Louisiana—Sales and Use Tax: Taxpayer Entitled to Refund on Purchase of Caustic

LOUISIANA : A taxpayer was not required to remit Louisiana sales and use tax on its purchase of sodium hydroxide (caustic) because the taxpayer used the caustic as a pollution control device system (PCDS) at its manufacturing facility. Generally, for sales and use tax purposes the term sale at retail does not include the sale of a PCDS. Further, a PCDS means any tangible personal property approved by the Department of Revenue (department) and the Department of Environmental Quality (DEQ) and sold or leased and used or intended for the purpose of eliminating, preventing, treating, or reducing the volume or toxicity or potential hazards of industrial pollution of air, water, groundwater, noise, solid waste, or hazardous waste in the state of Louisiana. In this matter, the taxpayer claimed a tax refund stating that the caustic it purchased was a PCDS, and therefore, exempt. The department submitted the taxpayer’s refund claim to the DEQ, and it was noted that chemicals were not eligible for the PCDS exemption. On appeal, it was noted that the DEQ’s interpretation of the law concerning the exemption was inaccurate. Since the caustic was used for the purpose of pollution control the DEQ incorrectly denied the taxpayer’s refund. 

Monsato Company v. Department of Revenue, Board of Tax Appeals (Louisiana), No. 11389D, April 14, 2021


About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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