217 So. 3d 1211
La. Ct. App.2017Background
- The Louisiana Department of Revenue audited Diamond Construction, Inc. (DCI) for Jan. 2009–Dec. 2011 and assessed $373,819.26 in unpaid sales/use taxes, plus interest, penalties and attorney’s fees, for a total judgment entered by the trial court.
- The State treated its assessment as prima facie true under La. R.S. 13:5034 and La. R.S. 47:307 after finding DCI failed to register and maintain sufficient records.
- DCI denied the assessment, submitted customer and consultant affidavits asserting many transactions were out-of-state (Texas) or otherwise non-taxable, and produced spreadsheets and sample invoices but not proof of taxes paid to other jurisdictions.
- The State moved for summary judgment; the trial court found DCI’s affidavits insufficiently specific to rebut the prima facie assessment, gave DCI 30 days to supplement, and ultimately granted summary judgment when adequate proof was not produced.
- On appeal, the court applied de novo review and affirmed, holding the assessment-estimate was prima facie correct and DCI failed to meet its burden to prove otherwise due to poor recordkeeping and lack of proof of out-of-state tax payments.
Issues
| Issue | Plaintiff's Argument (State) | Defendant's Argument (DCI) | Held |
|---|---|---|---|
| Whether the State’s audit/estimate creates a prima facie case shifting burden to DCI | The assessment, supported by affidavit, is prima facie true; burden shifted to DCI to rebut | DCI argued the State used estimates improperly and failed to distinguish taxable vs. non-taxable/out-of-state transactions | Held for State: statutory scheme deems the assessment prima facie correct and burden shifted to DCI |
| Whether DCI’s affidavits and documents create genuine issue of material fact | No; DCI’s submissions were conclusory and unspecific | DCI relied on customer affidavits, consultant analysis and invoice lists showing substantial out-of-state work | Held for State: affidavits were insufficiently specific to rebut the prima facie showing |
| Whether DCI’s recordkeeping failure permits the State to estimate tax liability | State: La. R.S. 47:307 and 47:309 permit estimation where dealer fails to keep records | DCI: complained employees left and records were unavailable, producing some sample evidence | Held for State: taxpayer must keep records; poor records justify the collector’s estimate |
| Appropriateness of summary judgment | State: no genuine issue remains because DCI failed to produce factual support after being put on notice | DCI: trial, not summary judgment, should resolve contested facts about out-of-state work and amounts | Held for State: no genuine material fact; summary judgment proper because DCI did not meet its shifted burden |
Key Cases Cited
- Jones v. Estate of Santiago, 870 So.2d 1002 (La. 2004) (de novo standard for appellate review of summary judgment)
- Schroeder v. Board of Supervisors of La. State Univ., 591 So.2d 342 (La. 1992) (summary judgment standards and appellate review principles)
- Smith v. Our Lady of the Lake Hospital, Inc., 639 So.2d 730 (La. 1994) (definition and significance of material facts for summary judgment)