VAL-PAK OF CENTRAL CONNECTICUT NORTH v. COMMISSIONER

235 Conn. 737 (1996) | Cited 0 times | Supreme Court of Connecticut | January 23, 1996

The principal issue in this tax appealis whether a corporation that designs and orders advertisingmaterials for cooperative direct mailing to privatehouseholds has engaged in transactions that are subject

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     to the use tax, General Statutes § 12-411(1).1 The,defendant, the commissioner of revenue services, as aresult of an audit for the years 1984 through 1989, initiallyconcluded that the plaintiff; Val-Pak of CentralConnecticut North, Inc., was liable for payment of thesales tax as a seller of tangible personal property.2 Aftera reassessment at the plaintiff's behest, the defendantrecharacterized the plaintiff's activities as those of anadvertising service provider that had made a taxableuse of advertising materials and therefore was liablefor payment of the use tax. Pursuant to General Statutes§ 12-422,3 the plaintiff appealed the reassessment to the

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     trial court, which rendered judgment in favor of theplaintiff. The defendant appealed from the judgment ofthe trial court to the Appellate Court, and we transferredthe appeal to this court pursuant to Practice Book§ 4023 and General Statutes § 51-199(c). We affirm thejudgment of the trial court.

The parties stipulated to the relevant facts. The plaintiffis a Connecticut corporation that was engaged in thebusiness of selling cooperative direct mail advertisingservices. It was a licensee or sublicensee of Val-PakDirect Marketing Systems, Inc. (Direct Marketing), aFlorida corporation.

In providing cooperative direct mail advertising servicesfor a group of otherwise unrelated business customers,the plaintiff arranged to have printed advertisements,coupons and the like sent in a single envelope to householdsin a specified geographic area. After a business customerhad agreed to use the plaintiffs services, the plaintiffplaced orders with Direct Marketing. In accordance withthe plaintiff's directions, advertising materials were thenprinted in Florida and mailed from Florida to the designatedhouseholds. Direct Marketing billed the plaintiff for theprinting and mailing services it performed. The plaintiffbilled its customers for its services.

On the basis of these stipulated facts, the trial courtfound that the plaintiff was engaged in providing servicesto its customers and in purchasing services fromDirect Marketing. Because the plaintiff at no time exercisedany ownership rights over the advertising materialsprepared and mailed by Direct Marketing, the trialcourt concluded that the plaintiff's transactions did not

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     constitute a taxable "use" of tangible property in thisstate.4 Accordingly, the trial court held that the transactionsin which the plaintiff had engaged were not taxableduring the audit years and rendered judgment forthe plaintiff.5 This appeal followed.

Our examination of the record on this appeal, andthe briefs and arguments of the parties, persuades usthat the judgment of the trial court should be affirmed.The central issue of the applicability of the use tax tothe plaintiff's activities during the audit years at issuewas properly resolved in the thoughtful and comprehensivememorandum of decision filed by the trial court.Val-Pak of Central Connecticut North, Inc. v. Commissionerof Revenue Services, 44 Conn. Sup. 133, 670 A.2d 343(1995). Because that memorandum of decision fullyaddresses the arguments raised in the present appeal,we adopt the trial court's well reasoned decision as astatement of the facts and the applicable law on thatissue. It would serve no useful purpose for us to repeatthe discussion therein contained. See Greater BridgeportTransit District v. State Board of Labor Relations,232 Conn. 57, 64, 653 A.2d 151 (1995); Advanced Business Systems,Inc. v. Crystal, 231 Conn. 378, 380-81,650 A.2d 540 (1994); Van Dyck Printing Co. v. DiNicola,231 Conn. 272, 273-74, 648 A.2d 877 (1994).

The judgment is affirmed.

1. General Statutes § 12-411 provides in relevant part: "The usetax. (1) Imposition and rate. An excise tax is hereby imposed onthe storage, acceptance consumption or any other use in thisstate of tangible personal property purchased from any retailerfor storage, acceptance, consumption or any other use in thisstate, the acceptance, or receipt of any services constituting asale in accordance with subdivisions (i) to (l) inclusive, ofsubsection (2) of section 12-407 or, the storage, acceptance,consumption or any other use in this state of tangible personalproperty which has been manufactured, fabricated assembled orprocessed from materials by a person either within or withoutthis state for storage, acceptance, consumption or any other useby such person in this state . . . . "(2) Liability for tax. Every person storing, accepting,consuming or otherwise using in this state services or tangiblepersonal property purchase from a retailer for storage,acceptance, consumption or any other use in this state and everyperson storing, accepting, consuming or otherwise using in thisstate tangible personal property which has been manufactured,fabricated, assembled or processed from materials purchased froma retailer by such person, either within or without this state,for storage, acceptance, consumption or any other use by suchperson in this state is liable for the tax. . . ."

2. The sales tax statute General Statutes § 12-407(2)(i)was amended in 1989 to include "advertising . . . services . . .not related to the development of media advertising . . ." PublicActs 1989, No. 89-251, § 1. The statute was further amended,two years later, to exclude "cooperative direct mailadvertising . . . ." Public Acts, Spec. Sess., June, 1991, No.91-3, § 103. The plaintiff began collecting sales tax as soonas the 1989 amendment became effective.

3. General Statutes § 12-422 provides in relevant part:"Appeal. Any taxpayer aggrieved because of any order decision,determination or disallowance of the commissioner of revenueservices under section 12-418, 12-421 or 12-425 may within onemonth after service upon the taxpayer of notice of such order,decision, determination or disallowance, take an appeal therefromto the superior court for the judicial district of Hartford-NewBritain, which shall be accompanied by a citation to thecommissioner of revenue services to appear before saidcourt. . . ."

4. General Statutes § 12-407 (5) defines "use" as "theexercise of any right or power over tangible personal propertyincident to the ownership of that property . . . "

5. Having found that the plaintiff was not liable for the usetax for which it had been assessed, the trial

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