LERNER NEW YORK, INC.
NEWELL D. NORMAND, SHERIFF, AND EX-OFFICIO TAX COLLECTOR FOR JEFFERSON PARISH; JEFFERSON PARISH SHERIFF'S OFFICE, BUREAU OF REVENUE AND TAXATION, SALES AND USE TAX DIVISION
APPEAL FROM THE BOARD OF TAX APPEALS STATE OF LOUISIANA NO.
COUNSEL FOR PLAINTIFF/APPELLEE, LERNER NEW YORK, INC. Andre
B. Burvant Matthew A. Mantle John F. Fletcher
COUNSEL FOR DEFENDANT/APPELLANT, JOSEPH P. LOPINTO, III,
SHERIFF AND EX-OFFICIO TAX COLLECTOR FOR THE PARISH OF
JEFFERSON, SUCCESSOR IN OFFICE TO FORMER JEFFERSON PARISH
SHERIFF NEWELL NORMAND Kenneth C. Fonte
composed of Judges Robert A. Chaisson, Hans J. Liljeberg, and
John J. Molaison, Jr.
J. MOLAISON, JR. JUDGE
an appeal from a judgment of the Louisiana Board of Tax
Appeals ("Board") taken by petitioner, Lerner New
York, Inc. ("Lerner"), concerning a request for a
refund of $147, 967.00 of sales taxes paid under protest
pursuant to a Rule for Taxes filed by the tax collector for
Jefferson Parish ("Collector") for the period of
January 1, 2010 through April 30, 2017. The Board rendered
judgment granting partial relief to Lerner and partial relief
to the Collector. Both parties have appealed. For the
following reasons, we affirm the judgment in part, and remand
the matter to the Board with instructions as set forth in
8, 2017, following an audit in September of 2016, the
Collector filed a Rule for Taxes demanding sales taxes, plus
interest and penalties totaling $147, 576.09 collected by
Lerner from online sales to customers in Jefferson Parish for
the period of January 1, 2010 through April 30, 2017. The
petition alleges that Lerner made a "false and bad faith
claim" that it was not required to file Jefferson Parish
sales tax returns on these sales because it qualified as a
Direct Marketer under La. R.S. 47:302(K)(5).
response, Lerner paid $147, 967.00, representing the
assessment of sales taxes, plus interest and penalties, under
protest. Lerner filed a petition to the Board seeking to
recover the taxes paid under protest. In the petition, Lerner
alleged that it filed timely sales tax returns for sales
taxes collected from in-store purchases in its stores in
Jefferson Parish. Lerner also alleged it paid the sales taxes
collected on its remote online sales to customers in
Louisiana to the Louisiana Department of Taxation
("Department") "in good faith pursuant to La.
Collector answered the petition and filed a reconventional
demand reasserting a demand for taxes and making the same
claims as set forth in the Rule for Taxes. Lerner filed an
answer to the reconventional demand seeking the refund of the
sales taxes paid under protest and an award of reasonable
attorney fees and costs. Lerner also filed a motion for
partial summary judgment asserting prescription as to taxes
for the period of January 1, 2010 through November 30, 2013.
That motion was denied.
hearing on the merits of the main claim, the Board rendered a
judgment on January 8, 2019 finding that Lerner is liable to
the Collector for sales taxes collected from online sales in
Jefferson Parish, and improperly remitted to the Department
via Direct Marketer Returns for the tax periods of January 1,
2010 through April 30, 2017. The Board also determined that
Lerner is not entitled to a credit under La. R.S.
47:337.86(A)(1), but ruled that Lerner is entitled to a
credit under La. R.S. 47:337.86(E)(1) in the amount of $45,
191.14. In that judgment, the Board also ruled in favor of
the Collector for the taxes due, interest, penalties and
attorney's fees at a rate of 10% on the amount due after
the application of the credit. Finally, the Board ruled that
the parties had fifteen days to submit a proposed money
judgment with calculations in accordance with the judgment
and declared the judgment was not final or appealable.
receiving the proposed judgments from the parties, the Board
rendered a final judgment on April 16, 2019. That judgment
denied Lerner a credit under La. R.S. 47:337.86(A)(1), but
gave Lerner a credit under La. R.S. 47:337.86(E)(1) in the
amount of $45, 223.69. The judgment also found Lerner liable
to the Collector for sales taxes in the amount of $84,
611.29, interest in the amount of $27, 861.41 and penalties
in the amount of $21, 152.82. The judgment also awarded the
Collector $13, 362.55 in attorney's fees. Finally, the
judgment ordered the refund of $46, 202.61 of the taxes paid
under protest plus interest, based on direct marketer sales
tax distribution to the Collector by the Department.
Collector filed a timely appeal in which he argues the Board
erred as a matter of law by granting Lerner a credit pursuant
to La. R.S. 47:337.86 (E)(1), and, in the alternative, if a
credit is allowed, an incorrect amount was awarded. Lerner
filed an answer to the appeal and assigns eight errors
relating to the Board's determination that it was not
entitled to a full refund of taxes paid under protest, that
it was not entitled to a credit under La. R.S.
47:337.86(A)(1), and challenging the award of attorney fees,
interest and penalties to the Collector. Lerner also
challenges the interim judgment denying its motion for
partial summary judgment on the prescription issue.
is a national retail outlet selling women's clothing that
maintains brick and mortar stores in Jefferson Parish, and
also sells merchandise online through its website. Lerner
collects sales taxes from both in-store and online customers.
The taxes at issue herein relate solely to the online sales
to customers in Jefferson Parish.
maintains a third-party database that captures the online
sales and computes the sales tax based on the shipping
address. The information is retrieved monthly and sent to its
sales tax preparers. One of the reports generated relates to
e-commerce sales taxes collected throughout the entire state,
categorized by parish. The sales taxes collected through
e-commerce sales statewide were reported and paid to the
State of Louisiana on a Direct Marketer Sales Tax Return
("DMR") for each of the months in question. Sales
taxes collected in the brick and mortar stores located in
Jefferson Parish were reported and paid to the Collector.
Thomas Magaldi, the Tax Director of Lerner, testified that
EisnerAmper prepares the tax returns for Lerner. He explained
that online sales taxes collected are reported on a DMR. Mr.
Magaldi stated that an audit by the Louisiana Department of
Revenue for the sales taxes reported for the years 2015
through 2017 was just concluded. The audit resulted in no
change, no deficiency, and no under payment. Mr. Magaldi also
stated that Lerner filed two affidavits with the Department
seeking to get a refund of the Jefferson Parish portion of
the direct marketer sales tax on the theory that the taxes
were paid to an incorrect taxing authority pursuant to La.
R.S. 47:337.86. The refund was denied.
Andria Siciliano, a director of EisnerAmper, the company that
prepares the tax returns for Lerner, testified at the
hearing. Ms. Siciliano explained that her company took over
preparation of Lerner's DMR remittances from Vertex in
January of 2016. She reviewed the returns Vertex prepared
previously that were reported on the DMR. Since this was the
first time she prepared reports in Louisiana, she read and
researched the applicable statutes. Ms. Siciliano also called
the state for guidance, but could not get a definitive answer
on whether Lerner's online sales should be reported in
this manner. Based on what was historically done and her
interpretation of applicable law, Ms. Siciliano reported and
remitted the online sales taxes on a DMR to the State of
Louisiana. She testified that she signed the return and
believed it to be in compliance with law.
Galland, Assistant Director of Income Tax in the Policy
Services Division of the Louisiana Department of Revenue,
testified that the Department keeps records of the amount of
taxes collected through the DMR remittances. The Department
also keeps records of the amount of taxes distributed from
the DMR to the parishes. Ms. Galland explained that the state
collects income taxes, consumer use taxes and direct
marketer's sales taxes. After the state takes its share
of the taxes, the remainder is distributed to the parishes
throughout the state according to population.
ASSIGNMENTS OF ERROR
1) The trial court erred as a matter of law by granting
Lerner a credit pursuant to La. R.S. 47:337.86(E)(1) for
misappropriated Jefferson Parish sales taxes belonging to
Collector unlawfully used by it to pay Direct Marketer Sales
Taxes contrary to the requirements and prohibitions of La.
2) The amount of the credit awarded to Lerner is contrary to
1) The Board erred in ruling that Lerner is liable to the
Collector for any additional taxes or related amounts
relating to Lerner's online sales into Jefferson Parish
during the Sales Tax Periods.
2) The Board erred in ruling that Lerner improperly remitted
the taxes relating to Lerner's online sales into the
Parish to the Department via the Direct Marketer Returns as
such remittances were proper under the applicable tax
3) The Board erred in separately ruling that the proper
prescriptive period in this case was ten (10) years under the
judicial doctrine announced in Sabine Pipe & Supply
v. McNamara, instead of the standard constitutional and
statutory three-year prescriptive period.
4) The Board erred in separately ruling that Lerner is not
entitled to full relief under the statutory safe harbor
immunity provision in La. R.S. 47:337.86(E)(1) for the entire
amount of taxes at issue.
5) The Board erred in separately ruling that Lerner is not
entitled to a credit under La. R.S. 47:337.86(A)(1).
6) The Board erred in separately ruling that Lerner is liable
to the Collector for interest and penalties.
7) The Board erred in finding that Lerner could not have
continued to remit the sales taxes on Direct Marketer Returns
"absent gross negligence of bad faith after September
2016" based solely on the fact that the Collector began
an audit of Lerner in September 2016.
8) The Board erred in separately ruling that Lerner is liable
to the Collector for attorney's fees. In the alternative,
the Board erred in the calculation of attorney's fees.
issues presented herein require two standards of review.
Issues relating to the applicability and interpretation of
the statutes is by de novo review. Glob. Constr.
& Equip., L.L.C. v. Rathborne Properties, L.L.C.,
18-169 (La.App. 5 Cir. 5/29/19), 274 So.3d 837, 841, writ
denied, 19-01096 (La. 10/8/19). However, factual issues