BSW Tax Blog

Federal and Louisiana Taxes

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.

Kids’ Investment Income Is Taxable, But Where?

Tax Rules for Children Who Have Investment Income

IRS Tax Tip 2013-38, March 21, 2013

Some children receive investment income and are required to file a federal tax return. If a child cannot file his or her own tax return for any reason, such as age, the child’s parent or guardian is responsible for filing a return on the child’s behalf.

There are special tax rules that affect how parents report a child’s investment income. Some parents can include their child’s investment income on their tax return. Other children may have to file their own tax return.

Here are four facts from the IRS about the taxability of your child’s investment income.
1.Investment income normally includes interest, dividends, capital gains and other unearned income, such as from a trust.

2.Special rules apply if your child’s total investment income is more than $1,900. The parent’s tax rate may apply to part of that income instead of the child’s tax rate.

3.If your child’s total interest and dividend income is less than $9,500, you may be able to include the income on your tax return. See Form 8814, Parents’ Election to Report Child’s Interest and Dividends. If you make this choice, the child does not file a return.

4.Your child must file their own tax return if they received investment income of $9,500 or more. File Form 8615, Tax for Certain Children Who Have Investment Income of More Than $1,900, with the child’s federal tax return.

For more information on this topic, see Publication 929, Tax Rules for Children and Dependents. This booklet and Forms 8615 and 8814 are available at IRS.gov. You may also have them mailed to you by calling 800-TAX-FORM (800-829-3676).

IRS Makes A Quaint Review: Taxable and Nontaxable Income

Taxable and Nontaxable Income.

IRS Tax Tip 2013-12, February 12, 2013

Most types of income are taxable, but some are not. Income can include money, property or services that you receive. Here are some examples of income that are usually not taxable:

  • Child support payments;
  • Gifts, bequests and inheritances;
  • Welfare benefits;
  • Damage awards for physical injury or sickness;
  • Cash rebates from a dealer or manufacturer for an item you buy; and
  • Reimbursements for qualified adoption expenses.

Some income is not taxable except under certain conditions. Examples include:

  • Life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
  • Income you get from a qualified scholarship is normally not taxable. Amounts you use for certain costs, such as tuition and required course books, are not taxable. However, amounts used for room and board are taxable.

All income, such as wages and tips, is taxable unless the law specifically excludes it. This includes non-cash income from bartering – the exchange of property or services. Both parties must include the fair market value of goods or services received as income on their tax return.

If you received a refund, credit or offset of state or local income taxes in 2012, you may be required to report this amount. If you did not receive a 2012 Form 1099-G, check with the government agency that made the payments to you. That agency may have made the form available only in an electronic format. You will need to get instructions from the agency to retrieve this document. Report any taxable refund you received even if you did not receive Form 1099-G.

For more information and examples, see Publication 525, Taxable and Nontaxable Income. The booklet is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Withholding Tax Payment Schedule Restates Existing Law For Simplicity

RULE
Department of Revenue
Policy Services Division

IncomeWithholding TaxPayment (LAC 61:I.1516)

Under the authority of R.S.47:1511, R.S.47:1519, and R.S.47:114 and in accordance with the provisions of the Administrative Procedure Act, R.S.49:950 et seq., the Department of Revenue, Policy Services Division, adopts LAC 61.I.1516.

Pursuant to Act 107 of the 2012 Regular Legislative Session relative to Returns and Payment of tax, this Rule provides for payment and due dates for payment of tax by every employer or person who deducts and withholds any amount from any wage as required by Louisiana law.

Title 61  REVENUE AND TAXATION
Part I. Taxes Collected and Administered by the Secretary of Revenue, Chapter 15. Income

Withholding Tax

§1516. Payment

A. All employers or persons who deduct and withhold any amount from any wage pursuant to R.S. 47:114 shall remit payment on a quarterly basis.

B. The due dates for quarterly payments are:

1. first quarterApril 30;

2. second quarterJuly 31;

3. third quarterOctober 31;

4. fourth quarterJanuary 31.

C. Exceptions

1. When the amount deducted or withheld within any calendar month from the combined wages of all employees is an amount equal to or greater than $500.00 but less than $5,000, the taxes withheld shall be paid monthly. Payment is due on the last day of the month following the close of the monthly period.

2. When the amount deducted or withheld within any calendar month from the combined wages of all employees is an amount equal to or greater than $5,000, the taxes withheld shall be paid semimonthly. For wages paid during the first 15 days of a calendar month, the due date is the last calendar day of that month. For wages paid between the sixteenth day and the last day of a calendar month, the due date is the fifteenth day of the following month.

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:114, R.S. 47:1511, R.S. 47:1519, and R.S. 47:1520.

HISTORICAL NOTE: Promulgated by the Louisiana Department of Revenue, Policy Services Division, LR 39:000 (January 2013).

Tim Barfield
Executive Counsel

§1520. Withholding by Professional Athletic Teams

A. – C. …

D. Due Date of Withholding Return and Payment. A withholding payment must be submitted for each game played in Louisiana. The payment must be submitted on or before the last day of the month following the month in which the game was played. A withholding return must be submitted for each quarter in which a game was played in Louisiana to reconcile all payments made within that quarter. The withholding return must be submitted quarterly on or before the last day of the month following the quarter in which the game was played.

E. – F. …

AUTHORITY NOTE: Adopted in accordance with R.S. 39:100.1, R.S. 47:164(D), R.S. 47:295, R.S. 47:1511, R.S. 47: 114 and R.S. 47:1602.1.

HISTORICAL NOTE: Promulgated by the Department of Revenue, Policy Services Division, LR 30:91 (January 2004), amended LR 39:000 (January 2013).

Tim Barfield
Executive Counsel

 

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.

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year.

WASHINGTON — The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

“This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction,” said Acting IRS Commissioner Steven T. Miller. “The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013.”

Home OfficeThe new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after Jan. 1, 2013, and the IRS welcomes public comment on this new option to improve it for tax year 2014 and later years. There are three ways to submit comments.

  • E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Rev. Proc. 2013-13” in the subject line.
  • Mail to: Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2013-13), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
  • Hand deliver to: CC:PA:LPD:PR (Rev. Proc. 2013-13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline for comment is April 15, 2013.

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.

Obama, Boehner, Reid Pass Budget Blame While Taxpayers Wonder: Who’s On First?

Time to Make a Move: New Law Allows for LLCs to Change their State of Organization

 Jacob_Roussel_10252012

Jacob E. Roussel

Associate—                                                                Baton Rouge Phone: 225.381.3172 Fax: 225.387.5397 jacob.roussel@bswllp.com

A new law in Louisiana will allow a limited liability company (LLC) to change its state of organization from Louisiana to any other state as well as allow for LLCs formed in another state to convert into a Louisiana LLC. The new law (R.S. 12:1308.3) was passed in the 2012 regular legislative session (Act 476) and will become effective on January 1, 2013. The process of transferring an LLC to a different state is called conversion in Louisiana. Some states use the term domestication to refer to this process.

Currently, LLCs organized in another state can obtain a certificate to transact business in Louisiana. However, internal governance of the LLC and the liability of its managers and members that arise solely out of their positions as managers and members are still governed by the laws of the state of organization. Other states have similar laws which allow LLCs to transact business in their state. One current method by which LLC members may elect to change the laws under which an LLC is governed is through the use of mergers or consolidations. This new law allows for either an LLC formed in another state to continue its existence in and under the laws of Louisiana, or allows for an LLC formed in another state to continue its existence under the laws of Louisiana. The new process allows for mobility and continued existence without the necessity for mergers or consolidations.

LLCs will be afforded this new flexibility provided that the conversion is not prohibited by the laws of the other state involved. The change must be authorized by a majority of the members of the LLC (or a greater vote if required by the LLCs own articles of organization or operating agreement). Finally, certain filing requirements with the Secretary of State must be accomplished to effectuate the change.

Members of an LLC benefit from having broad flexibility in determining the internal affairs of their company and set up their operational framework in an operating agreement. Issues not addressed in the operating agreement are governed by the default rules determined by the laws of the state of organization. Therefore, it is important for a company considering taking advantage of this law to be aware of the default rules in the new state which will govern the company. One should consult with an attorney familiar with the laws of the state to which the LLC is transferring and determine if it is necessary to amend the operating agreement. One should also consult with a tax professional to ensure that all requirements are met, which may vary depending on the new state of organization.

Whether you are a large regional company with subsidiary LLCs taking on projects in a market that is shifting locations or a smaller business looking to relocate, Act 476 provides new and important foundation for determining if it’s time to make a move.