David A. DeJarnett
Assistant Attorney General Michael E. Caryl
Attorney General's Office Bowles Rice McDavid Graff & Love, PLLC
Charleston, West Virginia Martinsburg, West Virginia
Attorney for Appellant Attorneys for Appellee
JUDGE ROBERT B. STONE,
sitting by special assignment, delivered the Opinion of the
JUSTICE SCOTT did not participate in the decision of the Court.
Pursuant to the provisions of West Virginia Code § 11-10-14(l)(1) (1999), a
claim seeking a refund of sales taxes is subject to a three-year statute of limitations when the
vendor to whom the sales tax was paid filed the sales tax return relative to the purchases at
issue. When, however, the vendor fails to file the requisite sales tax return, the applicable
limitations period is two years from the date the purchaser paid the sales taxes.
Appellant Joseph M. Palmer, State Tax Commissioner of the State of West
Virginia (Tax Commissioner)See footnote 1
appeals from the December 16, 1998, order of the Circuit
Court of Berkeley County, finding that Appellee John Houyoux (Taxpayer) had timely
filed a claim for a refund of sales taxes.See footnote 2
The Tax Commissioner asserts that the circuit court
erred in concluding that the applicable statute of limitations for claiming a refund of sales
taxes pursuant to West Virginia Code § 11-10-14(l)(1) (1999)See footnote 3
is three years from the date
the return is due to be filed by the vendor. After fulling examining this issue of statutory
interpretation, we conclude that the circuit court did not err in making its ruling, and
accordingly, we affirm.
Upon its review of the matter, the circuit court determined that the applicable
limitations period is a three-year period when the vendor has filed the required sales tax
return, and alternatively, a two-year period when the vendor fails to file the required sales tax
return. Since the vendor did file the required sales tax returns for the purchases Taxpayer
made from June 1991 to April 1992,See footnote 9
the circuit court ruled that Taxpayer's claim for refund
was timely as the request fell within the applicable three-year limitations period. With regard
to purchases Taxpayer made between April 5, 1991, to May 15, 1991, the lower court
determined that those claims were outside the three-year limitations period and were thus,
untimely filed. Appellant Tax Commissioner seeks a reversal of the circuit court's ruling,
arguing that a two-year statute of limitations applies under the facts of this case.
To support its position, Tax Commissioner looks almost exclusively to the statutory language which states, if no return was filed by the taxpayer and provides for a corresponding two-year limitations period in such instances. Since Taxpayer did not file a tax return relative to the sales taxes at issue, Tax Commissioner contends that the third statutory use of the term taxpayer must refer to the taxpayer seeking the refund. By construing the phrase if no return is filed in this fashion, Tax Commissioner suggests that you eliminate any need to examine the statutory language which precedes the third usage of the term taxpayer. Tax Commissioner argues that the circuit court's employment of alternate definitions for the term taxpayer renders the provision internally inconsistent and results in a limitations period that varies depending on the actions of the vendor. Tax Commissioner advocates interpreting the term taxpayer in West Virginia Code § 11-10- 14(l)(1) as uniformly referring to the individual or corporate entity seeking the refund. Under this approach, which permits consistency in application and eliminates reference to the conduct of third parties, economic taxpayers,See footnote 11 11 such as Mr. Houyoux, would always be subject to a two-year statute of limitations since they are never responsible for filing sales tax returns.See footnote 12 12
As further support for its position, Tax Commissioner cites High Power Energy v. Paige, No. 92-AA-24 (1993), a Kanawha County Circuit Court decision in which the court determined that the applicable limitations period for refund of consumer sales and service tax is two years from the date the statute began to run.See footnote 13 13 Since this Court did not grant the petition for appeal filed in that case, Tax Commissioner argues that High Power is persuasive authority on this issue and we should accordingly defer to the Tax Department's decision to employ a two-year limitations period following the High Power ruling.See footnote 14 14 See Syl. Pt. 7, Lincoln County Bd. of Educ. v. Adkins, 188 W.Va. 430, 424 S.E.2d 775 (1992) (stating that '[i]nterpretations of statutes by bodies charged with their administration are given great weight unless clearly erroneous') (quoting Syl. Pt. 4, Security Nat'l Bank & Trust Co. v. First W.Va. Bancorp, Inc., 166 W.Va. 775, 277 S.E.2d 613 (1981)).
Maintaining that the circuit court reached the correct decision, Taxpayer argues that the term taxpayer carries dual meanings under the statute.See footnote 15 15 The term refers to either the purchaser or vendor, depending on the term's usage in reference to the terms which accompany it in each of the three places that taxpayer is used in West Virginia Code § 11- 10-14(l)(1). See Banner Printing Co. v. Bykota Corp., 182 W.Va. 488, 491, 388 S.E.2d 844, 847 (1989) (discussing doctrine of noscitur a sociis, which requires that a term's meaning be ascertained in reference to the meaning of words or phrases with which the questioned language is associated). Taxpayer agrees with the Tax Commissioner that the first two statutory references are indisputably to the taxpayer who is seeking the refund. When you examine the words accompanying the term taxpayer in its third usage, however, Taxpayer argues it is clear that the term refers, in this instance, to the vendor taxpayer who has the responsibility for filing the subject sales tax return.See footnote 16 16 See W. Va. Code § 11-10-4(f) (1999). Only in the third instance is the term taxpayer used in reference to the filing of a return.
Since the vendor is the party obligated to file a sales tax return, Taxpayer argues that it stands
to reason that the third usage of taxpayer must connote the vendor and not the taxpayer
seeking the refund.
Conceding that his interpretation renders the limitations period malleable based
on facts outside the knowledge or control of the individual taxpayer, Taxpayer nonetheless
insists that his interpretation is preferential to the one advanced by Tax Commissioner.See footnote 17
Taxpayer posits that to view the statute as Tax Commissioner suggests would require a
wholesale disregard of portions of West Virginia Code § 11-10-14(l)(1). This approach,
according to Taxpayer, is in conflict with this Court's stated position of interpret[ing]
statutes to give practical effect to all their clauses, if possible. Ye Olde Apothecary v.
McClellan, 163 W.Va. 19, 22, 253 S.E.2d 545, 547 (1979); accord Belt v. Cole, 172 W.Va.
383, 385, 305 S.E.2d 340, 342 (1983) (stating [o]ur rules of statutory construction require
us to give meaning to all provisions in a statutory scheme, if at all possible). We stated this
same proposition more forcefully in Bullman v. D & R Lumber Co., 195 W.Va. 129, 464
S.E.2d 771 (1995), in recognizing that courts are not at liberty to construe any statute so as
to deny effect to any part of its language and [i]ndeed, it is a cardinal rule of statutory
construction that significance and effect shall, if possible, be accorded to every word. Id.
at 133, 464 S.E.2d at 775. By adopting his approach of viewing the term taxpayer as a
term that takes its meaning from those words around it, Taxpayer argues that meaning is
accorded to all parts of the statute, rather than just a portion of West Virginia Code § 11-10-
14(l)(1), and the statutory emasculation required by the Tax Commissioner's approach is
We agree with Taxpayer that Tax Commissioner's interpretation renders much
of the statutory language meaningless, as it applies to sales tax refunds.See footnote 18
In fact, Tax
Commissioner's suggestion that the third reference is necessarily to the economic taxpayer,See footnote 19
based on the fact that the economic taxpayer will never have filed a sales tax return, clearly
begs the question of what is meant by the term taxpayer. One can just as easily conclude,
as does Taxpayer, that since the vendor is the entity responsible for filing the sales tax return,
the reference to a return not having been filed is instead to the vendor as the statutory
taxpayer and not to the economic taxpayer. On balance, this conclusion and the position
advocated by Taxpayer appears more logical. Taxpayer's interpretation permits each of the
three statutory uses of the term taxpayer to be applied based on the facts of a given refund
claim scenario. As a general rule, the Legislature created a limitations period that is
determined in reference to the due date of the return in respect of which the tax was
imposed. W.Va. Code § 11-10-14(l)(1). That statutory period of limitations is three years.
As an alternative to using the due date of the return, and in clear anticipation of a filed return
but delinquent payment of the tax due, the Legislature provided for a two-year limitations
period from the date the tax was paid. Id. With its use of the phrase whichever of such
periods expires the later, in reference to the due date of the sales tax return compared to the
date the tax was paid, the Legislature clearly expressed a preference for a three-year period
of repose provided the delineated statutory conditions are met. When, however, the point of
reference that corresponds to the preferred three-year limitations period--the due date of the
return--is unavailable because the vendor has failed to file a return, the Legislature
determined that a two-year limitations period would control.
Principles of logic simply prevent this Court from concluding that the
Legislature would have initially provided for a longer limitations period (i.e. three years from
the return's due date) and at the same time, created a statutory mechanism for reducing the
same limitations period in all instances, as Tax Commissioner advocates, to a shorter two-
year period based on when the tax payment was made. Upon a full examination of the statute
and its possible applications, we conclude that, pursuant to the provisions of West Virginia
Code § 11-10-14(l)(1), a claim seeking a refund of sales taxes is subject to a three-year
statute of limitations when the vendor to whom the sales tax was paid filed the sales tax
return relative to the purchases at issue. When, however, the vendor fails to file the requisite
sales tax return, the applicable limitations period is two years from the date the purchaser
paid the sales taxes.See footnote 20
Based on the foregoing, the decision of the Circuit Court of Berkeley County is hereby affirmed.
confined to those instances where a sales tax refund is at issue. See infra note 16.
article. W.Va. Code § 11-15-2(v) (Supp. 1999). Although the purchaser is the original party liable for the tax, West Virginia Code § 11-15-4 (1995), the vendor becomes personally liable for the tax if it fails to collect the tax from the purchaser. See W. Va. Code § 11-15-4a (1995). Thus, Taxpayer argues that the statutes, when read in pari materia, clearly allow either the purchaser or the vendor to be considered the taxpayer since, dependent on the applicable factual scenario, either entity can be held liable for the sales tax.