Opinion ID: 2536857
Heading Depth: 1
Heading Rank: 1

Heading: facts and relevant procedural history

Text: In late 2002 Harrah's purchased Louisiana Downs, a racetrack in Bossier City. Harrah's immediately opened a temporary slot machine facility and hired a contractor to build a permanent facility. It drafted a document naming the contractor an Agent of Tax Exempt Entity and authorizing the general contractor to pass the designation on to subcontractors. The contractors made purchases totaling several million dollars without paying any sales or use tax. [1] The Department of Revenue conducted an audit of Harrah's operations and determined the slot-related purchases were not tax exempt. The State presented Harrah's with a bill for approximately $2.3 million in back taxes from January 2003 through December 31, 2005. Harrah's paid the amount under protest, and has continued to pay monthly sales and use tax remittances under protest. Harrah's then filed suit to recover the monies it paid under protest. [2] The State filed a reconventional demand seeking judgment against Harrah's in the amount of all taxes paid under protest, plus attorneys' fees pursuant to La.Rev.Stat. § 47:1512. The parties filed cross-motions for partial summary judgment. The State's motion for partial summary judgment urges during the entire Audit Period [defined as January 1, 2003 to December 31, 2005] La. R.S. 4:168 was suspended, ineffectual, and null and void. Harrah's cross-motion for summary judgment poses the following issue: Do the provisions of La. R.S. 4:168 and La. R.S. 4:227 apply to purchases made by [Harrah's] for the improvement and operation of its Racetrack, including purchases related to the slot parlor and to the `common areas' of the Racetrack? Harrah's also filed a peremptory exception of prescription. The trial court granted the State's motion for partial summary judgment, finding La.Rev.Stat. §§ 4:168 and 4:227 to be sales tax exemptions that were suspended during the audit period by the Legislature pursuant to La. R.S. 47:302 Q and La. R.S. 47:302 R. The court pretermitted consideration of Harrah's cross-motion for summary judgment, and overruled Harrah's exception of prescription. The partial judgment was certified as final and immediately appealable under La.Code Civ. Proc. art. 1915(B). The First Circuit reversed in a split decision. Harrah's Bossier City Investment Company, LLC v. Bridges, 2008-1727 (La.App. 1 Cir. 7/27/09), 22 So.3d 921. Judge Hughes, writing for the majority, held for Harrah's in finding no ambiguity in the language of LSA-R.S. 4:168 and LSA-R.S. 4:227.... These provisions effectively remove the horse racing and offtrack wagering industry from the application of the general sales tax law. Id. at 931. The majority opinion held §§ 4:168 and 4:227 are neither exemptions nor exclusions; instead, they create a unique taxing scheme solely directed at racetrack operators. Id. at 931-32. Footnote 11 of the court's decision extended this unique taxing scheme to Harrah's slot machine operations: This holding also applies to Harrah's slot machine casino, opened pursuant to LSA-R.S. 27:351 et seq. Judge Guidry concurred in part and dissented in part. Although he agreed La. Rev.Stat. §§ 4:168 and 4:227 were not exemptions suspended by La.Rev.Stat. § 47:302(Q)-(R), he would not apply the racetrack's tax immunity to purchases related to the slot gaming facility. Id. at 933-34. Judge McDonald dissented: I believe La. R.S. 4:168 and La. R.S. 4:227 provide for an exemption from the taxes. Once these exemptions were suspended by the Legislature pursuant to La. R.S. 47:302(Q) and (R) the taxes became due. Id. at 934. Judge McDonald noted the race track operators would be subject to sales, excise, and occupational taxes just like everyone else were it not for the action of the legislature. Id. This, he reasoned, created an exemption, which is a provision which exempts from tax a transaction which would, in the absence of exemption, otherwise be subject to tax. Tarver v. World Ship Supply, Inc., 615 So.2d 423, 426 (La.App. 4 Cir.1993), writ denied, 616 So.2d 672 (La. 1993). Finding the lower courts' analysis of the tax relief provisions troubling, we granted the State's writ application at 2009-1916 (La. 11/25/09), 22 So.3d 166.