Opinion ID: 1663452
Heading Depth: 3
Heading Rank: 2

Heading: Assessment of Taxes

Text: On June 13, 1995, Sheriff Stephens mailed a formal demand to Elevating Boats assessing it for unpaid sales and use taxes from January 1, 1984 to December 31, 1990. The latest month of taxes sought to be collected by that demand was for transactions in December of 1990; those taxes were due on January 20, 1991 and were set to prescribe on December 31, 1994. Thus, unless the prescriptive periods for the taxes due during this time (from January 1, 1984 to December 31, 1990) were either interrupted or suspended, the taxes had prescribed by the time the demand was made by the Sheriff on June 13, 1995 and the Parish has lost its right to assert its claim. Before reaching the merits of this issue, we must first determine whether La.Rev.Stat. § 33:2718.4 and its provisions for the interruption of the prescriptive period on sales and use taxes, a duly enacted statute effective on August 1, 1985, applies to taxes due St. Bernard Parish before August 1, 1985 (i.e. back to January 1, 1984the outset of the period for which this assessment was made). [11] Although Title I, Section 2 of the Revised Statutes states: No Section of the Revised Statutes is retroactive unless it is expressly so stated, applying a legislative act to conduct antedating the statute's enactment or upsetting a party's expectations based upon prior law does not mean that a statute is impermissibly operating retroactively. See Walls v. American Optical Corp., 98-0455, p. 5 (La.9/8/99), 740 So.2d 1262, 1266 (quoting Landgraf v. USI Film Products, 511 U.S. 244, 269, 114 S.Ct. 1483, 1499, 128 L.Ed.2d 229 (1994)). As Planiol explains: [A] law is retroactive when it goes back to the past either to evaluate the conditions of the legality of an act, or to modify or suppress the effects of a right already acquired. Outside of those conditions, there is no retroactivity. 1 Marcel Planiol, Treatise on the Civil Law, § 243 (La. State Law Inst. trans. 1959) (12th ed.1939). Furthermore, [a] law may modify the future effects of acts or even of acts prior to it, without being retroactive. Id. Finally, regarding prescription statutes, Planiol states: When a law modifies the duration of a prescription, either to lengthen it or to shorten it, prescriptions already accrued are not disturbed by it, but those which are running are affected by the change. Id. at § 248. This view is consistent with the decisions of the courts of this state. See Doyle v. St. Patrick Hosp., 499 So.2d 704, 708 (La.App. 3rd Cir.1986); Achord v. City of Baton Rouge, 489 So.2d 1373, 1376 (La.App. 1st Cir.1986); Barfield v. Barfield, 483 So.2d 1085, 1089 (La.App. 2nd Cir.1986). [12] The rationale for such decisions is that the application of a new, extended prescriptive period does not negatively affect any rights that have accrued in favor of any party, for two reasons. First, the injured party (the governing authority in this case) is the only party with any rights in the pursuit of the cause of action. The wrongdoer (the withholding corporation in this case) has only an obligation to perform or compensate. See Brown v. New Amsterdam Cas. Co., 243 La. 271, 277, 142 So.2d 796, 798 (1962). Second, this rule permitting the extension of prescriptive periods applies only to those prescriptive periods still running on the date of the statute's enactment. This is so because after the prescriptive period on an obligation has run, an obligor gains the right to plead prescription. In such a situation, that right to plead prescription has already accrued and application of a lengthened prescriptive period to revive the obligation, and effectively remove the right to plead prescription, would modify or suppress the effects of a right already acquired. 1 Planiol, supra at § 243. Thus, we have noted that the Legislature is without the authority to revive a prescribed claim. See Bouterie v. Crane, 616 So.2d 657, 664 n. 15 (La.1993); Hall v. Hall, 516 So.2d 119, 120 (La.1987) (per curiam). Consequently, we find that § 33:2718.4 and its provisions regarding the interruption of the prescriptive period on sales and use taxes are applicable to all sales and use tax obligations not prescribed on the effective date of the Act: August 1, 1985. In this case, the earliest tax obligation sought by the Parish, January of 1984, was not prescribed when the statute was enacted; thus, it (as well as the other tax obligations sought in the Rule which preceded the Act's effective date) are subject to the provisions of § 33:2718.4. The Parish contends that the prescriptive periods for these sales and use taxes have been interrupted by § 33:2718.4(B)(4), which interrupts prescription on sales and use taxes on the [f]iling of a false or fraudulent tax return. Initially, we will address the trial court's conclusion that Elevating Boats consistently filed fraudulent sales and use tax returns from 1984-1994. The Civil Code defines fraud as follows: Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction. La. Civ.Code art.1953. As discussed more fully above, the trial court specifically found: In order to gain an economic advantage, Elevating Boats, Inc. (EBI), through its president, Lynn B. Dean, intentionally, willfully, and fraudulently deprived the citizens of St. Bernard parish of critical tax revenue. In doing so, the court specifically found that Lynn Dean's testimony was impeached on so many occasions that the Court does not feel he is credible. In contrast, the court expressly believed the testimony of Marvin Acosta and Barbara Duhe. It is the task of the trial judge to determine the credibility of the witnesses and this determination will not be disturbed absent manifest error. Sevier v. United States Fid. & Guar. Co., 497 So.2d 1380, 1382-83 (La.1986) (quoting Boustany v. Fluid Dynamics, Inc., 392 So.2d 750, 751 (La.App. 3rd Cir.1980)). As we explained in Stobart v. State of Louisiana, Dep't of Transp. and Dev., 617 So.2d 880, 883 (La.1993), where two permissible views of the evidence exist, the fact finder's choice between them cannot be manifestly erroneous or clearly wrong. Here, the parties do not dispute the fact that sales and use taxes should have been paid to St. Bernard Parish; they only dispute the reason that Elevating Boats failed to pay them. Despite knowing the location of the Parish line and that the operations of the business had moved to St. Bernard Parish in the early 1970s, both Lynn and Doug Dean characterized the failure to pay taxes to St. Bernard Parish as innocent mistakes. On the other hand, Marvin Acosta testified that he was instructed by Lynn Dean not to pay taxes to St. Bernard because the taxes in Plaquemines Parish were lower. More significantly, Barbara Duhe testified that she knew the filings made between January 1984 and January 1988 were fraudulent at the time she made them and that she made the fraudulent filings at the direction of a superior, Nettie Dean. The trial court believed the version of events from Acosta and Duhe, and it was not manifestly erroneous in that finding. [13] We affirm the trial court's finding of fraud in this case. [14] Consequently, we must address what effect, if any, the filing of the fraudulent tax returns had on the prescriptive period for collection of sales and use taxes for St. Bernard Parish. [15] Liberative prescription is a procedural bar to an individual's assertion of a legal right or cause of action. The purpose of prescription is to protect an obligor from stale claims or the loss of relevant proof. See Terrel v. Perkins, 96-2629, p. 4 (La.App. 1st Cir.11/7/97), 704 So.2d 35, 38; Masson v. Champion Ins. Co., 591 So.2d 399, 402-03 (La.App. 4th Cir.1991). Because of the nature of prescription, prescriptive statutes are strictly construed against prescription and in favor of the obligation sought to be enforced. See Lima v. Schmidt, 595 So.2d 624, 629 (La.1992). Of two possible constructions of a prescription statute, one barring the action and one maintaining it, the statute will be read in such manner as to maintain the obligee's claim. See Lima, 595 So.2d at 629; Foster v. Breaux, 263 La. 1112, 1120, 270 So.2d 526, 529 (1972). With these principles in minds, we turn to the interpretation of the prescription statute at issue in this case: La.Rev.Stat. § 33:2718.4. [16] The words and phrases of the Revised Statutes are construed according to the common and approved usage of the language. See La.Rev.Stat. § 1:3. When the words of a statute are clear, they must be applied as written. See La. Rev.Stat. 1:4; Roberts v. State Farm Mut. Auto. Ins. Co., 27,501, p. 4-5 (La.App. 2 Cir. 11/1/95), 662 So.2d 821, 824. In construing legislative enactments, we must assume that the Legislature intended every word, phrase, and clause to have some meaning and that none was inserted by accident. See State v. Texas Co., 205 La. 417, 431, 17 So.2d 569, 573 (1944). Consequently, we will construe every provision of a statute in such a manner so as to give it some effect. See City of Gretna v. Aetna Life Ins. Co., 206 La. 715, 727-28, 20 So.2d 1, 5 (1944); State v. Mestayer, 144 La. 601, 604, 80 So. 891, 892 (1919). Above all else, that interpretation must give a fair and reasonable meaning to the legislation so that the intent of the Legislature is honored. See J.M. Brown Const. Co. v. D & M Mechanical Contractors, Inc., 275 So.2d 401, 404 (La.1975). Applying these principles to § 33:2718.4, we find that the sales and use taxes owed by Elevating Boats for the period between January 1, 1984 and December 31, 1990 had not prescribed when St. Bernard Parish made its assessment on June 13, 1995. As earlier indicated, § 33:2718.4 provides: A. Sales and use taxes levied by any political subdivision shall prescribe as of three years from the thirty-first day of December of the year in which such taxes became due. B. The prescriptive period running against any such sales and use tax shall be interrupted by any of the following: . . . . (4) Filing of a false or fraudulent tax return. . . . . La.Rev.Stat. § 33:2718.4. This language unmistakably indicates that the filing of a fraudulent tax return shall interrupt [t]he prescriptive period running against any such sales and use tax. Although the statute clearly mandates an interruption of prescription, the statute does not explain the effect of that interruption, when the prescriptive period begins running again after the interruption, or if the interruption contains a temporal element; thus, we will apply the basic principles of interruption from the Civil Code. Even though interruption is not defined by our Civil Code per se, article 3466 is quite clear in explaining the effect of interruption on a prescriptive period: Article 3466 Effect of Interruption If prescription is interrupted the time that has run is not counted. Prescription commences to run anew from the last day of interruption. La. Civ.Code art. 3466. Under this article, once the interruption of prescription ceases, the entire allowable prescriptive period begins to run anew, notwithstanding any amount of time that my have run before the interruption. [17] More significantly, the article mandates that once interruption has occurred, the prescriptive period does not begin to run again until the last day of interruption. The statute at issue in this case, § 33:2718.4, indicates when interruption begins (on the filing of a fraudulent tax return), but it is silent as to when the last day of interruption occurs. Elevating Boats argues that the last day of interruption is the date of the filing of the fraudulent return and, therefore, the prescriptive period on the taxes begins to run anew at the moment the fraudulent tax return is filed. We disagree. To adopt Elevating Boats's interpretation of § 33:2718.4(B)(4) would render the provision virtually meaningless. Under the plain language of the statute, a taxpayer filing a non-fraudulent return on February 20, 1987 would have any unpaid taxes from that return prescribe on December 31, 1990. Similarly, under Elevating Boats's interpretation, a taxpayer filing a fraudulent return on February 20, 1987 would have those taxes interrupted at the moment of filing, have the prescriptive period begin running again immediately, and have the taxes that should have been reported on the fraudulent return also prescribe on December 31, 1990. Thus, under Elevating Boats's interpretation, § 33:2718.4 provides no advantage to the taxing authority upon the filing of a fraudulent return. In fact, the only situation in which the filing of a fraudulent return would give the taxing authority the benefit of a longer prescriptive period is in the rare case where the fraudulent return is filed after December 31st of the year in which it was due (for instance, where the January 1987 return is both fraudulently and untimely filed after December 31, 1987). The Legislature surely intended § 33:2718.4(B)(4) to have a more significant application than the limited one such an interpretation would provide. See City of Gretna, 206 La. at 727-28, 20 So.2d at 5; Texas Co., 205 La. at 431, 17 So.2d at 573. Further, we construe prescriptive statutes in favor of maintaining a cause of action when possible. See Lima, 595 So.2d at 629; Foster, 263 La. at 1120, 270 So.2d at 529. Consequently, we will honor what surely was the Legislature's intent in regard to this statute by interpreting § 33:2718.4 as not permitting a fraudulent taxpayer to be treated the same as an honest one. Instead, we find that, under § 33:2718.4(B)(4), the filing of a fraudulent tax return interrupts the prescriptive period running on the sales and use taxes that should have been reflected on that return, had it not been fraudulent, and that the interruption continues until the taxpayer cures the fraud (the act causing the interruption) through the filing of an amended, non-fraudulent return. This interpretation grants the taxing authority three years from the date a non-fraudulent representation of taxes owed is madea period consistent with the general prescriptive period found in the Constitution and Revised Statutes. [18] In this case, we have affirmed the trial court's finding that Elevating Boats filed fraudulent sales and use tax returns monthly regarding transactions from January 1, 1984 to August 31, 1994; thus, the prescriptive periods on the tax obligations for each of those months were interrupted at the time of the filing of the respective fraudulent returns. Further, because Elevating Boats took no action to cure the fraud that caused the interruption, the obligations had not prescribed when the Sheriff filed the assessment in June of 1995. We are aware of Poirier v. Collector of Revenue, 417 So.2d 410, 411 (La.App. 1st Cir.1982), a court of appeal opinion which found that a similar statute regarding state income taxes would permit an immediate interruption of the prescriptive period on the filing of a fraudulent return and which construed the statute to allow prescription to begin running again immediately upon the filing. We see no need to overrule Poirier, however, because it was overruled by the Legislature with 1983 La. Acts No. 396, § 1. To the extent that we might address it, we do so as follows. The Poirier court reasoned: The prescription in this case was interrupted on April 25, 1967 when the false return was filed. An interruption means the previous time running was eradicated and the prescriptive period begins running anew from the time of the interruption. Hotard v. Fleitas, Inc., 67 So.2d 345 (La.App.Orleans Cir. 1953). Therefore, even though the prescription was interrupted on April 25, 1967, it began to run again and the three year period ended on April 25, 1970. Poirier, 417 So.2d at 411. Thus, the basis of the Poirier court's reasoning was that, following interruption, prescription begins running again from the time of interruption, thus, implying that interruption is an instant occurrence without a time frame component. We disagree with the court's reasoning based on the current language of our Civil Code. The Civil Code does not state that prescription begins to run anew from the time of interruption. The Code states that the period runs from the last day of interruption. La. Civ.Code art. 3466 (emphasis added). The emphasized language contemplates that interruption is more than simply an instant event; it is an event with a temporal significance. [19] Therefore, we disagree with the Poirier court's analysis and instead find that the prescriptive periods on the sales and use tax obligations for each of the months at issue were interrupted at the time of the filing of the fraudulent return pursuant to § 33:2718.4(B)(4). [20] Further, because Elevating Boats took no action to cure the fraud which caused the interruption, the interruption was continuous, and the obligations had not prescribed when the Sheriff filed the assessment in June of 1995. Consequently, the sales and use taxes owed from January 1, 1984 to December 31, 1990 are not prescribed. The court of appeal's ruling on this issue is reversed.