How did Louisiana's former first-purchase exclusion apply to digital television conversion equipment, multiple units, back orders, and pre-June 25, 2002 purchases?

Plain-English summary

Under the former exclusion, a qualifying television broadcast licensee could designate one first purchase for each statutory category of digital conversion equipment.

For a category written in the singular, only one unit qualified. For a plural category, multiple units could qualify if placed on the same purchase order. Later purchase orders for that category were taxable.

Who and what qualified

The purchaser had to hold a Federal Communications Commission license under 47 CFR Part 73. The ruling said the exclusion was then effective for television equipment, but not radio equipment because the FCC had not issued the triggering digital-radio conversion mandate.

The purchase order had to identify the statutory equipment category. Once the licensee chose a purchase or prior-purchase credit as its first purchase for that category, it could not choose another.

Same-day orders and back orders

For plural categories, multiple purchase orders issued on the same date to different vendors were treated as one purchase. Items back ordered for reasons beyond the customer's control remained part of the first purchase when they appeared on that first order.

Historical credit and forms

The ruling allowed a state sales or use tax credit for qualifying equipment bought after January 1, 1999, and before June 25, 2002. Electing that credit used up the first purchase for the category, but a licensee did not have to designate a pre-June 25, 2002 purchase.

Licensees applied on Form DCE-AP and, when approved, received Form DCE-EX for tax-free purchases. Form DCE-11 supported prior-purchase credits and served as the annual purchase report. The exemption certificate required annual renewal on or before September 1.

State and local treatment

The exclusion applied to state tax. Local sales or use tax relief and local credits existed only where the political subdivision adopted Act 61's provisions, so licensees were directed to local tax authorities.

Common questions

Q: Could a station claim one excluded unit now and another later from the same singular category?

A: No. Only the designated first unit qualified.

Q: Could several units in a plural category qualify?

A: Yes, if they were part of the same qualifying first purchase under the ruling's purchase-order rules.

Q: Did an old purchase automatically become the first purchase?

A: No. A licensee could elect the historical credit, but was not required to treat a pre-June 25, 2002 purchase as its first purchase.

Q: Was the exclusion automatically available for local tax?

A: No. The local political subdivision had to adopt the provision.

Citations and references

• La. R.S. 47:301(16)(i) — former digital television and radio conversion-equipment exclusion
• Act 61 of the 2002 Regular Session
• Louisiana Attorney General Opinion 02-0362
• 47 CFR Part 73 — qualifying FCC license
• LAC 61:I.4301 — amended administration of the exclusion
• Forms DCE-AP, DCE-EX, and DCE-11 — historical application, certificate, and reporting forms
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 03-001

Original ruling text

Revenue Ruling No. 03- 001
January 16, 2003
Sales and Use Tax
Exclusion for Digital Television Conversion Equipment
This Revenue Ruling discusses the exclusion provided by Act 61 of the 2002 Regular Legislative
Session for the first purchase of digital television conversion equipment. The Department of
Revenue amended Louisiana Administrative Code 61:I.4301 to administer the exclusion and
instruct taxpayers in its application. This revenue ruling supplements that regulation to provide
additional guidance for taxpayers.
Issues
Louisiana Revised Statue 47:301(16)(i), enacted by Act 61 of the 2002 Regular Legislative
Session, excludes from the definition of tangible personal property the first purchase of digital
television conversion equipment and digital radio conversion equipment by a taxpayer that holds
a Federal Communications License issued pursuant to 47 CFR Part 73. The exclusion applies to
state sales and use tax and local sales and use tax for those local political subdivisions that elect
to provide this exemption. However, the exclusion will not apply to radio equipment until the
Federal Communications Commission issues an order mandating radio stations to convert to
digital broadcasting. Since this has not occurred, the exclusion provided by Act 61 for radio
stations has not taken effect and only television broadcast stations currently qualify for this
exclusion.
Revised Statute 47:301(16)(i)(i) lists items that qualify as digital television conversion
equipment. Some categories are described in the plural and some in the singular. Because the Act
excludes the first purchase of “each enumerated item,” it was unclear if the exclusion applied to
a single item even for the plural categories. The Attorney General’s Office issued Opinion
Number 02-0362 stating that the first purchase of qualifying equipment applies to the first
individual item for categories listed in the singular and multiple items for categories listed in the
plural provided they are ordered at the same time.
Because television stations throughout the United States are upgrading to digital broadcasting, it
is anticipated that many items purchased under this exclusion will not be available when initially
ordered. Therefore, procedures for handling back ordered items are included in this revenue
ruling. Also, Act 61 includes a retroactive provision that allows digital television conversion
equipment purchased after January 1, 1999, and before June 25, 2002, to be eligible for a sales or
use tax credit. To administer this credit provision, guidelines for claiming it are included in this
ruling.
General Guidelines
The following guidelines apply to the first purchase of digital television conversion equipment:

Revenue Ruling No. 03-001
Page 2 of 3
•

The first purchase order issued for digital television conversion equipment from each
category listed in R.S. 47:301(16)(i) is the first purchase. Subsequent purchase orders for
digital television conversion equipment from that category do not qualify for exclusion
and are subject to sales and use tax.

•

For categories that are described in the singular, the purchase of only one piece of
equipment qualifies for exclusion. For categories that are described in the plural,
purchases of multiple pieces of equipment qualify for exclusion provided all of the pieces
are listed on the same purchase order.

•

Once a licensee has designated a purchase as the first purchase of digital television
conversion equipment from a particular category, that licensee may not claim credit or
exclusion for any other purchases for that category.

•

Multiple purchase orders issued on the same date to different vendors for digital
television conversion equipment in the same category are considered one purchase for
purposes of this exclusion. This is valid only for categories of qualifying equipment listed
in the plural in R.S. 47:301(16)(i).

•

Back orders due to circumstances beyond the control of the customer are part of the first
purchase when made on the first purchase order.

•

Purchase orders issued for the first purchase of digital television conversion equipment
must reference the category of equipment being purchased consistent with the terms used
in R.S. 47:301(16)(i)(i).

• If a licensee elects to claim a tax credit for the purchase of digital television conversion
equipment made before June 25, 2002, that will be considered their first purchase and
exclusion may not be claimed on future purchases. However, license holders are not
required to claim purchases made prior to June 25, 2002, as first purchases.
Registration
License holders must file form DCE-AP (Application for Sales Tax Exemptions/Credits on
Purchases of Digital Television or Radio Conversion Equipment) with the Department of
Revenue Taxpayer Services Division to make tax-free purchases or claim credit for the sales tax
paid on prior purchases of digital television conversion equipment. Once approved, license
holders will be issued form DCE-EX (Sales Tax Exemption Certificate for Purchases of Digital
Television Conversion Equipment and Digital Radio Conversion Equipment) allowing them to
make first purchases of qualifying digital equipment free from state sales and use tax. The
certificate must be renewed annually on or before September 1st. The certificate will be renewed
when licensees file an annual report of their purchases on form DCE-11 (see Annual Reports
below). The exemption certificate will be cancelled after first purchases have been claimed for
all categories of qualifying equipment. Licensees should contact their central parish tax authority
for information about the availability of this exemption at the local level.
Credit for Prior Purchases
License holders may request a credit for the state sales and use tax paid on digital television
conversion equipment purchased after January 1, 1999, and before June 25, 2002, by submitting
form DCE-11 (First Purchase of Digital Television Conversion Equipment Claimed for

Revenue Ruling No. 03-001
Page 3 of 3
Exclusion under R.S. 47:301(16)(i)) with their applications. Copies of purchase orders, invoices,
and any other documentation needed to confirm the amount of taxes paid to vendors must be
included with form DCE-11.
After the credit has been approved, license holders will be notified of the total amount of state
sales tax credit available and will be registered for state sale tax and allowed to apply the credit
monthly against the state sales and use tax paid on purchases to their vendors. To claim the
credit, license holders must file a sales tax return listing the amount of tax paid to vendors on line
12 of the state sales tax return, the line that is usually reserved for advance tax credit. Credit may
not be claimed on exempt first purchases of digital television conversion equipment. If a license
holder has made any purchases on which sales or use tax is due and has not been paid, these
purchases should be reported on line two of the state sales tax return.
If the use tax reported on line two is less than the sales tax payments credited on line 12, the
credit balance will be refunded. License holders must maintain a schedule of the monthly sales
tax purchases on which the credit has been claimed on line 12 for verification. The tax payments
credited on line 12 will be deducted from the license holder’s total sales tax credit due from
purchases made after January 1, 1999, and before June 25, 2002 and when the total credit has
been fully used, the taxpayer’s sales tax account may be closed.
A credit for local sales and use tax is not available in political subdivisions unless the political
subdivision adopts the provisions of Act 61 for its local taxes. License holders should contact
local authorities to inquire if they have adopted the provision and receive any details about
obtaining a credit.
Annual Reports
For fiscal year July 1, 2002, through June 30, 2003, and each subsequent fiscal year, license
holders must file Form DCE-11 (First Purchase of Digital Television Conversion Equipment
Claimed for Exclusion under R.S. 47:301(16)(i)) with copies of purchase orders, invoices, and
other documentation detailing the licensee’s first purchases of digital television conversion
equipment made during that year. This report must be filed annually for the July 1 through June
30 fiscal year and show the cost of digital equipment purchases for which exclusion has been
claimed for each category of digital television conversion equipment. The report must be mailed
to the Department’s Taxpayer Services Division at Post Office Box 201, Baton Rouge, Louisiana
70802 no later than September 1st following the fiscal year. The licensee’s exemption certificate,
Form DCE-EX, will be renewed after the annual report is filed.
For more information regarding this topic, taxpayers should contact the Taxpayer Services
Division at (225) 219-7356.
Cynthia Bridges
Secretary
By: _________
J. A. Cline, Jr., CPA
Revenue Tax Research Analyst
Policy Services Division
A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is issued
under LAC 61:III.101.C 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.