Case Name: LAFAYETTE PARISH SCHOOL BOARD v. MARKET LEASING CO., INC.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1983-02-04
Citations: 440 So. 2d 81
Docket Number: No. 82-C-0306
Parties: LAFAYETTE PARISH SCHOOL BOARD v. MARKET LEASING CO., INC.
Judges: 
Reporter: Southern Reporter, Second Series
Volume: 440
Pages: 81–88

Head Matter:
LAFAYETTE PARISH SCHOOL BOARD v. MARKET LEASING CO., INC.
No. 82-C-0306.
Supreme Court of Louisiana.
Feb. 4, 1983.
On Rehearing Oct. 17, 1983.
Rehearing Denied Nov. 18, 1983.
H. Purvis Carmouche, Jr., Mouton, Roy, Carmouche, Bivins, Judice & Henke, Lafayette, for applicant.
Nan M. Landry, Alfred Smith Landry, Landry, Watkins & Bonin, New Iberia, Riley J. Boudreaux, Bobby S. Gilliam, Arthur R. Carmody, Wilkinson & Carmody, Shreveport, for respondents.

Opinion:
LEMMON, Justice.
This is an action to collect a "sales tax" allegedly due by defendant on the long-term lease of vehicles to lessees who are domiciled in Lafayette Parish. The primary issues are (1) whether any additional tax is due to the Lafayette Parish School Board on leases of vehicles, when the Iberia Parish lessor had purchased specific vehicles for already negotiated long-term leases with Lafayette Parish domiciliarles and had paid a sales tax as purchaser on the sales of the vehicles, and (2) whether the lease transactions in this case are leases within Lafayette Parish so as to be subject to tax under the parish ordinance.
I.
Defendant, a corporation domiciled in Iberia Parish, is in the business of renting automobiles on long-term leases. When a new lease is obtained, defendant purchases an automobile for the specific lease and obtains a title as owner of the vehicle, remitting the total (state and parish) sales tax to the Collector of Revenue. All lease transactions take place in Iberia Parish, and defendant does not have an office or any salesmen operating in Lafayette Parish. The registration license issued to defendant by the state contains the name and address of the lessee. Although there was a Lafayette Parish ordinance requiring lessors to collect a tax on leases "within this Parish", defendant did not collect from the lessee or remit to the Lafayette Parish School Board any taxes on payments on leases to domicili-arles of Lafayette Parish.
When the Lafayette Parish School Board attempted to collect a tax from defendant on the monthly payments under leases of vehicles rented to Lafayette domiciliaries, defendant resisted on several grounds. The Board then filed this action, asserting that defendant should have collected and remitted the taxes. After trial on the merits, the trial court dismissed the suit, finding that the local tax collected on the sale was incorrectly remitted to the Board by the Collector of Revenue and that the Board is "entitled to no more". The court noted that a decision in favor of the Board "would result in taxing both the sale and the leasing of the vehicle".
The court of appeal affirmed, holding that defendant had paid the Board a tax not due and that defendant's debt to the Board was extinguished by confusion. 407 So.2d 23. We granted certiorari. 412 So.2d 87.
II.
In recent years, both state and local governments have enacted sales taxes which basically impose a tax not only on (1) the sale at retail of tangible personal property, but also on (2) the use or consumption, the distribution, and the storage for use or consumption of such property, (8) the lease or rental of such property, and (4) the sale of services.
Under present state law, La.R.S. 47:302 A imposes a tax on the sale or the use of each item of tangible personal property sold at retail or used in the state; Section 302 B imposes a tax on the lease or rental of each item of tangible personal property within the state; and Section 302 C imposes a tax on sale of services within the state.
At the local level in Lafayette Parish, Ordinance No. 1, adopted in 1965 by the Lafayette Parish School Board pursuant to La.R.S. 33:2737, imposes a tax upon the lease or rental of tangible personal property within the parish at the rate of 1% of the monthly lease or rental payments made or agreed to be made by the lessee. Section 2.01(4). The ordinance, substantially tracking the state statute, also imposes a tax on the sale at retail and the use of tangible personal property, as well as on sales of services.
The Legislature, apparently realizing that the imposition of a tax on several different transactions involving the same property may result in some unintended duplication, has enacted many exclusions and exemptions from state taxes as to specific items. Pertinent to the tax on leases, La.R.S. 47:305.23 A exempts lessors or lessees of automobiles and trucks from the payment of tax on the rental or lease payments, when the lease term is six months or more and a tax has been paid to the state on the sales price of the vehicle. However, the exemption expressly does not apply to taxes on lease or rental payments which have been imposed by school boards or other local taxing authorities. La.R.S. 47:305.23 B. Thus, as to the tax on lease or rental payments imposed by the ordinance enacted by the Lafayette Parish School Board, there is no exemption for long-term leases of vehicles on which taxes have already been paid on the sale or use of the vehicle, and there is no provision for deduction of previously paid taxes on the sale or use of the vehicle as a credit on the tax due the Board on the lease of the vehicle.
As to collection of the tax, La.R.S. 47:303 provides that the tax shall be collectible from the dealer, as defined in Section 301, except the tax imposed by Section 302 A (sales or use tax) on vehicles, which the vehicle commissioner collects at the time of the application for registration license or certificate of title. The dealer in turn is authorized to collect the tax from the purchaser or consumer (except for sales or use tax on motor vehicles) as an amount added to the sales price or charge, and the dealer who fails, neglects or refuses to collect the tax is himself liable to the state for the tax. The Lafayette ordinance contains similar provisions. See Sections 2.03, 4.01 and 4.06.
Thus, both the state and local laws contemplate that there are two taxable transactions when a party purchases a vehicle and then enters into a long-term lease of that vehicle. Moreover, the two taxes are imposed on two different parties. In the first transaction (the sale) the tax is imposed on the purchaser (who ultimately becomes the lessor), while in the second transaction (the lease) the tax is imposed upon the lessee. Finally, the sales tax is a onetime levy on the amount of the sale, whereas the lease tax is a recurring levy on the amount of each monthly rental installment paid or agreed to be paid by the lessee. See La.R.S. 47:302 B(2) and Ordinance No. 1, Section 2.01(4). Of course, the amount of the tax on the lease is considerably different from that on the sale, depending on the amount of monthly rental installments and the term of the lease.
On the basis of all these considerations, we conclude that the lower courts erred in holding that the Board could not collect a tax from defendant on leases of vehicles merely because defendant had already paid a tax on the retail sale of the vehicle.
Nevertheless, for reasons different from those expressed by the lower courts, we conclude that the Board is not entitled to collect the tax on the lease payments. We hold that this is not a lease within Lafayette Parish and that a parish or city school board, in the absence of express authorization from the Legislature, cannot impose a tax on an out-of-parish lease.
The Board argues, however, that the location of the leased property determines where the act of leasing takes place. On this point the Board cites Central Marine Service, Inc. v. Collector of Revenue, 162 So.2d 81 (La.1964). In the Central Marine case, the Collector sought to collect a tax on leases of barges, but only insofar as the barges were used by plaintiff's customer on waterways within the state. The court held that the tax was not upon the right to use the waterways or upon the use of the barges, but was upon the act of leasing in combination with the possession or use by the lessee within the state.
The Central Marine decision (which involved lessors who were Louisiana domicili-aries and leases which were confected within the state) did not purport to answer the question presented in this case, in which the Board is attempting to collect a lease tax from an out-of-parish lessor solely because the lessee is domiciled in Lafayette Parish.
The leases of the vehicles in this litigation were confected in Iberia Parish, where the lessor is domiciled. The lease installments were paid to the Iberia Parish domiciliary, who enjoyed any profits on the transaction. The lessor had no office and no salesmen or agents operating in Lafayette Parish. Although each lessee was domiciled in Lafayette Parish, the vehicles could be used anywhere, in any parish in the state or outside the state.
Furthermore, a lease tax (like a sales tax) is a tax on the transaction and is not a tax on the possession or use of the property. Therefore, the determination of the location of the act of leasing for lease tax purposes should be based on considerations similar to the determination of the location of the act of selling for sales tax purposes. In the sales tax situation, the local tax on the sale of tangible personal property (except for vehicles), while imposed on the buyer, must be collected by the seller who is in the business of making retail sales within that parish. For sales tax purposes, the location of each sale is the parish in which the transaction takes place, regardless of the domicile of the buyer. Similarly, the local tax on the lease of tangible personal property, while imposed on the lessee, must be collected by the lessor who is in the business of making leases within that parish. For lease tax purposes, the location of each lease is the parish in which the transaction takes place, regardless of the domicile of the lessee. We accordingly hold that the leases at issue were not leases "within this Parish", as contemplated by the Lafayette ordinance, and that defendant does not owe any taxes on the lease payments.
For these reasons, the judgments of the lower courts are affirmed.
. Section 2737 A authorizes a parish school board to levy a tax not in excess of 1% within the parish. Section 2737 B provides that the tax "shall be levied upon . the lease or rental . of tangible personal property . in the parish".
. La.R.S. 47:302 A(2), levying a use tax as a complement to the sales tax levied by Section 302 A(l), expressly provides that "there shall be no duplication of the tax".
. La.R.S. 47:302 D provides, for example, that sales or use tax which is paid to the state on certain new motor trucks, tractors, trailers and semi-trailers may be deducted as a credit against tax due on the rental of each such item, until the amount paid as sales or use tax has been exceeded. Section 2.02 of the Lafayette ordinance contains a similar credit provision.
. Upon purchasing each vehicle, defendant correctly paid state and local taxes on the retail sale to the Collector of Revenue. However, the question of whether or not the Collector remitted the local tax portions to authorities of the proper parish is not at issue in this action to collect a tax on a separate and distinct transaction involving the lease of the vehicle.
. La.R.S. 33:2737 authorizes a tax to be "levied upon the . lease or rental . of tangible personal property . in the parish". Section 2.01 of the Lafayette ordinance only purported to impose a tax on "the lease or rental . of tangible personal property . within this Parish".
. Of course, most sellers at retail have a fixed business location within the particular parish, and most retail sales occur at that location.
. Because we conclude that the Board is attempting to collect a tax on transactions beyond those authorized by the enabling statute and by the local ordinance, it is unnecessary to address the issue of whether the Board has legislative jurisdiction to enact an ordinance which requires an out-of-parish lessor to collect a tax on leases to parish domiciliaries. For a recent discussion of the constitutional requirements of a state law which requires an out-of-state seller to collect a use tax on sales to residents of the taxing state, see National Geographic Soc. v. California Bd. of Equalization, 430 U.S. 551, 97 S.Ct. 1386, 51 L.Ed.2d 631 (1977).