Sean Shepherd,et Al. v. Kimberly J. Lewis, Secretary, Dept of Revenue, State of Louisiana

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

22-337

SEAN SHEPHERD, ET AL.

VERSUS

KIMBERLY J. LEWIS, SECRETARY,

DEPARTMENT OF REVENUE, STATE OF LOUISIANA

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APPEAL FROM THE
BOARD OF TAX APPEALS
NO. 12779B
ANTHONY J. “TONY” GRAPHIA, CHAIR
CADE R. COLE, MEMBER
FRANCIS J. “JAY” LOBRANO, MEMBER

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SHANNON J. GREMILLION
JUDGE

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Court composed of Shannon J. Gremillion, John E. Conery, and Candyce G. Perret,
Judges.

REVERSED AND REMANDED.

Sean Shepherd
626 Joe Miller Road
Lake Charles, LA 70611
(713) 240-3381
IN PROPER PERSON
APPELLANT

Debra Dauzat Morris
Antonio C. Ferachi
Miranda Y. Conner
Brian Dejean
Louisiana Department of Revenue
P. O. Box 4064
Baton Rouge, LA 70821-4064
(225) 219-2080
COUNSEL FOR DEFENDANT/APPELLEE:
Kimberly J. Lewis, Secretary, Louisiana Department of Revenue

Brittani Anderson
Louisiana Board of Tax Appeals
617 North Third Street
Baton Rouge, LA 70802
(225) 219-2080
COUNSEL FOR DEFENDANT/APPELLEE:
Kimberly J. Lewis, Secretary, Louisiana Department of Revenue

GREMILLION, Judge.

The taxpayer, Mr. Sean Shepherd, appeals the Louisiana Board of Tax

Appeals’ determination that his demand for refund of overpaid taxes for the year

2013 is prescribed. For the reasons that follow, we reverse the determination and

remand the matter for further proceedings.

FACTS AND PROCEDURAL POSTURE

On May 13, 2019, Mr. Shepherd’s bank account with Chase Bank was

distrained1 by the Louisiana Department of Revenue (LDR) of $9,455.18 for taxes

LDR asserted were owed for 2013. On November 25, 2019, Mr. Shepherd filed his

Louisiana income tax return for 2013 in which he claimed entitlement to a refund of

$1,078.00. This return did not include the distrained funds.

On March 9, 2021, LDR wrote Mr. Shepherd and denied his request for a

refund on the grounds that his return was filed after the expiration of the period

prescribed by La.R.S. 47:1623(A).

By letter dated April 30, 2021, Mr. Shepherd filed an appeal before the

Louisiana Board of Tax Appeals regarding the rejection of his demand for a refund.

Mr. Shepherd’s demand was docketed.

LDR filed an exception of prescription, later amended by leave of the board,

which posited that Mr. Shepherd was barred from contesting the distraint for two

reasons: 1) Because he was sent notice of the assessment and failed to appeal it, the

assessment became final after the expiration of sixty days following the notice

pursuant to La.R.S. 47:1565; and 2) Mr. Shepherd’s bank account was levied in May

2019; therefore, the taxes were “paid” for purposes of La.R.S. 47:1623(A). This

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Distraint is “the right to levy upon and seize . . . any property or rights to property of the
taxpayer[.]” La.R.S. 47:1570. It is subject to certain limitations.

allowed him one year within which to claim a refund. Because Mr. Shepherd’s 2013

tax return failed to include the distrained funds, it did not constitute a claim for a

refund of that money.

The Louisiana Board of Tax Appeals heard LDR’s exception on November 3,

2021. LDR offered no evidence in support of its exception. LDR argued that it was

prevented from introducing evidence of the notice because its system includes

federal tax information of which the IRS prohibits disclosure. Initially, LDR argued

that Mr. Shepherd’s own documentation he submitted with his appeal constituted

full proof of its exception. The chairman of the board pointed out that these could

not be considered as they had not been submitted into evidence, after which a

member of the board suggested that LDR’s counsel simply introduce them. LDR

moved to offer those filings, and the filings were admitted.

Under questioning from members of the board, counsel for LDR conceded

that Mr. Shepherd had filed his 2013 return within one year of the distraint, and that

had he shown on the return the amount of the distraint as taxes he had paid, his

appeal would have been timely.

Mr. Shepherd argued that he was following the advice of LDR personnel he

contacted after he was informed of the distraint. He pointed out that LDR had not

introduced the notice. Further, he argued that his filing of the 2013 tax return was

timely, as it asserted that he was entitled to a refund of over $1,000.00.

The board took the matter under advisement and issued a ruling maintaining

LDR’s exception. Mr. Shepherd timely appealed. He asserts that the board

committed the following errors:

1. The LBTA erred in ruling in favor of the LDR because LDR
has the burden of proof and failed to meet the basic sufficiency
requirements to support the Exception. The Taxpayer has never seen

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the 2017 “Notice of Assessment” claimed in element # 1 of the
Amended Exception of Prescription, and the LDR refused to show that
such notice exists.

2. The LBTA erred in ruling in favor of the LDR because the
Taxpayer established his claim on November 25, 2019[,] when he filed
per the instructions of the “Issuer of The Levy” (aka Secretary, LA Dept
of Revenue).

3. The LBTA erred and showed bias in favor of the LDR because
the Amended Exception of Prescription was retroactively written
specifically for the purpose of depriving the Taxpayer of his money.

4. The LBTA erred in not awarding the Taxpayer at least the
amount claimed on the return since it was filed within 1 year of a large
levy taking place.

5. The LBTA ruling is unreasonable because the amounts levied
are excessive vs the fact that the Taxpayer never had any outstanding
tax liability or penalties.

6. The LBTA erred in ruling in favor of the LDR because the
ruling sets an unreasonable precedent. The Taxpayer demonstrated that
the LDR had been engaged in a pattern of covert garnishments over
years for which there is no accounting.

ANALYSIS

Prescription

“[P]rescriptive statutes are strictly construed against prescription and in favor

of the obligation sought to be extinguished; thus, of two possible constructions, that

which favors maintaining, as opposed to barring, an action should be adopted.”

Carter v. Haygood, 04-646, p. 10 (La. 1/19/05), 892 So.2d 1261, 1268. The party

urging prescription bears the burden of proving the merits of the exception except

when the grounds of the exception are evident on the face of the petition, in which

case the burden shifts to the plaintiff to demonstrate that prescription has not tolled.

Id. If evidence is adduced during the hearing on an exception of prescription, courts

of appeal review findings of fact under the manifest error standard; otherwise, the

exception is reviewed de novo. Stobart v. State, Dep’t of Transp. & Dev., 617 So.2d

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880 (La.1993). The manifest error standard of review applies to decisions of the

Board of Tax Appeals. Herman E. v. Robinson, 19-213 (La.App. 1 Cir. 12/27/19),

292 So.3d 561.

Tax assessment

The assessment and collection procedures available to LDR are governed by

La.R.S. 47:1561 through 1584. When a taxpayer does not file a return, the LDR

Secretary “shall determine the tax, penalty, and interest due by estimate or otherwise.

Having determined the amount . . . the secretary shall send by mail a notice to the

taxpayer at the address in the last report filed by him . . . or to any address that may

be obtainable[.]” La.R.S. 47:1562(A). This notice is to inform the taxpayer of the

secretary’s “purpose to assess the amount so determined against him after thirty days

from the date of the notice.” Id. The taxpayer may then, within that thirty-day

window, protest the secretary’s determination in writing. La.R.S. 47:1563. Thirty

days after the notice, the secretary then assesses the taxes, penalties, and interest he

has determined to be due if no protest has been lodged in writing. La.R.S. 47:1564.

After the secretary assesses the taxes, penalties, and interest, he must send a notice

to the taxpayer by certified mail. La.R.S. 47:1565(A). “This notice shall inform the

taxpayer of the assessment and that he has sixty calendar days from the date of the

notice to either pay the amount of the assessment or to appeal to the Board of Tax

Appeals for a redetermination of the assessment.” La.R.S. 47:1565(C)(2). The

secretary may alternatively mail the notice by regular mail. La.R.S. 47:1565(D)(1).

This mailing must be proven by a certificate of mailing or other proof of mailing

from the United States Postal Service, an affidavit of the person who mailed the

notice, or other evidence. Id.

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If the taxpayer has not filed an appeal with the Board of Tax
Appeals within the sixty day period, the assessment shall be final and
shall be collectible by distraint and sale as hereinafter provided. If an
appeal for a redetermination of the assessment has been filed, the
assessment shall not be collectible by distraint and sale until such time
as the assessment has been redetermined or affirmed by the Board of
Tax Appeals or the court which last reviews the matter.

La.R.S. 47:1565(B). And finally:

If the secretary in his sole discretion sends the copy of the notice
of assessment provided for in Paragraph (1) of this Subsection, the
transmittal of the notice shall have no impact on: the time within which
the amount of the assessment is required to be paid or paid under
protest, or, as provided in this Section, the time within which the
assessment becomes final or the time within which an appeal may be
made to the Board of Tax Appeals.

La.R.S. 47:1565(D)(3). The notice mandated by La.R.S. 47:1565 is the one LDR

claims, but did not prove, it sent Mr. Shepherd.

Section 1565 contains a proviso that allows the secretary discretion to

determine that an assessment is based on an error of fact or law, in which event the

assessment is not final. La.R.S. 47:1565(C). However, “no action against the

secretary with respect to the determination shall be brought in any court, nor shall

any appeal relating thereto be brought before the Board of Tax Appeals, and no court

shall have jurisdiction of any such action nor the Board of Tax Appeals of any such

appeal[.]” Id.

In Diamond M Drilling Co. v. Collector of Revenue, 349 So.2d 337 (La.App.

4 Cir. 1975), the court of appeal determined that the petition before the Board of Tax

Appeals filed by a taxpayer seeking recission of a certain amount was subject to an

exception of prematurity because the notice under Section 1565 had never been sent

to the taxpayer.

The same reasoning applies to Mr. Shepherd’s case. The sixty-day period for

appealing an assessment does not begin to run without notice. Thus, proof of the

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notice is essential to sustain an exception of prescription grounded in the finality of

the assessment. We find the Board of Tax Appeals erred in sustaining the exception

of prescription on that basis.

Refunds of overpayments

The procedures whereby a taxpayer may obtain a refund for taxes that were

overpaid are established by La.R.S. 47:1621-1627. The secretary is authorized to

refund overpayments under rather broadly prescribed circumstances. La.R.S.

47:1621(A). Before issuing a refund, the secretary may credit an overpayment to

other tax liabilities the taxpayer owes. La.R.S. 47:1622.

After three years from the 31st day of December of the year in
which the tax became due or after one year from the date the tax was
paid, whichever is the later, no refund or credit for an overpayment shall
be made unless a claim for credit or refund has been filed with the
secretary by the taxpayer claiming such credit or refund before the
expiration of said three-year or one-year period. The maximum amount
which shall be refunded or credited shall be the amount paid within said
three-year or one-year period. The secretary shall prescribe the manner
of filing claims for refund or credit.
La.RS. 47:1623(A). This is the provision on which LDR relies to argue that Mr.

Shepherd’s claim for a refund is prescribed: because he did not claim a refund for

the $9,455.18, he did not submit a claim for a refund within one year of when the

tax was paid.

We note that the statute does not designate a procedure by which a taxpayer

submits a “claim for credit or refund.” However, our colleagues of the first circuit

determined that LDR failed to prove that the taxpayers’ claim for refund was

prescribed when LDR asserted that the taxpayers’ tax return was received after the

expiration of the three-year period, but the taxpayers asserted that the return had

been mailed within the three-year period. Herman E., 292 So.3d 561.

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We adopt the first circuit’s interpretation of La.R.S. 47:1623(A): the

taxpayer’s return that seeks a refund of overpayment constitutes the filing of a “claim

for credit or refund.” In the present matter, Mr. Shepherd filed a 2013 return within

one year of the distraint of his funds held by Chase Bank. He asserted in that tax

return that he was owed a refund of $1,078.00 before the distrained funds were

considered. Thus, Mr. Shepherd timely filed a claim for a refund within seven

months of the distraint, regardless of the amount. The claim for a refund had not

prescribed.

The judgment of the Board of Tax Appeals is reversed. The matter is

remanded to the Board of Tax Appeals for further proceedings consistent with this

opinion. All costs of this appeal, totaling $773.00, are taxed to the Louisiana

Department of Revenue.

REVERSED AND REMANDED.

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