . . . individually designed, constructed or altered
solely for the use of a particular crippled person so as to become a brace, support,
supplement, correction or substitute for the bodily structure . . . . ” The resolution of this
question turns on what is meant by the word “crippled.”
Webster’s New International Dictionarv (2d ed. 1960), defines “cripple” as:
(1) to deprive of the use of a limb and especially a leg;
(2) to deprive of capability for service or of strength, efficiency, or
wholeness.
Under this definition, someone is physically “crippled” when he or she is deprived
of the use of a limb. The statute embraces this definition of the term. The statute twice
refers to “crippled person(s).”
The second reference exempts “crutches, walkers,
hospital beds, wheelchairs and wheelchair lifting devices for the use of invalids and
crippled persons.” Clearly, this exemption is limited to persons who have difficulty
walking or are unable to walk.
The first reference in the statute exempts a prosthetic device “individually
designed, constructed or altered solely for the use of a particular crippled person so as
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to become a brace, support, supplement, correction or substitute for the bodily structure
including the extremities of the individual . . . .‘I (emphasis added). The Court of
Appeals held that this part of the statute exempted the dental items in question.
“Extremity” is defined as: “A limb of the body; an arm or a leg; esp., the end part
of it.” Webster‘s New International Dictionarv (2d ed. 1960). The specific inclusion of
the word “extremities” makes clear that limbs, and any part thereof, are included in the
term “bodily structure.” While we are unable to find a definition for the term “bodily
structure,” the use of the definite article “the” indicates that the statute refers to the
entire body and not to discrete parts or components that could be considered a “bodily
structure,” m, the mouth. In other words, a person who needs dentures, crowns,
bridges or braces for his or her teeth is not “crippled” within the meaning of the statute.
We find support for our construction of the statute in the Connecticut Supreme
Court’s construction of a similar statute in Dent-Craft Laboratories of Connecticut. Inc.
v. Sullivan. Tax Commissioner, 167 A.2d 714 (Conn. 1961).
The Dent-Craft Court was
presented with the same issue as in this case, i.e., whether “the gross receipts derived
by dental laboratories from sales of dentures to duly licensed dentists [are] exempt from
sales tax” under Connecticut’s applicable tax exemption statute. Id. at n. 1. The statute
in question exempts in pertinent part:
Sales of oxygen, blood or blood plasma when sold for
medical use; sales of artificial devices individuallv desianed,
constructed or altered solely for the use of a oarticular
crippled person so as to become a brace. support,
supplement. correction or substitute for the bodilv structure,.
including the extremities of the individual; sales of artificial
limbs, artificial eyes and other equipment worn as a
correction or substitute for any functioning portion of the
body, and artificial hearing aids when designed to be worn
on the person of the owner or user; sales of crutches and
wheel chairs for the use of invalids and crippled persons.
Id. at n.2 (emphasis added).
The emphasized part of the above statute is almost identical to the part of KRS
139.472(2) that the Court of Appeals held to be applicable to the dental items in the
case at bar. While the Dent-Craft Court did hold that the dental items were exempt
under the Connecticut statute, it did not hold that the items were exempt under the
portion of the Connecticut statute common to KRS 139.472(2). Rather, the Dent-Craft
Court held that the items were exempt under the part of the statute that exempted
“sales of artificial limbs, artificial eyes and other equipment worn as a correction or
substitute for any functioning portion of the body . . . .” Id. at 716. KRS 139.472(2)
has
a similar section which exempts “artificial limbs, artificial eyes, hearing aids prescribed
by a licensed physician, or individually designed, constructed or altered solely for the
use of a particular disabled person.” The important difference between the two
sections is that Connecticut’s version is inclusive, whereas Kentucky’s version is
exclusive. Thus, our holding necessarily differs from the Dent-Craft Court.
We now briefly address the cross-appeal. The Court of Appeals held that part of
the Appellees’ application for a tax refund was time barred by KRS 134.580.
Given our
holding that the dental items in question are not tax exempt and, thus, the Appellees
are not entitled to a tax refund, the issue is moot.
Finally, we grant the Appellees’ motion to file supplemental authority.
We hold that the Appellees have not met their burden of showing the exemption
applies to the dental items in question. Therefore, the decision of the Court of Appeals
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is hereby reversed and this case is remanded to the Harlan Circuit Court to enter a
judgment consistent with this opinion.
Cooper, Graves, Keller, Stumbo, and Wintersheimer, JJ., concur. Lambert, C.J.,
dissents by separate opinion.
COUNSEL FOR APPELLANT/CROSS-APPELLEE:
Lauren Anderson
Douglas M. Dowell
Revenue Cabinet
Division of Legal Services
P. 0. Box 423
Frankfort, KY 40602-0423
COUNSEL FOR APPELLEESICROSS-APPELLANTS:
H. Kent Hendrickson
Rice & Hendrickson
398 Woodland Hills
P. 0. Box 980
Harlan, KY 40831
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RENDERED: DECEMBER 21,200O
TO BE PUBLISHED
1999-SC-0171
-DG
REVENUE CABINET,
COMMONWEALTH OF KENTUCKY
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1997-CA-0914
HARLAN CIRCUIT COURT NO. 93-xX-04
ERIKA HUBBARD, Administrator of the
Estate of Andy H. Hubbard, d/b/a Stone Age
Dental Laboratory, and JOHN W. BIANCHI,
D.M.D.
APPELLEES
AND
1999-SC-0992-DG
ERIKA HUBBARD, Administrator of the
Estate of Andy H. Hubbard, d/b/a Stone
Age Dental Laboratory, and JOHN W.
BIANCHI. D.M.D.
V.
CROSS-APPELLANTS
ON CROSS-REVIEW FROM COURT OF APPEALS
1997-CA-09 14
HARLAN CIRCUIT COURT NO. 93-Xx-04
REVENUE CABINET,
COMMONWEALTH OF KENTUCKY
CROSS-APPELLEE
DISSENTING OPINION BY CHIEF JUSTICE LAMBERT
Respectfully, I dissent.
The majority opinion offers an excessively technical interpretation of the
statute that renders it at odds with the statute’s more commonsense meaning and
purpose. The statute is very broad and should not be given such a narrow construction.
To determine the meaning of “crippled,” the majority quotes a two-part
dictionary definition of the verb “to cripple.” Yet the majority then relies only upon the
first part of the definition and fails to even acknowledge the second part, which is as
follows: “[T]o deprive of capability for service, efficiency, or wholeness.” According to
this definition, one without teeth or with defective teeth would be crippled, as such a
person would be deprived of the ability to eat and digest food effectively and efficiently,
and might also be unable to speak coherently. This, if we are to rely on dictionary
definitions, the whole definition should be applied rather than just a portion of it.
Dictionary definitions aside, the tenor and purpose of the statute leaves
no doubt in my mind that it applies to dental prosthetics. The statute refers to items
individually designed for a particular person that “substitute for the bodily structure.”
There can be no doubt that false teeth, bridges, braces, and crowns fall into this
category. Moreover, there is no reason in logic to exclude such prosthetic devices. I
can think of no rational basis to allow the tax exemption for artificial limbs, artificial eyes,
hearing aids, and other items in the statute and deny the exemption for prosthetic
dental devices. While a distinction might be made for artificial limbs necessary for
ambulation, artificial eyes serve only a cosmetic purpose, and while hearing aids are
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undoubtedly important, I doubt whether they would be universally regarded as more
important than artificial dental devices.
It is not the role of this Court to analyze the wisdom of legislation that
creates tax exemptions, yet when the legislature has spoken, this Court should not
impose artificial limitations on the Act. Rather, we should give effect to it in a
reasonable and common sense manner.
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