Did operating a charter boat for paying recreational anglers qualify as commercial fishing for Louisiana's vessel sales-tax exemption?

Plain-English summary

A charter boat carrying paying recreational anglers did not qualify as commercial fishing for Louisiana's vessel sales, use, lease, and services tax exemption.

The operator earned money by providing the boat and the guide's knowledge, fishing techniques, bait advice, fish cleaning, ice, and storage. The customer paid based on time aboard, not the amount of seafood caught.

That was recreational fishing service, not the business of extracting fish or seafood for wholesale or retail sale.

The ruling's commercial-fishing test

The Department used the ordinary meaning of commercial fishing: extracting fish or seafood for commercial sale.

It said at least 50% of the vessel's use had to be for that activity to be operated primarily for commercial fishing under La. R.S. 47:305.20. Merely holding a commercial license was not enough.

Why charter catches did not qualify

Fish could be caught during a charter, but the guide's business was bringing recreational fishermen onto state saltwater areas. Louisiana law also prohibited selling fish taken recreationally or under a recreational license or with recreational gear.

Even an operator who illegally sold recreational catch would still need to prove more than 50% qualifying commercial use.

Common questions

Q: Did charter-boat activity qualify for the exemption?

A: No.

Q: What counted as commercial fishing under the ruling?

A: Extracting fish or seafood for wholesale or retail sale.

Q: Was a commercial license alone sufficient?

A: No.

Q: What vessel-use percentage did the ruling require?

A: More than 50% use for qualifying commercial fishing.

Citations and references

• La. R.S. 47:305.20 — commercial-fishing vessel exemption
• La. R.S. 56:302.10(A) — prohibition on selling recreationally caught fish
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 06-001

Original ruling text

Revenue Ruling
No. 06- 001
April 7, 2006
Sales and Use Tax
Charter Boat Activity and the Sales Tax Exemption for Commercial Fishermen under La. Rev. Stat. § 47:305.20 The purpose of this revenue ruling is to clarify that charter boat activity does not qualify as commercial fishing pursuant to La. Rev. Stat. § 47:305.20. Issue Is charter boat activity “commercial fishing” for § 47:305.20? Law La. Rev. Stat. § 47:305.20 provides a state sales, use, lease, and services tax exemption for any Louisiana resident domiciled in Louisiana who possesses a valid Louisiana fishing license(s) and who owns or operates a vessel operated primarily for the conduct of commercial fishing as a trade or business where the Department of Wildlife and Fisheries has determined the vessel will be used predominantly and principally for commercial fishing as a trade or business and whose catch is for human consumption. It further states that“[p]ossession of a commercial license issued by the Department of Wildlife and Fisheries shall not be used as the sole determination that a vessel will be used predominantly and principally for commercial fishing ventures.” The regulations of the Louisiana Department of Wildlife and Fisheries define both “charter boat fishing guide” and “commercial fisherman” and have different licensing requirements for the two classes or individuals. A commercial fisherman is “ any person who derives income from the harvesting of living aquatic resources for commercial purposes.” A charter boat fishing guide is “any person who operates a vessel for hire and derives income from the bringing of recreational fishermen upon saltwater areas within the state for the purpose of taking fish.” La. Rev. Stat. § 56:302.10 (A) provides as follows: No person shall sell or barter any fish that has been taken recreationally or under the authority of any type of recreational fishing license or with any recreational gear. Analysis Neither the Department of Revenue nor the Department of Wildlife and Fisheries defines “commercial fishing.” The common usage of commercial fishing is the business of extracting fish or other seafood from salt or fresh waters for the commercial purpose of selling such fish or seafood at wholesale or retail. Therefore, for a vessel to be “operated primarily for the conduct of commercial fishing” as required by § 47:305.20, at least fifty percent of the usage of the boat must be for extracting fish or other seafood from salt or fresh waters for the commercial purpose of selling such fish or seafood at wholesale or retail. Although fish and seafood are caught on charter boats, the service provided by a charter-fishing guide is the provision of the charter boat and the guide’s knowledge and expertise of the area, the best bait for a particular type fish, and proper fishing techniques. Aside from the expertise the guide provides, guides often clean the fish and provide necessary ice and storage for the

Revenue Ruling No. 06-001
Page 2 of 2

customer’s catch. The price paid for the service and use of the charter boat is not dependent on the number or pounds of fish or seafood caught but is based on the time that the customer spends onboard the vessel with the fishing guide. Ruling Charter boat operators are not predominantly engaged in the extraction of fish or seafood for sale, but rather are predominantly engaged in providing the use of boats to paying customers for the purpose of recreational fishing. For this reason, charter boat activity is not considered “commercial fishing” for the § 47:305.20 exemption. Although a charter boat operator could sell his catch for profit in contravention of La. R.S. § 56:302.10, which provides that fish or seafood caught recreationally cannot be legally sold, he would still have to prove that his fishing vessel was used more than fifty percent for commercial fishing in order to qualify for the § 47:305.20 exemption. Conclusion Commercial fishing is the business of extracting fish or other seafood from salt or fresh waters for the commercial purpose of selling such fish or seafood at wholesale or retail. The provision of charter boats for the purpose of facilitating customer’s recreational fishing for a fee is not “commercial fishing.” Therefore, charter boat activity does not constitute commercial fishing activity for the § 47:305.20 exemption.
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Cynthia Bridges
Secretary
By: Leslie C. Strahan
Attorney
Policy Services Division

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.