[Editor's Note: An earlier version of this story was headlined "Youngsville sports complex loses tax appeal." We changed the headline to avoid readers confusing Topshelf Sports, a privately owned business, with the city-owned Youngsville Sports Complex.]
Topshelf Sports in Youngsville has been ordered by the 3rd Circuit Court of Appeal to pony up almost $43,000 in back taxes owed to the Lafayette Parish School System. The 32,000-square foot facility includes a skating rink, locker rooms, basketball goals and other amenities.
It was notified by the LPSS Sales Tax Division in September of 2014 that it owed just over $40,000 in back taxes on sales for 2011 through 2013. The facility appealed to the state Board of Tax Appeals, which sided with the school system. (The final amount Topshelf is being held liable for — $42,944.19 — includes interest and penalties.)
Topshelf claimed in its appeal that “the arrangements it had with its customers were non-taxable rental income” on immovable property, according to the 3rd Circuit opinion released Wednesday. “In essence,” the opinion clarifies, “Topshelf argued that it provided leases of immovable property which were not subject to sales tax, or alternatively, sales for resale that are excluded from tax. The BTA disagreed and found that Topshelf was operating an entertainment, athletic, or recreational facility ... subject to tax.”
In a six-page opinion — short by appellate standards — authored by Judge Shannon Gremillion, the 3rd Circuit enumerated reasons why Topshelf’s argument that its facility wasn’t subject to sales tax because it was “rented” by outside groups was in error:
Topshelf never relinquished possession of the building, as would occur in a lease. Topshelf employees were present at all times, and, at their discretion, sold food and beverages. Topshelf employees opened and closed the building and set up for events and activities. Topshelf cleaned up after activities concluded. Many of the events held at Topshelf were very limited in nature and duration, such as two-hour birthday parties.
...It is a mischaracterization to call the fees paid “rent.” Topshelf retained ultimate control over the facility. That fact that Topshelf’s patrons were given the privilege of access to the facility in return for a fee cannot be transformed by designating it as a “lease” in which its patrons paid “rent.”
Simply, this is not the kind of a lease envisioned by the legislature as being tax-free.