Wyoming: Taxpayer Did Not Qualify for Asset Purchase Exemption

The Wyoming Supreme Court recently held that a taxpayer’s purchase of certain assets of a business was subject to sales and use tax. Under Wyoming law, the definition of a “sale” specifically excludes “the sale of a business entity when sold to a purchaser of all or not less than eighty percent (80%) of the value of all of the assets which are located in this state….” The Wyoming Department of Revenue determined that the taxpayer’s purchase of the tangible personal property and goodwill of an entity amounted to only 28 percent (and not at least 80 percent) of the total value of the Seller’s assets and therefore the purchase was taxable. The 28 percent was calculated by looking at the seller’s total tangible and intangible assets, including cash, promissory notes and receivables which were not acquired by the purchaser. After the Board of Equalization affirmed this determination, the taxpayer appealed. Before the state’s highest court, the taxpayer argued that the statute should be interpreted to apply only to the seller’s total value of tangible personal property. In other words, the value of the seller’s assets should not include cash, notes and receivables.  The court, after noting that the taxpayer might be making a credible policy argument, concluded that the plain and ordinary meaning of the statute requires measurement of “all of the assets” of the seller in determining whether the 80 percent test is met.  No distinction is made between tangible and intangible assets, and to read it otherwise would be an improper exercise of legislative power by the court. As such, the court held that the Department correctly determined that the transaction between the taxpayer and the seller was not excluded from the definition of a sale, and was therefore was subject to sales tax. For more information on Delcon Partners LLC v. Wyoming Department of Revenue, please contact Steve Metz at 303-382-7177.