Department of Taxation v. Daimler-Chrysler Services North America, LLC

OPINION By the Court, Rose, J.: In this case, we consider whether a person who provides primary financing of a retail sale may exercise the retailer’s right to sales tax refunds from the State under Nevada’s bad-debt statute, NRS 372.365(5). We conclude that the statute unambiguously precludes a finance company from obtaining tax refunds and therefore reverse. FACTS AND PROCEDURAL HISTORY Respondent, DaimlerChrysler Services North America, LLC, financed numerous retail motor vehicle purchases within the State of Nevada. Under these arrangements, the purchasers agreed to repay [543] all or part of the purchase price, including a pro rata portion of sales tax incurred, on an installment or credit basis. As part of these sales, the dealers assigned to DaimlerChrysler all of the dealers’ rights associated with the contracts without recourse. In exchange for the assignments, DaimlerChrysler paid the dealers the full amount financed under the contracts, including the full amount of sales tax. From this amount, the dealers remitted the sales tax to the Nevada Department of Taxation (Department). The contracts at issue eventually went into default and, after exhausting collection and repossession efforts, DaimlerChrysler determined that the unpaid balances were uncollectible. It ultimately claimed the unpaid amounts as bad-debt deductions on its federal income tax returns for the years 1997 through 1999. DaimlerChrysler applied to the Department under NRS 372.365(5) for a sales tax refund proportionate to the unpaid amounts. The Department denied the refund request, and an administrative hearing officer later denied a petition for redetermi-nation. DaimlerChrysler then appealed to the Nevada Tax Commission (Commission), which unanimously upheld the hearing officer’s decision. Subsequently, the district court granted Daimler-Chrysler’s petition for judicial review, concluding that Daimler-Chrysler was entitled to a sales tax refund. The Department appeals. DISCUSSION The Department argues on appeal that DaimlerChrysler does not qualify for bad-debt relief under NRS 372.365(5)1 We agree. “[Qjuestions of statutory construction, including the meaning and scope of a statute, are questions of law, which this court reviews de novo.”2 When the language of a statute is unambiguous, this court gives that language its ordinary meaning unless it is clear that this meaning was not intended.3 NRS 372.365(5) states: 5. If a retailer: (a) Is unable to collect all or part of the sales price of a sale, the amount of which was included in the gross receipts reported for a previous reporting period; and [544] (b) Has taken a deduction on his federal tax return pursuant to 26 U.S.C. § 166(a) for the amount which he is unable to collect, he is entitled to receive a credit for the amount of sales tax paid on account of that uncollected sales price. To summarize, this statute allows for relief if (1) the entity requesting the relief is a retailer, (2) the retailer is unable to collect all or part of the sales price, (3) the sale was included in gross receipts, and (4) the retailer has taken a deduction on its federal income tax equal to the uncollectible amount. NRS 372.055 defines retailers for the purposes of NRS Chapter 372 as “[e]very seller who makes any retail sale or sales of tangible personal property,” and “[e]very person making more than two retail sales of tangible personal property during any 12-month period.”4 NRS 372.040 defines “persons” as including, among others, individuals, firms or assignees. DaimlerChrysler argues that, as the retailers’ assignee, it stands in the retailers’ shoes for the purpose of sales tax refunds under NRS 372.365(5). Because this court has not had occasion to reach this question, DaimlerChrysler asks that we embrace Puget Sound National Bank v. Department of Revenue, in which the Washington Supreme Court addressed a statute similar to NRS 372.365(5).5 The statutory scheme at issue in Puget Sound entitled retail sellers to “a credit or refund for sales taxes previously paid on debts which are deductible as worthless for federal income tax purposes,”6 defined “sellers” as “person[s]” making retail sales,7 and defined a “person” as including an “assignee.”8 Within that framework, the court determined that third-party financing entities given rights under retail credit assignment agreements were eligible to claim bad-debt sales tax refunds.9 We decline to adopt the Washington approach in this instance. Most states confronted with a finance company’s claim that it is entitled to a bad-debt tax credit have denied the finance company relief for a variety of reasons.10 Like Washington, Ohio’s bad-debt [545] statutes are similar to Nevada’s in that they include an “assignee” in the definition of a “person.”11 The Ohio court, in Chrysler Financial Co., L.L.C. v. Wilkins, strictly interpreted its statute in denying a finance company relief because the statute was granting something similar to a tax exemption, which it concluded should be strictly interpreted.12 Other states that have considered a finance company’s claim to a bad-debt credit have also used strict construction of the statute to deny the requested relief.13 The most recent case on the subject from the Connecticut Supreme Court14 rejected the same argument made by the respondent in this case by relying, in part, on strict statutory construction. The Connecticut court first stated that: “The general rule of construction in taxation cases is that provisions granting a tax exemption are to be construed strictly against the party claiming the exemption. . . . Exemptions, no matter how meritorious, are of grace, and must be strictly construed. They embrace only what is strictly within their terms.”15 It went on to observe that the right to assign the retail tax credit was not expressly given by the state legislature to anyone and therefore it is a common-law right to assignment that Daimler-Chrysler claimed. And, between a general common-law right to assign and the statutory right to a tax credit, the Connecticut court concluded that the principle of strict statutory construction of tax statutes must prevail. The common thread among most of the decisions cited by the plaintiff is that they reach their conclusion based on common-law principles of assignment without regard for the general rules for construing tax provisions. Our approach, however, is in accord with the majority of jurisdictions that have considered the statutory origin of the right to tax relief. [546] We similarly conclude that, absent an express indication from the legislature that such a right could be assigned, the plaintiff cannot invoke the tax credit by virtue of its status as an assignee.16 We conclude that the plain meaning of NRS 372.365(5) compels the same result as that reached in the Ohio and Connecticut cases.17 In two other recent cases, the Arkansas Supreme Court determined that a finance company was not entitled to a tax credit because it was not the entity responsible for paying the tax.18 Instead, under the statute, the actual motor vehicle consumer was responsible for paying the taxes.19 Similarly, in Nevada, the retailer is responsible for remitting the sales tax to the state.20 Further, the bad-debt statute makes no reference to entities providing retail credit financing. Therefore, only the original retailers, and not the finance companies lending money for the purchase, should be allowed to claim the tax credit. Additionally, Nevada’s statutory scheme differs from that at issue in Puget Sound in that NRS Chapter 372 includes an anti-assignment statute. NRS 372.700 states: A judgment may not be rendered in favor of the plaintiff in any action brought against the Department to recover any amount paid when the action is brought by or in the name of an assignee of the person paying the amount or by any person other than the person who paid the amount. [547] (Emphasis added.) By its explicit terms, Nevada’s anti-assignment statute only affords relief to persons who paid the taxes in the first instance. Applying the plain meaning of this statute, as we have concluded we must, DaimlerChrysler’s refund claims fail because it never paid any sum by way of sales tax to the Department during the period at issue. Going further, the statute explicitly provides relief in the form of a “credit,” not a refund.21 The State explains that, under the previous statutory construct, a bad-debt credit actually operated as a refund. However, in 1997, the Legislature amended the statute and clarified that when a retailer is unable to collect previously paid sales taxes, that retailer is entitled to a “credit” against ongoing sales tax obligations.22 The use of the word “credit” in a similar statute was enough to persuade the Maine Supreme Court to conclude that only retailers with sales tax liability could avail themselves of the statute.23 In that case, the court determined Daimler-Chrysler to be ineligible for the bad-debt credit in part because there was no evidence it had any existing sales tax liability.24 This reasoning is persuasive. Under the basic claims provision governing this controversy, the retailer, not the lender, physically forwards tax payments to the Department and incurs future obligations as sales continue against which credit may be assessed. Third-party lenders such as DaimlerChrysler never develop such balances with the Department. Thus, the provision’s use of the credit device for relief structurally eliminates third-party lenders from its protection. DaimlerChrysler claims that it is entitled to the relief requested because the definition of a retailer includes any “person” engaged in retail sales, and the definition of a “person” includes an assignee.25 We disagree. First, it should be noted that these definitions are contained at the beginnings of NRS Chapter 372, the Sales and Use Tax Act, and apply generally to the entire Act; they are not specifically tailored to the bad-debt provisions contained later in the Act. Second, we have already concluded that the plain meaning of a tax statute will prevail over general principles of assignment unless there is an express provision permitting the assignment and granting an assignee the benefit of the tax credit. Nevada law contains no such express provision, and we have previously [548] held that a tax exemption should be strictly construed.26 Third, piling definition upon definition in order to reach the conclusion in this case that DaimlerChrysler was entitled to the bad-debt tax credit produces a distorted view of the facts at hand. The bad-debt tax credit is given to a retailer who included the sales in its gross receipts. DaimlerChrysler was not a retailer for these purposes. We should not permit the bootstrapping of several broad definitions to unreasonably distort the uncontested facts of a case or defeat a clear statutory directive. Even if we assume that the statute is ambiguous, the statute’s legislative history and a host of statutory construction principles combine to repel DaimlerChrysler’s claim. This court has held that an agency’s opinion on the application of an ambiguous statute should be given deference27 and undoubtedly the Department does not believe DaimlerChrysler is entitled to any bad-debt credit. Nevada law also provides that omissions of subject matters from statutory provisions are presumed to have been intentional.28 Here, the Legislature could have clearly provided that those financing a retailer’s sale were entitled to the bad-debt tax credit, but it did not do so. The legislative history of NRS 372.365(5) also indicates that the bad-debt credit should not be available to finance companies. In discussions about this statute before the Assembly Committee on Taxation, Assemblyman John Marvel asked Mary Lau, executive director of the Retailers Association of Nevada, if she had developed any figures on uncollected debts during any one year on the original fiscal note.29 Ms. Lau replied that they had adjusted the fiscal note and “[tjhey also did it only for the retailer that sold the goods; it was not for third party credit.”30 Mr. Marvel then stated that he understood that the first retailer was responsible for collecting the tax and remitting it to the Department and “ [subsequently the retailer would file for a refund if the debt [was] not collectible.”31 He was informed that that was the way the law was [549] written and passed the last session, “but now it would be a credit against the tax” and immediately due and payable.32 Because the statutory credit can only be assessed against a preexisting sales tax liability, the measure’s legislative history validates the Department’s contention that these credits are provided exclusively for the benefit of the retailer. As noted, having never incurred a sales tax liability, the third-party lender can develop no sales tax liability balance against which the credit would be applied. CONCLUSION NRS 372.365(5) does not afford DaimlerChrysIer bad-debt relief. Accordingly, we reverse the district court’s order granting DaimlerChrysler’s petition for judicial review. Becker, C.J., Gibbons, Douglas and Parraguirre, JJ., concur. Footnotes [1] NRS 372.365(5) will be repealed and replaced, effective January 1, 2006, by NRS 372.368. See 2003 Nev. Stat., ch. 400, §§ 46, 57, at 2366-67, 2370. [2] City of Reno v. Reno Gazette-Journal, 119 Nev. 55, 58, 63 P.3d 1147, 1148 (2003). [3] Harris Assocs. v. Clark County Sch. Dist., 119 Nev. 638, 641-42, 81 P.3d 532, 534 (2003). [4] NRS 372.055(1)(a), (c) (emphasis added). [5] 868 P.2d 127, 129 (Wash. 1994). [6] Wash. Rev. Code § 82.08.037. [7] Id. § 82.08.010(2). [8] Id. § 82.04.030. [9] See Puget Sound, 868 P.2d at 132. [10] See, e.g., DaimlerChrysler v. Weiss, No. 04-284, 2004 WL 2904685 (Ark. Dec. 16, 2004); Weiss v. American Honda, No. 04-617, 2004 WL 2904680 (Ark. Dec. 16, 2004); Chrysler Financial Co., L.L.C. v. Wilkins, 812 N.E.2d 948 (Ohio 2004); In re Appeal of Ford Motor Credit Co., 69 P.3d 612 [545] (Kan. 2003); DaimlerChrysler v. State Tax Assessor, 817 A.2d 862 (Me. 2003); Department of Revenue v. Bank of America, 752 So. 2d 637 (Fla. Dist. Ct. App. 2000); General Motors Acceptance v. Jackson, 542 S.E.2d 538 (Ga. Ct. App. 2000); Suntrust Bank, Nashville v. Johnson, 46 S.W.3d 216 (Tenn. Ct. App. 2000). [11] Chrysler Financial, 812 N.E.2d at 951; DaimlerChrysler, 817 A.2d at 866. [12] Chrysler Financial, 812 N.E.2d at 950. [13] Weiss, 2004 WL 2904680, at *2; DaimlerChrysler, 2004 WL 2904685, at *2; General Motors Acceptance, 542 S.E.2d at 541; Bank of America, 752 So. 2d at 644; In re Appeal of Ford Motor Credit Co., 69 P.3d at 620; Suntrust Bank, 46 S.W.3d at 224. [14] DaimlerChrysler Services v. CIR, 875 A.2d 28, 30-36 (Conn. 2005). [15] Id. at 32 (quoting Interlude, Inc. v. Skurat, 831 A.2d 235, 241-42 (Conn. 2003)). [16] Id. at 39 (citing, among other cases, Department of Revenue v. Bank of America, 752 So. 2d 637, 643 (Fla. Dist. Ct. App. 2000) (“[s]ince the issue in this case involves a tax refund, general principles of statutory construction, together with the principles governing proper construction of tax statutes, should prevail over general assignment principles”); General Elec. Capital v. New York State, 754 N.Y.S.2d 84, 86 (App. Div. 2003) (“It cannot be doubted that the statute, as written, refers to credits or refunds only to vendors inasmuch as only vendors are possessed of ‘taxable receipts.’ Accordingly, there was nothing irrational in promulgating [a statute] which limited such credits or refunds to vendors and excluded third-party assignees.” (citation omitted)); and In re Appeal of Ford Motor Credit Co., 69 P.3d 612, 621 (Kan. 2003) (“Although not specifically limited to the retailer paying the [sales] tax, the definition of retailer [in the relevant statute and regulation] is not broad enough to include the assignee of such retailer. We will not extend by implication the clear import of that definition to include an assignee of the retailer.”)). [17] Chrysler Financial, 812 N.E.2d at 950; DaimlerChrysIer Services, 875 A.2d at 40. [18] Weiss, 2004 WL 2904680, at *1; DaimlerChrysIer, 2004 WL 2904685, at *1. [19] Weiss, 2004 WL 2904680, at *3; DaimlerChiysler, 2004 WL 2904685, at *3. [20] NAC 372.050; Bing Constr. v. State, Dep’t of Taxation, 109 Nev. 275, 279, 849 P.2d 302, 304 (1993). [21] NRS 372.365(5). [22] 1997 Nev. Stat., ch. 304, § 1, at 1105. [23] DaimlerChrysler; 817 A.2d at 865. Contra Suntrust Bank, 46 S.W.3d at 220 n.1. [24] DaimlerChrysler; 817 A.2d at 865. [25] See NRS 372.040; NRS 372.055. [26] Sierra Pac. Power v. Department Taxation, 96 Nev. 295, 297, 607 P.2d 1147, 1148-49 (1980). [27] See Imperial Palace v. State, Dep’t Taxation, 108 Nev. 1060, 1067, 843 P.2d 813, 818 (1992). [28] See Galloway v. Truesdell, 83 Nev. 13, 26, 422 P.2d 237, 246 (1967) (“The maxim ‘EXPRESSIO UNIUS EST EXCLUSIO ALTERIUS’, the expression of one thing is the exclusion of another, has been repeatedly confirmed in this State.”). [29] Hearing on A.B. 535 Before the Assembly Taxation Comm., 69th Leg. (Nev., June 12, 1997). [30] Id. [31] Id. [32] Id.