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Sales & Use Tax Rules and Regulations 101-128

Rules 1-25
Rules 26-50
Rules 51-75
Rules 76-100
Rules Home
Subject Index

Rule 101. Vending Machines
Rule 102. Warehouse, Shipping, and Packaging Services
Rule 103. Waiver of Penalty
Rule 104. Credit for Taxes Paid
Rule 105. Videographers
Rule 106. Cleaning (of Textiles) Services
Rule 107. Rentals of Automobiles
Rule 108. Exempt Organizations
Rule 109. "Tax-Free" Shopping
Rule 110. Enterprise Zone Program
Rule 111. Non-Profit Organizations
Rule 112. Direct Pay Permits
Rule 113. Video Poker Machines
Rule 114. Corporate Officers' Liability
Rule 115. Parochial and Private Schools
Rule 116. Manufacturers' Coupons
Rule 117. Cellular Telephones
Rule 118. Medicare and Medicaid Transactions
Rule 119. Lottery Sales not Subject to Tax
Rule 120. Classification of Property - Movable vs. Immovable
Rule 121. Tire Disposal Fee
Rule 122. Rent-to-Own
Rule 123. Carpet and Flooring - Sales and Installation
Rule 124. Fuels - Gasoline and Diesel Fuel
Rule 125. Pipe Coating, Bending, Galvanizing, Threading, and Wrapping
Rule 126. By-Product Fuels - Coke-on-Catalyst
Rule 127. Hotel-Motel Occupancy Tax
Rule 128. Nexus

Rule 101. Vending Machines

A.     The sale, use or leasing of vending machines is subject to tax.

B.     Sales of tangible personal property via vending machines are taxable and the seller of the merchandise vended is responsible for the reporting and payment of tax on total taxable sales. Taxable sales may be computed by dividing the total gross receipts removed from the machine by 1.00, plus the total state and local tax rate. The tax is computed by multiplying taxable sales by the local tax rate.

Rule 102. Warehouse, Shipping, and Packaging Services

A.     Moving, storing (other than cold storage), packing, and shipping tangible personal property belonging to other persons are activities which constitute services of a type which are not ordinarily taxable. Crating, boxing, packaging, and packing materials used in the performance of these services are deemed to be purchased for use or consumption by the person furnishing the non-taxable services and the seller of such materials to a person for such use is making a sale for use and consumption, which is taxable.

B.     Sales of secondhand furniture or other tangible personal property to which title has been acquired through the provision of these services, as a result of the abandonment of property, is subject to tax when the seller holds himself out to the public as being engaged in the business of selling such property.

Rule 103. Waiver of Penalty

A.     The Finance Department, Auditing Division, is responsible for performing sales and use tax audits of taxpayers doing business in East Baton Rouge Parish. The Finance Department, Revenue Division, is responsible for the assessment and collection of taxes, interest, and penalties. After an assessment is made, the taxpayer has the right to request a waiver of penalty. Any request for waiver must be made in writing and addressed to the Revenue Manager. This request becomes a permanent record in the taxpayer's audit file.

B.     Penalty waivers not exceeding $10,000 are approved by the Revenue Manager. Penalty waivers exceeding $10,000 must be approved by the Finance Director.

C.     The following are the primary factors considered when acting on a request for waiver:

  1. Level of Cooperation with Auditors. If a taxpayer has imposed needless time delays in providing the necessary records to conduct an audit, uses abusive language, subjects auditors to unnecessarily uncomfortable working conditions, or has provided incomplete records, he is less likely to receive favorable consideration.

  2. Previous Audits. A taxpayer is more likely to receive a penalty waiver on an initial audit than on subsequent audits. Additionally, if the tax issues in question have previously been the subject of an audit with the taxpayer requesting a waiver, the taxpayer is less likely to receive favorable consideration.

  3. Level of Taxpayer Effort. If a taxpayer is attempting to collect or accrue taxes properly and the errors made do not appear to be intentional, then the taxpayer is more likely to receive favorable consideration.

  4. Taxpayer Payment History. If a taxpayer has been paying his taxes timely in prior periods, his chances of receiving favorable consideration are enhanced.

  5. Taxpayer Registration. A taxpayer that has not registered for sales and use taxes with Revenue is less likely to receive favorable consideration than one who has been properly registered.

  6. Taxes Collected but Not Remitted. If a taxpayer has collected, but not remitted taxes, he is not in a good position for obtaining favorable consideration.

  7. Complexity of Tax Issue. There may be circumstances in complex tax situations when it is not clear whether or not tax applies. If the tax issue in question is a complex one where the applicability of tax to the transaction is not clear, the taxpayer is in a better position to obtain favorable consideration.

  8. Special or Unusual Conditions Relative to Audit Findings. If the tax in question resulted from apparent inadvertent coding errors, the taxpayer is in a better position for obtaining favorable consideration than under other circumstances.

  9. Prompt Payment. If a taxpayer pays the tax and interest in a timely manner after being billed and following their audit, he is in a better position to obtain favorable consideration.

  10. Corrective Action. Willingness of a taxpayer to take corrective action to prevent a recurrence of tax underpayment is an important consideration. If a taxpayer is willing to change his method of accounting and procedures in order to reduce the likelihood of the same error occurring again, he is more likely to obtain favorable consideration.

D.     Requests for waivers of penalties may be granted or denied in whole or part. In all cases, the goal of the Finance Department is to maintain a consistent and effective policy while treating all taxpayers fairly. The factors listed above are also utilized, to the extent applicable, in making decisions relative to penalty waivers in non-audit situations.

Rule 104. Credit for Taxes Paid

A.     Louisiana Revised Statute 33:2718.2 E clearly states that no person shall be taxed on a particular event more than once, provided the person can produce documentary evidence of a good faith effort to recover taxes paid to the incorrect taxing jurisdiction. Documentary evidence consists of the following:

  1. A formal request for refund by certified mail to the taxing jurisdiction paid in error, including all evidence supporting such claim.

  2. A second request by certified mail if no response was received within 60 days of the first refund request.

  3. Either the response approving or denying the first or second request, or an affidavit from the person stating that no response was received within 60 days of the second request.

B.     This statute further provides that no penalty or interest can be imposed on taxes erroneously paid to another jurisdiction, unless bad faith or gross negligence can be proved. In addition, in instances where a legitimate disagreement exists as to which taxing authority is owed, the involved taxing authorities shall resolve the dispute among themselves without involving the taxpayer in the dispute.

C.     If a taxpayer is assessed for sales taxes paid to the wrong local taxing jurisdiction, it is in the taxpayer’s best interest to obtain a refund from the taxing jurisdiction originally paid before remitting payment to the proper taxing jurisdiction.

Rule 105. Videographers

The same rules that apply to photographers apply to videographers. The total selling price of the videotape is subject to tax. This would include the charges for videotaping weddings, special events or programs, etc.

(See Rule 88 - Photographers.)

Rule 106. Cleaning (of Textiles) Services

A.     The taxability of cleaning services for laundering, cleaning, pressing, and dyeing of clothing, furs, furniture, carpets, and rugs is taxable. Dealers performing cleaning services on these items must collect and remit the local tax.

B.     The cleaning of pipe, tanks, barges, or automobiles is not taxable.

C.     Cleaning services performed as a part of a repair of tangible personal property will be treated as a repair of tangible personal property and, as such, considered taxable.

Rule 107. Rentals of Automobiles

The rental tax on automobiles shall be due to the jurisdiction where possession is transferred when the rental period is less than 180 days. When the lease period is more than 180 days, the tax shall be due to the jurisdiction where the lessee resides in the case of an individual; in the case of a business, the tax shall be due to the jurisdiction of the official domicile of the business, unless the automobile is assigned, garaged, and used elsewhere. Separately stated charges for refueling and insurance are not subject to local sales tax. However, drop charges are subject to local sales tax.

(See Rule 35 B Lease or Rental of Tangible Personal Property.)

Rule 108. Exempt Organizations

The following organizations, agencies, commissions, etc., are exempt from paying the local sales and use tax:

Assessor Food Banks
Baton Rouge Port Commission Greater Baton Rouge Airport District
Baton Rouge Recreation and Parks Commission Lane Memorial Hospital
City of Baker Louisiana Lottery Corporation
City of Baton Rouge Parish of East Baton Rouge
City of Zachary Public Schools and School Boards
Clerk of Court Registrar of Voters
Coroner Safety Council of Greater Baton Rouge
Court Systems Sheriff
Demco (Electrical Co-op) State of Louisiana
District Attorney State Universities
Federal Credit Unions The American Red Cross

Rule 109. "Tax-Free" Shopping

The 2% general sales tax of the City of Baton Rouge and Parish of East Baton Rouge, East Baton Rouge Parish School Board, Educational Facilities Improvement District tax, and the 1/2% Street Improvement tax are eligible for refund under the "Tax-Free Shopping Program," which provides tax-free shopping for foreign visitors. The tax-free shopping program does not affect the 1/2% Sewer Improvement tax.  This program allows foreign visitors to qualify for a refund of local sales taxes paid on retail purchases. Hotel accommodations, meals, entertainment, and car rentals do not qualify. Any merchant interested in participating in the program should call the Louisiana Tax-Free Shopping Program office at (504) 529-1601. The program was established by Louisiana Revised Statute 51:1302 and is administered by the State of Louisiana.

Rule 110. Enterprise Zone Program

Louisiana Revised Statute 51:1781 establishes a sales tax rebate to encourage economic growth in depressed economic areas in the Parish. Sales taxes must be remitted to the proper local authority before they are eligible for rebate to the taxpayer. The enterprise zone rebates apply only to the 2% general sales tax of the City of Baton Rouge and Parish of East Baton Rouge. The East Baton Rouge Parish School Board tax, the Educational Facilities Improvement District tax, the Street Improvement tax, and the Sewer tax are not subject to rebate.

The rebate applies to purchases of materials used in the construction of or additions to buildings, equipment, and machinery that remain with the buildings after completion.

  1. Examples of qualifying items are as follows:
  • depreciable capital assets.
     
  • equipment used in the business such as machinery, desks, cabinets, chairs, copy machines, and forklifts used exclusively on the enterprise zone site.
     

  • general construction items such as pilings, couplings, rebars, paneling, sheetrock, shell, sand, and gravel which remain on site, lumber, bricks, concrete for building and driveways, grass, shrubs, and landscaping materials.

  1. Examples of non-qualifying items are as follows:
  • all hand tools
  • safety equipment
  • office supplies
  • blueprints, photographs
  • repairs to equipment
  • leases and rentals of any type
  • purchases made by contractors that do not become a component part of the building or are not passed on to the business
  • vehicles licensed for highway use
  1. Filing Deadlines Strictly Enforced

Taxpayers should review the Enterprise Zone contract to determine filing deadlines.  The contract allows for a 60-day period to file for rebates.  An additional 60-day extension can be granted upon written request prior to the end of the initial 60-day period.  If the rebate is requested after the deadline, the rebate request will be denied in its entirety.

  1. Required Documentation

When filing for rebates, the request must include a worksheet which includes the following information:

  • Description of the Item Purchased
  • Invoice Number
  • Name of the Vendor
  • Invoice Date
  • Purchase Price
  • Amount of State Sales Tax
  • Amount of City-Parish Sales Tax
  • Tax Paid to Vendor
  • Tax Paid to the City-Parish

An invoice must be provided for every item listed on the worksheet.  The invoice should indicate whether tax was paid, the delivery dates, and what items were purchased.  If tax was paid, this tax must have been remitted to the City of Baton Rouge - Parish of East Baton Rouge by the purchaser or vendor to be eligible for the rebate.

If the tax was not charged and your business accrued the tax directly to the City-Parish, then detailed accrual documentation is required.  We also require this detailed accrual documentation for transactions involving contractors and subcontractors.  This documentation must prove that accrued taxes were actually remitted to the City of Baton Rouge - Parish of East Baton Rouge.

  1. Common Reasons Rebate Requests are Denied

The following is a list of reasons that invoices are commonly denied for rebate:

  • The vendor was not registered with East Baton Rouge Parish.
  • The vendor had insufficient sales tax remittances to East Baton Rouge Parish.
  • The purchase did not comply with contract requirements.
  • Sales tax was not paid to the vendor.
  • Local sales tax for another jurisdiction was charged by the vendor.
  • Mathematical errors are found in the worksheet submitted with the refund request.
  • Additional information is needed regarding the purchase.
  • Copies of invoices are not provided.
  • The invoice amounts are adjusted as a result of vendor's compensation taken.

Rule 111. Non-Profit Organizations

A.     Louisiana Revised Statute 47:305.14 provides a sales and use tax exemption on admission charges and the sale of tangible personal property at events sponsored by domestic, civic, educational, historical, charitable, fraternal, or religious organizations that are non-profit. In order for the exemption to apply, the entire proceeds, except for necessary expenses connected with the event, must be used for educational, charitable, religious, or historical restoration purposes.

B.     The exemption provided by Louisiana Revised Statute 47:305.14 does not apply to any event intended to yield a profit to either the promoter or to any individual engaged in providing services or tangible personal property. Neither does this statute exempt any organization or activity from the payment of sales or use taxes on any purchases made by the organization.

C.     An organization must apply for and receive an exemption certificate from the Louisiana Department of Revenue before the Revenue Division will issue a local exemption certificate under this statute. A certificate of exemption will apply only to sales made directly by the organization seeking the exemption. Any organization that endorses any candidate for political office or is otherwise involved in political activities is not eligible for this exemption. Another limitation on the exemption is that it does not exempt regular commercial ventures of any type such as bookstores, restaurants, gift shops, commercial flea markets, and similar activities that are sponsored by qualifying organizations which are in competition with retail merchants.

Rule 112. Direct Pay Permits

A.     The Direct Pay Permit allows taxpayers to pay all sales and use taxes due in East Baton Rouge Parish directly to the East Baton Rouge Parish taxing jurisdiction. The taxpayer must provide vendors with a Direct Pay Certificate that will allow the taxpayer to purchase items without paying tax to the vendor. The taxpayer will accrue the tax each month.

B.     Taxpayers must meet the following qualifications for approval of a Direct Pay Permit:

  1. Qualify under Louisiana Revised Statute 47:303.1.
  2. Pay 90% of tax due for last three years.
  3. Have an annual average of $30 million or more in purchases and leases of tangible personal property.
  4. Describe its accrual system in detail.
  5. Notify all vendors that they have a Direct Pay Permit.

C.     The Direct Pay Permit applies to taxable transactions occurring in East Baton Rouge Parish. It does not apply to taxable transactions occurring in another parish. These latter transactions are taxable in the parish where the sale occurs or the services are furnished.

Rule 113. Video Poker Machines

The purchase and sale of video poker machines is subject to local sales and use tax. According to Louisiana Revised Statute 27:314, an annual license fee of $50 is due on each machine located in this Parish.

Rule 114. Corporate Officers' Liability

When a corporation fails to file sales/use tax returns or to remit the sales and use taxes collected from purchasers or consumers, the corporate officers and directors may be liable as set forth under Louisiana Revised Statute 47:1516.1.

Rule 115. Parochial and Private Schools

A.     Act 15 of the 1996 Regular Session of the Louisiana Legislature provides limited sales and use tax exclusions (Louisiana Revised Statute 47:301(7)(f), 47:301(10)(q) and 47:301 (18)(e)), effective July 1, 1997, for certain purchases, leases, rentals, and sales made by approved parochial and private elementary and secondary schools. Before claiming the exclusions provided by Act 15, schools must receive an exemption certificate from the Revenue Division.

B.     Under this act, approved private and parochial elementary and secondary schools can make tax-free purchases, leases, or rentals of books, workbooks, computers, computer software, films, videos, and audio tapes to be used for classroom instruction. In addition, these schools, their students, administrators, teachers, and other employees can sell tangible personal property without collecting sales or use tax on the sales, provided that the net proceeds, after the deduction of reasonable and necessary expenses associated with the sales, are used solely and exclusively to support the school, its programs, or curricula. The act specifically provides that the exclusion from the collection of the sales tax on sales shall not be construed to allow tax-free sales to students or their families by promoters or regular commercial dealers through the use of schools, school faculty, or school facilities.

C.     To be approved for these exclusions, the schools must comply with the court order from the Brumfield vs. Dodd decision and Section 501(c)(3) of the United States Internal Revenue Code.

Rule 116. Manufacturers' Coupons

A.     When a customer presents a manufacturer’s coupon to a retail dealer, which is redeemable by the retail dealer for the amount stated on the coupon, the sales tax should be charged on the "sales price" before the deduction of the coupon discount. In this case, the total "sales price" is not reduced by the acceptance of the coupon. The dealer receives a portion of the "sales price" by payment from the retail customer and the remaining portion of the "sales price" from the manufacturer through the seller’s redemption of the coupon.

B.     The sales tax treatment of manufacturers’ coupons is contrasted with the sales tax treatment of coupons that are issued by retail dealers, when the coupons are not redeemable by the retail dealers after their allowance of discounts to their customers. When a retailer redeems a coupon that the retailer has issued, the retailer has lowered the "sales price" of the property or services. In such cases, the sales tax is calculated on the reduced amount after the allowance of the coupon discount.

Rule 117. Cellular Telephones

A.     Sales of cellular telephone equipment and repairs of cellular telephones are subject to sales tax. Cellular telephone service charges (air-time) are not subject to sales tax.

B.     Cellular telephones sold for less than fair market value or given away with the condition that the customer subscribe to cellular services for a specified period of time, are subject to use tax based on the cost price of the cellular phone.   Credit will be given for local sales/use tax paid on the sale of the telephone.

C.     According to Act 46 of 2003 (effective 5/23/03), the "sale price" of any cellular telephone, PCS telephone, or wireless telephone or any electronic accessory physically connected with such telephone shall mean and include the greater of (i) the amount of money received by the dealer from the purchaser at the time of retail sale or (ii) twenty-five percent of the cost of such telephone to the dealer.  Also, the term "use" shall not include the withdrawal, use, distribution, consumption, storage, donation, or any other disposition of any such telephone or electronic accessory by the dealer.

Rule 118. Medicare and Medicaid Transactions

A.     Sales of medical devices and equipment to individuals qualifying for Medicare are considered retail sales subject to 3% local sales tax. These sales are not considered sales to the Federal Government. The Medicare program acts as an insurance company, making payments for medical devices or equipment to the individuals as a reimbursement or directly to the vendor on the individual’s behalf. This applies to all medical expenses covered by Medicare, not just medical services and equipment. These medical expenses are exempt from the Sewer Improvement tax, the Street Improvement tax, and the Educational Facilities Improvement District tax.

B.    According to Act 60 of the 2001 Legislative Session, effective July 1, 2001, the sale, lease or rental of tangible personal property covered under the provisions of Medicare is excluded from local sales and use tax.

C.    Medical devices, equipment, and drugs purchased by individuals qualified by the Medicaid Program are exempt from all local sales taxes. These transactions are considered sales to the State of Louisiana and are exempt from all local sales tax.

Rule 119. Lottery Sales not Subject to Tax

A.     Sales of Louisiana state lottery tickets are not subject to the local sales tax.

B.     Receipts from the sale of lottery tickets should not be included in the gross receipts reported or in the deductions from the sales taken on sales tax returns. Proceeds from lottery sales should be segregated by the retailer from other sales proceeds and remitted directly to the Louisiana Lottery Corporation.

C.     Purchases by the Louisiana Lottery Corporation are not subject to local sales and use tax. The Lottery Corporation is considered an agency of the State and is exempt from local sales tax.

Rule 120. Classification of Property - Movable vs. Immovable

A.     This regulation is intended to be a guideline for classifying property as either movable or immovable and is based on a guideline issued by the Louisiana Department of Revenue. The sale and repair of tangible personal property (movable property) is taxable; therefore, it is important to classify the property correctly to determine whether a transaction involving the property would be taxable or non-taxable.

B.     When determining whether property is movable or immovable, the Civil Code and past court decisions should be examined. The Courts have consistently used the Civil Code in connection with the sales tax law. The link was established through the definition of tangible personal property in the sales tax law and the definition of corporeal movable property in the Civil Code. Corporeal movable property is defined by Article 471 of the Civil Code as:

"Corporeal movables are things, whether animate or inanimate, that normally move or can be moved from one place to another."

C.     The Civil Code places property into several different categories. Articles 463, 465, and 466 are the most helpful.

  1. Component Parts of Tracts of Land - Article 463:

    "Buildings, other constructions permanently attached to the ground, standing timber, and unharvested crops or ungathered fruits of trees, are component parts of a tract of land when they belong to the owner of the ground."

  2. Things Incorporated into an Immovable - Article 465:

    "Things incorporated into a tract of land, a building, or other construction, so as to become an integral part of it, such as building materials, are its component parts."

  3. Component Parts of Buildings or Other Constructions - Article 466:

    "Things permanently attached to a building or other construction, such as plumbing, heating, cooling, electrical or other installations, are its component parts."

    "Things are considered permanently attached if they cannot be removed without substantial damage to themselves or to the immovable to which they are attached."

D.     Although these Articles give some factors to be considered in the determination of immovable and movable property, it is impossible to give a complete listing. The Courts have provided guidance in the interpretation of these Civil Code Articles in their decisions.

E.     Definitions: The following definitions are helpful, for purposes of taxation, in determining whether property is immovable or movable:

  1. Permanent - property is placed in its final position and intended to stay in that position for the remainder of its useful life.

  2. Substantial Damage - immovable property or attached property is no longer functional as originally intended or must be repaired in order to function as originally intended.

  3. Factors that indicate permanence:
  • The property is not intended to be removed from the building or other structure to which it is attached during its useful life. This would be evidenced by affixing the property with permanent fasteners that will cause substantial damage to either the immovable or the property being attached to the immovable when the property is removed.

  • Attached property will be incapable of functioning in its intended capacity if removed.

  • The property will be expected to remain with the immovable if title to the immovable is transferred to another party.

  • Property is a permanent part of the electrical, cooling, heating, or plumbing systems.

  1. Factors that indicate impermanence:
  • The property is expected to be removed and replaced as technology changes.

  • The property is not permanently affixed to a building or other structure.

  • The property may be removed without substantial damage to it or the immovable.

  • If removed, the property will have a value that is consistent with its original function allowing for normal depreciation.

  • The property is subject to a chattel mortgage.

F.     Court Introduced Concepts. The Courts have added certain concepts to be considered in the determination of the classification of property.

  1. Societal Expectations - Residential

    In Equibank, a Pennsylvania Banking Corporation, Plaintiff-Appellant vs. United States of America Internal Revenue Service, Defendant-Appellee, 749 F.2d 1176 (5th Cir. 1985), the Court was asked to decide if the crystal chandeliers in a mansion in New Orleans were component parts of the residence. The Court agreed that the chandeliers were component parts of the residence. The Court introduced the concept of "societal expectations."  It was stated in the decision that when a light switch is turned on, "people expect to have the lights go on." The Court also talked about the difference between items that are merely plugged into a wall and items "permanently" attached to the wiring.

    Following is a listing of items the Court considered to fall into the "permanently" attached category: "built-in stoves or ovens, wall and ceiling electric heaters, central heating and air conditioning, heat pumps, electrical hot water heaters, built-in public address and alarm systems, overhead fans, interior physically attached light fixtures, exterior lighting, automatic garage door controls, and like electrical equipment." The Court held that society expects these items to be immovable.

  2. Societal Expectations - Commercial

    The concept of societal expectations was applied to a commercial setting in Jay Hyman, et al., Plaintiff-Appellant vs. Richard Franklin Ross, et al. Defendant-Appellee, 643 So.2d 256 (La. App. 2nd Cir. 1994). The Court reasoned that the first paragraph of Article 466 uses the word permanent in an illustrative way and "facility of removal is immaterial." Therefore, because the property in question was expected to be included with this type of structure, they were considered immovable.

  3. Adaptation of Civil Code to New Technology

    The Courts have reconsidered the concepts of movable and immovable in light of new technology. In Beckham, et al. vs. Hibernia National Bank, 665 So.2d 706 (La. App. 2nd Cir. 1995), a modular building was determined to be a movable piece of property. The Court used Article 466 of the Civil Code to determine whether the building was permanently attached to the land. The Court determined that substantial damage was not done in the removal of the building.

G.     Examples

  1. In applying the policy, it may be necessary to break down different components of the property being attached to an immovable. For example, a telephone system contains components that are immovable, such as wiring within the walls of the building, and movable components, such as the telephones themselves. The telephones are designed to be easily moved and replaced; thus, they are property classified as movable property.

  2. Another example would be computer systems used to control networks or processes within a business. These systems may be connected in a similar manner as the telephone handset and receiver. The components, which may be plugged into the system, include monitors, personal computers, servers and other freestanding components. Because the components are specifically designed to be replaced or removed without damage to the immovable or the other components of the network, they are movable property.

Rule 121. Tire Disposal Fee

On January 20, 1992, retail dealers of new tires began adding a two dollar waste tire disposal fee to the selling price of each new tire sold. This fee should not be included as part of the selling price for sales tax purposes.

Rule 122. Rent-to-Own

There is a special provision for Rent-to-Own businesses that rent/sell non-business furniture and appliances for the home. Louisiana Revised Statute 9:3351-3362 provides that local sales tax on rent-to-own agreements shall be payable in equal monthly installments over the entire term of the agreement. These transactions are considered sales at retail and not lease or rental transactions.

Rule 123. Carpet and Flooring - Sales and Installation

The collection of sales tax on the sale and installation of carpet and flooring can be handled in any one of three ways depending upon the nature of the sales agreement.

  1. First, the dealer making the sale can treat such a transaction as a real property contract. Using this method, the dealer furnishes the carpeting, padding, all materials necessary to complete his contract, and installs the carpet for one lump sum price. Title to the carpet does not pass to the customer until after it has been installed and has become immovable. The dealer then charges one lump sum for the entire contract, which includes the taxes he paid on his purchase of the carpet and materials as a cost factor in arriving at the contract price. No additional sales tax is collected on the contract amount from the customer.

  2. Second, the dealer can treat the transaction as a retail sale with the obligation to install. Using this method, title to the carpet is considered to pass in its movable state prior to installation. The dealer separates the charges for the carpet and materials from the charge made for installing the carpet. Sales tax is charged on the selling price of the carpeting and any other tangible personal property, but not on the separately stated installation charge.

  3. The third method is a retail sale with the obligation to install in which the dealer cannot determine or does not distinguish the cost of installation from the selling price of the carpeting and other tangible personal property. Again, title to the carpet is considered to pass to the customer in its movable state. Using this method, the total charge is taxable.

Rule 124. Fuels - Gasoline and Diesel Fuel

The Louisiana Constitution Act 7, Section 27, mandates an exemption from state and local sales/use taxes on purchases of gasoline, diesel fuel or special fuels which are subject to excise taxes under Chapter 7 of Subtitle 2 of Title 47.

Rule 125. Pipe Coating, Bending, Galvanizing, Threading, and Wrapping

A.     Charges made for coating, wrapping, threading, and galvanizing of pipe and other property which have not been previously treated by such methods are considered to be fabrications. Fabrications are considered taxable sales and the vendor is required to collect sales tax on the gross proceeds from coating, wrapping, threading, and galvanizing transactions. In addition, drilling holes in pipe is also considered a fabrication of tangible personal property.

B.     The re-coating, re-wrapping, re-threading or re-galvanizing of property that has previously been coated, wrapped, threaded or galvanized is considered to be a taxable repair service. Sales tax is due on the full amount charged for this service, including materials and labor. Taxes are due in the jurisdiction where the repair transaction is performed

C.     Pipe bending is not considered a taxable service.

Rule 126. By-Product Fuels - Coke-on-Catalyst

Act 29 of 1996 provides an exclusion from state and local sales and use tax for tangible personal property created or derived as a residue or by-product from the processing of raw materials for resale when such items are consumed in the manufacturing process. This residue or by-product includes coke-on-catalyst and other fuel sources used for non-boiler fuels. The effective date of this Act is July 1, 1996.

Rule 127. Hotel-Motel Occupancy Tax

A.     The terms "hotel" and "motel" shall each mean and include any establishment engaged in the business of furnishing or providing rooms intended or designed for dwelling, lodging or sleeping purposes to transient guests where such establishment consists of two or more guest rooms and does not encompass any hospital, convalescent or nursing home or sanitarium, or any hotel-like facility operated by or in connection with a hospital or medical clinic providing rooms exclusively for patients and their families.

B.     The hotel-motel tax shall not apply to the rent of hotel or motel rooms rented to the same occupant for a period of 30 or more consecutive calendar days, nor shall it apply to hotel or motel rooms on an annual contract basis for consecutive or nonconsecutive days.

Hotel-motel occupancy taxes that are paid during the first 30 days are not refundable.

C.     Government Employees and Educational Groups - Government employees and educational groups are not exempt from hotel-motel occupancy tax. However, room charges billed directly to and paid by the Federal Government are not subject to hotel-motel occupancy tax.

Religious Groups - Religious groups are not exempt from hotel-motel occupancy tax.

Charitable Organizations - The only charitable organization that is exempt from hotel-motel occupancy tax is the American Red Cross.

Rule 128. Nexus

A.     A seller must have a minimum connection with the parish, which is labeled "nexus," before a parish may impose collection duties of the parish sales and use taxes on the seller. A seller has sufficient nexus with the jurisdiction if the seller has a place of business, sales representatives, or an office or warehouse located in the jurisdiction.

B.     Parishes have found nexus to exist where the seller conducted the following activities: regularly made deliveries in his own vehicles in a parish; made installation and repairs of goods in a parish; utilized the state court to repossess goods; enjoyed the benefits of parish services, such as police protection and use of the highways; and when performing services in a parish for the benefit of customers.

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