                     NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.




                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE


                    RANDA DRIVER, Plaintiff/Appellant,

                                        v.

     ARIZONA DEPARTMENT OF REVENUE, Defendant/Appellee.

                             No. 1 CA-TX 18-0006
                              FILED 6-11-2019


                   Appeal from the Arizona Tax Court
                           No. TX2017-000183
                    Maricopa County Superior Court
                        No. LC2016-000509-001
               The Honorable Christopher T. Whitten, Judge

                                  AFFIRMED


                                   COUNSEL

Randa Driver, Scottsdale
Plaintiff/Appellant

Arizona Attorney General’s Office, Phoenix
By Benjamin H. Updike
Counsel for Defendant/Appellee
                           DRIVER v. ADOR
                          Decision of the Court



                     MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.


C R U Z, Judge:

¶1             Randa Driver appeals from the grant of summary judgment
in favor of the Arizona Department of Revenue (the “Department”) finding
Driver liable for luxury and use tax on the cigarettes she purchased over a
three-year period. For the following reasons, we affirm.

                  FACTS AND PROCEDURAL HISTORY

¶2             Between January 1, 2007 and November 30, 2009 (the
“Assessment Period”), Driver purchased cigarettes from Chavez, Inc.
(“Chavez”), a company that sold cigarettes by phone and over the Internet.
In 2010, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”)
investigated Chavez for the unlawful diversion of tobacco products.
Chavez pled guilty to wire fraud and admitted to running “an illegal retail
cigarette trafficking business” and selling unstamped cigarettes on which
no tax was paid.

¶3             During the investigation, ATF identified the Arizona
customers to whom Chavez had sold and shipped cigarettes and provided
their names and purchase information to the Department. Using that
information, the Department issued Driver a Notice of Proposed
Assessment (“Notice”) reflecting that she owed $4,473.89 in luxury and use
tax, plus interest.

¶4           Driver protested the assessment. At a hearing before the
Office of Administrative Hearings, the Administrative Law Judge (“ALJ”)
deducted five invoices from the assessment, concluding that Driver’s sister
had made those purchases, but upheld the remaining assessment. Driver
appealed the ALJ’s decision to the Department Director, who affirmed. She
then appealed to the Board of Tax Appeals (“BOTA”), who also affirmed.

¶5          After exhausting her administrative remedies, Driver
appealed to tax court. The parties filed cross-motions for summary
judgment. The court granted the Department’s motion and denied
Driver’s. After entry of final judgment, Driver appealed. We have


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                            Decision of the Court

jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-
2101(A)(1) (2019).

                                DISCUSSION

¶6             We review the tax court’s grant of summary judgment de novo.
See Wilderness World, Inc. v. Dep’t of Revenue State of Ariz., 182 Ariz. 196, 198
(1995). In doing so, we view the facts in the light most favorable to Driver,
the party against whom judgment was entered. See Valencia Energy Co. v.
Ariz. Dep’t of Revenue, 191 Ariz. 565, 568, ¶ 2 (1998).

I.     Luxury and Use Tax

¶7            Driver first argues the tax court erred in granting summary
judgment because Chavez “legally owed all taxes on cigarettes sold into
this state” and, therefore, Driver is not liable for the tax.

¶8            Arizona imposes a luxury privilege tax on all cigarette
purchases. See A.R.S. § 42-3051 (2019). Under Arizona law, cigarettes
cannot be sold unless the luxury tax has been paid and an official tax stamp
is affixed. See A.R.S. § 42-3452 (2019), formerly A.R.S. § 42-3202 (2006). A
tax stamp is evidence that luxury tax was paid, and the law presumes that
unstamped cigarettes “are intended for first sale by the person and are
subject to the taxes imposed by this chapter.” A.R.S. § 42-3453 (2019),
formerly A.R.S. § 42-3202.01 (2006); see also A.R.S. § 42-3452 (2019), formerly
A.R.S. § 42-3202 (2006). “First sale” means either “the initial sale or
distribution in intrastate commerce” or “the initial use or consumption of
cigarettes.” A.R.S. § 42-3001(10) (2019), formerly A.R.S. § 42-3001(12) (2006).

¶9            Current Arizona law prohibits the purchase of cigarettes by
telephone, Internet, or mail. See A.R.S. § 36-798.06 (2019); 2012 Ariz. Sess.
Laws, ch. 311, § 2 (2nd Reg. Sess.). Under current law, an individual cannot
possess unstamped cigarettes unless that person is a licensed cigarette
manufacturer, importer or distributor, or has a proper bill of lading. See
A.R.S. § 42-3457(A) (2019). During the Assessment Period, however, phone
and Internet cigarette sales were permitted and were governed by the
“Delivery Sales” statutes. See A.R.S. §§ 42-3221 to -3230 (2006), repealed by
2012 Ariz. Sess. Laws, ch. 3, § 20 (2nd Reg. Sess.).

¶10          At the time Driver was purchasing cigarettes from Chavez, an
individual could possess unstamped cigarettes for his or her own use and
consumption if the person complied with certain requirements. See A.R.S.
§ 42-3205(A) (2006). To legally possess unstamped cigarettes, the
individual had to register with the Department “on a form and in a manner


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                            Decision of the Court

prescribed” by the Department and remit luxury tax within ten days after
receipt of the unstamped cigarettes. See A.R.S. § 42-3201(C) (2006). The
prescribed registration form was Arizona Form 800DS, entitled the
“Cigarette Tax Return” required for “unstamped cigarettes imported into
Arizona.”

¶11          Driver purchased cigarettes from Chavez for her own use or
consumption in Arizona. No tax was paid on those cigarettes. Although
required under law to file a Form 800DS and remit taxes to the Department,
Driver did neither. Therefore, she is liable for the unpaid luxury tax.

¶12             In addition to luxury tax, Arizona also imposes a tax on the
use or consumption of tangible personal property purchased from an out-
of-state retailer. See A.R.S. § 42-5155(A) (2019). A purchaser is personally
liable for use tax. See A.R.S. § 42-5155(F) (2019), formerly A.R.S. § 42-5155(E)
(2006). This court has previously explained the distinction between the
transaction privilege tax and the use tax: “In contrast to the transaction
privilege tax, which is imposed on transactions consummated within
Arizona, a use tax is designed to reach out-of-state sales of tangible personal
property to Arizona purchasers.” See Ariz. Elec. Power Coop., Inc. v. Ariz.
Dep’t of Revenue, 242 Ariz. 85, 87, ¶ 7 (App. 2017).

¶13         The record reflects that, over the course of three years, Driver
purchased cigarettes from Chavez, an out-of-state retailer, and used or
consumed the cigarettes in Arizona. Thus, Driver is liable for use tax.

¶14            Driver’s complaint alleged that “[t]he remote tobacco seller
[Chavez], NOT the buyer, was legally required to collect and remit all
Arizona taxes owed at the time of taking the internet order.” Driver is
correct that under the Delivery Sales statutes, “[e]ach person accepting a
purchase order for a delivery sale” was required to “collect and remit to the
[D]epartment all taxes imposed on tobacco products by this state.” A.R.S.
§ 42-3227 (2006). Chavez failed to comply with the Delivery Sales statutes.
Its failure, however, does not relieve Driver of tax liability. As a purchaser
of unstamped cigarettes, Driver was still liable for payment of luxury and
use tax. See A.R.S. §§ 42-3201(C) (2006); -5155 (2006).

¶15            Because the tax court properly determined that Driver was
liable for luxury and use tax on her cigarette purchases, we affirm the entry
of summary judgment.




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                            Decision of the Court

II.    Statute of Limitations

¶16            Driver next argues the assessment is barred by the four-year
statute of limitations set forth in § 42-1104. This statute authorizes the
Department to make a deficiency assessment within four years after a
return is either filed or required to be filed, whichever date comes later. See
A.R.S. § 42-1104(A) (2019). The assessment here reached back more than
four years.

¶17           Section 42-1104(B), however, provides exceptions to the four-
year limitation period and authorizes the Department to assess a tax
deficiency “at any time” if the taxpayer fails to file a return. See A.R.S. § 42-
1104(B)(1)(b) (2019). We review the application of § 42-1104 de novo. See
Ader v. Estate of Felger, 240 Ariz. 32, 36, ¶ 9 (App. 2016) (applying de novo
review to the interpretation of statutory time limitations).

¶18           Driver does not contend that she filed a Form 800DS, the
cigarette tax return. Therefore, the Department’s assessment falls within
the exception to the four-year statute of limitations applying when a
taxpayer fails to file a return. See A.R.S. § 42-1104(B)(1)(b) (2019). Because
the Department’s assessment is not time barred, we affirm the entry of
summary judgment.

III.   Due Process of Law

¶19           Finally, Driver argues that the tax court deprived her of due
process of law in violation of the Fourteenth Amendment of the United
States Constitution. This court reviews Driver’s constitutional claim de
novo. See In re Estate of Snure, 234 Ariz. 203, 204, ¶ 5 (App. 2014).

¶20           “Due process requires notice and an opportunity to be heard
at a meaningful time and in a meaningful manner.” Huck v. Haralambie, 122
Ariz. 63, 65 (1979). The Department provided Driver with the Notice, as
required by law, and she had an opportunity to be heard in the
administrative proceedings. Driver protested the Notice in a hearing before
the Office of Administrative Hearings, where the ALJ reduced the amount
of the assessment. Driver then appealed the ALJ’s decision to the
Department Director. After the Director affirmed the ALJ’s decision, Driver
appealed to the BOTA where she was given a second hearing. From there,
she appealed to tax court. Driver was provided notice and ample
opportunity to be heard.

¶21           Driver also argues that “the opportunity to defend on statute
of limitations grounds is a vested right protected by due process.” As the


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                              DRIVER v. ADOR
                             Decision of the Court

United States Supreme Court has explained, however, the right to shelter
from a statute of limitations is not a “fundamental” or “natural right.” See
Chase Sec. Corp. v. Donaldson, 325 U.S. 304, 314 (1945).

       Statutes of limitation find their justification in necessity and
       convenience rather than in logic. They represent expedients,
       rather than principles. They are practical and pragmatic
       devices to spare the courts from litigation of stale claims, and
       the citizen from being put to his defense after memories have
       faded, witnesses have died or disappeared, and evidence has
       been lost. . . . Their shelter has never been regarded as what
       now is called a ‘fundamental’ right or what used to be called
       a ‘natural’ right of the individual. He may, of course, have
       the protection of the policy while it exists, but the history of
       pleas of limitation shows them to be good only by legislative
       grace and to be subject to a relatively large degree of
       legislative control.

Id. (citation omitted); see also Lucia v. United States, 474 F.2d 565, 569-70 (5th
Cir. 1973) (“[T]here is no substantive or fundamental right to the shelter of
a period of limitations.”).

¶22           The Arizona legislature has provided a four-year statute of
limitations to taxpayers but has declined to extend that protection to
taxpayers who fail to file their returns. See A.R.S. § 42-1104 (2019). Other
states have established similar limitations. See, e.g., Zignego Co., Inc. v.
Wisconsin Dep’t of Revenue, 565 N.W.2d 590, 593 (Wis. Ct. App. 1997)
(holding that “if a sales and use tax return is never filed,” the statute of
limitations “never begins to run”); Dye Constr. Co. v. Dolan, 589 P.2d 497,
498 (Colo. Ct. App. 1978) (holding that if a taxpayer fails to file a return, the
taxing authority is not bound by the statute of limitations).

¶23            Driver had no fundamental right to the statutory four-year
statute of limitations, and there was no violation of her due process rights.




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                           DRIVER v. ADOR
                          Decision of the Court

                             CONCLUSION

¶24          For the foregoing reasons, we affirm the tax court’s decision.
We award costs to the Department upon compliance with Arizona Rule of
Civil Appellate Procedure 21.




                          AMY M. WOOD • Clerk of the Court
                          FILED:    JT

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