Opinion ID: 1663452
Heading Depth: 2
Heading Rank: 5

Heading: Interest, Penalties, and Attorney Fees

Text: The final issue that we determine must be resolved in this case is the trial court's assessment of 15% interest and 10% attorney fees on the tax obligation of Elevating Boats. The St. Bernard Parish ordinance pertaining to penalties, interest, and attorney fees provides: If the amount of the tax due by the dealer is not paid on or before the twentieth (20th) day of the month next following the month for which the tax is due, there shall be collected, with said tax, interest upon said unpaid amount, at the rate of six percent (6%) per annum, or fractional part thereof, [and] there shall also be collected a penalty equivalent to five percent (5%) for each thirty (30) days, ... not to exceed twenty-five percent (25%) in aggregate, of the tax due, ... and in the event of suit, attorneys' fees at the rate of ten percent (10%) of the aggregate of tax, interest and penalty. St. Bernard Parish Sales and Use Tax Ordinance § 9.03 (emphasis added). Thus, in total, the Parish ordinance permits the imposition of a maximum of a 6% annual interest penalty as well as a one time delinquency penalty of 25% and attorneys fees totaling 10% of tax, interest, and penalties at collection. In contrast, the state statute pertaining to penalties for unpaid local government sales and use taxes provides: Upon local taxes not paid and delinquent thirty days after the date upon which the tax is due, there shall be an interest penalty of one and one-quarter percent per month on the amount of the tax due, which shall be collected by the tax recipient body, together with and in the same manner as the tax. La.Rev.Stat. § 33:2746 (emphasis added). Thus, this statute regarding unpaid local government sales and use taxes permits the imposition by a local governing authority of a 15% interest penalty alone over a year's time (1¼% per month). We have addressed, in earlier cases, conflicts between a state statute and a parish ordinance regarding sales and use taxes. In BP Oil Co. v. Plaquemines Parish Government, 93-1109 (La.9/6/94), 651 So.2d 1322, the Plaquemines Parish's sales and use tax ordinance granted the taxpayer one rate of interest for a refund owed for overpayment of taxes. In contrast, the Revised Statutes set a higher level of interest to be given a taxpayer in such a situation. In resolving this conflict, we found: [A] local government, while constitutionally empowered to levy a local use tax without legislative authorization and to fix the rate of the tax, cannot go beyond the taxing limits set by the Legislature. In La.Rev.Stat. 33:2718A(2), which is found in the Sales Tax Section of the Chapter of Title 13 on Taxation and Fiscal Affairs, the Legislature fixed the interest rate generally on tax refunds or credits. Therefore, the Parish's fixing of the rate of interest on refunds to taxpayers on local use taxes at less than the amount fixed by the Legislature is invalid, and the statute prevails in the event of conflict. BP Oil Co., 93-1109 at p. 19-20, 651 So.2d at 1333. While upholding the state statute over the local ordinance in BP Oil, we reasoned that a Parish ordinance could not be less beneficial to the taxpayer than state law required. Therefore, we found that the rate of interest due on the taxpayer's refund pursuant to state law would control. We find that the Parish's combined interest, penalty, and attorney fees cannot exceed the 15% interest penalties permitted by La.Rev.Stat. § 33:2746. Just as the parish ordinance cannot be less beneficial to the taxpayer than a state statute regarding refunds, it similarly cannot be more burdensome regarding delinquencies. In this case, the Parish ordinance permits a 6% per annum interest charge, a 25% maximum delinquency penalty geared to the length of delay, and a 10% attorney fee in the event of a lawsuit. The state statute, on the other hand, permits only a 15% annual interest penalty (1¼% per month). We find that the Parish ordinance's increased burden on the taxpayer is impermissible and that the state statute's 15% interest penalty sets the maximum allowable burden for delinquent taxes. Therefore, Elevating Boats is responsible for no more than the 15% interest penalty permitted by La.Rev.Stat. § 33:2746. We will remand to the district court for a determination of the exact amount owed.