Justia Tax Law Opinion Summaries

Articles Posted in Louisiana Supreme Court
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Plaintiffs Justin and Gwen Ulrich and Raymond and Pam Alleman purchased and installed residential solar systems with the expectation of receiving an income tax credit of up to $12,500 pursuant to La. Rev. Stat. 47:6030(B)(1). In 2016, when plaintiffs filed their Louisiana income tax returns for the 2015 tax year, asserting entitlement to the solar electric system tax credits under La. Rev. Stat. 47:6030, the tax credits were denied or reduced by the Department of Revenue, citing Acts 2015, No. 131, which limited the maximum amount of solar tax credits to be granted by the Department of Revenue to $25,000,000. In letters sent by the Department of Revenue to plaintiffs in August 2016, they were informed that Act 131 of the 2015 Regular Session had amended La. Rev. Stat. 47:6030 “to establish the maximum amount of solar tax credits that may be granted;” that “[f]or fiscal years 2015-2016 and 2016- 2017, the cap limit was $10,000,000 per year;” that “[t]he credits are required to be granted based on a first-come, first served basis;” and that the “cap limits were met prior to [their] claim being filed.” This appeal challenged the district court’s judgment declaring unconstitutional 2015 La. Acts, No. 131, section 1, which amended La. Rev. Stat. 47:6030 by placing a cap on the total amount of solar electric system income tax credits available to Louisiana taxpayers, because it retroactively deprived plaintiffs of a vested property right and substantially impaired the obligations of private contracts. The district court also implicitly found the plaintiffs had standing to bring the constitutional claim and that a justiciable controversy existed because the constitutional issue was not moot. The Louisiana Supreme Court found the district court erred in overruling the Department of Revenue’s peremptory exception of mootness, and reversed. View "Ulrich v. Robinson" on Justia Law

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Plaintiffs Ivan Smith, Jr. and Gloria G. Smith (collectively “Taxpayers”), were Louisiana residents and part owners of several limited liability companies (“LLC”) and Subchapter S corporations (“S corporation”) that transacted business in Texas, Arkansas, and Louisiana. Taxpayers filed suit seeking recovery of income taxes paid under protest against Defendant Kimberly Robinson, in her capacity as Secretary of the Department of Revenue of the State of Louisiana (the “Department”). . At issue was whether Act 109, which amended La.R.S. 47:33, a state income tax statute that provides a credit to taxpayers for income taxes paid in other states, violated the dormant Commerce Clause of the United States Constitution. After review, the Louisiana Supreme Court concurred with the trial court that Act 109 violated the dormant Commerce Clause of the United States Constitution. View "Smith v. Robinson" on Justia Law

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In this case, the issue presented for the Louisiana Supreme Court’s review centered on whether a City of New Orleans ordinance levying a gallonage tax based on volume upon dealers who handle high alcoholic content beverages was a valid exercise of its authority to levy and collect occupational license taxes within the meaning of La. Const. Art. VI, sec. 28. The trial court declared the ordinance unconstitutional. The Supreme Court found the portion of the ordinance at issue was not an unconstitutional exercise of the City’s taxing authority. Thus, the Court reversed the trial court’s grant of summary judgment in favor of the plaintiffs, and remanded to the trial court for further proceedings. View "Beer Industry League of Louisiana v. City of New Orleans" on Justia Law

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The issue this case presented for the Louisiana Supreme Court’s review centered on whether the Court of Appeal erred in declaring unconstitutional certain provisions of Senate Concurrent Resolution No. 55 of 2014, which applied the formula contained in La.R.S. 17:3995 and allocated Minimum Foundation Program (“MFP”) funding to New Type 2 charter schools. After review, the Supreme Court determined the appellate court erred in declaring the constitution prohibits the payment of MFP funds to New Type 2 charter schools. In this case, the plaintiffs’ view was that local taxes were being used to improve privately-owned facilities to which the public had no title or interest. The Court determined this was a mischaracterization. “[L]ocal revenue is considered in the allotment of MFP funds to public schools. Calculation of the local cost allocation includes sales and ad valorem taxes levied by the local school board. These figures are used to calculate a per-pupil local cost allocation. A public school’s allotment of MFP funding is based on the number of students enrolled in that particular public school irrespective of whether the improvements made to that particular public school are vested in the public or not. Thus, the use of a phrase in an ad valorem tax, such as ‘improvements shall vest in the public’ does not prohibit the use of local revenue in the funding of New Type 2 charter schools and cannot be used as defense to thwart the goal of La. Const. art. VIII, §13(C). Thus, SCR 55 does not transfer actual local tax revenue to charter schools.” Thus, the appellate court’s declaration of unconstitutionality was reversed. View "Iberville Parish Sch. Bd. v. Louisiana Board of Elementary & Secondary Education" on Justia Law

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At issue in consolidated cases was the correctness of administrative decisions issued by the Louisiana Tax Commission (“Commission”) on review of the valuations, for the 2014 and 2015 tax years, by the Orleans Parish Tax Assessor (“Assessor”) of a low-income housing development, owned by Opportunity Homes Limited Partnership (“Opportunity Homes”), for purposes of assessment of ad valorem taxes. The Commission ruled in favor of Opportunity Homes for both tax years. The administrative decisions were upheld by the district court but reversed by the appellate court. The Louisiana Supreme Court reversed the appellate court and reinstated the assessment values as determined by the Commission. The Court found no conflict between La. R.S. 47:2323, providing parish assessors a choice of three generally recognized appraisal methods to utilize to determine fair market value (the market approach, the cost approach, and/or the income approach), and La. Admin. Code, Title 61, Part V, sec. 303(C), which recommended the use of the income approach for assessing affordable rental housing, such as the Opportunity Homes LIHTC development. The Supreme Court found this case turned purely on the facts established before the Commission, proving that the income approach was the more appropriate method for determining fair market value in this case. Consequently, the appellate court erred in holding that the Commission’s decisions were in violation of statutory provisions, in excess of its authority, based upon unlawful procedures, and legally incorrect. View "Williams v. Opportunity Homes Limited Partnership" on Justia Law

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In connection with its operation of a land-based casino in New Orleans, Jazz Casino Company, L.L.C. (Jazz) entered into contracts with various hotels for rooms made available to casino patrons on a complimentary or discounted basis. Jazz was required to pay for a specific number of rooms for the duration of the contract even if the rooms were not used by Jazz patrons. As a result of these hotel room rentals, hotel occupancy taxes were remitted to the Louisiana Department of Revenue (Department). The taxes consisted of state general sales taxes and sales tax collected on behalf of the following three entities: Louisiana Tourism Promotion District, the Louisiana Stadium and Exposition District, and the New Orleans Exhibition Hall Authority. In August 2004, Jazz filed three claims for refund with the Department, alleging that Jazz overpaid hotel occupancy taxes for various hotel room rentals from October 1999, and June 2004. Following the denial of its claims by the Department, Jazz filed suit with the Louisiana Board of Tax Appeals, seeking a determination of overpaid taxes in accordance with La. R.S. 47:1621. Finding that these statutory duties were ministerial, the district court issued a writ of mandamus to the tax collector to compel payment of the tax refund judgment. The court of appeal reversed and recalled the writ due to the lack of evidence needed to obtain a writ of mandamus. Based on the ministerial nature of the constitutional and statutory duties owed by the tax collector in connection with the taxpayer’s refund judgment, the Supreme Court reversed the decision of the appellate court, and reinstated the district court’s judgment. View "Jazz Casino Co, LLC v. Bridges" on Justia Law

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At issue in this case was a tax exclusion, La. R.S. 47:301(14)(g)(i)(bb), which provided exclusions from state and local sales tax of charges for repairs on certain property that was delivered to customers out of state. At the local tax level, the 2013 version of this tax exclusion was mandatory for tax authorities in East Feliciana Parish and optional for all other parishes, municipalities and school boards. The question presented for the Louisiana Supreme Court's review was, when the legislature enacted a tax exclusion, whether La. Const. art. VI, section 29(D)(1) required the legislature to treat tax authorities in all parishes the same or to make tax authorities in all parishes act the same. The Supreme Court held that the uniformity provision of the constitution, based on its plain and unambiguous meaning, required that a legislative tax exclusion treat tax authorities in all parishes the same. The Court found La. R.S. 47:301(14)(g)(i)(bb), as amended in 2013, to be unconstitutional because tax authorities in all parishes are not required to apply the tax exclusion in the same form, manner, or degree. "However, the portion of this statutory provision-mandating tax authorities in East Feliciana Parish apply the exclusion-is severable from the rest." Therefore, the Court severed this portion, leaving the balance of the statutory provision unchanged. Accordingly, the Court affirmed the district court ruling and remanded this matter to the district court for further proceedings. View "Arrow Aviation Co., LLC. v. St. Martin Parish Sch. Bd." on Justia Law

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This matter involved the interpretation and application of the Uniform Local Sales Tax Code (ULSTC). Yesterdays of Lake Charles, Inc. (Yesterdays) and Cowboy’s Nightlife, Inc. (Cowboy’s) were cash-based bars or nightclubs located adjacent to each other in Calcasieu Parish. The clubs were audited in 2009, by the Calcasieu Parish School System Sales and Use Tax Department ("Collector) for years 2005 through 2008, on the basis that the clubs had violated their duties as tax collection agents for the Calcasieu Parish School System. The trial court found ambiguity in the language of the ULSTC requiring the plaintiff nightclubs to “keep and preserve suitable records” of all sales and expenditures. The trial court then found the tax collector had failed to show that the records actually kept by the clubs, in this case, bank statements and deposit slips, were not "suitable records" within the meaning of the ULSTC. The trial court further found the tax collector’s assessment was arbitrary and that the tax collector had failed to establish that its methodology for auditing the taxpayer was proper. Accordingly, the trial court: (1) ordered the tax collector to refund amounts paid under protest by the clubs; (2) determined that prescription had run on the sales taxes for the years 2005 and 2006 for one of the clubs, aside from those taxes admittedly withheld by the clubs; and (3) denied the tax collector’s motion for new trial and awarded attorney fees to the clubs. After its review, the Supreme Court reversed the trial court’s judgment ordering a refund of the taxes and interest paid under protest by the clubs. Furthermore, the Court reversed the trial court’s award of attorney fees. In all other respects, the judgment of the trial court was affirmed, and the matter was remanded to the trial court for further proceedings. View "Yesterdays of Lake Charles, Inc. v. Calcasieu Parish Sales & Use Tax Dept." on Justia Law

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Nelson Industrial Steam Company (“NISCO”) was in the business of generating electric power in Lake Charles. In order to comply with state and federal environmental regulations, NISCO introduces limestone into its power generation process; the limestone acts as a “scrubbing agent.” The limestone chemically reacts with sulfur to make ash, which NISCO then sells to LA Ash, for a profit of roughly $6.8 million annually. LA Ash sells the ash to its customers for varying commercial purposes, including roads, construction projects, environmental remediation, etc. NISCO appealed when taxes were collected on its purchase of limestone over four tax periods. NISCO claimed its purchase of limestone was subject to the “further processing exclusion” of La. R.S. 47:301(10)(c)(i)(aa), which narrowed the scope of taxable sales. The Louisiana Supreme Court granted NISCO’s writ application to determine the taxability of the limestone. The trial court ruled in the Tax Collectors' favor. After its review, the Supreme Court found that NISCO’s by-product of ash was the appropriate end product to analyze for purposes of determining the “further processing exclusion’s” applicability to the purchase of limestone. Moreover, under a proper “purpose” test, the third prong of the three-part inquiry enunciated in "International Paper v. Bridges," (972 So.2d 1121(2008)) was satisfied, "as evidenced by NISCO’s choice of manufacturing process and technology, its contractual language utilized in its purchasing of the limestone, and its subsequent marketing and sale of the ash." Therefore the Court reversed the trial court and ruled in favor of NISCO. View "Bridges v. Nelson Industrial Steam Co." on Justia Law

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At issue before the Louisiana Supreme Court was whether the materials, machinery, and equipment that became part of an inland marine drilling barge during its reconstruction following a fire were exempt from sales and use tax. La. R.S. 47:305.1(A) exempted these materials when vessels were “built in Louisiana.” The Louisiana Department of Revenue promulgated LAC 61:I:4403(A) and (B)(2) to clarify that certain reconstruction projects fell within the scope of the statutory exemption. The lower courts found the regulation exceeded the scope of the statute and declared it unconstitutional. The Supreme Court granted review to determine the constitutionality of LAC 61:I:4403(A) and (B)(2), and to review its application to the facts at issue. After this review, the Court found the regulation constitutional and applicable to the facts in this case. Accordingly, the Court reversed the court of appeal’s judgment and rendered judgment in favor of the taxpayer. View "Coastal Drilling Company v. Dufrene" on Justia Law