LOUISIANA SUPREME COURT ALLOWS CREATION OF SALES TAX SHELTER LLC

Recently, the Louisiana Supreme Court addressed whether an out-of-state limited liability company can be formed for the sole purpose of avoiding payment of Louisiana sales tax. In the case of Thomas v. Bridges, 2013-1855 (La. 5/7/14) -- So.3d --, a Montana limited liability company was formed by Thomas, a Louisiana resident, to purchase an RV and to avoid sales taxes. The Louisiana Dept. of Revenue assessed Thomas with the sales tax personally, which was upheld by the Board of Tax Appeals. The Supreme Court disagreed, and found that: (1) the Louisiana Dept. of Revenue failed to recognize the existence of a validly formed LLC; (2) sales tax could not be assessed on Thomas personally unless the veil of the LLC was pierced; and, (3) Montana law would have governed any attempt by the Department to “pierce to corporate veil.”