Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

American Multi-Cinema, Inc. v. Normand

Court of Appeals of Louisiana, Fifth Circuit

April 3, 2019

AMERICAN MULTI-CINEMA, INC. A/K/A AMC THEATERS
v.
NEWELL NORMAND, SHERIFF AND EX-OFF ICIO TAX COLLECTOR FOR THE PARISH OF JEFFERSON

          ON APPEAL FROM THE BOARD OF TAX APPEAL STATE OF LOUISIANA NO. L00216 HONORABLE CADE R. COLE, JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, AMERICAN MULTI-CINEMA, INC. A/K/A AMC THEATERS Jaye A. Calhoun Linda S. Akchin William J. Kolarik, II

          COUNSEL FOR DEFENDANT/APPELLEE, NEWELL NORMAND SHERIFF AND EX-OFFICIO TAX COLLECTOR, JEFFERSON PARISH AND JEFFERSON PARISH BUREAU OF REVENUE AND TAXATION Kenneth C. Fonte

          Panel composed of Judges Jude G. Gravois, Robert A. Chaisson, and John J. Molaison, Jr.

          JUDE G. GRAVOIS JUDGE

         Appellant, American Multi-Cinema, Inc., a/k/a AMC Theaters, appeals a judgment of a Louisiana Board of Tax Appeals judge which granted a motion for summary judgment filed by Newell Normand, Sheriff and Ex-Officio Tax Collector for the Parish of Jefferson, and denied AMC's motion for summary judgment, thereby denying AMC's request for a refund of parish sales taxes for the taxing periods of June 1, 2011 through December 31, 2013 and January 1, 2014 through September 30, 2014 that AMC claims it overpaid to the Sheriff as the taxing authority.[1] AMC claimed that its point-of-sale software mistakenly treated virtual rewards issued to members of its loyalty program, the "Stubs Rewards Program," as "taxable cash receipts," rather than as cash discounts or retailer-issued coupons, resulting in AMC allegedly remitting an overpayment of sales taxes to the Parish. Neither the Sheriff nor the Board of Tax Appeals judge agreed with AMC's position, both denying AMC's request for a refund, though each for different reasons. Upon de novo review, for the following reasons, we affirm the judgment of the Board of Tax Appeals judge granting the Sheriff's motion for summary judgment and denying AMC's motion for summary judgment, finding no error, omission, or mistake of fact in AMC's calculation, collection, and remittance of the sales taxes in question to the Sheriff, or in the Sheriff's determination of AMC's tax liability on its Stubs Rewards Program, for the taxing periods in question.

         FACTS AND PROCEDURAL HISTORY

         AMC Theaters is a business headquartered in Leawood, Kansas, operating movie theaters nationwide, with three locations in Jefferson Parish.[2] Sales of goods and services (concessions and movie tickets) are subject to parish sales and use taxes pursuant to La. R.S. 47:301. Pertinent to this case, on April 1, 2011, AMC introduced a loyalty rewards program to its patrons called the "Stubs Rewards Program," which allowed those patrons who purchased a Stubs Rewards membership for $12 per year to accrue "virtual rewards" on the purchases of goods and services at AMC's theaters. For every $100 Stubs Rewards members spent on goods and services at AMC, they accrued a virtual reward of $10 that they could use towards the future purchase of goods and services at the theaters.[3] During the taxing periods in question, the $10 virtual reward could be redeemed in any amount of the patron's choosing, with the unused portion of the reward, if any, staying in the member's virtual account to be used towards a future purchase.[4]

         For the taxing periods at issue, AMC used a "tax inclusive" pricing structure, in which the ticket or concession was sold for a posted or fixed sales price that included all applicable state and local sales taxes, as opposed to a "tax exclusive" pricing structure, in which the ticket or concession is sold for a posted or fixed sales price upon which the sales tax is then computed as an additional charge to be paid by the purchaser.[5] This tax inclusive pricing structure was used for all transactions during the taxing periods at issue, whether or not the patron was a Stubs Rewards member. In a tax inclusive pricing structure, the sales tax to be remitted to the taxing authority is calculated by dividing the sales price by 1 plus the tax rate, and then subtracting that result from the sales price.[6]

         In 2011, not long after the introduction of its Stubs Rewards Program, AMC determined that its point-of-sale software system was treating the redeemed Stubs Rewards as taxable cash receipts, rather than as cash discounts or retailer issued coupons. In a transaction involving cash receipts, sales taxes are computed on the total amount of the sale prior to deducting the cash receipt (unadjusted sales price), and the customer pays the sales taxes computed on the unadjusted sales price. In a transaction involving a discount or retailer issued coupon, the discount or coupon amount is deducted from the sales price (adjusted sales price) and sales taxes are then computed and remitted on the adjusted sales price, in accordance with La. R.S. 47:301(13)(b)[7] and the Louisiana Administrative Code, Title 61, Part I, § 4301(C) - Sales Price - (a)(viii)(b), infra, n. 14.

         In its review, AMC determined that its treatment of the Stubs rewards was a "mistake or error" in its own software system, as per the sales tax "refund" statute, La. R.S. 47:337.77(B)(3).[8] AMC claimed that its point-of-sale system had computed the sales taxes on the unadjusted sales prices, yet from its Stubs Rewards members it had collected only the sales taxes computed on the adjusted sales prices, which caused AMC to remit to the Parish, allegedly from its own funds, the excess sales taxes which were the difference between the taxes on the unadjusted sales prices and the taxes on the adjusted sales prices. Following this determination, on May 2, 2012, AMC engaged the accounting firm of Ernst & Young, LLP to audit its accounting and sales records to determine the amount of sales taxes it had allegedly erroneously remitted to the Sheriff. In May, 2015, based upon reports generated by Ernst & Young, AMC applied to Jefferson Parish for a refund of sales taxes in the total amount of $106, 290.38 for the aforementioned taxing periods for AMC's Jefferson Parish locations.[9]

         On June 29, 2015, the Sheriff commenced an audit of AMC's three Jefferson Parish locations for sales/use taxes, for the audit period of June 1, 2011 through May 31, 2015.[10] In audit reports dated November 2, 2015, the auditors disallowed AMC's tax refund claims, finding that AMC had properly treated the Stubs Rewards as taxable cash receipts, and recommended that the Sheriff deny the refund requests. The Sheriff denied the refund requests by letters to AMC dated December 23, 2015.[11]

         Thereafter, AMC timely filed an "Appeal of Disallowance of Tax Refunds" with the Louisiana Board of Tax Appeals. Following motion practice and discovery, the parties filed cross-motions for summary judgment. After a hearing on the cross-motions for summary judgment, the Board of Tax Appeals judge rendered a judgment on March 18, 2018 that granted the Sheriff's motion for summary judgment, denied AMC's motion for summary judgment, and denied AMC's Petition for Refund, thereby denying AMC's requested refunds. In undated written reasons for judgment, the judge provided that AMC's requests for refunds were denied on the basis that the evidence showed that AMC's patrons, not AMC, had paid the disputed amount of excess sales taxes, and thus no tax refunds were due to AMC. The judge's written reasons did not explicitly address the Sheriff's audit finding that the Stubs Rewards were taxable cash receipts. This timely appeal followed.[12]

         On appeal, AMC argues that there is no genuine issue of material fact, and as a matter of law, AMC's Stubs Rewards are cash discounts that reduce the taxable sales price and that the judge erred in concluding that AMC had not met its burden of proof that it was entitled to the tax refunds requested. AMC further argues that the Board of Tax Appeals judge erred in concluding that AMC's tax inclusive pricing model caused AMC's customers, rather than AMC, to make the erroneous overpayment of taxes. In this regard, AMC argues that: a) under a tax inclusive pricing model, the vendor (not the customer) accrues and pays the tax; and b) AMC's overpayments are not taxes paid by customers, but rather, are AMC's own funds. Finally, AMC argues that the judge erred in applying the tax principles incorrectly, or in applying the tax principles that have no application to a tax inclusive pricing model.

         The Sheriff, in brief, argues that the evidence is clear that AMC's Stubs virtual reward is a taxable cash receipt, based upon AMC's actual treatment of the reward, both in its point-of-sale software and in its patrons' individual reward accounts, as well as in statements AMC made in its Stubs Rewards Program terms and conditions disseminated to members. The Sheriff further cites to evidence of actual transactions from the refund periods that its auditor considered, furnished to the Sheriff by AMC during discovery, that show the sales taxes were properly computed and that AMC's Stubs Rewards members rather than AMC paid the sales taxes AMC now claims should be refunded.

         LAW AND ANALYSIS

         After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(A)(3). A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. King v. Illinois Nat. Ins. Co., 08-1491 (La. 4/3/09), 9 So.3d 780, 784.

         The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. La. C.C.P. art. 966(D)(1).

         Appellate courts review summary judgments de novo using the same criteria applied by trial courts to determine whether summary judgment is appropriate. Pizani v. Progressive Ins. Co., 98-225 (La.App. 5 Cir. 9/16/98), 719 So.2d 1086, 1087. A de novo review or an appeal de novo is an appeal in which the appellate court uses the trial court's record, but reviews the evidence and law without deference to the trial court's rulings. Wooley v. Lucksinger, 06-1140 (La.App. 1 Cir. 12/30/08), 14 So.3d 311, 352; Sarasino v. State through Department of Public Safety and Corrections, 16-408 (La.App. 5 Cir. 3/15/17), 215 So.3d 923, 927. The decision as to the propriety of a grant of a motion for summary judgment must be made with reference to the substantive law applicable to the case. Muller v. Carrier Corp., 07-770 (La.App. 5 Cir. 4/15/08), 984 So.2d 883, 885.

         Both parties agree that the substance of a transaction, not its form, controls for the purpose of classifying a transaction as taxable or not. J & B Pub. Co. of La., Inc. v. Secretary, La. Dept. Rev. & Taxation, 34, 105 (La.App. 2 Cir. 12/15/00), 775 So.2d 1148.

         On appeal, AMC first argues that there is no genuine issue of material fact, and as a matter of law, AMC's Stubs Rewards are cash discounts that reduce the taxable sales price and that the judge erred in concluding that AMC had not ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.