APPEAL FROM THE BOARD OF TAX APPEAL STATE OF LOUISIANA NO.
L00003, HONORABLE CADE R. COLE, JUDGE PRESIDING
COUNSEL FOR PLAINTIFF/APPELLANT, WILLOW BEND VENTURES, LLC
Robert S. Angelico Cheryl M. Kornick
COUNSEL FOR DEFENDANT/APPELLEE, COLLECTOR, ST. JOHN THE
BAPTIST PARISH, SALES AND USE TAX OFFICE Patrick M. Amedee
composed of Judges Fredericka Homberg Wicker, Robert A.
Chaisson, and Hans J. Liljeberg
FREDERICKA HOMBERG WICKER JUDGE
Willow Bend Ventures, L.L.C., (hereinafter "Willow
Bend") appeals the Board of Tax Appeals' judgment
awarding St. John the Baptist Parish Sales and Use Tax
Collector (hereinafter "the Collector") $1, 479,
914.17 in owed taxes, penalties, interest, and attorney fees
related to the sale of dirt from Willow Bend's borrow pit
located in St. John the Baptist Parish. For the following
reasons, we affirm the Board's judgment.
litigation arises out of past due taxes allegedly owed on the
sale of processed dirt from Willow Bend's borrow pit
located in St. John the Baptist Parish. Following Hurricane
Katrina, Willow Bend purchased a 540-acre piece of property
in the parish and underwent an extensive certification
process to have its processed dirt sold on the property
certified to be used in Corps of Engineers (COE) projects. On
May 23, 2014, the Collector issued a "Notice of
Assessment" which reflected that Willow Bend owed a
total amount of $1, 605, 244.42 to the Collector in taxes,
penalties, and interest for the tax period of January 1, 2010
to June 30, 2013.
26, 2014, Willow Bend filed a "Petition for
Redetermination of Assessment" with the Board of Tax
Appeals, representing that it had been aggrieved by the
Collector's "improper assessment of St. John Parish
sales and use tax, interest and penalties." In its
petition, Willow Bend alleged that, because the dirt sold
from its pit was used for COE projects, the sales at issue
were not "retail sales" as defined under La. R.S.
47:301(10)(g) and, thus, are not subject to sales and use
tax. On March 5, 2015, the Collector filed a reconventional
demand against Willow Bend additionally seeking attorney fees
pursuant to La. R.S. 47:337.13.1.
matter proceeded to trial on May 31, 2016 and June 1, 2016.
trial, Dr. Bob Thorn testified that Willow Bend retained him
in December 2007 to aid in the permitting and certification
process for its borrow pit. He explained the certification
process, which is required for a vendor to be approved to
sell dirt for use in COE hurricane protection levee projects.
He further testified that COE project contractors would
receive a list of COE-approved borrow pits and that Willow
Bend expended a great deal of resources to obtain
certification for its 540-acre pit.
Wayne Fletcher testified that he worked closely with the
formation of Willow Bend after Hurricane Katrina and was in
communication with the COE during that time period as well.
He testified that the dirt business following Hurricane
Katrina was lucrative and that the primary purpose behind the
development and certification of the Willow Bend borrow pit,
which he estimated at a cost of $7.5 to $8 million dollars,
was to sell dirt to be used for COE projects. He further
testified that contractors not involved in COE projects would
not have been interested in purchasing dirt from Willow Bend,
as it was priced higher than dirt at non-certified pits.
testimony, Mr. Fletcher examined the invoices and contracts
introduced into evidence to attempt to establish links
between the customers' contracts or invoices and various
COE projects. Mr. Fletcher discussed thirty customers'
contracts or invoices in his testimony. The documents
introduced into evidence reflected that while some of the
customers had contracts or invoices with clear references to
a specific COE contract, other customers' invoices
reflected vague descriptions of various projects (such as the
term "airport" or "Chalmette") with no
reference to a COE project. Additionally, various invoices
referenced a COE contract or code but the evidence reflected
that the dirt purchaser was not a COE-approved contractor
provided on the COE project "Master List" and
Willow Bend provided no subcontract or any evidence to show a
relationship between the COE project and the dirt purchaser.
Moreover, the evidence reflected that, as to some of the
invoices that related to a known COE project and contractor,
Willow Bend unnecessarily collected, but failed to remit,
taxes on those invoices. Willow Bend further acknowledged
that other customers clearly had no connection to any COE
Thomas Hook, a representative of Assured Compliance, Inc.,
testified that he works for a third-party administrator that
conducts audits for the Collector. He testified that he
participated in the audit process for the Willow Bend audit
at issue. In his testimony, Mr. Hook also thoroughly
discussed each customer's contract and/or invoices to
explain whether the customers' invoices or contracts made
any reference to any COE projects. He acknowledged that some
of the customer contracts did involve COE projects, and that
his office properly excluded that amount of sales from the
estimated taxes owed in the Notice of Assessment. He
testified that, in reviewing the invoices, he interpreted the
invoices to the "benefit of the taxpayer," meaning
that if he could recognize a code or reference to a COE
project by a COE contractor on the COE Master List, he would
exclude those invoices from his calculations. 
Hook also testified that, as to some of the contracts or
invoices that would generally be excluded as involving COE
projects, Willow Bend's records reflected that it had in
fact unnecessarily collected from those customers a total of
$48, 649.12 in sales tax in 2010; $40, 959.85 in 2011; and
$29, 825.63 in 2012 during the audit period. He further
testified that, although Willow Bend charged their customers
sales tax during this period, it did not remit the taxes
collected to the Collector and, thus, that amount actually
collected but not remitted was included in the amount owed to
the Collector in the Notice of Assessment. Mr. Hook further
testified that Willow Bend did not file tax returns or remit
any taxes during the three-year audit period at issue.
Debbie Fletcher testified that she worked in Willow
Bend's office during the audit period and handled the
billing. She testified that when trucks arrived to pick up
dirt, she would issue each truck a ticket providing the
amount of dirt loaded and that the ticket would be compared
to the amount of dirt delivered to the contractor's
site. Mr. Joe Spivey testified that he worked
for Willow Bend in the dirt processing during the audit
period. He stated that each truck was weighed before and
after it was loaded with the dirt and that Willow Bend would
issue each customer a ticket indicating the amount of dirt
April 11, 2017, the Board of Tax Appeals, the Honorable Cade
R. Cole presiding, issued a written judgment in favor of the
Collector and against Willow Bend for: $609, 471.60 in tax;
$182, 841.48 in penalties (25% late penalty and 5% negligence
penalty); $539, 608.90 in interest (1.25% per month); $133,
192.19 in attorney fees (10% of tax, penalty, and interest
due); and $14, 800 in audit costs.
amount of the judgment totaled $1, 479, 914.17. The Board, in ...