Rules 26-50
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Subject Index

Rule 1.  Bracket Schedule
Rule 2.  Deliveries and Storage of Tangible Personal Property in the Parish
Rule 3.  Export Sales
Rule 4.  Nonresident Purchases
Rule 5.  Transactions in Interstate and Foreign Commerce - Use Tax
Rule 6.  Sales to Taxing Jurisdiction Departments and Constitutional Offices
Rule 7.  Sales to Federal Government, State of Louisiana, and their Agencies
Rule 8.  Sales to Religious Institutions
Rule 9.  Use Tax
Rule 10. Liability for Payment
Rule 11. Certificate of Registration
Rule 12. Resale Exemption Certificates
Rule 13. Gratuities
Rule 14. Cash Discounts
Rule 15. Transportation Charges
Rule 16. Finance and Service Charges
Rule 17. Federal Excise Taxes
Rule 18. Record Keeping
Rule 19. Advertising "Tax-Free"
Rule 20. Intercompany Transactions
Rule 21. Premiums and Other Gifts
Rule 22. Exchanges and Adjustments
Rule 23. Returned Merchandise
Rule 24. Bad Debts
Rule 25. Repossessions

Rule 1. Bracket Schedule

A.   All taxes shall be calculated and collected according to the integrated tables prepared by the Louisiana Department of Revenue.

B.   1.  On all taxable transactions in the taxing jurisdiction, other than those listed in Subsection C below, the following table shall apply:

B.  2.  On May 5, 2001, the voters in the City of Baker approved a 1/2% sales and use tax increase.  The total local sales and use tax rate in the City limits of Baker will change from 5% to 5½% effective October 1, 2001.  The following table applies to taxable transactions in the City of Baker and the Central Community School District.  On May 2, 2009, the voters in the Central Community School District approved an additional 1/2% sales and use tax increase.  The total local sales and use tax rate in the Central Community School District will change from 5% to 5-1/2% effective July 1, 2009.

C. The following exemptions specifically apply to the additional 1/2% tax that became effective January 1, 1989 (sewer and sewerage work), the additional 1/2% tax that became effective July 1, 1990 (street improvement), the 1% East Baton Rouge Parish School Board/Educational Facilities Improvement District tax that became effective July 1, 2000, and the 1% Zachary Community School District Educational Facilities Improvement District that became effective July 1, 2003.

1. Drugs prescribed by a physician or dentist;

2. Orthotic and prosthetic devices and wheelchairs and wheelchair lifts prescribed by physicians or licensed chiropractors for personal consumption or use;

3. The sale or purchase of any ostomy, ileostomy or colostomy device or any other appliance, including catheters or any related items which are required as the result of any surgical procedure by which an artificial opening is created in the human body for the elimination of natural waste;

4. Patient aids prescribed by a physician or a licensed chiropractor for home use;

5. Food sold for preparation and consumption in the home, including by way of extension and not of limitation, bakery products; dairy products; soft drinks; fresh fruits and vegetables; package foods requiring further preparation by the purchaser; and

6. Any and all medical devices used personally and exclusively by the patient in the medical treatment of various diseases under the supervision of and prescribed by a registered physician.

D. With respect to transactions involving the exemptions in Subsection C, the following table shall apply:

E. The brackets provided herein are applicable only to transactions that are taxable by the taxing jurisdiction. Similarly, the rates apply only to the 3%, 5%, and 5½% tax collected by the Finance Director and do not include taxes levied by the State of Louisiana.

Rule 2. Deliveries and Storage of Tangible Personal Property in the Parish

A.   In general, every sale of tangible personal property within the Parish is taxable, whether the purchaser or agent of purchaser picks up the merchandise or has it delivered. However, where the merchandise is delivered by the seller to a bona fide destination outside the Parish, the transaction is not taxable.

B.   Dealers must register with the Parish and collect tax when delivering tangible personal property into the Parish via their own vehicle (leased vehicles included) or enjoying the benefits of Parish services such as police protection, use of roads when performing taxable services in this Parish for the benefit of customers or otherwise establishing nexus with the Parish.

C.   When property comes to rest in the Parish and has become a part of the mass of property in the Parish, its sale, use, consumption, distribution, or storage for use in the Parish will be taxable. Transactions involving specific pieces of property delivered to a buyer in the Parish via carrier other than the seller’s vehicle, which have had invoices or purchase orders clearly labeled (earmarked) for transshipment outside the Parish at the time of the property’s manufacture or importation into the Parish, are exempt from use tax even though such property may be stored in the Parish for an indefinite period of time. Any disposition of the property for a purpose contrary to that originally labeled (earmarked) would immediately subject the transaction to tax.

D.   When merchandise is delivered to the buyer at a point in this Parish from a point outside the Parish via a seller's own vehicle, or when a seller in this Parish delivers goods to a buyer in this Parish, the transaction is subject to tax in this Parish. When the seller's vehicle is used, tax is due regardless of whether the goods are invoiced for use in another jurisdiction and stored in this Parish or whether the goods are delivered in this Parish and immediately put on the buyer's truck and transported outside the Parish. The key factor in the transaction is the delivery in this Parish via the seller's vehicle or by the seller's agent. In such event, the seller is physically giving possession of the goods to the buyer in the Parish and the place of storage or subsequent use of the goods is immaterial.

Rule 3. Export Sales

The power to regulate commerce with foreign nations is vested in the Congress of the United States. Accordingly, the taxing jurisdictions do not tax sales of tangible personal property requiring shipment to a foreign country.

Rule 4. Nonresident Purchases

If a nonresident of this Parish purchases articles of tangible personal property or taxable services from a dealer in this Parish and the transfer of title or possession or repair service takes place in this Parish, the sale is subject to the tax levied by the local taxing ordinance. It is immaterial that the property purchased or repaired will be subsequently transported outside this Parish or State.

Rule 5. Transactions in Interstate and Foreign Commerce - Use Tax

Even though a transaction is one in interstate or foreign commerce, if the property which is the subject of the transaction is brought into this Parish for use or consumption, use tax is owed. If the out-of-parish vendor is not engaged in business in this Parish within the meaning of the ordinance, the vendor is not required to collect use tax. However, the vendor's customer in this Parish must report and pay the use tax directly to the Finance Director. If the vendor is engaged in business in this Parish, he qualifies as a dealer under the ordinance and must collect and remit the use tax to the Finance Director. "Engaged in business" means and includes any of the following methods of transacting business: Maintaining directly, indirectly or through a subsidiary, an office, distribution house, sales house, warehouse, or other place of business; renting or leasing tangible personal property in the Parish; having an agent, salesman or solicitor operating within the Parish under the authority of the seller or its subsidiary, irrespective of whether such place of business, agent, salesman, or solicitor is located in the Parish permanently or temporarily or whether such seller or subsidiary is qualified to do business in the Parish; making deliveries into the Parish via the seller's vehicle; or enjoying the benefits of services provided by the Parish such as police protection, use of roads when performing taxable services in the Parish for the benefit of customers, or any other method satisfying jurisprudential requirements of nexus.

(See also Rule 9 for general rules concerning Use Tax.)

Rule 6.  Sales to Taxing Jurisdiction Departments and Constitutional Offices

A.   When construction materials, supplies, equipment or other items of tangible personal property are sold and billed by the seller to the local taxing jurisdictions or any of the departments or agencies thereof, and such sales are paid for by such agencies, these transactions are not taxable.

B.   Local taxing jurisdictions and constitutional offices in the Parish such as the Sheriff's Office, the Clerk of Court, Registrar of Voters, etc., making purchases of tangible personal property should not be charged the local sales tax and the seller is not required to collect and remit tax on these sales.

Rule 7. Sales to the Federal Government, the State of Louisiana, and their Agencies

A.   When tangible personal property or a charge for taxable services is billed and sold directly to, and is paid for by check from the Federal Government, its departments or agencies, or the State of Louisiana, its departments or agencies, the local taxing jurisdictions are without power to impose the local sales/use tax on such transactions. The determining factor in all cases is whether or not a sale is made and billed directly to the Federal Government, its departments or agencies, or the State of Louisiana, its departments or agencies, and is paid directly by the Federal Government or the State.

B.   The ordinances contain a specific exemption relative to contracts with the U. S. Department of the Navy for the construction or overhaul of U. S. Naval vessels.

Rule 8. Sales to Religious Institutions

Purchases of bibles, song books, or literature used for religious instruction classes by churches or synagogues are exempt from tax. This exemption became effective July 1, 1996. All other taxable purchases by these organizations are not exempt.

Rule 9. Use Tax

A.   The local ordinances impose a tax on the use, consumption, distribution or storage for use, distribution or consumption within the Parish of tangible personal property purchased in such a manner that sales tax does not apply. The use tax does not apply to the use of any property which has been subjected to sales tax in a taxing jurisdiction outside the Parish in an amount equal to or greater than the amount of tax imposed by the local ordinances, nor does the tax apply to the use of any property which is exempt from the tax imposed upon the sales at retail by the local ordinances.

B.   Use tax is based on the cost price of the tangible personal property. Cost price is defined in the ordinances as the lesser of the reasonable market value of tangible personal property at the time it becomes susceptible to use tax or the actual cost of the property subject to the use tax liability. The lesser of the two applies, regardless of the manner by which the property was acquired, whether by purchase, manufacture or otherwise, and regardless of where acquired.

C.   The use tax applies to the use of property purchased in interstate commerce in another state or in another parish of the State of Louisiana for the purpose of use in the Parish after the interstate or intrastate movement has ended. For the purpose of taxation, interstate or intrastate commerce ends when the property reaches the purchaser and comes to rest within the Parish. The tax does not apply until the property has come to rest in the Parish.

D.   Generally, it may be said that use tax applies to the use of property in the Parish, the sale of which would be subject to tax had there been a purchase within the Parish. The two taxes, sales and use, stand as complements to each other and provide a uniform tax upon either the sale at retail or the use of tangible personal property. There shall be no duplication of the tax.

E.   The State of Louisiana exempts from sales/use tax tangible personal property purchased for lease or rental purposes. Except for automobiles and motor vehicles as described in Rule 35 K, this exemption does not currently apply to the 5% local jurisdiction tax levied. The taxpayer must pay the 5% local tax on any purchases of tangible personal property for rental or lease purposes in East Baton Rouge Parish. There are some limited exemptions that are explained and can be referenced through the rules listed below.

(See also Rules 2, 5, 15, and 17 for other applications of the use tax.)

Rule 10. Liability for Payment

Either the purchaser or seller, to any transaction, use, consumption, storage, or lease involving tangible personal property or sales of services, is liable for payment of the tax.

Rule 11. Certificate of Registration

A.   Every person who is responsible for collecting and accounting for the tax or who engages in any business involving transactions for which tax is imposed under the local taxing ordinances shall apply for and obtain a certificate of registration from the Finance Director. This requirement does not apply to persons whose entire gross proceeds are from sales which are expressly exempt under the ordinance, but responsibility for use tax may make it necessary for such persons to obtain a certificate of registration.

B.   The certificate of registration shall be posted in a conspicuous place in the place of business for which it is issued.

C.   A certificate of registration is personal and nontransferable. The old certificate must be canceled and a new one secured when there is a change of ownership of a business. No change of ownership occurs upon the transfer of assets to an assignee for the benefit of creditors or upon the appointment of a receiver or trustee in bankruptcy.

D.   Whenever the place of business for which a certificate of registration has been issued is changed, the existing certificate shall be returned to the Finance Director for cancellation. The new certificate will be issued for the new place of business.

E.   If any original certificate of registration is destroyed or defaced as the result of an accident or from natural wear and tear, a duplicate certificate will be issued upon request.

Rule 12. Resale Exemption Certificates

A.   The Finance Director will consider all sales to be taxable retail sales unless the seller takes from the buyer a Resale Exemption Certificate, signed by and bearing the name, address, and registration number of the buyer to the effect that the property is purchased for resale. Dealers may recognize the claim of a buyer that the articles are purchased for resale only when the buyer is properly registered under the provisions of the local ordinances (if the buyer is located in this Parish) or under the provisions of the State sales tax law (if the buyer is located elsewhere within the State).

B.   The seller shall be responsible for the collection of the tax on all sales made to persons who have not secured the proper registration certificate, except in cases where fertilizer and containers are sold directly to farmers. Resale Exemption Certificates claiming that goods are purchased for resale must state the registration number assigned to the buyer when such buyer is a retail merchant.

C.   Because a person is registered under the law does not mean that all of his purchases are being made for the purpose of resale. For example, a person engaged in selling automobile tires and accessories would not be buying a diamond ring for resale. The burden of proving that a sale is in fact for resale shall be upon the person who makes the sale. Claims of purchasers must appear reasonable, with consideration being given to the nature of their business.

D.   Dealers shall keep all Resale Exemption Certificates furnished them for examination by the Finance Director.  Dealers may be given 30 days from the date examination is requested by the Finance Director to furnish the Director the properly executed and signed Resale Exemption Certificates. Certificates received by the Finance Director after such 30-day period will not be accepted. Any dealer who fails to secure a properly executed and signed certificate is liable for and shall pay the tax himself. Resale Exemption Certificate forms may be obtained from the Finance Department Revenue Division.

Rule 13. Gratuities

The local ordinances require that the "sales price" of tangible personal property include any amount charged for services in connection with the sales. Restaurants, bars, and other sellers of food and drink frequently invoice to customers amounts labeled tips, gratuities or service charges. These charges, however labeled, are not included in the sales price if they are collected merely as a convenience to the server and customer and are passed on in whole by the seller directly to the person rendering the service. However, if the charges are collected to supplement labor cost or are retained by the seller, the tips, gratuities or service charges must be included in the sales price and tax paid thereon. Tips or gratuities which are given by customers directly to waiters, waitresses or service personnel are not includable in the sales price.

Rule 14. Cash Discounts

The sales price of an article of tangible personal property does not include the amount of bona fide cash discounts actually taken by the buyer, and the amount of such discounts may be deducted from taxable sales if such discount has been previously reported in taxable sales. For example, "A" sells merchandise to "C" for $100 subject to a discount for cash of 2%-10 days. "A" credits his taxable sales with $100. On the ninth day, "C" sends "A" his check for $98, plus tax. "A" may deduct from taxable sales the $2 discount taken.

Rule 15. Transportation Charges

A.   Separately stated transportation charges for delivery of purchased goods to the buyer’s designated location are generally not taxable.

B.    Transportation charges by a manufacturer or wholesaler for delivering property to the retail dealer’s location are subject to tax when the product is sold and these costs are passed on to the customer.

C.    An exception would be the sale of a product contingent on the satisfactory condition of the product on delivery. Concrete vendors, for example, must deliver their product to the job site in specialized vehicles that turn the ready-mixed concrete while in transit to ensure that the product reaches the job site in acceptable condition, and the conditions of the sale are not met until delivery is completed. The transportation charge under these circumstances is taxable.

"Sales price" does not include charges made to the customer for financing or servicing his account within certain amounts fixed by the ordinances. With respect to charges for financing, the ordinances limit the amount which can be charged and eliminated from sales price for sales tax purposes to the legal rate of interest and limits the amount which can be charged for servicing the customer's account to an amount not to exceed 6% of the amount financed, regardless of the time covered by the purchase contract.

Rule 17. Federal Excise Taxes

Import duties and federal excise taxes which are imposed on a producer, processor, manufacturer, or importer and passed on to the buyer are a part of the dealer's cost and cannot be excluded in determining sales price. The only exception is with respect to the federal retailers' excise tax which must be collected from the consumer or user. If those taxes are billed (invoiced) to the consumer or user separately, they may be excluded from the tax base. However, if such taxes are not billed separately, the total amount, including the excise tax, is taxable.

Rule 18. Record Keeping

A.    The local taxing ordinances require that every dealer keep and preserve suitable records of the sales, purchases, and sales of services taxable under the ordinances, and such other books of account as may be necessary to determine the amount of tax due. Records must be kept for at least three calendar years, in addition to the current year. In cases of assessments, waivers of prescriptions, and taxpayer fraud, records must be maintained for extended periods, which will vary depending on circumstances.

B.    Listed below are guidelines that indicate items needed to meet this record keeping requirement:

1. Sales Records
   
   a.  Sequentially numbered sales invoices.
   
   b.  Daily sales register receipts or tapes which have been posted to a summary document, such as a sales journal or general ledger.
   
   c.  Bank statements.
   
   d.  Sales invoices posted to a journal or ledger which distinguish taxable sales and services from non-taxable sales and services.
   
   e.  Properly executed exemption certificates on non-taxable sales and services.
   
   f.  Bills of lading, delivery tickets or similar transportation records for sales.
   
   g.  Any other documentation to support entries on the sales/use tax return.
   
   

2. Purchase Records
   
   a.  Purchase invoices or other billing documents.
   
   b.  Purchases posted to a summary document, such as a purchase journal or general ledger.
   
   c.  Check register.
   
   d.  Depreciation schedule or fixed assets register.
   
   e.  Any other records to support entries on the sales/use tax return.
   
   

3. Tax Returns and Work Papers
   
   a.  Tax returns filed with the City of Baton Rouge and Parish of East Baton Rouge.
   
   b.  Use tax accrual records to show invoices on which no tax was charged by the vendor, but was accrued by the business and reported on its own tax return.
   
   c.  Any other records to support entries on the sales/use tax return.

C.    The sales, purchases, and tax return records itemized above should be secured, maintained, and kept by each business until each affected sales/use tax transaction has prescribed. These guidelines are not all-inclusive and, depending on the nature of the business, additional records may be required.

D.    The failure to comply with these record keeping requirements is a criminal offense. Refer to Section 32b(9) of the ordinance for more details.

Rule 19. Advertising "Tax-Free"

Each dealer is required to charge tax on all taxable sales, services, and rentals and must separately state and collect the tax from the price paid by the purchaser. It is unlawful for a dealer to advertise any taxable transaction as "tax-free."

Rule 20. Intercompany Transactions

Transactions between affiliated companies may be subject to tax. Questions used to determine the taxability of intercompany transactions are as follows:

1. Do the companies employ separate personnel?

2. Are the employees of each company paid out of separate funds?

3. Is a markup included in the transactions between the companies?

4. Are the companies separate legal entities?

5. Are the Board of Directors and owners different in each company?

These questions are to be used for guidance when determining taxability, with affirmative answers being an indication that a transaction is taxable. The entire set of facts and circumstances must be evaluated before making a taxability decision. Taxability cannot be determined from the answer to just one of these questions.

Rule 21. Premiums and Other Gifts

Gross proceeds from the sales of goods to be given away as premiums or gifts, through promotion of products or otherwise, are taxable.

Rule 22. Exchanges and Adjustments

When any tangible personal property is returned to the seller for adjustment or exchange under a guarantee as to its quality of service and a new article is given pursuant to the guarantee, tax shall be due on the additional amount, if any, paid to the seller.

Rule 23. Returned Merchandise

A.     In the event articles of tangible personal property are voluntarily returned to the seller by the consumer or user, before such articles have been used, but after tax has been collected or charged to the account of the consumer or user and not yet remitted to the Finance Director, the seller may deduct the sales price of such articles from the gross proceeds shown on his report for the current month. The purchaser must provide a receipt documenting the payment of local sales taxes in this Parish. In the event the taxes have been remitted to the Finance Director, the dealer, within 90 days of making such refunds, may file a sworn statement of the gross amount of any refunds made by him and shall be issued an official credit memorandum equal to the net amount remitted by the dealer for such tax remitted. No credit shall be allowed for any refund claimed more than 90 days after it has been made. The credit memorandum may be used in payment for subsequent taxes owed under the ordinances.

B.     The records of the dealer must clearly reflect and support his claim for all such deductions for merchandise returned. Articles of tangible personal property that have been used, but are then repossessed, cannot be classified as returned merchandise for the purposes of this rule.

Rule 24. Bad Debts

The ordinances allow reimbursement for taxes paid on debts incurred on and after September 3, 1989, which are determined to be worthless. In such event, the dealer shall submit a claim annually for refund, together with necessary documentation showing compliance with the ordinance and proof that the Louisiana Department of Revenue has found him to be entitled to a refund in accordance with Louisiana Revised Statutes 47:315(B)(4).

Rule 25. Repossessions

Dealers who repossess articles of tangible personal property shall not, for local sales tax purposes, deduct from their gross proceeds of sales the unpaid amounts on repossessed merchandise or claim any other deduction with respect to such repossessions.

Rules 26-50