Last October, a Louisiana appeals court ruled a portable toilet rental company owed the City of East Baton Rogue back sales taxes on fees charged for cleaning and servicing its units (see “Louisiana appeals court battles over taxability of servicing of portable toilets“.) Although “services” are normally not taxable, the appeals court agreed with the city that in this case, the cleaning was “incidental” to the “true object” of the purchase, which was the rental of the toilets themselves. One judge on the appeals panel dissented, arguing this created an “absurd result,” as the company did not owe any sales tax when it cleaned other people’s toilets, only its own.
As it turns out, Louisiana’s highest court agreed with the dissenting judge. In an unsigned January 16 order, the Louisiana Supreme Court overturned the appeals court and held the cleaning of portable toilets – regardless of who owns the toilets – is not a taxable event. The toilet rentals themselves remain taxable, which as the court noted highlights the inconsistency of Louisiana’s sales tax rules in its treatment of portable toilets versus trash dumpsters. In the latter case, the state exempts both the rental of dumpsters and their servicing. Yet in both cases the “true object” of the transaction is the removal of waste.
S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.
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