Opinion Number ( 1999 )

Dear Mayor Harris:

You have requested an opinion from this office concerning whether or not the Town of Richwood can collect sales and use taxes from the contractors/vendors of the Ouachita Parish Police Jury involved in the renovation and expansion of the Ouachita Parish Correctional Center (OPCC), which is located within the corporate limits of the town. In addition, you have asked whether the Town of Richwood can legally request restitution of back taxes owed by contractors/vendors participating in the renovation of the OPCC?

The Ouachita Parish Police Jury is excluded from the definition of a "person" who would be liable for the payment of both state and local sales and use taxes. La. R.S. 47:301(8)(c). Therefore, any materials/equipment purchased directly from a contractor/vendor by the Parish Police Jury for this particular project is not subject to any sales and use taxes levied by the Town of Richwood. See: Regional Mechanical Contractors, Inc. vs.McNamara, 536 So.2d 818 (La.App. 1st Cir. 1988); CajunContractors, Inc. vs. Department of Revenue and Taxation,515 So.2d 625 (La.App. 1st Cir. 1987).

Now as a general rule, the jurisprudence considers a contractor to be the purchaser and ultimate consumer of the building materials used in the construction of an immovable; and, therefore, owes the sales tax on those purchases. See: BillRoberts, Inc. vs. McNamara, 539 So.2d 1226 (La. 1989).

However, if a tax exempt entity, in the case the Parish Police Jury, properly designates its contractors as its purchasing agents on this project, then the contractors-purchasing agents of the Parish Police Jury do not incur any sales or use tax liability because title and possession of the materials/equipment purchased by the contractors-purchasing agents is considered passing directly from the vendor to the Parish Police Jury. See: Opinion No. 98-284;Opinion No. 96-309.

In the final analysis, only an audit of the contractors/vendors involved in this project can answer the question of whether or not purchases were made by the Parish Police Jury either directly or by a properly designated contractor-purchasing agent of the Parish Police Jury. If an audit does in fact determine that taxes are owed the Town of Richwood by the contractors/vendors participating in the renovation of the OPCC, then the town has three (3) years from the 31st day of December of the year in which the taxes became due before those taxes prescribe. See: Louisiana Constitution Article VII, § 16; La. R.S. 33:2718.4.

We hope that this information will be of assistance to you in this matter.

Very truly yours,

RICHARD P. IEYOUB ATTORNEY GENERAL

BY:ROBERT H. CARPENTER, JR. ASSISTANT ATTORNEY GENERAL

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