Justia Tax Law Opinion Summaries

Articles Posted in Louisiana Supreme Court
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Calcasieu Parish School Board Sales & Use Tax Department and Kimberly Tyree, in her capacity as Administrator thereof (collectively, “CPSB”) appealed the court of appeal's declaration that 2016 Act No. 3 (“Act 3”) was unconstitutional for violating La. Const. Art. VII, section 2 (the “Tax Limitation Clause”). Appellee Nelson Industrial Steam Company (“NISCO”) owned and operated an electrical power generating facility in Lake Charles in which it produced multiple products: electricity, steam, and ash. After not taxing NISCO for its limestone purchases for many years, the Louisiana Department of Revenue (“LDR”) and CPSB sued NISCO to collect unpaid taxes for its limestone purchases between 2005 and 2012. The suit went before the Louisiana Supreme Court in Bridges v. Nelson Indus. Steam Co., 190 So. 3d 276 (“NISCO I”), in which the Court determined the limestone purchases were excluded from sales tax of sales at retail under the “further processing exclusion” as then set forth in La. R.S. 47:301(10)(c)(i)(aa). Before NISCO I was final, Act 3 was passed into law in the 2016 Second Extraordinary Session with less than a two-thirds favorable vote of the members of both houses of the Legislature. Following legislative amendments, CPSB brought the underlying lawsuit against NISCO to collect sales taxes on its limestone purchases retroactively. The court of appeal held that Act 3 was a “new tax” and therefore unconstitutional under the Tax Limitation Clause for failure to garner a two-thirds vote in each house of the Legislature. Finding no reversible error in that judgment, the Supreme Court affirmed. View "Calcasieu Parish School Bd. Sales & Use Dept., et al. v. Nelson Industrial Steam Co." on Justia Law

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Taxpayers Kraig and Kelly Strenge appealed directly to the Louisiana Supreme Court a declaration by a district court that La. R.S. 47:1990 was unconstitutional, as applied. The district court’s ruling on partial summary judgment also held that the Louisiana Tax Commission (the “Commission”) exceeded its authority in promulgating Section 3103(Z) of Title 61, Part V of the Louisiana Administrative Code (the “Rules and Regulations”) and declared Section 3103(Z) unconstitutional. The underlying issue centered on the Taxpayers challenge to the correctness of the appraisal of their residential property in Lafayette Parish in 2016. After the Lafayette City-Parish Council (Board of Review) ruled in favor of the Assessor, Taxpayers appealed to the Commission. The Commission ruled that the fair market value of the property for tax year 2016 was $231,500, not $288,270 as determined by the Assessor, and ordered the Assessor to reduce Taxpayers’ 2016 assessment accordingly. Two days after the Commission’s oral ruling, the Assessor assessed the fair market value of Taxpayers’ property for the 2017 tax year again at $288,270. Taxpayers again appealed, and after a hearing, the Commission issued a “Rule to Show Cause” to the Assessor. That dispute went before the district court, and the court’s decision served as the grounds for this appeal. The Supreme Court found the district court erred in ruling the Commission exceeded its authority in promulgating Section 3103(Z) and declaring Section 3103(Z) unconstitutional but correctly declared La. R.S. 47:1990 unconstitutional, as applied. Accordingly, judgment was reversed in part and affirmed in part. View "Comeaux v. Louisiana Tax Commission" on Justia Law

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This dispute involved ad valorem taxes for the tax years 2013 through 2016. In October 2012, D90 Energy, LLC, purchased two gas wells and one saltwater disposal well. The wells were subject to ad valorem property taxation in Jefferson Davis Parish, Louisiana. Relying on a Commission regulation applicable to oil and gas wells, D90 argued that a purchase price in a valid sale is fair market value; therefore, the wells should be valued at $100,000.00 for each of these tax years. For each tax year, the Assessor rejected D90’s documentation of the sale, explaining, in part, that his office never uses the sales price as fair market value for oil and gas wells. Rather, the Assessor used valuation tables provided by the Commission, which take into account age, depth, type, and production of the wells. D90 appealed each assessment to the Commission, presenting documentary evidence and live testimony to establish the $100,000.00 purchase price for the wells and the arms-length nature of the sale. It presented additional evidence to establish that the condition and value of the wells were virtually identical for each tax year. The district court affirmed the Commission’s valuations for all four tax years. Reviewing only what was presented to the Assessor, the court of appeal reversed the district court and reinstated the Assessor’s valuation. The Louisiana Supreme Court granted D90’s writ application to determine the correctness of the assessments, the proper scope and standard of review, and the legal effect of D90’s failure to pay taxes under protest. After review, the Court determined the district court was correct in affirming the Commission, thus reversing the appellate court's judgment. View "D90 Energy, LLC v. Jefferson Davis Parish Board of Review" on Justia Law

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The Louisiana Supreme Court granted certiorari to determine whether the lower courts correctly ruled an online marketplace was obligated as a "dealer" under La. R.S. 47:301(4)(l) and/or by contract to collect sales tax on the property sold by third party retailers through the marketplace’s website. Wal-Mart.com USA, LLC (“Wal-Mart.com”) operated an online marketplace at which website visitors could buy products from Wal-Mart.com or third party retailers. From 2009 through 2015, Wal-Mart.com reported its online sales in Jefferson Parish, Louisiana of its products and remitted the required sales tax to the Louisiana Department of Revenue and ex-officio tax collector, then Sheriff Newell Normand (Tax Collector). The reported sales amount did not include proceeds from online sales made by third party retailers through Wal-Mart.com’s marketplace. Following an attempted audit for this period, Tax Collector filed a “Rule for Taxes” alleging Wal-Mart.com “engaged in the business of selling, and sold tangible personal property at retail as a dealer in the Parish of Jefferson,” but had “failed to collect, and remit . . . local sales taxes from its customers for transactions subject to Jefferson Parish sales taxation.” In addition, Tax Collector alleged that an audit of Wal-Mart.com’s sales transactions was attempted, but Wal-Mart.com “refused to provide [Tax Collector] with complete information and records” of Jefferson Parish sales transactions, particularly, those conducted on behalf of third party retailers. In connection with online marketplace sales by third party retailers, Tax Collector sought an estimated $1,896,882.15 in unpaid sales tax, interest, penalties, audit fees, and attorney fees. The Supreme Court determined an online marketplace was not a “dealer” under La. R.S. 47:301(4)(l) for sales made by third party retailers through its website and because the online marketplace did not contractually assume the statutory obligation of the actual dealers (the third party retailers), the judgment of the trial court and the decision of the court of appeal were reversed and vacated. View "Normand v. Wal-Mart.com USA, LLC" on Justia Law

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Plaintiffs were the Plaquemines Parish Council and the St. James Parish School Board, each being designated as the single collector for sales and use taxes levied by all taxing authorities within their respective parishes. Plaintiffs filed a Petition for Declaratory Judgment and Request for Preliminary and Permanent Injunction, and supplementing and amending petitions thereto, alleging that La.R.S. 47:337.102(I) violated La.Const. art. VI, section 29 and La.Const. art. VII, section 3. In 2010, Plaquemines Parish entered into an Agreement to Collect Local Taxes Due on the Sale or Use of Motor Vehicles and Factory Built Homes (“the agreement”) with the Louisiana Department of Public Safety and Corrections (“the Department”) on behalf of the Department and the Vehicle Commissioner (“OMV”) for the collection of sales and use taxes levied in the parish. The agreement contains a provision allowing OMV to collect the identified sales and use taxes and to retain 1% of the taxes levied. St. James Parish also entered into an agreement with OMV for the collection of sales and use taxes levied in the parish. Their agreement contains the identical provision allowing OMV to collect the sales and use taxes and to retain 1% of the taxes levied as payment for its collection duties. After de novo review, the Louisiana Supreme Court concurred that La.R.S. 47:337.102(I) was unconstitutional. Consequently, the judgment of the district court declaring La.R.S. 47:337.102(I) unconstitutional and permanently enjoining the State of Louisiana, Department of Public Safety and Corrections, Office of Motor Vehicles from withholding locally levied sales and use taxes under the authority of La.R.S. 47:337.102(I) and from disbursing any funds withheld to the Louisiana Uniform Local Sales Tax Board was affirmed. View "West Feliciana Parish Government v. Louisiana" on Justia Law

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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