Administrative Hearing Commission
State of Missouri
DARRELL R. & DIANA L. SMITH, )
vs. ) No. 99-2045 RV
DIRECTOR OF REVENUE, )
On June 30, 1999, Darrell R. and Diana L. Smith filed a petition appealing the Director of Revenue’s final decision assessing state sales tax, local sales tax, and a motor vehicle title penalty. The Smiths argue that they do not owe the sales tax because they intended to purchase the vehicle for the inventory of their dealership.
On November 4, 1999, this Commission convened a hearing. Darrell Smith presented his case. Senior Counsel James Hoagland represented the Director. The last written argument was due on February 23, 2000.
Findings of Fact
The Smiths have owned a licensed motor vehicle dealership known as Smith & Company since 1995 (Missouri dealership #D8367). The majority of Smith & Company’s business involves the sale of tractor-trailer rigs.
In order to maintain its dealer’s license, Smith & Company must sell six vehicles per year. Smith & Company sold six vehicles in 1997 and seven vehicles in 1998.
On August 29, 1998, the Smiths purchased a 1997 Chevrolet pickup, Vehicle Identification No. 2GCEC19R7V1132981, from Courtesy Chevrolet, a dealership located in Kansas City, Missouri. The purchase price of the vehicle was $18,750. The Smiths’ address on the date they purchased the vehicle was 799 East Market, Diamond, Missouri, 64840. When they purchased the vehicle, Darrell Smith signed an application for Missouri title and license, and Diana Smith signed on the assignment portion of the certificate of title.
The assignment portion of the certificate of title on the 1997 Chevrolet indicates an assignment of the vehicle from Courtesy Chevrolet to “Smith, Darrell R. &/or Diana L.” The certificate of title shows the signature of Sue Wallingford on behalf of Courtesy Chevrolet with the notation that she was an agent of the dealership. The signature of Diana L. Smith appears on the assignment as the purchaser. The assignment of title was not made to Smith & Company and did not indicate an assignment to an agent of Smith & Company.
The application for Missouri title and license signed by Darrell Smith states that the purchasers of the vehicle were “Smith, Darrell R. &/or Diana L.” Darrell Smith did not sign the application as an agent of Smith & Company. He did not write the word “agent” or anything else indicating that he was purchasing the vehicle on behalf of Smith & Co.
The application for Missouri title and license indicated that the Smiths purchased the vehicle subject to a first lien to Mercantile Bank. Courtesy Chevrolet forwarded the lien perfection copy of the application for Missouri title and license to Mercantile Bank. Mercantile Bank forwarded the lien perfection copy to the motor vehicle bureau, which received it on September 8, 1998.
The Smiths have not paid sales tax on the purchase of the 1997 Chevrolet. They have not provided to the motor vehicle bureau their copy of the application for Missouri title and license.
The Smiths have used the 1997 Chevrolet to obtain parts and to take business trips on behalf of Smith & Company.
On May 6, 1999, the Director assessed the Smiths $792.19 in state sales tax, $445.31 in local sales tax, and a $100 title penalty on the purchase of the 1997 Chevrolet.
Conclusions of Law
We have jurisdiction to hear the Smiths’ petition. Sections 621.050.1, RSMo 1994.1 The Smiths have the burden of proof on the petition. Section 621.050.2, RSMo 1994, and section 136.300.
The Smiths argue that they should not be liable for the tax or penalty because they intended to purchase the vehicle for the inventory of their dealership, Smith & Company. The Director argues that the Smiths purchased the vehicle in their personal names, not in the name of their dealership, and therefore owe tax under section 144.070.1, which provides:
At the time the owner of any . . . motor vehicle . . . which was acquired in a transaction subject to sales tax under the Missouri sales tax law makes application to the director of revenue for an official certificate of title and the registration of the automobile . . ., he shall present to the director of revenue evidence satisfactory to the director of revenue showing the purchase price . . . in the acquisition of the motor vehicle . . ., or that no sales tax was incurred in its acquisition, and if sales tax was incurred in its acquisition, the applicant shall pay or cause to be paid to the director of revenue the sales tax provided by the Missouri sales tax law[.]
Section 144.069 sets forth the applicable local tax:
All sales of motor vehicles . . . shall be deemed to be consummated at the address of the owner thereof, . . . and all applicable sales taxes levied by any political subdivision shall be collected on such sales by the state department of revenue on that basis.
Section 301.190.5 provides a penalty of $25 per thirty days to a maximum of $100 when “application for the certificate is not made within thirty days after the vehicle is acquired by the applicant[.]” The transfer of title between dealers is not a sale at retail and does not result in sales tax. Section 144.010(10).
In order to transfer ownership of a motor vehicle, strict compliance with the statutory requirements is necessary. Fluker v. Lynch, 938 S.W.2d 659, 661 (Mo. App., W.D. 1997). The ownership of a motor vehicle is transferred only by the transfer of a certificate of ownership in accordance with section 301.210. See Heineman v. Heineman, 768 S.W.2d 130, 139
(Mo. App., W.D. 1989). Section 301.210 provides:
1. In the event of a sale or transfer of ownership of a motor vehicle or trailer for which a certificate of ownership has been issued, the holder of such certificate shall endorse on the same an assignment thereof, with warranty of title in form printed thereon, and prescribed by the director of revenue, with a statement of all liens or encumbrances on such motor vehicle or trailer, and deliver the same to the buyer at the time of the delivery to him of such motor vehicle or trailer[.]
2. The buyer shall then present such certificate, assigned as aforesaid, to the director of revenue, at the time of making application for the registration of such motor vehicle or trailer, whereupon a new certificate of ownership shall be issued to the buyer[.]
* * *
4. It shall be unlawful for any person to buy or sell in this state any motor vehicle or trailer registered under the laws of this state, unless, at the time of the delivery thereof, there shall pass between the parties such certificates of ownership with an
assignment thereof, as provided in this section, and the sale of any motor vehicle or trailer registered under the law of this state, without the assignment of such certificate of ownership, shall be fraudulent and void.
The certificate of ownership on the 1997 Chevrolet was assigned to the Smiths in their individual capacity, not to their dealership, Smith & Company. The lien perfection copy of the title application indicates that the vehicle was sold to the Smiths, not to their dealership. Diana Smith signed the certificate of ownership, and Darrel Smith signed the title application. Pursuant to section 301.210, the ownership of the vehicle was transferred to the Smiths in their individual capacity, not to Smith & Company.
The Smiths did not attempt to remedy their situation by a rescission of the sale or otherwise within 60 days of the purchase. We do not decide whether the Smiths are entitled to a refund of the tax under section 144.071. That statute requires paying the tax to the Director, returning the vehicle and receiving the sale price back within 60 days, and filing a claim for refund with the Director. No decision of the Director denying such a refund claim is before us.
The law does not provide an exception as requested by the Smiths, nor does it provide any authority for us to make an exception. Neither the Director nor this Commission has any power to change the law. Lynn v. Director of Revenue, 689 S.W.2d 45, 49 (Mo. banc 1985). The law requires that the tax and penalty be imposed.
We conclude that the Smiths owe $792.19 in state sales tax, $445.31 in local sales tax, and a $100 title penalty.
SO ORDERED on March 16, 2000.
WILLARD C. REINE