1) Certified Mail Handling – No Protocol’s Whatsoever. Why should our client’s be concerned?
a) Notice of Assessment is to last address used by taxpayer on last report filed, or if no report ever filed, any address Collector can find by private entity free of charge. La. R.S. 47:1565 and 337.51. (LDR 60 Day Letter” or “Local 30 Day Letter”). b) Jeopardy Assessment Notices must be sent within 2 days of assessment. Note: distraint is allowed with the assessment. La. R.S. 47:337.53 and 1566. c) Ad valorem tax sale can occur 20 days after delinquency notice. d) Local refund request denial triggers the 30-day period to request internal appeal, 90-day period to appeal in district court. La. R.S. 47:337.81. e) Notice of Tobacco Stamp liability begins tolling the 10-day deadline before Collector proceeds against Dealer’s bond. La. R.S. 47:843. f) Notice of individual income tax refund seized for benefit another agency provides a 45-day contest period. La. R.S. 47:299.9. g) Notice of property distrained (seized) by local sales tax collector guarantees only 15-day period to act before property is sold. La.R.S. 47:337.58.
2) Not Opening Your Mail From Your Friendly Tax Collector
a) Audit Requests: i) Jeopardy Assessment – Collector can estimate tax and without notice begin distraint. La. 47.337.53 and 1566. ii) Collector can estimate by any means. See certified mail handling protocol’s. La. 47:337.48 and 1562.
b) Refund Request Denial by LDR– have 60 days from notice, or must wait for one year after filing refund request if LDR fails to respond, to appeal in BTA . La. R.S. 47:1625. But see TIN, Inc. v. Washington Parish Sheriff’s Office, 2012-0156 (La. App. 1st. Cir., 7/2/12).
c) Notice of ad valorem tax sale and redemption period. La. R.S. 47:2156.
3) 3. Allowing Assessment Finality
a) Assessment is unreviewable. b) Officer’s Liability La. 47:1561.1. c) Cease and Desist Order. d) The Lovely People of DCS. e) 10% Attorney’s Fee for Court Proceeding. f) Criminal Liability for sales taxes per La. R.S. 47:337.82 and 83 for any person required to collect, account for, or pay over or for any person who willfully fails to file or files a fraudulent return. g) Suspended licenses for individual income taxes, excluding P&I and other charges, in excess of $500 (hunting and fishing) or if in excess of $1,000 (driver’s).
4) Not Minding Your P’s and Q’s…. And Your Calendar
a) Jeopardy assessment is appealable for only 60 days from payment or posting bond. La. 47:337.53 and 47:1566. b) Local collector internal hearing request regarding proposed assessment is allowed within 15 days, if no return was filed, within 30 days if a return was filed. La. 47.337.49 . c) LDR internal hearing request valid for 30 days from notice of proposed tax due. La.R.S. 47:1563. d) Local collector’s notice of final assessment provides only 30 days to pay under protest and file suit in district court, request mandatory arbitration, or appeal to district court. La. 47.337.51. e) LDR notice of final assessment demarks 60-day deadline to appeal to the BTA or pay under protest and file suit in district court. f) December 31 marks another year prescribed from collection, arguably. See Elevating Boats, Inc. v. St. Bernard Parish, 2000-3518 (La. 9/5/01), 795 So.2d 1153. g) Refund must be requested before December 31, 3 years from the year the tax was due or within 1 year from payment if later. La. R.S. 47:1623.
5) Never Getting a Checkup
a) Reverse audits: i) Paying sales tax on exempt transactions. ii) Changes in law such as the CIFT apportionment percentages.
b) Having business processes reviewed by a CPA or tax attorney.
c) Multistate businesses should consult with a multistate tax planner.
6) Being Too ______ During Audit
a) Too Friendly: i) Having auditor among office operations. ii) Having the auditor hear all office discussions. iii) Permitting auditor too much access. iv) Gifts that are prohibited under state ethics laws.
b) Too Antagonistic: i) Putting the auditor in cold storage with a folding table and chair without any bathrooms. ii) No heat/air conditioning. iii) Delay providing documents and reports until the last day of the audit.
c) What to do: i) Locate auditor and documents at the lawyer’s or CPA’s office, or conference room away from office functions. Office Pod? ii) If from out of town, provide auditor with a list of recommended restaurants and hotels. iii) Provide digital copies of documents requested so work can be done at his/her office. iv) Treat them like your mother-in-law. Never disrespect, and give basic courtesies.
7) Sourcing Transactions
a) Sales Taxes, Volume of Business Factor and Sales Factor. b) Mileage factor allocation for interstate transportation taxpayers. La. 47:337.20.1 and 306.1. c) Use tax relies upon the “taxable moment” which is generally described as where the property has come to rest, or where it was delivered. Word of Life Christian Center v. West, 2004-1484 (La., 4/17/06),936 So.2d 1226.
8) Making Sales Tax Collections a Business Loan
a) Penalty for absorbing sales tax can become criminal misdemeanor punishable by not more than $2,000 fine or parish jail for up to 2 years. La. R.S. 47:337.18 and 1641. b) See consequences of allowing an assessment to become final.
9) Lumping Fees on the Receipt
a) Including nontaxable transactions with taxable transactions on one receipt item such as delivery, labor, and operator rentals.
10) Not Trying to Fix the Problems
a) Secretary’s discretion to abate final assessment if made upon mistake of fact.
b) Installment plan.
c) Request refund: i) Only 3 years unless prescription waivers. ii) Appeal refund denial with district court or BTA.
d) Pay under protest and file suit.
e) Appeal LDR assessment to BTA.
f) Request mandatory arbitration with local collector.
g) Appeal AVT assessments with La. Tax Commission.
Nicole Gould Frey
BSW Tax Blog 