M & H Car Rental, L.L.C. VS Cynthia Bridges, Secretary, Department of Revenue & Taxation and Charles Foti, Attorney General for the State of Louisiana
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NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2005 CA 2574 M H CAR RENTAL LlC VERSUS CYNTHIA BRIDGES SECRETARY OF THE LOUISIANA DEPARTMENT OF REVENUE AND CHARLES FOTI ATTORNEY GENERAL OF THE STATE OF LOUISIANA On Appeal from the 19th Judicial District Court Parish of East Baton Rouge louisiana Docket No 535 549 Honorable Janice Clark Division 0 Judge Presiding Donald M Meltzer Attorney Baton Plaintiff Rouge ILA M Emily Baton W Toler H Car Rental Attorney Rouge ILA for Appellant IL ILC for Defendant Appellee State of Louisiana Department BEFORE PARRO of Revenue GUIDRY AND McCLENDON JJ Judgment rendered March 23 2007 PARRO J H Car Rental M cause H appeals a through 165 266 June 30 its rule to show For the following reasons we affirm Background and Procedural Historv In 2003 the Louisiana the amount of judgment that denied should not be declared unconstitutional and 6 petition for a declaratory judgment factual 2000 M 5 R 47 303 B why former LSA dismissed its L Lc Department of plus interest and 2002 After a the Revenue Department assessed penalty for the initially filing tax petition that a petition for petition with the Board of Tax a declaratory judgment a H contended that LSA R S M statutory provision declared unconstitutional because it was contravention of LSA Const Art 47 303 B 6 III 92 A 2 in the district court imposed to be unconstitutional enacted in 1993 H period of January 1 Appeals contesting the factual and legal issues regarding the assessment subsequently filed M an M H a tax and H In its sought to have alleged the statute to be odd numbered year which at that time M provided in in direct pertinent part No or shall be introduced levying or authorizing a new tax by the state enacted during a regular session held in an odd numbered year measure In oral reasons for constitutionality had 47 303 B 6 court erred in was judgment the district not been overcome unconstitutional refusing M Therefore H has tax period in question LSA 2 presumption of it declined to find that LSA R S appealed contending that the district to declare the statute to be unconstitutional Applicable During the court found that the law 5 R 47 303 B 6 provided Those lessors to the tax levied subject renters or 5 R 47 by 5511 taxes paid on any may directly transfer the cost of any local sales and use automobile purchased for lease or rental by allocating such taxes to each automobile shall be determined Such allocation rental contract by a promulgated by the secretary of the Department of Revenue and Taxation and shall be collected by such lessors or renters The schedule shall be based on automobile purchases in the year prior to the particular The secretary shall promulgate such other rules as allocation assessed he deems necessary to ensure that the allocation provided in this Paragraph is equitable and is not in excess of the actual local sales taxes paid by such lessors and renters Footnote added schedule Louisiana Revised Statute 47 303 B effective March through d a 1994 which Department promulgated LAC 61 the pertained The 6 to the local sales tax recovery surcharge of local sales tax recovery regulation Following Acts No was promulgated There is A a enactment of this use taxes to I 4307 B as system 4 h I Subpart 9 shall be in addition to any tax fee rental per paid on day per their fleet pursuant 1 LSA 5 R 47 551 provided in period from August 1 1990 through June 30 percent and a local tax of one half of one percent the lease or rental of an automobile pursuant to an use tax included in such contract license or The tax The tax shall service invoice The tax shall be payable to the secretary of the Department of Revenue The payment enforced pursuant to the provisions of Chapter 2 of Subtitle II of Title 47 of the Revised Statutes of 1950 insofar as such provisions are not in conflict with this Section The secretary is authorized to promulgate rules and for the proper administration and enforcement of this Chapter regulations necessary tax shall be collected and For purposes of this Chapter automobile rental contract shall mean all for the rental of an automobile without a driver designated to carry less than agreements Rental nine passengers for a period of not more than twenty nine calendar days C for a period of more to the pertinent part for the or than twenty nine calendar unless the actual days shall not be subject to days as period of the rental agreement is less than twenty nine result of the exercise of a cancellation clause 3 to D of the Louisiana Revised Statutes indirectly imposed directly apply to any automobile rented by an insurance company as a replacement vehicle for a policyholder or by an automobile dealer as a replacement vehicle while a customer s vehicle is being serviced or repaired nor shall the tax apply to any individual or business who rents a vehicle as a replacement vehicle while his vehicle is being repaired if the individual presents to the renter upon return of the rented vehicle a copy of the repair or the tax by contract as not agreements a authorized half one of the gross proceeds derived from automobile rental contract less any sales and B ii provide for the allocation of such local sales and to hereby levied state tax of two and 2 use taxes its amendment by 2000 La Acts No 18 2002 a 2 569 regulation authorized qualified automobile rental dealers provisions of Title 33 Chapter 6 Part 1 by 1993 La provided that the to Act 569 preamble reimbursement for the local sales and The added allow the transfer of costs for certain local sales and 5 R 47 303 B collect was under certain circumstances consumers In The 1993 was to provision LSA 1 July 6 use The recovery taxes to each automobile rental contract mandatory not was option This surcharge was to be a line item and apart from the state and local sales and use tax and the Automobile Rental Excise Tax LAC 61 I 4307 B automobile lessor lessees b ii event that actual amount needed paid tax on the lessor h The to right the recover local sales percent excise local tax sales automobiles subject to special rules found in LSA 2 Following 1996 1 were or after July 1 January 1996 1 resale regulations afforded to every qualified h or renters 2 that ii taxes i a paid on However the La Acts by 1996 purchased for subsequent lease or or iii a in pertinent part provided as subdivisions as such transactions or for lease or after which is not shall himself be liable for and pay the tax 4 and shall mean and include finds to be in lieu of sales length transaction must be regulations Any dealer making a sale for in strict compliance with the rules and rental in with the rules and rental on or to any other person for any purpose property or for lease or rental in an arm s a consumer or tangible personal tangible personal property the secretary upon investigation compliance or on an arm s 7 rental Seemingly after July 1 1996 local sales and 47 301 10 sale to No sale at retail by a were purchases of such on means for lease purchases of for purposes of sales and use taxes imposed the sale for rental of automobiles which take place that sales for resale or on involving 1991 and by political all such transactions made in strict was Only those lessors transaction in the form of provided less paid sale at retail or other than for resale length iii a transactions on or taxes use excluded from the definition of retail sale this amendment LSA R S Retail sale 4 use automobiles 5 R 47 301 10 the state See allowed to transfer to each individual rental were and See LAC 61 1 4307 B July and 5 R 47 551 by LSA cost of effective as registered for collected and remitted the Automobile contract the 91 return for the Automobile Rental Excise Tax periods of 29 days rental dealer who to the three Department ii d ii Rental Excise Tax levied subject In the paid during the to be remitted to the excess was monthly s automobiles held for rental automobile an calendar year exceeded the a for recoverable local taxes to reimburse the lessor 4 ii d i amount of local surcharge equaled the surcharge during collections of the LAC 61 1 4307 B h eligible vehicles during the preceding calendar year on preceding calendar year any such excess 4 separate required to discontinue the collection of the surcharge from its was taxes use to LAC 61 I4307 B According total annual collections from the once sales and h 4 the customer invoice which would be on use taxes were no longer levied In October 2003 were the on the such to LSA revision 47 303 B 6 was repealed 3 4 provisions of LAC 61 I4307 B 4 repealed by the Department 1996 qualified transactions as these 47 301 10 s R ii through d ii a in provisions had become obsolete iii a For this Acts entirety by 2005 La in its h same No 384 LSA reason 9 light of s R effective June 1 30 2005 Discussion M 61 I 4307 B before 4 as company the it h ii was a ii through d not aimed at enactment rental automobile of lessors in acting 6 owed liable at the time of the was the as Statutes The 47 303 B automobile rental purchaser 6 authorized debtor for the tax owed remains 3 If pursuant The local sales and provision on it it was not not been but did to transfer the financial This authorized transfer does not financially use imposed H qualified as a result challenged by not use tax owed require impact of this M such H Louisiana a qualified tax to its customers the as owner applicable version of the local sales and tax was on the imposed on to be D of the Louisiana Revised change the fact that M H to the M customers purchaser of the automobile provisions of Title 33 Chapter 6 Part I Subpart Statute to purchase for the local sales and constitutionality of this tax has and LAC agents for the taxing the under the Revised by the rental According essence 6 the customers of the rental not collect the tax suffered Clearly under the applicable law it was was not 47 303 B LSA R S were a tax on constituted regulation and authority and such lessors who did rented who s R 47 303 B urged that the surcharge authorized by LSA H the rental customer was the use tax purchaser lessor and by virtue of LSA s R qualified automobile rental dealer did not have to pay local sales and use taxes after July 1 1996 5 question whether LSA R 47 303 8 6 would even be applicable for the tax period of January 1 2000 through June 30 2002 This is especially questionable in light of the particular language in LSA The schedule shall be based on automobile purchases in the year R S 47 303 8 6 which provides to the particular allocation assessed Obviously if no local sales and use taxes were paid after July prior 1 1996 there would be nothing to allocate during the tax period at issue a we 4 See La Reg 29 2115 5 47 303 B contract 6 although limited a by the lessor with portion of the of the lessor as State Wilson v Furthermore Co by LSA 648 La 5 R 154 So 47 303 B 6 paid by such lessors and associated with the purchase of the automobile findings these on of any local sales and by allocating such error discretionary with exceed the Under previous year for was not to raise revenue 6 a use taxes but not legislature s allowing renters to transfer to their rental customers the cost paid taxes to each a tax on s conclude that the we requiring the qualified lessors and of 1934 to allow the lessor to recoup some of the local sales and use taxes public body but imposition of 638 was not to renters in the these conditions the purpose of LSA R S 47 303 B Based to the renters 636 was the lessors and renters and if done the allocation of such taxes actual local sales taxes purchase just the time of the use tax at 179 of Louisiana the transfer authorized rental a for the rental of the automobile because might result in increased rental fees any other expense of the lessor See more payment of the local sales and s incorporated into The rental customer did not pay the total tax its customers although he would have paid the lessor tax could be on any automobile automobile those customers rental Therefore we purchased for lease rental contract did not result in conclude that M 5 R 47 303 B relating to the unconstitutionality of LSA or 6 H s the assignment lacks merit Decree For the of this appeal foregoing are reasons the judgment of the district H Car Rental assessed to M court is affirmed Costs L Lc AFFIRMED 5 See City 247 La of New Orleans 285 Mech CoiL v 170 So 2d 654 234 La 419 182 La Heymann 1965 Ewell 100 So 2d 221 v 738 162 So 582 1935 City of Lake Charles Board of Supervisors of Louisiana State Univ 1958 6 v Wallace Agric
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