BSW Tax Blog

Federal and Louisiana Taxes

Category Archives: Louisiana State Sales Taxes

LDR disagrees with welding company: fuel is not excluded from sales tax, despite the written law saying as much.

 

The “sale or purchase by a person of any fuel or gas” has been excluded from sales taxes since July 1, 2008.  Nevertheless, LDR claims the written law is mistaken and takes the position that the spirit of the Act was only to exclude purchases of butane and propane.  The Department’s position is untenable; it is not free to ignore the letter of the law. The Louisiana Board of Tax Appeals is considering the matter for welding fuel purchases in Metals USA Plates & Shapes Southeast, Inc. v. Robinson (BTA 9342D) consolidated with O’Neal Steel Louisiana, LLC v. Robinson, (BTA 9250).

Consumers of fuel used anywhere but on the highway should consider making a refund claim for sales taxes paid as far back as January 2014.  Additionally, those consumers should consider making its next sales tax payments under protest followed by suit for refund.  Aviation or marine businesses in transit or shipping stand to benefit the most. The exclusion, however, was fully suspended and subject to the full 5 cents from April 1 to June 30, 2016 and is partially suspended and subject to 3 cents thereafter until June 30, 2018.

“Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” – Learned Hand

Louisiana Sales and Use Tax Consultation

Are You Over or Under Paying?

Louisiana derives 1/3 of its tax revenue from its 4% sales and use tax alone.  Estimates show that an equal amount of tax is avoided through 192 exemptions or exclusions to sales and use tax.  Since the combined state and local rate averages 10%, it is clear that the money involved in sales and use tax can be staggering.   Despite the significant amount of money involved, we find that many of our clients are unable to access sales and use tax expertise to gain affordable advice.  The result is either a surprise hefty tax bill or unclaimed refunds.  Our BSW SALT Team can help.

WHICH BUSINESSES SHOULD CONSIDER A SALES AND USE TAX CONSULTATION?

As a quick test, any business that cannot afford to waste money equal to 10% of expenses or 10% of sales, needs a consultation.  The need for a consultation exists with any business scheduled for a sales and use tax audit.

Businesses selling or leasing tangible personal property (think movable property) must collect the correct sales tax for the correct jurisdiction or else it can be made to pay its customer’s tax out of pocket as a penalty.  Conversely, the same business often enjoys exemptions and exclusions on its own purchases, such as those for raw materials, manufacturing equipment, and purchases for resale.

Business engaged in one of the seven taxable services or leasing movable property must also carefully watch its transactions with customers and venders.  These services can be complicated, but are generally summarized as: rooms for lodging, parking, cold storage, amusements, printing, repair to movables, and laundry.

Businesses selling immovable property, usually contractors, rarely collect any sales tax but must be hyper vigilant in paying sales and use taxes on its purchases to the correct jurisdiction.  Contractors with multi-parish jobsites operating from a centralized storage facility are a particular favorite of local tax auditors these days.

Any business in the following particular industries often receive significant benefit from a consultation:

  1. Healthcare
  2. Nonprofits
  3. Construction
  4. Fabrication
  5. Manufacturing or Farming
  6. Repair services
  7. Any entity with gross sales or expenses over $1M

WHAT ARE THE DELIVERABLES? 

A sales and use tax consultation will deliver training specific to your business based upon its historical transactions and provide peace of mind that your sales and use tax practices are up to snuff.  Some clients have sales personnel join in the consultation along with their payables clerk for greater accuracy in project cost and sales price estimates.

Through sampling methods and then drilling down to individual transactions, Mrs. Gould can identify audit risks, possible exemptions, overpayments, or reporting errors.  Mrs. Gould will provide recommendations at the conclusion of the consultation which may warrant a full reverse audit.  If you are entitled to a refund, you are free to handle it yourself or retain Mrs. Gould and our BSW SALT Team at an hourly or contingency fee for recovery.

WHAT IS THE PROCESS?

The consultation fee is equal to 0.2% of your 3-year IRS Form 1040 gross sales average.  Mrs. Gould will review your basic financial statements, tax returns and the nature of your business before conducting an onsite visit to review specific transactions.  During the onsite visit, valuable sales and use tax training occurs as part of her transaction investigation with your payables clerk.  At the conclusion of the visit, Mrs. Gould will deliver a confidential written report identifying areas of reporting error and potential exemptions and overpayments that may generate a refund or future tax savings.  Every consultation has delivered bottom-line results that have surprised our clients.

La. Supreme Court Protects Taxpayers From Creeping Rental Taxes

“La. Supreme Court Protects Taxpayers From Creeping Rental Taxes”

Breazeale, Sachse & Wilson successfully defended its client, Pot –O-Gold, from the imposition of taxes on services offered in conjunction with the rental of tangible personal property. Pot-O-Gold Rentals, LLC v. City of Baton Rouge, 2014-CA-2154, (La.1/16,/15).

Pot-O-Gold leases various waste collection equipment, in this case, portable toilets and holding tanks. Pot-O-Gold also offers waste removal and equipment cleaning services, which are entirely optional for its rental customers.  For those options which are chosen, a separate charge for the service is made by Pot-O-Gold. Waste removal and cleaning services are not listed among the services subject to tax. La. R.S. 47:301(14).

Louisiana, and its parishes, levy sales tax upon the “gross proceeds” of rentals of tangible personal property. R.S. 47:302B.  The tax laws do not define the phrase “gross proceeds.” In this case the City of Baton Rouge interpreted it to include the amounts charged for the separately stated services and issued an assessment for additional taxes. Pot-O-Gold paid the taxes under protest and filed suit to recover the protested amounts.

The Firm filed a motion for summary judgment which was granted by the trial court. The court found that because the nontaxable services were independent and optional, they did not become part of the taxable “gross proceeds” simply because the services were rendered by the owner of the rental.

The City appealed and the First Circuit reversed with 2 judges dissenting. Pot-O-Gold Rentals, LLC v. City of Baton Rouge, 2013-1323 (La. App. 1 Cir. 9/17/14) (La. Ct. App. Sept. 17, 2014) writ granted, judgment rev’d sub nom. Pot-O-Gold Rentals, L.L.C. v. City of Baton Rouge, 2014-2154 (La. 1/16/15). The appellate court found that while the “true object” of the rental was the rental of the tangible personal property the  “Money collected for ordinarily nontaxable cleaning and sanitation services became taxable gross proceeds of the lease by virtue of the inexorably intertwined relationship between the services and the leased property.” The appellate court went on to state “ It is of no import whether the services were optional for lessees, whether the services could be purchased from another party, whether the services could be rejected, or whether the services could be purchased independently from the plaintiff by others.”

The Firm filed a writ application with the Supreme Court. The Court not only granted Pot-O-Gold’s writ application, but also simultaneously reversed the appellate court’s decision. In so doing, the Court adopted the dissenting judges’ reasoning that “that to hold that providing cleaning services for portable toilets is not a taxable event if the toilet is owned by someone else, but is a taxable service if the toilet is owned by the lessor, creates an absurd result.” The Court also found  “that the “true object” of the transactions is, in the least, debatable, requiring the court to adopt the interpretation urged by the applicant as the least onerous to the taxpayer.”

A rental company which collected taxes on separately stated, optional services may want to notify its customers as to possible refund opportunities.  A rental company currently collecting taxes on such services may want to reconsider its policy.

If you have questions about your sales tax liabilities or duty to collect, do not hesitate to call a member of our SALT Team.

Louisiana Tax Amnesty 2014

It’s back, and better than ever.  Louisiana will waive penalties and half of interest if you qualify for tax amnesty during October 15, 2014 through November 14, 2014.  This year even permits installment agreements.  You should consult your SALT advisor to be sure it is right for you.

More information was provided by LDR at RIB 14-017.

 

Taxpayer’s Right to Claim Refund Held Open By Collector’s Suit

Ordinarily, claims for additional taxes or for a refund of taxes paid prescribe within 3 years from the year in which the taxes were due. It is not uncommon, however, for tax collectors and taxpayers to agree, during the course of an audit, to suspend the running of prescription as to potential claims by both parties in order to give them additional time within which to resolve their differences. In a matter handled by our State and Local Tax (SALT) group, the Louisiana Board of Tax Appeals was called upon to review an agreement to suspend prescription and has now rendered a decision which may be of benefit to any taxpayer currently litigating its tax liability.

The taxpayer was audited for corporate income taxes for numerous years. During the audit, the parties executed several of the Department’s stock agreement to suspend the running of prescription. The first agreement was executed in the year the first audit period would have prescribed. Subsequent agreements would include the years included in the prior agreements and any year about to prescribe.

Under the terms of the agreement prescription was suspended as to the claims of both parties until December 31 of the year after the year of execution. The last agreement extended the period of suspension until December 31, 2008. In December of 2008, the Department filed suit against the taxpayer for additional taxes.

While preparing for trial, the taxpayer discovered that its gain on the sale of an asset had been overstated. Under Louisiana law this overpayment could not be raised as a defense in the Department’s suit against the taxpayer. Rather, the only way the overpayment could be recovered was by filing a refund claim. After the trial court’s decision (which abated the assessment) but before it became final, the taxpayer filed its claim with the Department.

The Department failed to act on the claim within a year of its filing, so the taxpayer filed suit at the BTA asking that the Department be ordered to refund the amount claimed. The Department filed an exception of prescription. It was the Department’s position that, under the terms of the agreement, the taxpayer’s claim had to be filed no later than December 31st of 2008. Since the claim wasn’t filed until 2012 it was, according to the Department, untimely. The BTA disagreed.

Ordinarily, the filing of suit by the Department against a taxpayer does not extend the time within which a claim for refund must be filed., The BTA found, however, that under the agreement, the taxpayer agreed to never plead prescription if suit was filed prior to December 31, 2008 and the Department agreed that the period of prescription for claiming a refund was “extended in accordance with the terms of the agreement.” The BTA ruled that what was good for the goose was good for the gander and since the filing of the Department’s suit had interrupted prescription as to its right to seek additional taxes, so too did it interrupt prescription as to the taxpayer’s refund claim.

One can expect the Department to try and effectively overrule this decision by rewriting the agreement to make it more one sided in the goose’s favor. Until then, a taxpayer who is defending a suit filed by a tax collector may have an unexpected opportunity for a refund.

If you have questions please contact one of our attorneys in the Breazeale, Sachse & Wilson, L.L.P. state and local tax controversy team.

Louisiana Tax Reform Proposal – Sales Tax Exemptions to be Eliminated

 

 

Category

Name

Tax   Exemption Budget #

Advertising

Sales of telephone directories   by advertising companies

44

Catalogs distributed in La.

145

Aircraft

Rental or purchase of airplanes   or airplane equipment and parts b Louisiana-domiciled commuter airlines

18

Certain aircraft assembled in   La. With a capacity of 50 people or more

41

Antique airplanes held by   private collectors and not used for commercial purposes

166

Aircraft/   Automobiles

Trucks, automobiles, and new   aircraft removed from inventory for use as demonstrators

104

Art

Admissions to museums

60

Sales of admission tickets by   Little Theater organizations

111

Rentals of motion-picture film   to commercial theaters

114

Sales of original one-of-a-kind   works of art sold in certain locations

153

Automobiles   Rented/ Owned

Adaptive driving equipment and   motor vehicle modification

105

New vehicles furnished b a   dealer for driver-education programs

131

Education

Certain educational materials   and equipment and parts  by   Louisiana-domiciled commuter airlines

20

Purchases by regionally   accredited independent educational institutions

25

Purchases by a private   post-secondary academic degree-granting institution

50

General   Business

Purchases, services, and   rentals for construction of sewerage or wastewater treatment facility

3

Purchases of consumable by   paper and wood manufacturers and loggers

9

Purchases of school buses by   independent operators

38

Use tax on residue of   by-products consumed by the producer

83

Advertising services

84

Additional tax levy on   contracts entered into prior to and within 90 days of tax levy

116

Raw materials used in the   printing process

142

Sales of railroad ties to   railroads for use in other states

149

Purchase of certain water   conservation equipment for use in the Sparta Groundwater Conservation   District

156

Certain interchangeable   components; optional method to determine

167

Cash-basis sales tax reporting   and remitting for health and fitness club membership contracts

169

Collection from interstate and   foreign transportation dealers

171

General   Public

Installation charges on   tangible personal property

5

Annual La. sales tax holiday

152

Hurricane preparedness La.   sales tax holiday

154

Second Amendment sales tax   holiday

157

Homes

Purchases of storm shutter   devices

52

Used manufactured homes and 54%   of cost of new manufactured homes

71

Certain digital television and   digital radio conversion equipment

73

Cable television installation   and repair services

124

Extended time to register   mobile homes

172

Materials used in construction,   restoration, or renovation of housing in designated areas

178

Mardi   Gras

Specialty Mardi Gras items   sold  certain organizations

58

Specialty Mardi Gras items   purchased or sold by certain organizations

138

Non-Profit/   Religious

Sales and rentals to Boys State   of La., Inc. and Girls State of La., Inc.

21

Outside gate admissions and   parking fees at fairs, festivals, and expositions sponsored by nonprofit   organizations

126

Construction materials and   operating supplies for certain nonprofit retirement centers

133

Tickets to dance, drama, or   performing arts presentations b certain nonprofit organizations

140

Purchases b and sales by   certain nonprofit organizations dedicated to the conservation of fish and   migratory waterfowl

141

Sales of construction materials   to habitat for humanity

155

Purchases of construction   materials by Hands on New Orleans and Rebuilding Together New Orleans   Covenant partners

160

Purchases by the Fore!kids   Foundation

163

Purchases of construction   materials by the Make it Right Foundation

165

Sales tax collected by a qualified   charitable institutions

180

Room rentals at certain   homeless shelters

15

Qualifying events providing La.   heritage, culture, crafts, art, food and music sponsored by domestic   nonprofit organizations

55

Oil/   Gas

Lease or rental of certain   vessels in mineral production

127

Sales of gasohol

132

Installation of board roads to   oil-field operators

6

Property used in the   manufacture, production, or extraction of unblended diesel

23

Pollution control devices and   systems

40

Alternate substance used as a   fuel

47

Natural gas held, used, or   consumed  in providing natural gas   storage services or operating natural gas storage facilities

49

Sales of anthropogenic carbon   dioxide used in qualified tertiary recovery projects

54

Precious   Metals

Coin bullion with a value of   $1,000 or more

67

Racetracks/   Racehorses

Purchases by off-track wagering   facilities

1

Purchase b Pari-Mutuels   Racetracks

2

Racehorses claimed at races in   La.

92

Recreational   Vehicles/ Vessels

Boats, vessels, and other watercraft   as demonstrators

89

Purchase of off-road vehicles   by certain buyers domiciled in another state

90

Retail/   Sales

Purchases of certain custom   computer software

72

Receipts from coin-operated   washing and drying machines in commercial Laundromats

125

Purchases and sales b Ducks   Unlimited and Bass Life

139

Credit for costs to reprogram   cash registers

175

Sales through coin operated   vending machines

31

Seafood/   Fishing

Purchases of supplies, fuels,   and repair services for boats used by commercial fishermen

128

Telecommunications

Sales of cellular telephone and   electronic accessories

45

Interstate telecommunications   services purchased by defined call centers

64

Telecommunications services   through coin-operated telephones

65

Miscellaneous telecommunication   services

66

 

Louisiana Tax Reform Proposal – Sales Tax Exemptions Maintained

 

 

Category

Name

Tax   Exemption Budget #

Agriculture

Sales   of raw agricultural products

35

Pharmaceuticals   administered to livestock for agricultural purposes

70

Sales   farm products direct from the farm

91

Farm   products produced and used by the farmers

96

Sales   of fertilizers and containers to farmers

101

Sales   of seeds for planting crops

110

Sale   of polyroll tubing

158

Automobile Dealers

Manufacturers   rebates on new motor vehicles

7

Manufactures   rebates paid directly to a dealer

8

Credit   for use tax paid on automobiles imported by certain members of the armed   services

185

Use   of vehicles in La. by active military personnel

186

Automobiles   Rented/ Owned

Vehicle   rentals for re-rent to warranty customers

22

Sales   of motor vehicles to be leased or rented by qualified lessors

134

Construction/   Repairs

Repair   services performed in La. when the repaired property is exported.

62

Other   constructions permanently attached to the ground

76

Disabled

Sales   or purchases by blind persons operating small businesses

122

Purchases   by certain organizations that promote training for the blind

123

Purchase   of vehicles modified for use by an orthopedically disabled person

164

Fishing/Seafood

Materials   used in the production of harvesting of crawfish

94

Materials   used in the production or harvesting of catfish

95

Certain   seafood processing facilities

129

Fuel   Subject to Excise Tax

Sale   of gasoline, gasohol, and diesel

182

General Business

Work   product of certain professionals

69

Fees   paid by radio and television broadcasters for the rights to broadcast film,   video, and tapes

107

Vendor’s   compensation (Amended and Capped)

174

Sales   tax remitted on bad debts from credit sales

176

General Public

Sale   of newspapers

81

Purchase   of breastfeeding items

162

La.   Tax Free Shopping program

181

Purchases   made with WIC vouchers and food stamps

183

Credit   for sales and use taxes paid to other states on property imported into La.

184

Sale   of food for preparation and consumption in the home

187

Government

Sales   by state-owned domed stadiums

87

Sales   by certain publicly-owned by certain publicly-owned facilities

88

Governmental   Purchases

Purchases   of equipment by bona fide volunteer and public fire department

43

Purchases   by state and local governments

26

Sales   to the United States Government and its agencies

36

Manufacturing

Leases   or rentals of pallets used in packaging products produced by a manufacturer

24

Manufacturing Machinery and Equipment

Purchases   of manufacturing machinery and equipment.

11

Purchase   of certain machinery and equipment used to produce a new publication

12

First   $50,000 of new farm equipment used in poultry production

57

Purchases   by motor vehicle manufacturers

77

Purchases   by glass manufacturers

78

Purchases   of machinery and equipment by owners of certain radio stations

79

Purchases   of machinery and equipment by certain utilities

80

Medical

Purchases   and leases by free hospitals

19

Sales   of human-tissue transplants

34

Materials   used in collection of blood

74

Apheresis   kits and leuko reduction filters

75

Pharmaceutical   samples distributed in La.

144

Sickle   cell disease organization

151

Purchase,   lease or repair of certain capital equipment and computer software of   qualifying radiation therapy treatment centers

159

Medical/   Prescription Drugs

Purchases   and leases of durable medical equipment paid by or under provisions of   Medicare

179

Drugs   prescribed by physicians or dentists

191

Military

Sales   of TPP by the Louisiana Military Department

53

Sales   by thrift shops on military installations

119

Nonprofit/Education

Donations   to certain schools and food banks from resale inventory

82

Sales   of food by certain institutions

106

Admissions   to entertainment by domestic nonprofit charitable, educational, and religious   organizations

117

Sales   of TPP at or admission to events sponsored by certain nonprofit groups

118

Sales   of newspapers by religious organizations

120

Sales   to nonprofit literacy organizations

121

Room   rentals at camp and retreat facilities owned by IRC 501(c)(3) organizations

14

Certain   educational materials and equipment used for class room instruction

20

Purchases   by nonprofit entities that sell donated goods

29

Sales   of food items by youth organizations

37

TPP   sold to food banks

39

Purchases   of food items for school lunch or breakfast programs by nonprofit elementary   or secondary schools

51

Admission   to athletic or entertainment events by elementary and secondary education   institutions and membership dues to certain nonprofit, civic

59

Admissions   to places of amusement at camp or retreat facilities

61

Non-Profit/Religious

Donation   of toys

48

Tickets   to musical performance by nonprofit musical organizations, educational, and   religious organizations

112

Non-Residential Utilities

Purchase   of electric power and natural gas by paper or wood products manufacturing   facilities

13

Natural   gas used in the production of iron

32

Electricity   for clor-alkali manufacturing process

33

Pelletized   paper waste used in a permitted boiler

42

Purchases   by nonprofit electric cooperatives

85

Sales   of water- nonresidential

99

Sales   of electric power or energy – nonresidential

100

Sales   of natural gas – nonresidential

102

Materials   and energy sources used for boiler fuel

103

Utilities   used by steelworks and blast furnaces

150

Sales   of steam – nonresidential

98

Oil/Gas

Rental   of leases of certain oil-field property to be released or re-rented

16

Repairs,   renovations or conversions of drilling rigs

63

Certain   geophysical survey information and data analyses

68

Repairs   and materials used on drilling rigs and equipment

108

Helicopters   leased for use in the extraction, production, or exploration for oil, gas or   other minerals

168

Sales   or “cost price” of refinery gas

173

Racetracks/Racehorses

Feed   and feed additives for animals held for business purposes

93

Railroads

Leases   or rentals of railroad rolling stock and lease or rentals by railway   companies and railroad corporations

10

Piggyback   trailers or containers and rolling stock

143

Rail   rolling stock sold or leased in La.

148

Residential   Utilities

Purchases   of fuel or gas by residential consumers

46

Purchases   of certain fuels for private residential consumption

137

Sales   of electric power of energy to the consumer for residential use

188

Sales   of natural gas to the consumer for residential use

189

Sales   of water to the consumer for residential use

190

Tangible Personal Property

Purchase   of TTP for lease or rental

30

Articles   traded in on TPP

56

Property   purchased for exclusive use outside the state

115

Transportation/ Large Vessels & Trucks

Certain   trucks and trailers used 80% in interstate commerce

146

Certain   contract carrier buses used 80% in interstate commerce

147

Sales   of 50-ton vessels and new component parts and sales of certain materials and   services to vessels operating in interstate commerce

109

Isolated   occasional sales of tangible personal property

4

 

Louisiana Tax Reform Proposal

Cassidy photoDavid Cassidy, Partner

David.Cassidy@bswllp.com

 

 

 

2010 Low Res BW NFG PhotoCropped

Nicole Gould, Of Counsel

Nicole.Gould@bswllp.com

Louisiana Tax Alert

Tim Barfield , Executive Counsel to the Louisiana Department of Revenue, , provided a draft of Governor Jindal’s tax reform bill to the Louisiana House Ways and Means Committee on March 19, 2019.  The bill is scheduled to be introduced in the Legislative Session which opens April 8.The bill is already receiving opposition from parties ranging from various advocacy groups, local governments, business leagues, and religious leaders so it is unlikely that the bill will make it through in its present form, if it makes it all. (Indeed the opposition to the bill is so strong at this point that there is already talk about the Governor convening a special session to take up tax reform.)  We will update you as changes occur. The purpose of this bulletin is to alert you of the proposed tax changes so that you may anticipate how the bill may affect you and your business.    The proposed changes are to:

  1. Repeal individual income tax which represents a significant portion of the state’s revenue.
  2. Repeal the  corporate income and franchise tax.  This change is presently in HB 178, but the Administration’s version is coming.
  3. Increase the state sales and use tax rate from 4% to 5.88%.
  4. Broaden the state (but not the local) sales and use tax to include services which are not currently taxed., “Service” is defined as “all activities engaged in for other person, natural or juridical, for a fee, retainer, commission, or other monetary charge or consideration, which involve predominantly the performance of a service as distinguished from the selling of property.”
  5. Repeal certain sales and use tax exemptions.

To determine the impact of the Governor’s proposal you should consider every transaction you or your business enter into. If any transaction is not among the exempt transactions set out below then, you will be required to pay or collect and remit tax on those services and transactions.  Under the draft bill, a service is taxable even if that service was not the principal reason for you entering into a transaction.

Proposed Taxable Services:

All Services, unless specifically exempted, are taxable; however the administration has a “target” list of services to be taxed.

 

Mining

213113+ Support services for other   mining

Transportation

Transit and ground passenger   transportation services
487 + 488 Scenic and sightseeing   transportation services and support activities for transportation
492 Couriers and messengers   services

Professional   Services

5412 Accounting, tax preparation,   bookkeeping, and payroll services
5413 Architectural, engineering, and   related services
5414 Specialized design services
541511 Custom computer programming   services
541512 Computer systems design   services
541513 Other computer related   services, including facilities management
54161 Management, scientific, and   technical consulting services
54162+9 Environmental and other   technical consulting services
5417 Scientific research and   development services
Advertising related services
54192 Photographic Services
54194 Veterinary services
54199 All other miscellaneous   professional, scientific, and technical services

Business   Services

5613 Employment services
5615 Travel arrangement and   reservation services
5611 Office administrative services
5612 Facilities support services
5614 Business support services
5616 Investigation and security   services
5617 Services to buildings and   dwellings
5619 Other support services
562 Waste management and   remediation services

Information

5152 Cable and other subscription   services
518 Data processing-hosting ISP-web   search portals
519 Other information services

Financial   Services

52429 Insurance related support   services

Entertainment

7111 Performing arts
7113 Promotional services for   performing arts and sports and public figures
7115 Independent artists, writers,   and performers
712 Museum, heritage, zoo, and   recreational services

Personal   Services

8121 Personal care services
8129 Other personal services

Proposed Nontaxable Services:

 

(1)               Services already taxed will not be subject to the state’s 5.88% rate , but will instead to continue to be taxed at the old state rate, 4%, and local sales tax rate.  Therefore, the following are exempt from the additional tax under the proposal:

  1. Furnishing of hotel rooms,
  2. Sale of admissions to certain events,
  3. Furnishing parking facilities,
  4. Certain printing services,
  5. The furnishing of cleaning or storage services for clothes, furs, rugs, and the like,
  6. Furnishing of cold storage, and,
  7. Repairing tangible personal property:

(2)               Services performed by an employee for his employer are not taxable.

(3)               Services performed directly for the state, a political subdivision of the state, the United States government, or the agencies of the United States government are not taxable.

(4)               Purchases and resales of advertising time or space from media outlets.

(5)               The following services enumerated in the North American Industrial Classification System, 2007, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President shall be exempt from the tax levied and imposed by this Chapter:

(a)    Industry 23112 Support Activities for Oil and Gas Operations.

(b)   Sector 22 Utilities.

(c)    Sector 23 Construction.

(d)   Subsector 481 Air Transportation.

(e)    Subsector 482 Rail Transportation.

(f)    Subsector 483 Water Transportation.

(g)   Subsector 484 Truck Transportation.

(h)   Subsector 486 Pipeline Transportation.

(i)     Subsector 491 Postal Service.

(j)     Industry 51913 Internet Publishing and Broadcasting and Web Search Portals.

(k)   Sector 52 Finance and Insurance, except Industry Group 5242 Agencies, Brokerages and Other Insurance Related Activities.

(l)     Subsector 531 Real Estate, except Industry 53113 Lessors of Miniwarehouses and Self-Storage Units and Industry 531130 Lessors of Miniwarehouses and Self-Storage Units.

(m) Industry Group 5411 Legal Services.

(n)   Sector 55 Management of Companies and Enterprises.

(o)   Sector 61 Educational Services.

(p)   Sector 62 Health Care and Social Assistance.

(q)   Industry Group 8122 Death Care Services.

(r)     Industry Group 8131 Religious Organizations.

(s)    Industry Group 8132 Grantmaking and Giving Services.

(t)     Industry Group 8133 Social Advocacy Organizations.

(u)   Industry Group 8134 Civic and Social Organizations.

(v)   Industry Group 8139 Business, Professional, Labor, Political, and Similar Organizations.

Louisiana to Repeal Income Tax? LDR Tax Facts January 2013 Building A Case For It.

http://taxtopics.revenue.louisiana.gov/2013/01/17/know-the-facts-sales-taxes-income-taxes/

Know the Facts: Sales Taxes & Income Taxes

January 17, 2013 at 10:59 am · Filed under LDR News Release · Tagged , , , , ,

BATON ROUGE – With news outlets continuing to report on the Governor’s goal of eliminating personal and corporate income taxes, some comparisons have been made between the sales tax and the income tax, and what it means for individuals and the state. Here are some facts and figures to keep in mind: 

1. Sales tax is a MORE STABLE form of revenue compared to the personal income tax. According to the Louisiana Revenue Estimating Conference (REC) and the Louisiana Department of Revenue (LDR), sales tax collections have historically been MORE STABLE than personal income tax collections.  (REC Historical Data; LDR Annual Reports). Additionally, according to R. Alison Felix, who authored “The Growth and Volatility of State Tax Revenue Sources in the Tenth District,” state sales taxes have proven to be a more stable source of revenue for year-to-year budgetary expenditures.”

2. Over a 30-year period, the nonpartisan Tax Foundation used 26 different economic studies to determine sales taxes were MORE BENEFICIAL for economic growth than both personal and corporate income tax. (Tax Foundation Special Report No. 207 December 18, 2012)

3. Eliminating personal income tax will create a business climate that encourages MORE BUSINESS INVESTMENT and MORE JOBS. According to the nonpartisan Tax Policy Center, America’s economy would steadily grow by “0.6 percent larger than otherwise after two years; 1.8 percent larger after ten years; and 3.6 percent larger in the very long run” if the nation switched to a tax system that relied on sales tax, not income tax. (Tax Policy Center)

4. Sales tax grows with the economy. When compared to other sources of revenue, sales tax is relatively stable during economic downturns resulting in more revenue as the need arises.

5. Governor Jindal’s proposal will KEEP the Constitutional protections for the exemptions of food for home consumption, prescription medicine, and residential utilities. These exemptions result in the average individual or family with income under $30,000 per year having almost half of their annual purchases exempt from state sales tax. These progressive provisions lessen the impact of the sales tax on lower income individuals and families.

6. In order to offset unfair impacts to low income groups, Governor Jindal’s proposal will set aside funding to operate an Earned Income Tax Credit or a similar mechanism.

Top Ten SALT Blunders

SALT

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.