Sales Tax State Activity Update - July 2004

Louisiana Use Tax On Aircraft Violates Interstate Commerce Clause

The Louisiana Court of Appeal (First Circuit) held that imposition of local use tax on the purchase of two aircraft used in interstate commerce violates the Commerce Clause.

The Taxpayer, Word of Life Christian Center, purchased two aircraft for transportation to various religious functions both within and outside the state of Louisiana. The aircraft were purchased outside the state and the taxpayer received delivery outside the state. The taxpayer established by use of the aircraft logs that the aircrafts were used more than 90% in interstate commerce. Accordingly, the aircrafts had not come to rest in the parish to become a part of the mass property in the state.

The tax collector disagreed and issued two assessments on the aircrafts for use taxes due to the parish. The taxpayer paid the assessment under protest and sued for a refund. The Tax collector asserts that use tax is due even though the aircraft purchased outside the parish, the aircraft were imported into the parish for use thus subject to the parish use tax. In addition, the tax collector claimed that the “ultimate use” test does not involve the consumption of tangible personal property as this test is applicable only at retail and is not applicable to property such as trucks and aircraft.

The Court of Appeal held that the imposition of use tax against the aircraft violated the Commerce Clause as the ultimate use of the aircraft was interstate commerce and the exclusion in La. R.S. 47:305(E) is applicable to aircraft purchased by the taxpayer. The Court ordered the Collector to refund the amounts paid under protest.

The case is available at : http://www.lafcca.org/Opinions/PUB2004/200405/2003CA1399.May2004.Pub.12.pdf

(Louisiana Court Of Appeal, First Circuit, Word Of Life Christian Center v. Mark West, et al {No 2003 CA 1399} 05/14/2004) 07/04

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