STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
15-1062
TRUNKLINE LNG COMPANY, LLC
VERSUS
CALCASIEU PARISH SCHOOL SYSTEM, SALES & USE TAX DEPARTMENT
**********
APPEAL FROM THE LOUISIANA BOARD OF TAX APPEALS, NO. L00029 HONORABLE CADE R. COLE, LOCAL TAX JUDGE
JOHN D. SAUNDERS JUDGE
Court composed of Sylvia R. Cooks, John D. Saunders, and Phyllis M. Keaty, Judges.
AFFIRMED.
Cooks, J., concurs. David R. Kelly David R. Cassidy Nicole F. Gould Frey Breazeale, Sachse & Wilson, LLP P. O. Box 3197 Baton Rouge, LA 70821 (225) 387-4000 COUNSEL FOR PLAINTIFF/APPELLANT: Trunkline LNG Company, LLC
Russell Joseph Stutes, Jr. Stutes & Lavergne, LLC 600 Broad Street Lake Charles, LA 70601 (337) 433-0022 COUNSEL FOR DEFENDANT/APPELLEE: Calcasieu Parish School System, Sales & Use Tax Department SAUNDERS, Judge.
This is a taxation case related to how large a refund the taxpayer is entitled
to receive. The taxpayer was originally assessed excessively in some months,
while deficiently in others. After having paid the total amount it owed according
to the original audit, the taxpayer requested a refund. Although the tax collector
and taxpayer agree that the taxpayer is entitled to a refund, they do not agree as to
whether the taxpayer is allowed a set-off between the excessive amounts it paid in
some months against the deficient amounts it paid in other months. Were the
taxpayer entitled to a set-off, it would have no underpaid taxes subject to the
statutorily permitted 15% interest since its payment of the amount originally
assessed.
The Board of Tax Appeals (BTA) found that the taxpayer was not entitled to
a set-off resulting in there being some tax periods where the taxes paid were
insufficient while other periods where the taxes paid were excessive. As such, the
BTA reduced the taxpayer’s refund accordingly. The taxpayer appeals. We affirm.
FACTS AND PROCEDURAL HISTORY:
The Calcasieu Parish School Board (CPSB) conducted an audit of Trunkline
LNG Co., LLC (Trunkline) for the taxable period of January 1, 2007, through
December 31, 2009. As a result of that audit, Trunkline paid, without protest,
$1,371,553.05 on April 30, 2013. Shortly thereafter, Trunkline alleged
overpayments and filed a refund claim. Trunkline’s claim for refund was denied
by CPSB.
On September 4, 2014, Trunkline filed a petition with the BTA for
overpayment of taxes. After reducing its claim for refund considerably prior to
trial, Trunkline claimed entitlement to a refund of $99,674.73. The BTA found that Trunkline was entitled to a refund of $14,367.59. The
basis for this finding was that Trunkline’s refund amount was lowered due to the
interest accruing on the months that Trunkline paid insufficient taxes at a much
higher rate than the interest accruing on the months that Trunkline paid excessive
taxes. Trunkline appeals and asserts two assignments of error.
ASSIGNMENTS OF ERROR:
1. The BTA committed reversible error in ruling that interest of 15% per annum [] continued to accrue on taxes even though they had been paid.
2. The BTA abused its discretion in excluding the testimony of Johnny Bailey, a CPSB representative, who admitted Trunkline owed no additional taxes after the April 30, 2013 payment.
ASSIGNMENT OF ERROR NUMBER ONE:
Trunkline’s first assignment of error is that the BTA erred by finding that
interest continued to accrue on taxes even though those taxes had been paid. We
disagree.
A tax is not a debt in the usual and ordinary sense of that word. It is not a contract between two parties, but the imposition of a tax is the positive act of the government, binding upon the inhabitants, and does not require their individual or personal consent to enable it to be enforced. Taxes are not demands against which a set-off is admissible . . . . They are to be regarded not as a debt, but as a contribution required from the citizen for the support of government. Considerations of public policy require that a tax of one year should not be compensated by an overpayment of a previous year. The taxes of each year are laid to meet the exigencies of that year. If they could be reduced by a deduction of such sums as had been already wrongfully demanded and paid, the revenues requisite for the support of government might be diminished so largely as to occasion public detriment. But outside of this public policy, as a matter of law, taxes are not such demands as admit of a plea in compensation.
City of New Orleans v. Davidson, 30 La.Ann 541, 541-42 (La.1978) (citation
omitted). “Before refunding any overpayment, the collector may first determine
whether the taxpayer who made the overpayment owes any other liability under
2 any ordinance administered by him. If such be the case, the collector may credit
the overpayment against such liability and notify the taxpayer of the action taken.”
La.R.S. 47:337.78 (emphasis added). Calcasieu Parish Tax Ordinance Section
6.01 (emphasis added) states that “[t]he taxes levied under this Ordinance shall be
due and payable by all dealers monthly on the first day of the month.”
In the case before us, the original audit by CPSB of Trunkline mistakenly
assessed sales taxes with a due date for certain items on the month those items
were ordered by Trunkline. On April 30, 2013, Trunkline paid an amount equal to
the amount of what it believed to be all outstanding taxes due in the erroneous,
original audit. Thereafter, Trunkline filed for a refund and the original audit was
corrected.
The corrected audit changed the month that taxes became due to when the
items ordered by Trunkline were actually received by it rather than when they were
ordered. The corrected audit increased the amount of taxes due for some months,
while lowering the amount of taxes due for others. The changes lowered the total
amount Trunkline owed in sales taxes. Thus, the parties agree that Trunkline is
owed a refund. The central issue in this case is the amount of Trunkline’s refund.
CPSB contends that the 15% interest rate charged when monthly sales taxes
are unpaid continued to accrue for unpaid taxes for the months that Trunkline was
found to have underpaid under the corrected audit while the 2-3% interest rate
accrued for the refund amount CPSB owed Trunkline for the months that it was
found to have overpaid. This, according to CPSB and BTA’s ruling, reduces
Trunkline’s refund.
Trunkline emphatically disagrees, arguing that interest could not accrue on
taxes that it already paid. Trunkline contends that it already paid all of the taxes it
was assessed by CPSB. This is not accurate. 3 As is clear from Calcasieu Parish Ordinance § 6.01, the tax periods are
monthly. On April 30, 2013, Trunkline paid what it mistakenly believed to be all
outstanding taxes due. However, after the errors in the original audit were
corrected, Trunkline owed additional taxes for some months. Contrarily, Trunkline
was owed a refund for excess taxes that it paid for earlier months. Trunkline’s
argument relies on the premise that it has the option to set-off what it owes to
CPSB on later months with the overpayments it made for earlier months.
Trunkline does not point to any legal basis for entitlement to set-of, nor does
Louisiana law give Trunkline this option.
As such, the 15% interest rate on outstanding taxes Trunkline owes to CPSB
has been running since those taxes became due. All the while, the 2-3% interest
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STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
15-1062
TRUNKLINE LNG COMPANY, LLC
VERSUS
CALCASIEU PARISH SCHOOL SYSTEM, SALES & USE TAX DEPARTMENT
**********
APPEAL FROM THE LOUISIANA BOARD OF TAX APPEALS, NO. L00029 HONORABLE CADE R. COLE, LOCAL TAX JUDGE
JOHN D. SAUNDERS JUDGE
Court composed of Sylvia R. Cooks, John D. Saunders, and Phyllis M. Keaty, Judges.
AFFIRMED.
Cooks, J., concurs. David R. Kelly David R. Cassidy Nicole F. Gould Frey Breazeale, Sachse & Wilson, LLP P. O. Box 3197 Baton Rouge, LA 70821 (225) 387-4000 COUNSEL FOR PLAINTIFF/APPELLANT: Trunkline LNG Company, LLC
Russell Joseph Stutes, Jr. Stutes & Lavergne, LLC 600 Broad Street Lake Charles, LA 70601 (337) 433-0022 COUNSEL FOR DEFENDANT/APPELLEE: Calcasieu Parish School System, Sales & Use Tax Department SAUNDERS, Judge.
This is a taxation case related to how large a refund the taxpayer is entitled
to receive. The taxpayer was originally assessed excessively in some months,
while deficiently in others. After having paid the total amount it owed according
to the original audit, the taxpayer requested a refund. Although the tax collector
and taxpayer agree that the taxpayer is entitled to a refund, they do not agree as to
whether the taxpayer is allowed a set-off between the excessive amounts it paid in
some months against the deficient amounts it paid in other months. Were the
taxpayer entitled to a set-off, it would have no underpaid taxes subject to the
statutorily permitted 15% interest since its payment of the amount originally
assessed.
The Board of Tax Appeals (BTA) found that the taxpayer was not entitled to
a set-off resulting in there being some tax periods where the taxes paid were
insufficient while other periods where the taxes paid were excessive. As such, the
BTA reduced the taxpayer’s refund accordingly. The taxpayer appeals. We affirm.
FACTS AND PROCEDURAL HISTORY:
The Calcasieu Parish School Board (CPSB) conducted an audit of Trunkline
LNG Co., LLC (Trunkline) for the taxable period of January 1, 2007, through
December 31, 2009. As a result of that audit, Trunkline paid, without protest,
$1,371,553.05 on April 30, 2013. Shortly thereafter, Trunkline alleged
overpayments and filed a refund claim. Trunkline’s claim for refund was denied
by CPSB.
On September 4, 2014, Trunkline filed a petition with the BTA for
overpayment of taxes. After reducing its claim for refund considerably prior to
trial, Trunkline claimed entitlement to a refund of $99,674.73. The BTA found that Trunkline was entitled to a refund of $14,367.59. The
basis for this finding was that Trunkline’s refund amount was lowered due to the
interest accruing on the months that Trunkline paid insufficient taxes at a much
higher rate than the interest accruing on the months that Trunkline paid excessive
taxes. Trunkline appeals and asserts two assignments of error.
ASSIGNMENTS OF ERROR:
1. The BTA committed reversible error in ruling that interest of 15% per annum [] continued to accrue on taxes even though they had been paid.
2. The BTA abused its discretion in excluding the testimony of Johnny Bailey, a CPSB representative, who admitted Trunkline owed no additional taxes after the April 30, 2013 payment.
ASSIGNMENT OF ERROR NUMBER ONE:
Trunkline’s first assignment of error is that the BTA erred by finding that
interest continued to accrue on taxes even though those taxes had been paid. We
disagree.
A tax is not a debt in the usual and ordinary sense of that word. It is not a contract between two parties, but the imposition of a tax is the positive act of the government, binding upon the inhabitants, and does not require their individual or personal consent to enable it to be enforced. Taxes are not demands against which a set-off is admissible . . . . They are to be regarded not as a debt, but as a contribution required from the citizen for the support of government. Considerations of public policy require that a tax of one year should not be compensated by an overpayment of a previous year. The taxes of each year are laid to meet the exigencies of that year. If they could be reduced by a deduction of such sums as had been already wrongfully demanded and paid, the revenues requisite for the support of government might be diminished so largely as to occasion public detriment. But outside of this public policy, as a matter of law, taxes are not such demands as admit of a plea in compensation.
City of New Orleans v. Davidson, 30 La.Ann 541, 541-42 (La.1978) (citation
omitted). “Before refunding any overpayment, the collector may first determine
whether the taxpayer who made the overpayment owes any other liability under
2 any ordinance administered by him. If such be the case, the collector may credit
the overpayment against such liability and notify the taxpayer of the action taken.”
La.R.S. 47:337.78 (emphasis added). Calcasieu Parish Tax Ordinance Section
6.01 (emphasis added) states that “[t]he taxes levied under this Ordinance shall be
due and payable by all dealers monthly on the first day of the month.”
In the case before us, the original audit by CPSB of Trunkline mistakenly
assessed sales taxes with a due date for certain items on the month those items
were ordered by Trunkline. On April 30, 2013, Trunkline paid an amount equal to
the amount of what it believed to be all outstanding taxes due in the erroneous,
original audit. Thereafter, Trunkline filed for a refund and the original audit was
corrected.
The corrected audit changed the month that taxes became due to when the
items ordered by Trunkline were actually received by it rather than when they were
ordered. The corrected audit increased the amount of taxes due for some months,
while lowering the amount of taxes due for others. The changes lowered the total
amount Trunkline owed in sales taxes. Thus, the parties agree that Trunkline is
owed a refund. The central issue in this case is the amount of Trunkline’s refund.
CPSB contends that the 15% interest rate charged when monthly sales taxes
are unpaid continued to accrue for unpaid taxes for the months that Trunkline was
found to have underpaid under the corrected audit while the 2-3% interest rate
accrued for the refund amount CPSB owed Trunkline for the months that it was
found to have overpaid. This, according to CPSB and BTA’s ruling, reduces
Trunkline’s refund.
Trunkline emphatically disagrees, arguing that interest could not accrue on
taxes that it already paid. Trunkline contends that it already paid all of the taxes it
was assessed by CPSB. This is not accurate. 3 As is clear from Calcasieu Parish Ordinance § 6.01, the tax periods are
monthly. On April 30, 2013, Trunkline paid what it mistakenly believed to be all
outstanding taxes due. However, after the errors in the original audit were
corrected, Trunkline owed additional taxes for some months. Contrarily, Trunkline
was owed a refund for excess taxes that it paid for earlier months. Trunkline’s
argument relies on the premise that it has the option to set-off what it owes to
CPSB on later months with the overpayments it made for earlier months.
Trunkline does not point to any legal basis for entitlement to set-of, nor does
Louisiana law give Trunkline this option.
As such, the 15% interest rate on outstanding taxes Trunkline owes to CPSB
has been running since those taxes became due. All the while, the 2-3% interest
rate on the outstanding refund that CPSB owes to Trunkline has been running since
the refund was owed. This is the reasoning that the BTA used, and we find no
error in that reasoning. Accordingly, this assignment of error is without merit.
ASSIGNMENT OF ERROR NUMBER TWO:
In its second assignment of error, Trunkline asserts that the BTA abused its
discretion in excluding the testimony of Johnny Bailey, a CPSB representative,
who asserted that Trunkline owed no additional taxes after the April 30, 2013
payment. We find no merit to this assertion.
“The trial court has vast discretion in determining whether to exclude or
allow evidence, and its decisions will not be overturned in the absence of an abuse
of discretion.” Allen v. PHI, Inc., 15-461, p. 2 (La.App. 3 Cir. 12/9/15), 181 So.3d
890, 893 (citing Bellsouth Telecomms., Inc. v. City of Lafayette, 05-1478, 05-1505
(La.App. 3 Cir. 1/5/06), 919 So.2d 844).
Here, the BTA excluded the testimony of Johnny Bailey because he was not
listed by Trunkline as a witness. Trunkline listed “any witness called by the 4 opposing party” in the pretrial order. Bailey was on CPSB’s witness list in the
pretrial order, but CPSB did not call him as a witness. When Trunkline attempted
to call Bailey as a witness, CPSB objected because he did not appear on
Trunkline’s witness list. The BTA excluded Bailey’s testimony but Trunkline
proffered that testimony.
Trunkline argues that excluding Bailey’s testimony caused it to suffer
manifest prejudice because Bailey would testify that it did not owe any taxes after
its payment on April 30, 2013. We do not agree.
An employee’s opinion as to whether taxes are owed is not binding on the
entity charged with collecting taxes unless collecting those taxes would cause a
manifest injustice to the taxpayer. See Showboat Star Partnership v. Slaughter,
00-1227 (La. 4/3/01), 789 So.2d 554. In Showboat, our supreme court ruled that a
written statement by a Department of Revenue official stating that certain property
was exempt from sales tax was not binding on the Department absent manifest
prejudice. As stated in Showboat, “no detriment is incurred when the party’s only
injury is that it must pay taxes legitimately owed under the correct interpretation of
the law.” Id., at 563(quoting Valencia Energy Co. v. Arizona Dep’t of Revenue,
191 Ariz. 565, 959 P.2d 1256, 1268-69 (1998)).
Here, we have found that the correct interpretation of the law occurred in
this case. We also find that Trunkline did not suffer manifest injustice by the BTA
excluding Bailey’s testimony. Further, Bailey’s opinion that Trunkline owed no
taxes after April 30, 2013, is not binding on CPSB. Accordingly, this assignment
of error is without merit. The BTA did not abuse its vast discretion in excluding
Bailey’s testimony.
5 CONCLUSION:
Appellant, Trunkline LNG Co., LLC, raises two assignments of error. We
find no merit in either assignment. Accordingly, we affirm the judgment and
assess all costs of these proceedings to Trunkline LNG, Co., LLC.