LAC 61:I.4411 — Contracts Prior to and within 90 Days of Tax Levy

A. R.S. 47:305.11 relieves a party to a construction contract from the burden of added sales or use tax imposed by either the state of Louisiana, any parish, municipality, or other political subdivision thereof on the sales of materials or services involved in either lump-sum or unit price contracts after the contractor has made himself liable for performance and completion of a contract which did not provide for new or additional taxes. The exemption from new taxes applies only to lump-sum or unit price contracts and does not apply to contracts entered into on a cost plus or fixed fee basis. It is also required that the contracts must have been entered into prior to the effective date of the statute or ordinance levying the new tax. The exemption does apply to sales and services involved in a contract reduced to writing within 90 days after the effective date of a statute levying a new tax, but only if the contractor had a contractual obligation entered into prior to the effective date. The 90-day period is intended to cover a situation where a contractor has computed and bid a contract on the basis of existing taxes prior to the effective date of the new tax but where awarding of the contact and formal signing thereof did not take place prior to the effective date, but within 90 days after the effective date of the new tax.