[No. 36977-0-II. Division Two. May 5, 2009.]
Scott M. Edwards (Perkins Coie, LLP), for appellants.
Robert M. McKenna, Attorney General, and Heidi A. Irvin and Donald F. Cofer, Assistants, for respondent.
¶1 HOUGHTON, J. -- Richard and Annette Bowie, d/b/a Valpak of Western Washington--North, as franchisees of Valpak Direct Marketing Systems, Inc., create and distribute advertising coupon mailings to Washington residential addresses. The Department of Revenue (DOR), at their request, categorized this activity as "publishing" and taxed them under the business and occupations (B&O) tax rate applicable to persons engaged in the publishing business. The DOR later rescinded this decision. The Bowies and other Valpak Marketing franchisees (Taxpayers) FACTS ¶2 On October 14, 2002, the Taxpayers asked the DOR to confirm their status as publishers of periodicals under RCW 82.04.280, which imposes a B&O tax on persons engaged "in the business of . . . [p]rinting, and of publishing newspapers, periodicals, or magazines." Clerk's Papers (CP) at 35. After the Taxpayers verified that they distributed coupons at stated intervals, as required under the statute for periodicals and magazines, the DOR confirmed their publisher status. ¶3 In December 2002 and January 2003, the Taxpayers sought refunds for overpaid taxes based on the DOR's classification of the Taxpayers' activities as "publishing" under RCW 82.04.280. The DOR issued two refund checks. ¶4 In March 2003, however, the DOR rescinded its determination because, although the Taxpayers sell advertising space in the mailings, "[t]he actual printing and mailing is provided by a third party." CP at 44. The Taxpayers filed an administrative appeal. ¶5 A DOR appeals division administrative law judge (ALJ) found that the Taxpayers' activities did not include the publication of periodicals because the coupons constituted neither a "periodical or magazine" nor a "printed publication" under RCW 82.04.280. The ALJ ruled that because the mailings were not publications, they did not qualify as periodicals or magazines for tax purposes. ¶6 The Taxpayers filed a complaint for a tax refund and a notice of appeal in superior court. The parties cross-moved for summary judgment. ¶7 In discussing its ruling on the cross motions, the trial court noted that it remained troubled that a bound coupon collection, such as "Boat Trader," would qualify as a periodical under the B&O statute whereas coupons stuffed in an envelope would not. Report of Proceedings (RP) at 44. The trial court acknowledged that the statute's plain language included the coupon mailings within the definition of "periodical." ANALYSIS PRINTED PUBLICATION ¶8 The Taxpayers first contend that the trial court erred in granting the DOR summary judgment based on its reasoning that the coupon mailings are not periodicals within the plain meaning of the B&O statute, RCW 82.04.280. The DOR counters that the Taxpayers' coupon mailings do not fall within the statute's term "printed publication" and, therefore, are not periodicals. ¶9 We review a grant of summary judgment de novo, engaging in the same inquiry as the trial court and viewing the facts and reasonable inferences from those facts in the light most favorable to the nonmoving party. [1, 2] ¶10 In reviewing the trial court's interpretation of RCW 82.04.280, we look to the statute's plain meaning in order to fulfill our obligation to give effect to legislative intent. [3] ¶11 RCW 82.04.280 imposes a tax on "every person engaging within this state in the business of . . . [p]rinting, and of publishing newspapers, periodicals, or magazines." The statute defines a "periodical or magazine" as "a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication." RCW 82.04.280. ¶12 Webster's Dictionary defines a "periodical" as "a magazine or other publication of which the issues appear at stated or regular intervals." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1680 (2002). It defines a "publication" as "communication . . . to the public," such as a "public announcement," "the act or process of issuing copies . . . for general distribution," or "a published work." WEBSTER'S, supra, at 1836. ¶13 The plain meaning of RCW 82.04.280 requires only "a printed publication . . . issued regularly at stated intervals." Although the conventional/dictionary definition of "periodical" is narrower than "publication," by including all "publications" in enacting RCW 82.04.280, the legislature chose to adopt a broad definition of "periodical." Moreover, in enacting the statute, the legislature did not impose any format or any content requirements. See generally Agrilink Foods, Inc. v. Dep't of Revenue, 153 Wn.2d 392, 397, 103 P.3d 1226 (2005) (analyzing plain language of tax statute and declining to add a requirement not included by the legislature). [4, 5] ¶14 Our Supreme Court notes that it "does not subject an unambiguous statute to statutory construction and has 'declined to add language to an unambiguous statute even if it believes the Legislature intended something else but did not adequately express it.'" Cerrillo, 158 Wn.2d at 201 (quoting Kilian v. Atkinson, 147 Wn.2d 16, 20, 50 P.3d 638 (2002)). Thus, the trial court's reasoning that "the legislature passed legislation that does more than they [sic] intended it to" cannot form a basis for a decision to exclude the coupon mailings from the definition provided under RCW 82.04.280. RP at 46. ¶15 The DOR urges us to rely on the Florida case Department of Revenue v. Val-Pak Direct Marketing Systems, Inc., 862 So. 2d 1 (Fla. Ct. App. 2003). We decline to do so. ¶16 In deciding whether the Florida mailings qualified for a sales tax exemption, the Val-Pak court determined: A publication may consist of printed material, but not all printed material constitutes a publication. A publication is presented in an identifiable form as a work or an issue. A published work or an issue of a publication necessarily has a unitary physical quality like the unitary physical quality of a newspaper, magazine, or book. Although it need not be bound together, a publication is identifiable as a discrete physical item, such as a newspaper, magazine, or book. An assortment of separate printed advertisements on separate pieces of paper inserted in an envelope cannot properly be described as a work or an issue and therefore is not a publication. 862 So.2d at 4. Although the Florida court states that it does not impose a binding requirement, under its analysis no unbound printed matter would qualify under its definition of "publication." Moreover, the Taxpayers' work setting the order in which the coupons appear, as well as the coupon mailing's envelope, provide the mailings with a "unitary physical quality." Val-Pak, 862 So.2d at 4; see CP at 286. [6, 7] ¶17 Here, as the trial court acknowledged, "The legislature has said in words, and the words that they [sic] used would allow this to fall within what counts as a periodical, whether that's what the legislature intended or not." RP at 46. We agree the coupon mailings fit, at least in part, within the definition of "periodical" or "magazine" because the mailings are printed pieces of paper comprising a "printed publication." See RCW 82.04.280. We must next decide whether the Taxpayers issue the publications at stated intervals. STATED INTERVALS [8] ¶18 To fall within the B&O statute, a publication must issue "regularly at stated intervals at least once every three months." ¶19 Reversed and remanded. VAN DEREN, C.J., and BRIDGEWATER, J., concur.