Leslie Turk

3rd Circuit: refund Scientific's $443,692 in use taxes

by Leslie Turk

In addition to upholding the lower court decision that the Moss water intrusion case cannot go forward, the Third Circuit Court of Appeal dealt yet another blow to the Lafayette Parish School Board this week. The appeals court affirmed the July 2009 district court ruling that the sales tax division must return more than $443,000 in use taxes assessed to Scientific Drilling International Inc. for equipment stored in Lafayette Parish.

Houston-based Scientific, which paid the tax under protest, maintained that while the equipment was stored in the parish, it was used out of the parish and should not be subject to taxation. According to the Lafayette Parish School Board Sales and Use Tax Ordinance, argued Scientific, “only tangible property that is stored for use in the Parish is subject to the tax levy Ordinance.” The district court sided with Scientific last year, and the LPSB Sales Tax Division appealed.

In affirming the decision, released Wednesday, the Third Circuit panel agreed with Scientific's argument, noting that “the language of the Lafayette ordinance does not grant the authority to impose such a tax on property stored but not used in Lafayette Parish.”

Read the decision here.