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First Transit, Inc. v. Barfield

Court of Appeals of Louisiana, First Circuit

November 13, 2014

FIRST TRANSIT, INC.
v.
TIM BARFIELD, EXECUTIVE COUNSEL AND ACTING SECRETARY, DEPARTMENT OF REVENUE, STATE OF LOUISIANA, AND THE STATE OF LOUISIANA

On Appeal from The 19th Judicial District Court, In and for Parish of East Baton Rouge, State of Louisiana Trial Court No. C618259 The Honorable Timothy E. Kelley, Judge Presiding

Christopher J. Dicharry Angela W. Adolph Baton Rouge, Louisiana Attorneys for Plaintiff/ Appellee, First Transit, Inc.

Johnette L. Martin Baton Rouge, Louisiana Attorney for Defendant/ Appellant, Louisiana Department of Revenue

BEFORE: PARRO, McDONALD, AND CRAIN, JJ.

CRAIN, J.

The issue presented by this appeal is whether buses provided exclusively for the transit needs of Louisiana State University qualify for sales tax relief applicable to a "school bus . . . used exclusively in a public school system" pursuant to Louisiana Revised Statute 47:30l(10)(i). The Louisiana Board of Tax Appeals (Board) ruled that the buses did not qualify for the sales tax relief; however, on judicial review, the Nineteenth Judicial District Court reversed the Board and found that the buses did satisfy the statutory requirements. We affirm.

FACTS AND PROCEDURAL HISTORY

The parties stipulated to most of the relevant facts in this matter. After a public bid process, First Transit, Inc. entered into an exclusive contract with LSU to provide transportation services for the university. Pursuant to that contract, First Transit operates the bus system for LSU to meet the "ever expanding transit needs of [LSU's] approximately 40, 000 (and growing) student population, faculty, staff, administration, visitors, and guests." The buses are purple and/or white with gold markings and signs, and have "LSU" displayed on their exterior. The bus routes are established and approved by LSU, and most, if not all, of the routes originate or terminate on LSU's campus. The predominant use of the buses is on LSU's campus, and riders of the buses primarily include students of LSU, faculty and staff of LSU, visitors to and guests of LSU, but may include members of the general public. First Transit is compensated by LSU based upon the hours of service provided by the buses, and no fare is charged to any bus rider. In addition to the scheduled routes required by the contract, LSU has the sole authority to dictate non-scheduled uses of the buses, including charters by sponsored LSU organizations.

In a request filed with the Louisiana Office of Motor Vehicles, First Transit sought a refund of $699, 048.34 for sales/use taxes paid by First Transit for the buses used to provide transportation services for LSU. The refund request relied on Louisiana Revised Statute 47:301(10)(i), which provides:

The term "sale at retail" does not include the purchase of a new school bus or a used school bus which is less than five years old by an independent operator, when such bus is to be used exclusively in a public school system. This exclusion shall apply to all sales and use taxes levied by any local political subdivision.

The Office of Motor Vehicles denied the request and gave the following reason:

School buses used in higher education do not qualify for the exemption referenced in RS 47:301(10)i. The exemption is for school buses used exclusively to transport students to and from primary and secondary schools in the public school system.

First Transit filed a petition with the Board seeking further review of its refund request and named the Department of Revenue, State of Louisiana, (Department) as a defendant. The matter proceeded to a hearing, where the parties stipulated to the pertinent facts in a "Statement of Joint Stipulated Facts" filed with the Board. First Transit argued that the subject buses satisfy the requirements of Section 47:301(10)(i) because the phrase "school bus" should include buses that transport postsecondary students, such as LSU students, and the buses are used pursuant to an exclusive contract with LSU, which is a public school. First Transit also asserted that Section 47:301(10)(i) is an "exclusion" from taxation, rather than an "exemption"; and, therefore, the provision should be interpreted in favor of the taxpayer. First Transit relied on the joint stipulation and did not call any witnesses at the hearing.

The Department called four witnesses, William Waters, the general manger of First Transit; Toni Watson, an employee of the Office of Motor Vehicles; Lynn Bonnecaze, a revenue tax specialist supervisor for the Department; and Raymond Tangney, the assistant director of the Tax Administration Division at the Department. Their testimony mostly repeated information that was already established by the joint stipulation. Waters testified that the purpose of the buses is to provide transportation for LSU students, although anyone can get on a bus. No fares are charged to riders, and LSU is the only entity invoiced by First Transit. He also confirmed the specific routes assigned to the buses and that the routes are intended to transport students and staff to and from LSU. According to Waters, if the contract limited passengers to LSU students, First Transit would comply with that requirement, because First Transit is operating exclusively for the benefit of LSU as directed by the contract. Watson, Bonnecaze, and Tangney essentially confirmed the Office of Motor Vehicle's decision and stated reason for denying the request for ...


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