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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE # 21 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 17th day of April, 2006 , are as follows:

BY JOHNSON, J. :

2004-C- 1484

WORD OF LIFE CHRISTIAN CENTER v. MARK WEST, ADMINISTRATOR, ASCENSION PARISH SALES AND USE TAX AUTHORITY, STATE OF LOUISIANA (Parish of Ascension) We affirm the judgment of the lower courts for the reasons expressed herein. AFFIRMED. CALOGERO, C.J., concurs and assigns reasons. VICTORY, J., concurs. KNOLL, J., additionally concurs and assigns reason.

04/17/2006

SUPREME COURT OF LOUISIANA 04 - C - 1484
WORD OF LIFE CHRISTIAN CENTER vs. MARK WEST, ADMINISTRATOR, ASCENSION PARISH SALES AND USE TAX AUTHORITY, STATE OF LOUISIANA ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, PARISH OF ASCENSION

JOHNSON, Justice This case involves the application of Louisiana's use tax to out-of-state purchase of airplanes that were subsequently imported into Louisiana and used in interstate commerce. The Ascension Parish Sales and Use Tax Authority takes the position that the airplanes were imported into and used in Ascension Parish, and therefore, the taxpayer is subject to the parish use tax. Word of Life Christian Center, Inc. argues that the airplanes have been in interstate commerce since the time of purchase and are, therefore, excluded from taxation under Louisiana law. The taxpayer relies upon La. R.S. 47:305(E), which provides, in pertinent part, that: It is not the intention of any taxing authority to levy a tax upon articles of tangible personal property imported into this state . . . nor is it the intention of any authority to levy a tax on bona fide interstate commerce. It is, however, the intention of the taxing authorities to levy a tax on the sale at retail, the use, the consumption, the distribution, and the storage to be used or consumed in this state, of tangible personal property after it has come to rest in this state and has become a part of the mass of property in this state ....

For the reasons that follow, we hold that the airplanes came to rest in Louisiana and became a part of the mass of property in this state. Thus, both airplanes are subject to taxation in Louisiana. However, the property is not subject to taxation in Ascension Parish. FACTS and PROCEDURAL HISTORY Word of Life Christian Center, Inc. (hereinafter "Word of Life") is a non-profit religious organization located on Highway 22 in Darrow, Louisiana, in Ascension Parish. Beginning in 1996, Word of Life's ministry saw a growing need to provide for extensive interstate travel by its pastor, Dr. Leroy Thompson, Sr., and supporting staff. To facilitate these travel requirements, Word of Life decided to purchase an airplane. Initially, Word of Life intended to use the Louisiana Regional Airport in Ascension Parish. On April 21, 1997, Dr. Leroy Thompson, Sr. wrote a letter to Mr. Shafter King, the Airport Commissioner for Ascension and St. James Parishes, which indicated that the ministry was in the process of acquiring a jet airplane and wanted to use the Louisiana Regional Airport. The letter requested that the Louisiana Regional Airport (1) extend its runway to a minimum of 5,000 feet and (2) procure fuel service and adequate hangar space. There is no indication in this record whether the Louisiana Regional Airport in Ascension Parish ever made the requested modifications during the applicable tax period. In June 1997, Word of Life signed a contract with Lockard Aircraft Sales Co. of Tulsa, Oklahoma for the purchase of a 1974 Cessna Citation Aircraft (Model 500 aircraft) (hereinafter "Airplane I"). The contract was signed at Word of Life's offices in Ascension Parish while the plane was hangared in Tulsa, Oklahoma. Word of Life

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purchased Airplane I for $1,115,000.00 but paid no sales or use taxes in connection with the purchase. On August 3, 1997, Dr. Thompson and his wife took delivery of the airplane and flew on Airplane I from Oklahoma to East Baton Rouge Parish, where Airplane I was hangared in between its subsequent interstate and intrastate flights. The aircraft travel logs and testimony seem to reflect that Airplane I never landed at the Louisiana Regional Airport in Ascension Parish, despite Word of Life's initial intentions.1 According to the affidavit of pilot Barry Paulk, who piloted Airplane I from August 16, 1997 until its destruction on February 2, 1998: The "call letters" for the Louisiana Regional Airport in Ascension Parish are "L38". If that aircraft had landed at the Louisiana Regional Airport, those call letters would appear on the attached log in the `to' or `from' columns. As evidenced by the absence of those call letters on the log attached as Exhibit A, at no time did I pilot aircraft number N501TK to or from the Louisiana Regional Airport in Ascension Parish. According to Reverend Leroy Thompson Jr.'s affidavit, "Airplane I never landed or took off from Louisiana Regional Airport in Ascension Parish." In his deposition, Dr. Thompson claimed that Airplane I was flown over Ascension Parish to determine if the airport was suitable for landing; it was determined to be unsuitable. On February 2, 1998, Airplane I traveled from Baton Rouge to Miami, Florida. The airplane was destroyed by a hurricane while hangared in Miami. After using a chartered plane for a period of time, Word of Life purchased a 1982 Cessna Citation II aircraft (hereinafter "Airplane II"), from Bell Aviation, Inc.,

See Airplane I flight logs, affidavit and deposition of Reverend Leroy Thompson, Jr. However, it should be noted that this was a contested fact. Word of Life argued that Airplane I never landed in Ascension Parish. Conversely, Ascension Parish asserted that Word of Life had imported and used Airplane I in Ascension Parish. Ascension Parish based its claim on the responses that Word of Life made in the pleadings. Word of Life subsequently asserted that the responses were in error, as shown by testimony and other evidence introduced into the record. None of the aircraft travel logs, nor any other evidence or testimony, proved that Airplane I ever landed in Ascension Parish. 3

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a South Carolina company, for $2,240,000.00 in April, 1998. The purchase of Airplane II occurred in South Carolina, but Word of Life took possession of the plane in Texas. No sales or use taxes were paid to either the state of South Carolina or the state of Texas in connection with the purchase. Subsequently, Airplane II was imported into Louisiana. Like Airplane I, Airplane II was hangared in an East Baton Rouge Parish airport in between its subsequent flights. Unlike Airplane I, it is clear that Airplane II landed in Ascension Parish on multiple occasions, beginning in June 1998. On August 24, 1998, the Ascension Parish Sales and Use Tax Authority (hereinafter "Ascension Parish") assessed a "Sales/Use Tax, Delinquent Penalty and Interest" against Word of Life in connection the purchase and use of Airplane I. The $64,183.86 assessed by Ascension Parish consisted of $44,600.00 in use tax, $11,150.00 as a delinquent penalty, and $8,433.86 in interest. On October 20, 1998, Word of Life paid the amount due and noted that the taxes were being "Paid in Protest." Word of Life filed a Petition for Refund on November 19, 1998, where it alleged that since Airplane I was purchased out of state and was used in interstate commerce, Louisiana's interstate commerce exclusion applied and no use taxes were owed pursuant to La. R.S. 47:305(E). Ascension Parish filed a Second and Third Supplemental and Amended Reconventional Demand which assessed Word of Life's tax liability for Airplane II was $89,600.00. There is nothing in the record to indicate that Word of Life ever paid these taxes. Thereafter, Ascension Parish filed a Partial Motion for Summary Judgment, where it argued that the purchase and use of Airplanes I and II were taxable events

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pursuant to local ordinances, reserving for trial the issue of attorney fees. Word of Life filed a cross Motion for Summary Judgment, where it argued that the out-of-state purchase and subsequent use of Airplanes I and II were nontaxable events, since both airplanes were used almost exclusively in interstate commerce. Following a December 9, 2002 hearing, the trial court granted Word of Life's Motion for Summary Judgment and denied Ascension Parish's Partial Motion for Summary Judgment. As a result, the trial court abated Ascension Parish's tax assessment and ordered the Department of Revenue to refund the $64,183.86 that Word of Life paid under protest. Ascension Parish appealed. Court of Appeal The court of appeal affirmed the trial court's ruling. In its opinion, the court discussed both the "taxable moment" and "ultimate use" doctrines. First, the court held that for property used in interstate commerce, a "taxable moment" occurs when the property comes to rest in Louisiana and becomes a part of the mass of property in Louisiana. Word of Life Christian Center v. Mark West, Administrator, Ascension Parish Sales and Use Tax Authority State of Louisiana, 2003-1399 (La.App. 1st Cir. 5/14/04), 879 So.2d 213, 214. Second, the court concluded that if an item is "ultimately used" in interstate commerce then it has not come to rest and become a part of the mass of property in this state and, therefore, is not subject to the use tax. In essence, the court held that there is no "taxable moment" when the subject property is "ultimately used" in interstate commerce. This ruling followed the holdings in The Shaw Group, Inc. v. John H. Kennedy, Secretary, Dept. of Revenue, State of Louisiana, (La.App. 1st Cir. 2000), 767 So.2d 937 and Tigator Inc.v. West Baton Rouge Police Jury, 94-1771, 94-1772 (La. App. 1st Cir. 5/5/95) 657 So.2d 221, writ denied, 95-2126 (La.11/17/95), 663 So.2d 712.

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In a dissent, Judge Gaidry suggested that the "ultimate use" test has no application here. In support of his position, Judge Gaidry cited Cotten v. Collector of Revenue, 90-1383 (La.App. 4th Cir. 1991), 579 So.2d 499, and Vector Company, Inc. v. Benson, 491 S.W.2d 612 (Tenn. 1973). We granted Ascension Parish's writ of certiorari to decide the following issue which is res nova before this Court and resolve the conflicting decisions among the circuit courts of appeal, namely, the applicability of state and local use tax to the outof-state purchase of tangible property which is subsequently imported into Louisiana then "ultimately used" in interstate commerce, in light of La. R.S. 47:305(E), which prohibits a tax on bona fide interstate commerce. LAW and ANALYSIS Judicial Notice of Local Ordinances Before considering the issue, we must address a procedural issue raised by Word of Life as to whether this court may consider the merits of this writ application since Ascension Parish failed to include in the record below certified copies of the tax ordinances at issue. La. R.S. 13:3712 provides, in pertinent part, that: B. All courts of record in the state shall take judicial cognizance of the municipal ordinances and parochial ordinances which may be enacted by governing authority of any town, city, municipality, or parish within their respective jurisdictions whenever certified copies of such ordinances have been filed with the clerk of said court. La. R.S. 13:3712 supplemented former La. R.S. 15:422(1), which provided for judicial notice of "laws" but excluded municipal and parochial ordinances. See, La. C.E. art. 202 Comments 1998-(b). In Klohn v. Louisiana Power & Light, 406 So.2d 577, 578 (La. 1981), this court considered La. R.S. 13:3712 and held that the certified copies of the ordinances "should be made part of the record either before its lodging in the appellate court or
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... by the filing of a motion to supplement the record in the appellate court." Id. at 579. In 1998, the Louisiana Legislature enacted La. C.E. art. 202, Judicial Notice of Legal Matters, by Acts 1988, No. 515,

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