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Tax Facts Vol. 18, No. 1

Tax Facts Index

TAX FACTS NEWSLETTER

East Baton Rouge Parish

Department of Finance

Vol. 18,  No. 1

January 2007

RENTAL OF PORTABLE TOILET FACILITIES NOW TAXABLE

According to Louisiana Department of Revenue Ruling No. 06-013 issued September 19, 2006, the furnishing of temporary portable toilet facilities is considered as a lease or rental of tangible personal property because the customer pays a consideration for the right to use the property without acquiring the title to the property. The portable toilet is clearly classifiable as tangible personal property because it is movable property.

Louisiana Revised Statute 47:302(B) levies a tax upon the gross proceeds derived from the lease or rental of tangible personal property, where the lease or rental of such property is an established business, or part of an established business, or the same is incidental or germane to the said business. Louisiana Revised Statute 47:302(B)(2) levies a tax upon the monthly lease or rental price paid by lessee or rentee, or contracted or agreed to be paid by lessee or rentee to the owner of the tangible personal property. Louisiana Revised Statute 47:301(7)(a) defines the term “lease or rental,” as “the leasing or renting of tangible personal property and the possession or use thereof by the lessee or renter, for a consideration, without transfer of the title of such property”.

Louisiana Administrative Code title 61:I.4303(B)(1)(e) provides that “operating expenses and maintenance costs for keeping leased property in repair cannot be deducted from gross proceeds in arriving at the taxable base.” This means that the charges to the customer for waste removal and sanitation of the portable toilets are included in the taxable base. However, because of the judicial decision in McNamara v. Patterson Services Inc., 382 So, 2d 971(La. App. 1 Cir. 1980) sales tax shall not apply to any separately stated charges for the delivery and pick up of the leased or rented property.

The Revenue Division takes the position that the furnishing for consideration of the temporary use of portable toilet facilities are taxable as leases or rentals. The taxable base will include the charges for the lease or rental, as well as any charges for the cleaning and sanitation of the facilities, regardless of whether those charges are or are not separately stated. Additionally, any separately stated charges for the delivery and pick up of the property are excludible from the taxable base on the lease or rental of the property. The tax on leases and rentals must be remitted by the 20th of the months following the months in which payments for leases and rentals are collected.

The portable toilet facilities and other durable tangible personal property that dealers acquire for the exclusive purpose of lease or rental as tangible personal property are eligible as a tax exempt purchase pursuant to Louisiana Revised Statute 47:301(10)(a)(iii).

This change is prospective and becomes effective on January 1, 2007. As a result, dealers will not be allowed to claim prior purchases of toilet facilities as tax exempt under the above statute. All dealers, however, will be required to collect the sales or use tax on leases and rentals of portable toilet facilities as of January 1, 2007, regardless of whether the sales or use tax was paid at the time the property was purchased for lease or rent.

Any questions regarding this position change should be directed to the Revenue Division at 225-389-3084.

SIX BATON ROUGE BUSINESSMEN INDICTED BY GRAND JURY

According to a news article which appeared in the Advocate on December 12, 2006, a grand jury alleges Roman’s Café owner Jamal Roman, Arzi’s Restaurant and Cajun Café owner Rostom Laymon and others under reported their sales to state and local governments. The estimated loss in sales tax revenue is $1 million in addition to an unknown amount of payroll taxes.

Those charged include:

Jamal Roman of Baton Rouge, owner of Mes Padres, formally Papacito’s Restaurant in Prairieville and on Bluebonnet Boulevard; Roman’s Café on Perkins Road, Roman’s Mediterranean Restaurant on Airline Highway and Roman’s Lebanese Greek Market on Government Street. Roman is charged with seven counts of mail fraud in connection with sales tax and payroll tax fraud and three counts of bribery.

Rostom Laymon, owner of Arzi’s Restaurant on Government Street and Arzi’s Express and Cajun Café in the Mall of Louisiana. Laymon is charged with nine counts of mail fraud in connection with sales tax and payroll tax fraud and three counts of bribery. He intends to plead guilty.

Humam Al-Alousi, who owns Side Stop Convenience store on Florida Boulevard and General Goods of Louisiana on Greenwell Springs Road is charged with two counts of mail fraud, one count of bribery, one count of using an interstate facility in aid of racketeering, and lying to a federal agent. Al-Alousi intends to plead guilty.

Khoa Dinh Chau, who owns Lee’s Grocery on Foster Drive and Weller’s Grocery on Weller Avenue, pleaded guilty in November to one count of mail fraud and bribery. Sentencing has not been scheduled.

Hassan Abouosayd, owner of Pennywise Accounting and Tax Service, pleaded guilty in August to four counts of bribery and one count of using an interstate facility in aid of racketeering. Sentencing has not been scheduled.

Mohamed Ruman is charged with two counts of mail fraud.

The investigation began three years ago, but the indictments and plea agreements were kept secret until December 2006.

OCCUPATIONAL LICENSE TAX RENEWALS

Occupational License Tax Renewals for 2007 were mailed to businesses in early December. Licenses renewed after March 1, 2007, will be deemed delinquent and subject to penalty and interest. Penalty at the rate of 5% per month or fractional part thereof, not to exceed 25%, and interest at the rate of 1.25% per month, or fractional part thereof, will be computed from the first day of March and will increase on the first day of each succeeding month.

OCCUPATIONAL LICENSE TAX RENEWALS ON-LINE

Any registered occupational license taxpayer that receives a personal identification number (PIN) along with their renewal form, is eligible to file and pay their 2007 Occupational License Tax on-line. You can access our website at www.brgov.com/dept/finance and click on Occupational License Tax Renewals to pay on-line. Renewals for tax codes 1520 (Service) and 1525 (Retail Dealer) with gross receipts of less than $2,500 will not be accepted on-line. Those taxpayers must file a paper return.

Remember to mail your return early!  Returns bearing a U.S. postmark on or after the above delinquent dates will be assessed penalty, interest, and loss of vendor's compensation.

Sales Tax Due Dates

Following are the sales tax due dates for the first quarter of 2007:

For the Month of Tax Due Date Delinquent
Date
January February 1 February 21
February March 1 March 21
March April 1 April 21

Need help?

Taxpayers may contact the Revenue Division by phone or fax to receive assistance between the hours of 8 a.m. and 5 p.m., Monday-Friday.

Taxpayer Assistance: (225) 389-3084
Fax Number: (225) 389-5369

 

Taxpayer Topics

The Tax Facts Newsletter is issued quarterly by the Finance Department/Revenue Division.  Our mission is to provide taxpayers with information concerning developments and policies regarding the collection of local sales and use taxes within East Baton Rouge Parish.  The Revenue Division invites any suggestions, questions or comments that you would like addressed in future issues of Tax Facts.  Please send these items to:

City of Baton Rouge -
 Department of Finance
P. O. Box 2590
Baton Rouge, LA  70821-2590
Attention:  Steve Thomas
or send us an e-mail
 

Department of Finance - Revenue Division
222 St. Louis Street, Room 404
Baton Rouge, LA  70802

Proud Member of the Louisiana Association of Tax Administrators External web link not maintained by City of Baton Rouge