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FMT Shipyard & Repair, LLC v. Sheriff

Court of Appeals of Louisiana, Fifth Circuit

May 30, 2019

FMT SHIPYARD & REPAIR, LLC
v.
NEWELL NORMAND SHERIFF AND EX-OFFICIO TAX COLLECTOR, JEFFERSON PARISH AND JEFFERSON PARISH BUREAU OF REVENUE AND TAXATION

          ON APPEAL FROM THE BOARD OF TAX APPEAL, STATE OF LOUISIANA NO. L00214, LOUISIANA BOARD OF TAX APPEALS

          COUNSEL FOR PLAINTIFF/APPELLANT, FMT SHIPYARD & REPAIR, LLC Jason R. Brown William J. Kolarik, II

          COUNSEL FOR DEFENDANT/APPELLEE, JOSEPH P. LOPINTO, III, SHERIFF AND EX-OFFICIO TAX COLLECTOR, JEFFERSON PARISH AND JEFFERSON PARISH BUREAU OF REVENUE AND TAXATION Kenneth C. Fonte

          Panel composed of Judges Marc E. Johnson, Robert A. Chaisson, and Stephen J. Windhorst

          ROBERT A. CHAISSON JUDGE

         Taxpayer, FMT Shipyard & Repair, LLC ("FMT"), appeals a final judgment of the Louisiana Board of Tax Appeals - Local Division ("the Board") that denied its petition for redetermination of taxes owed, rendering judgment in favor of the Sheriff of Jefferson Parish, as Tax Collector ("the Sheriff"), and against FMT, in the amount of $23, 800.00, plus applicable penalties and attorney's fees. For the following reasons, we affirm the judgment of the Board of Tax Appeals.

         FACTS & PROCEDURAL HISTORY

         FMT operates a shipyard in Harvey, Louisiana, where it performs various services and repairs to floating ships and barges that are used in the inland waterways of the United States of America. Its principal business is performing repairs to vessel hulls, as well as various other steel repairs, for the purposes of returning vessels to seaworthiness. The work is performed on-site at its Harvey shipyard. In connection with these repairs, FMT fabricates certain parts, such as propeller shafts, rudders, rudder shafts, and stairwells. Each of these parts is typically unique to the vessel being repaired.

         FMT began operating in Jefferson Parish in 2008. At that time, and throughout the taxable period at issue, 2010 to 2013, FMT registered and paid occupational license taxes ("OLT") under the "contractor" designation as set forth in Jefferson Parish Code Ordinance ("J.P. Code Ord.") Sec. 35-182. Under this classification, FMT paid OLT in the amount of $700.00 per year.

         In 2015, the Sheriff conducted an audit of FMT for the tax years 2010 through 2013 and determined that FMT should have paid its OLT under the classification of "shipbuilder" as provided by J.P. Code Ord. Sec. 35-175, which imposed a higher OLT rate than that of the "contractor" classification. Following the audit, on December 23, 2015, the Sheriff sent a Notice of Delinquent Taxes -Formal Assessment to FMT, which claimed a total OLT deficiency of $41, 015.88, consisting of $23, 800.00 in tax, $11, 265.88 in interest, and $5, 950.00 in penalties for the taxable period.[1]

         On January 15, 2016, FMT timely filed with the Louisiana Board of Tax Appeals a petition for redetermination of the Sheriffs OLT assessment. In its petition, FMT claims that during the taxable period it erroneously, but not improperly, claimed to be a "contractor" while it should have been classified as a "manufacturer" and is therefore exempt from all OLT liability. The Sheriff filed an answer and reconventional demand in which he rejected FMT's claim to be a manufacturer and demanded attorney's fees in addition to the total amount of tax, interest, and penalty owed.

         Following a hearing on the matter during which both parties introduced documentary evidence and testimony from accountants and auditors, the Board rendered judgment with written reasons denying FMT's petition for redetermination and further rendered judgment in favor of the Sheriff in the amount of $23, 800.00 in tax and $5, 950.00 in penalty, together with interest and 10% attorney's fees on the amount of tax, penalty, and interest due.

         On appeal, FMT raises numerous assignments of error which may be generally summarized: first, the Board legally erred in failing to classify FMT as either a "manufacturer"" or, in the alternative, as a simple "contractor" for purposes of the Jefferson Parish OLT; and second, the Board legally erred in failing to rule that the Jefferson ...


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