The Exposition Hall Tax (also referred to as “NOEHAT”) is a sales tax imposed on all Orleans Parish bars and restaurants with annual gross receipts exceeding $200,000. However, this tax is virtually unknow by such businesses. Large NOEHAT tax deficiencies and penalties often lead to extreme hardship and even business cessation. However, certain taxpayers have the ability to challenge the assessments if they were previously advised by the Department of Revenue not to collect the tax from customers.
In this ground-breaking decision, the Louisiana Tax Review Board ruled the Department of Revenue was estopped from collecting the tax because the taxpayer relied on previous advice from the Department that the tax was not owed.
Mr. Foundas’ argument centered on whether the Taxpayer would suffer “extreme harm” by retroactively paying taxes owed by others (the customers) after not collecting such taxes in reliance on advice of the Department of Revenue. After hearing testimony from the Taxpayer and two revenue agents, the Louisiana Tax Review Board granted the appeal and awarded a full abatement of tax, interest and penalties.
Previously, erroneous advice from the Department would not preclude collection of the tax by the Department if the tax was clearly due. This decision allows taxpayers to rely on clear advice from the Department in trust tax cases (ie: sales or employment taxes). It should be noted this ruling would likely not apply to the payment of one’s own taxes, because that would not meet the “extreme harm” prong of the test. Ernest Foundas represents numerous service industry clients and is available to discuss this issue further for businesses with similar circumstances. Mr. Foundas also provides a full-range of entity formation, tax, and transactional work for the service industry and other local businesses.