Did the interstate-vessel exemption cover fuel, supplies, repairs, and laundry for stevedoring or cargo-handling vessels that never left Louisiana waters?

Plain-English summary

Beginning November 28, 2001, fuel, supplies, repair materials and services, and laundry for stevedoring, cargo-handling, or fleeting vessels operating wholly in Louisiana waters were taxable.

The controlling question was where the service vessel itself operated. Interstate movement of the barges or cargo did not make a Louisiana-only vessel operate exclusively in interstate or foreign commerce.

Court-driven change

In Archer Daniels Midland Co. v. St. Charles Parish School Board, the Louisiana Supreme Court applied a local exemption modeled on La. R.S. 47:305.1(B). Tugboats moved interstate grain barges but never left Louisiana waters.

The court held that the tugboats' own movements controlled and overruled the earlier First Circuit approach in Cooper Stevedoring.

Treatment before November 28, 2001

For earlier periods, the Department continued to follow Cooper Stevedoring for eligible purchases by stevedoring vessels handling exclusively interstate cargo, even when those vessels operated only in Louisiana waters.

That earlier treatment never extended to fleeting vessels or other locally used cargo-handling vessels.

Treatment on and after November 28, 2001

The Department applied the Supreme Court decision to all purchases for stevedoring, cargo-handling, and fleeting vessels operating in Louisiana waters. Fuel, supplies, repair services, and repair materials did not qualify for the state exemption.

Common questions

Q: Did interstate cargo make a Louisiana-only tugboat eligible?

A: No, for periods beginning November 28, 2001.

Q: Did the limited earlier treatment include fleeting vessels?

A: No.

Q: What purchases did the ruling list as taxable?

A: Fuel, operational and maintenance supplies, repair materials and services, and laundry services.

Citations and references

• La. R.S. 47:305.1(B) — vessel materials, repairs, and laundry exemption
• La. R.S. 47:302 and 47:321 — taxes referenced in the exemption
• Archer Daniels Midland Co. v. St. Charles Parish School Board, 01-C-0511 (La. Nov. 28, 2001)
• Cooper Stevedoring Co. v. Secretary, 555 So. 2d 32 (La. App. 1st Cir. 1989), overruled as described in the source
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 02-004

Original ruling text

Revenue Ruling
No. 02- 004
Sales and Use Tax
Effective November 28, 2001
Sales and Use Tax Is Payable on Purchases of Fuel, Repair Services, Supplies, and
Laundry Services for Stevedoring Vessels Operating in Louisiana Waters; Exemption
Under La. R.S. 47:305.1(B) Not Applicable
The purpose of this Revenue Ruling is to announce a change in the department’s position regarding the
taxability of purchases of maintenance and operational materials and supplies; repair materials,
supplies, and services; and laundry services for stevedoring vessels that operate in Louisiana waters,
in accord with the Louisiana Supreme Court decision in Archer Daniels Midland Company et al. v.
The Parish School Board of the Parish of St. Charles, 01-C-0511 (La. Sup. Ct. 11/28/01). Effective
November 28, 2001, the date of this decision, all such purchases will be subject to state sales or use
tax.
This judicial decision dealt with the applicability of a local sales tax exemption to Archer Daniels
Midland’s purchases for its stevedoring vessels. This local exemption ordinance was modeled after
Louisiana Revised Statutes, Title 47, Section 305.1(B), which reads as follows:
The taxes imposed by R.S. 47:302 and R.S. 47:321 shall not apply to materials and
supplies purchased by the owners or operators of ships or vessels operating
exclusively in foreign or interstate coastwise commerce, where such materials and
supplies are loaded upon the ship or vessel for use or consumption in the
maintenance and operation thereof; nor to repair services performed upon ships or
vessels operating exclusively in foreign or interstate coastwise commerce; nor to
the materials and supplies used in such repairs where such materials and supplies
enter into and become a component part of such ships or vessels; nor to laundry
services performed for the owners or operators of such ships or vessels operating
exclusively in foreign or interstate coastwise commerce, where the laundered
articles are to be used in the course of the operation of such ships or vessels.
In the cases before the Supreme Court, Archer Daniels Midland tugboats were used within Louisiana
waters to move barges loaded with grain. The barges arrived from other states and were destined for
points outside of the state of Louisiana. Taxpayers’ vessels never left Louisiana waters while
performing their services. The Louisiana Supreme Court held that whether vessels were “operating
exclusively in interstate or foreign commerce” so as to be entitled to the above exemption, was dictated
by the movement of the stevedoring vessels themselves, rather than by the movement of the barges or
cargo handled by the stevedoring vessels. Because the stevedoring vessels in question operated wholly
within Louisiana waters, the Supreme Court held that the vessels were not entitled to the exemption.
In so holding, the Louisiana Supreme Court overruled the decision of the Louisiana First Circuit Court

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue
employees. It is issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply
principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law
and is not binding on the public. It is a statement of the department's position and is binding on the
department until superseded or modified by a subsequent change in statute, regulation, declaratory
ruling, or court decision.

Revenue Ruling No. 02-004
Page 2 of 2

of Appeal in Cooper Stevedoring Co., Inc. v. Secretary of the Louisiana Dept. of Revenue and
Taxation, 555 So. 2d 32 (La. App. 1st Cir. 1989).
For periods prior to November 28, 2001, the department will abide by the First Circuit Court of Appeal
decision in Cooper Stevedoring with respect to eligible purchases for those stevedoring vessels
handling exclusively interstate cargo, even if the stevedoring vessels operated exclusively in Louisiana
waters. However, the department will not for any period of time abide by the First Circuit Court of
Appeal decision in Cooper Stevedoring with respect to fleeting vessels or to any other type of locally
used cargo-handling vessels, other than stevedoring vessels.
Effective November 28, 2001, the Supreme Court decision in Archer Daniels Midland will be applied
to all purchases for stevedoring, cargo handling or fleeting vessels that operate in Louisiana waters.
Such purchases will not be eligible for state sales tax exemption under La. R.S. 47:305.1(B). All
purchases for such vessels, including fuel, supplies, repair services, and repair materials, will be
subject to the sales or use tax.
Questions concerning this matter can be directed to the Policy Services Division at (225) 219-2780.
Cynthia Bridges
Secretary
By:

Raymond E. Tangney
Senior Policy Consultant
Policy Services Division