Mississippi Authorizes Contingent-Fee Tax Head Hunters

Department of Revenue Now Authorized to Hire Auditors and Expert Witnesses on Contingency Fees

$1,000,000 Appropriation to Fund Contingency Contracts

RFPs Quickly Issued for Transfer Pricing Audits and Underreported Cash Sales

The Mississippi Legislature recently authorized the Department of Revenue to hire third party tax auditors and expert witnesses and to pay them contingency fees based on revenue generated from audits they identify and bring to the Department. This new authority was not included in the original Senate Bill 2973 passed by the Senate or the amended bill passed by the House of Representatives, but appears to have been slipped in quietly during the conference committee process before final passage. While it is possible many legislators voting on the final appropriations bill were unaware of this new authority to hire contingent-fee auditors, the bill appropriated up to $1,000,000 to fund those contingency contracts for the current fiscal year. The Legislature’s website contains copies of the final bill and the conference report reflecting the insertion of this contingent fee authority.

The Governor signed the bill on April 18, and the new provisions became effective on July 1, 2017. Wasting no time, in May the Department issued requests for proposals targeting transfer pricing and underreported cash sales audits. The Department reissued the transfer pricing RFP in August in substantially the same form, and while the contract was supposed to have been awarded on August 31, the Department does not appear to have awarded it at this point. The Department appears to have abandoned the underreported cash sales initiative, at least for now.

Transfer Pricing

The original Transfer Pricing Analysis request (RFP 2017-02) was reissued in August in substantially the same form as RFP 2017-05, and specifies that the contractor “will provide Intercompany Transfer Pricing Analysis and Transfer Pricing Analysis Reports prepared consistent with the provisions of the Internal Revenue Code Section 482 and the regulations promulgated thereunder.” The Department claims to need these reports to identify profit shifting via intercompany transactions, and the contract will require the vendor to provide training to the Department’s staff and any expert witnesses for Board of Tax Appeal hearings and litigation in the event of a lawsuit. The RFP further defines the scope of those services as follows:

  • To “provide audit leads” and rank those targets from highest to lowest based on the size of the recommended Section 482 adjustments;
  • To perform audit and legal analysis, which will include the initial basis for the potential adjustments for those taxpayers selected from the target list;
  • Drafting information document requests to be issued to the targeted taxpayers and analyzing information received in response;
  • Preparation of formal transfer pricing reports, to be in a form sufficient for submission as evidence in administrative and judicial proceedings;
  • Providing expert witnesses at the Board of Tax Appeals and court, and providing other audit and litigation support (all within the scope of the contingency fee); and
  • Training Department employees on transfer pricing methods and providing support in responding to taxpayers’ studies and reports.

At least one group is believed to have submitted questions seeking clarification of the scope and terms of the original RFP, but it is unknown if they or any others ultimately submitted proposals to that first RFP. This development suggests the Department is investing heavily in the transfer pricing arena, and adds a new dynamic to recent reports of Mississippi’s active participation in the Multistate Tax Commission’s transfer pricing initiatives.

The state’s new use of contingent fee auditors – and especially contingent fee expert witnesses – could significantly alter the nature of audits and the Department’s litigation of any intercompany pricing adjustments. The authors have seen a noticeable increase in the number and complexity of Mississippi transfer pricing audits, and the Legislature’s blessing and funding of these contingent fee arrangements suggest this trend is likely to increase in the near future.

Underreported Cash Sales

The Department verbally stated that the Department decided not to proceed with the underreported cash sales request (RFP 2017-01), and the authors have been unable to obtain a copy of that proposal so the exact scope and terms of the request are currently unknown. Based on questions submitted by unidentified potential bidders, however, these arrangements also would have been contingency-based and likely were similar to the transfer pricing contracts described above.

The questions submitted suggest that the Department was seeking a “turnkey solution” and that the contractor would have been responsible for targeting unregistered taxpayers and underreported transactions, but also stated that the Department did not expect the contractor to perform actual audits or site visits. Rather, it sought “information that will lead to the recovery of unpaid taxes” which the Department staff would then presumably handle through field audits, investigations and other normal processes. The project would have included information matching as the questions specifically referenced federal Forms 1099K which taxpayers use to report payment card and third party network transactions (i.e., prepaid cards such as gift cards).

Considering the Department’s recent activities directed toward remote internet sellers, it is plausible that the Department intended this project to target non-resident sellers who might fall within the Department’s recently proposed economic nexus standards. Although this initiative appears to be on hold at least temporarily, we will continue to monitor this area in the event a revised RFP is issued.

Jones Walker will continue to monitor and report on these developments, and welcomes any questions or comments as well as any taxpayer’s experiences with these new contingent fee audits.

SAVE THE DATE! The JW SALT Team will be back in Houston, Texas on October 5th!

2017 Jones Walker LLP State & Local Tax Seminar

Thursday, October 5, 2017 | Hilton Americas-Houston

It’s that time of year again! The Jones Walker State & Local Tax Team will be back in Houston, Texas, for our annual State & Local Tax Seminar on Thursday, October 5, 2017.

The Jones Walker LLP SALT Team will be “Cooking with SALT,” presenting a day-long program covering the most important Louisiana and Mississippi state and local tax issues currently facing taxpayers, as well as Louisiana and Mississippi legislative updates.

Secretary of the Louisiana Department of Revenue and former Jones Walker LLP State & Local Tax Partner, Kimberly Lewis Robinson, will once again join the program as the featured luncheon speaker.

This program is intended for industry tax professionals and will be recommended for Texas CPE credit.

Full brochure coming soon.

Mississippi’s Sales Tax Regulatory Smorgasbord Continues—Internet Sellers and Commercial Contractors on the Menu!

The Mississippi Department of Revenue’s recent flurry of regulatory activity continues unabated with a number of proposals and developments, primarily in the sales and use tax arena. With its most recent filings, the Department appears to take aim at remote internet sellers who have not voluntarily registered with the Department under its widely publicized “economic nexus” use tax proposals. Commercial construction contractors also have numerous substantive changes to consider, including a new 10 percent penalty regime that could apply even if all taxes are timely paid and even in some tax overpayment situations.

Newly Proposed Amendments

  • Contractor’s Tax Rules and Penalties. On June 21, 2017, the Department issued a notice that it intended to amend Reg. 35.IV.10.01 concerning application of the contractor’s tax and penalties for failing to prequalify a taxable contract. A public hearing will be held on Wednesday, July 26, 2017, at 2:30 p.m. Continue reading >

Economic Impact Statements

The Department has come under sharp public criticism recently over the fact that it has never issued an economic impact statement for any of its proposed regulations or amendments, in spite of the fact that such statements are explicitly required under Mississippi’s Administrative Procedures Act. In response to this criticism, the Department has begun issuing those statements, but, as seen below, so far it has concluded none of its amendments and new regulations pose any additional economic burden on taxpayers.

  • Airbnb, VRBO, etc. – Economic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.5.01 addressing the short-term rental of homes and other dwelling facilities for purposes of levying the state’s sales tax on “hotels.” A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, offering a room or home for rent on a short-term basis renders it taxable if the facility is “known to the trade” as a hotel or motel. The regulation now provides that advertising the room or home by the owner or through a third party would render it “known to the trade” for purposes of rendering that rental taxable. Continue reading >
  • Prepared foodsEconomic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.9.02 attempting to define what constitutes “prepared foods” for purposes of local sales taxes on those items, as that term was not previously defined in the statutes or regulations. A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, prepared foods include (a) food made to order upon the customer’s request; (b) food sold in a heated state or heated by the seller; (c) two or more food ingredients mixed or combined by the seller for sale as a single item, but not including food that is only cut, repackaged, or pasteurized by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the Food and Drug Administration in Chapter 3, part 401.11, of its Food Code so as to prevent food-borne illnesses; or (d) food sold with eating utensils “provided by the seller,” including plates, knives, forks, spoons, glasses, cups, napkins, or straws. Continue reading >
  • Printing industryEconomic Impact Statement. On March 24, 2017, the Department proposed to amend Reg. 35.IV.4.05 addressing customer use of printing equipment and printed products delivered out of state. A public hearing was held on that regulation on April 26, 2017. Under that proposed amendment, the term “Printer” includes publishers and other producers or reproducers of lettering or images of any kind on paper, printing plates, or other material. Providing copiers, printers, or other machinery in the owner’s place of business for use by customers who make their own printed material for a fee does not fall under the term “Printer.” The regulation also clarified that printed products that are delivered outside of this state are exempt from sales tax; specified that computers, digital equipment, and software used in the printing process is subject to the reduced 1.5 percent tax rate; and that electric power and other fuels used in the process are fully exempt in accordance with recent statutory changes. New language in the regulation specified that other forms of printing equipment such as inserters or mail sorting equipment, as well as purchases of copiers and other equipment provided for use by customers who make their own printed material, are taxable at the regular retail rate of tax. Continue reading >

Other Pending Actions

Final action remains to be taken on numerous other previously issued regulatory amendments for which public hearings have already been held. Those proposals include the following… Continue reading >

Any taxpayer who has questions or concerns about these or any other regulatory actions is encouraged to attend the public hearings and/or submit written comments to the Department. Members of the Jones Walker Tax & Estates Practice Group are available to answer questions about that process or to assist any taxpayers in assessing the impact or likely application of these proposals to taxpayers’ particular circumstances.

JW SALT Team Summer Recipe Series – Part 1

What better food to make in the middle of the summer than tacos! Below is the recipe for my favorite summertime indulgence, Tacos Al Pastor!

Meat Needed
• 2 pounds pork shoulder, preferably boneless

Ingredients for Marinade
• 2 tablespoons achiote paste
• 1 tablespoons guajillo chili powder
• ½ tablespoon garlic powder
• ½ tablespoon oregano
• ½ tablespoon cumin
• ½ tablespoon salt
• ½ tablespoon pepper
• ½ cup white vinegar
• ½ cup pineapple juice

Ingredients for Cooking
• 1 pineapple, skinned and sliced into 1 inch rounds

Ingredients for Dressing
• 1 white onion, finely chopped
• 1 cup cilantro, finely chopped
• 1 cup salsa of your choice
• some lime

Step 1: Slice the pork shoulder in ¼ inch slices to prepare the pork for the marinade.

Step 2: Mix all marinade ingredients in a bowl. Adding the pineapple juice may cause the marinade to curdle so ensure that the marinade is smooth and consistent.

Step 3: Add the marinade to the pork, mix well, and put it in an airtight container. Ideally, let the pork marinate for 4-8 hours.

Step 4: Line a baking dish with parchment paper and place 3 pineapple rounds on the sheet. Secure the pineapple rounds with a skewer. Layer the pork on top of the pineapple rounds. Once all the pork is layered, put 3 pineapple rounds on top of the pork. Ensure that the skewer is in the middle of the pineapple rounds and the pork.

Step 5: Bake the meat in an oven at 325 degrees for about 1 ½ hours or until the internal temperature is about 185 degrees. Let the pork sit for about 15 minutes, then carve thin slices of the pork and the pineapple rounds.

Step 6: Mix the chopped onion and cilantro in a bowl and add lime to assemble the dressing.

Step 7: To serve, assemble the pork on the tortillas, followed by a few pieces of pineapple, dressing, lime, and salsa.

Jones Walker SALT Team Presents at SEATA

Jones Walker SALT Team members Jay Adams and Matt Mantle presented at the 67th annual Southeastern Association of Tax Administrators Conference July 9-12 in New Orleans, LA. Jay co-presented on property tax issues while Matt co-presented on sales tax nexus for online purchases.

Fellow team members Bill Backstrom and John Fletcher were able to catch up with former SALT Team member, current Louisiana Secretary of Revenue, and SEATA President, Kimberly Lewis Robinson.

“Secretary Robinson and the entire team at the Louisiana Department of Revenue put on a great program in New Orleans for the 2017 SEATA Conference. The substantive panels were first class and Louisiana put on a great show for all of the attendees. Jones Walker was proud to be a sponsor of the 2017 SEATA Conference. Nashville, get ready for 2018!” – Bill Backstrom

Jones Walker Tax Team Members to Speak at NYU Summer Institute in Taxation

Jones Walker LLP Tax Team members Bill Backstrom and Hugh Seligman will speak at the NYU 2017 Summer Institute in Taxation Conference July 17-28, 2017.

Bill will speak on corporate and other business activity taxes including allocation and apportionment, UDITPA, return filings, NOLs, and credits. Hugh’s session entitled “Post-Mortem Income Tax Planning for Closely-Held Companies” will focus on on the income tax issues that arise from a decedent owning an interest in a partnership or S corporation at death. The topics addressed include elections to mitigate income tax, funding of bequests, utilization of losses accrued prior to death, post-death sales of company interests and application of the net investment income tax.

The intensive tax conferences are ideal for the new professional who wants a solid foundation in a specialized area of law or tax practice. Those attorneys and accountants already practicing attend to refresh their knowledge and to learn about new developments in legislation and regulations. Attend the introductory conferences and acquire critical new skills and practical knowledge you can use immediately. Attend the intermediate/advanced conferences and receive a high-level update and an in-depth analysis of the latest developments. CLE, CPE, and CE credits also are available.

Jones Walker LLP and the BCNO Host Discussion on Federal Tax Reform led by Derek Theurer, Tax Counsel to U.S. Sen. Bill Cassidy

IMG_0690Jones Walker LLP and the Business Council of New Orleans and the River Region recently hosted a discussion on federal tax reform and its potential impact on businesses and individuals. The discussion was led by Derek Theurer, Tax Counsel to U.S. Senator Bill Cassidy, M.D. Sen. Cassidy serves on the Senate Finance Committee and will be a key leader in federal tax reform debates. Sen. Cassidy is keen to understand taxpayers’ concerns and priorities regarding federal tax reform and welcomes ongoing dialogue with stakeholders.

Mr. Theurer discussed items such as tax reform goals, the average corporate tax rate, the pros and cons of passing a tax bill through reconciliation, moving to a territorial system, and the border adjustment tax.

Tax reform has been a long time coming… There are a lot of distortions in the tax code.

-Derek Theurer, Tax Counsel to Sen. Bill Cassidy

Several business leaders in the audience stressed:

• the importance of the Historic Tax Credit and New Markets Tax Credit on rebuilding Louisiana after Katrina, and on continued economic development in Louisiana;

• the need to consider the impact that tax reform will have on affordable housing, especially in light of proposed budget cuts to HUD;

• the importance of a transition period to give companies a chance to adjust to any tax reform;

• and to be meaningful, tax reform needs to be on a permanent basis. Reform that can only be relied upon for a few years adds more uncertainty to business decisions.

Much Ado About Nothing: Louisiana’s 2017 Regular Session Legislative Wrap-Up

IMG_5444The Louisiana Legislature’s 2017 Regular Session has now concluded, and as previously reported, numerous tax measures were proposed.  Ultimately, however, much of the proposed legislation addressing long-term tax reform was largely rejected by the Legislature during the Regular Session, leaving questions currently unanswered as to how the state will ultimately address the long-term issue of its current taxing and spending structure, as well as the short-term issue of the $1.3 billion “fiscal cliff” looming in the next fiscal year.

Tax Bills Passed by the Legislature in the 2017 Regular Session

Notwithstanding the title of this article, the following notable tax bills were passed by the Legislature and sent to the desk of Governor John Bel Edwards (D) for review and signature (or veto):

Corporate Income/Franchise Taxes:

HB 313

  • Extends the inventory tax credit to certain property held by retailers engaged in the short- term rental of such property.
  • Defines “inventory” to include any property available for short-term rental, which will ultimately be sold by the retailer.
  • Applicable short-term rentals include: a rental less than 365 days, a rental for an undefined period, or a rental under an open-ended agreement.

HB 425

  • Removes the restriction against taxes paid under protest concerning claims for the tax credit for ad valorem taxes paid with respect to certain offshore vessels.
  • Further provides that if a taxpayer does pay ad valorem under protest, the taxpayer is required to notify the Department of Revenue when the judgment is final and the department then has two years to recapture the credit after receiving notice of a final judgment.

HB 555

  • Provides a deduction against corporate income tax for amounts received as dividends from a related member in a “regulated group of entities.”
  • “Regulated Group of Entities” is defined to apply the proposed dividends received deduction to certain entity groups in which one of the members is either a telecommunications provider or an electric utility in Louisiana.

SB 182

  • Limits the refundability of excess inventory tax credits to treat those taxpayers who file a consolidated federal tax income tax return as one single taxpayer for credit cap purposes.

SB 243

  • Reduces the tax credit for the purchase of alternative fuel vehicles from 36% to 30% of the vehicle cost.
  • Imposes additional requirements on the tax credit for alternative fuel commercial vehicles such as registration and primary use in Louisiana.
  • Changes the tax credit from refundable to nonrefundable beginning January 1, 2018.

Sales/Use Taxes:

HB 264

  • Expands the types of construction contracts excluded from the imposition of a new sales and use tax levy if entered into and reduced to writing prior to the effective date of such levied tax.
  • Protected construction contracts will include the sales of materials or services in lump sum, unit price, fixed fee or guaranteed maximum price contract contracts.

HB 601

  • Establishes the Louisiana Uniform Local Sales Tax Board as a political subdivision of the state for the purpose of promoting certain uniform procedures and policies concerning the collection and administration of local sales and use taxes, and to provide policy advice and support to local sales and use tax collections.
  • Establishes the Louisiana Sales and Use Tax Commission for Remote Sellers as an independent agency within the Department of Revenue for the administration and collection of state and local sales and use taxes related to remote sales, and to provide for policy uniformity and simplicity in sales and use tax compliance for remote sellers.
  • Provides details of the duties, operations, and funding for both of the proposed political subdivisions.

SB 180

  • Restores the state-level sales and use tax exemption for medical devices, beginning July 1, 2017.

Credits/Incentives:

HB 237

  • Extends the sunset for the Enterprise Zone Program through July 1, 2021.

HB 300

  • Reduces the research and development tax credit rate to 5% of the difference, if any, of the Louisiana qualified research expenses for the taxable year minus the “base amount” for a taxpayer that employs more than one hundred or more persons, 10% for employment of fifty to ninety-nine persons, 30% for employment of less than fifty persons.
  • “Base Amount” is defined as 80% of the average annual qualified research expense during the three preceding taxable years if taxpayer employs 50 or more persons or 50% if taxpayer employs less than 50 persons.
  • Allows taxpayers participating in the Small Business Technology Transfer Program or the Small Business Innovation Research Grant program to sell or transfer their unused credits to another Louisiana taxpayer if both parties.

HB 454

  • Extends the sunset date of the Angel Investor Tax Credit through July 1, 2021, reduces the amount of the credit from 35% to 25% of the investment, and reduces the number of years over which the credit shall be taken from five to three years.
  • Limits the total amount of Angel Investor Tax Credits granted by the state in any calendar year to $3,600,000 and provides that if there is a balance at year end, it will be carried forward to the subsequent year.
  • Reduces the annual limit per business from $1 million to $720,000, and the overall limit per business from $2 million to $1,440,000.

SB 177

  • Provides a withholding requirement for the Motion Picture Tax Credit, requiring the payor to withhold taxes, excluding amounts otherwise not subject to withholding requirements, at the rate determined in accordance with an employee’s withholding allowance certificate, or the highest individual rate in effect at the time if there is no employee withholding allowance certificate.

SB 150

  • Removes the sunset date of July 1, 2018 and makes permanent the reductions of the investor tax credits and total annual program costs as provided in Section 2 of Act 125 of the 2015 Regular Session.
  • Eliminates the requirement of the State Bond Commission approval for such tax credits.
    Extends both the investor credit and the import-export cargo credit to July 1, 2021.

SB 172

  • Provides a sunset date of January 1, 2022  for the following income and corporation franchise tax credits:
    • Offset against tax based on insurance premiums
    • Rehabilitation of historic structures
    • Conversion of vehicles to alternative fuel usage
  • Also proposes a sunset date of January 1, 2022, for other income and corporation franchise tax credits such as the Louisiana Citizens Property Insurance Corporation Assessment.
  • Eliminates the 36% credit for the value of the property directly related to the alternative fuel.
  • Increases the value of the credit for the purchase of an alternative fuel vehicle from 7.2% to 10 % and changes the per vehicle credit cap from $1,500 to $2,500.

SB 178

  • Ends the authority of the Department of Economic Development to contract with a corporation to allow the use of a single sales factor in determining Louisiana corporation income and franchise tax liability as of July 1, 2017.
  • Eliminates the green job tax credits, urban revitalization zone exemption, and the technology commercialization tax credits as of July 1, 2017.
  • Proposes a sunset date of both the Angel Investor Tax Credit Program and the Sound recording investor tax credit as of July 1, 2021.
  • Proposes a repeal of the Motion Picture Incentive Act.

HB 187

  • Increases the amount of credit for a leased solar panel system from 38% of the first $20,000 of the cost of purchase to 38% of the first $25,000 of the cost of purchase.
  • Proposes a supplemental credit for taxpayers whose claim for the solar energy credit was denied or was not receive in full because of the annual $10 million dollar cap on the program, where qualifying taxpayers can receive credit for equipment purchased installed on or before December 31, 2015.
  • Terminates the solar energy system tax credit as of January 1, 2016.

HB 646

  • Extends the sound recording investor tax credit program to July 1, 2021 and additionally proposes credits for 10% of payroll for investors who create fewer than 10 new jobs, each with a minimum annual salary of $35,000 per year and 15% of payroll for investors who create 10 or more new jobs, each with a minimum annual salary of $35,000 per year.
  • Provides a new QMC (entity authorized to do business in Louisiana, engaged directly or indirectly in the production, distribution and promotion of music, certified by the secretary) payroll credit program beginning July 1, 2017.

SB 183

  • Provides termination dates for certain tax incentive and rebate programs such as:
    • Enterprise Zone Program – July 1, 2021
    • Cooperative endeavor agreements with a mega-project for the rebate of severance tax – July 1, 2017
    • Quality Jobs Program – July 1, 2022
    • Competitive Projects Payroll Incentive Program – July 1, 2022
  • The purpose of these sunset dates are to “force a discussion” concerning each credit program’s effectiveness in generating economic growth and/or benefit for the state.

SB 79

  • Provides amendments to certain income tax credits/sales tax exemptions and includes additional qualifications for such programs.
  • Repeals the sunset date of June 30, 2018 and thus makes permanent the 28% “haircut” reductions to certain tax credits, such as:
    • Angel Investor tax credit program
    • Digital interactive media and software tax credit
    • Sound recording investor tax credit
    • Musical and theatrical production income tax credit
    • Credit for conversion of vehicles to alternative fuel usage
    • Ports of Louisiana tax credit
    • Credit for “green job industries”
    • Proposed law includes a retroactive effective date of January 1, 2017

Ad Valorem Property Tax:

SB 140

  • Constitutional Amendment to exempt from ad valorem taxation certain property delivered to a construction site for the purpose of incorporating the property into any tract of land, building, or other construction as a component part, including the type of property that may be deemed to be a component part once placed on an immovable for its service and improvement pursuant to the provisions of the Louisiana Civil Code.
  • The exemption would remain effective until the construction project is complete and can be used or occupied for its intended purpose.
  • Includes an exception for projects constructed in two or more distinct phases, where if one phase is complete for its intended use, the property of such phase can be properly assessed.

The 2017 Second Extraordinary Session of the Legislature

At the close of the 2017 Regular Session, the fiscal year budget had not been agreed upon and set by the Legislature.  As a result, a “precautionary” 2017 Second Extraordinary Session of the Legislature that was previously called by the Governor did in fact convene at 6:30 PM on June 8th (immediately after the 2017 Regular Session ended).  The Governor, however, restricted his call in this second special session to outlays and appropriations; taxes are off the table.  The complete call is available by clicking here.

Future Special Sessions

Given the looming “fiscal cliff” in next year’s budget resulting from the scheduled roll-off of incoming revenue from the additional 1% “clean penny” state sales tax, it is almost assured that another special session will be called by the Governor in 2018 to again address revenue needs of the state and possible long-term tax reform.  As we move closer to a 2019 gubernatorial election year in Louisiana, budget issues, tax reform, and the raising of taxes will surely continue to be infused with a heavy dose of politics from all sides.

The Jones Walker SALT team will continue to monitor and report on the Louisiana Legislature’s efforts in the current 2017 special session and the future legislative sessions to come.

Thank You for Attending Jones Walker’s Legislative Update Webinar

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Thanks to all who participated in our legislative update webinar!

Presenters from the Jones Walker State & Local Tax and Government Relations Teams provided an update on the ever-changing dynamics of the 2017 Regular Session of the Louisiana Legislature via a special webinar. With a budget shortfall for the upcoming fiscal year and a looming “fiscal cliff” in 2018, the Legislature is currently dealing with numerous spending and revenue-raising bills that will have a significant impact on businesses that operate in Louisiana, including bills to expand the sales tax base, reduce exemptions, and change the rate. Some of the proposed tax increases in this fiscal session will also likely have quickly approaching effective dates, so businesses will have to move swiftly to address the changes that affect them. Presenters also provided their insight on the political dynamics at play in this year’s Regular Session.

Now more than ever, businesses need to be actively engaged in the legislative process, as many of the tax measures working their way through the legislature and many of the longer-term tax reform measures could heavily affect businesses’ tax profiles in Louisiana.

Also, remember to SAVE the DATE for our annual State and Local Tax Seminar in Houston, Texas on October 5, 2017! More details to come!

Mississippi Governor Announces Special Session for June 5

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Mississippi Governor Phil Bryant announced Tuesday afternoon on Facebook that he would call a special session of the Mississippi Legislature to begin June 5. The 2017 regular session ended earlier this year without having approved 2018 fiscal year budgets for the Department of Transportation or the Attorney General’s office, and the special session is intended to complete that budget process.

While there has been no open discussion yet of any tax increases or similar changes and the official call has not been released, taxpayers should keep a close eye on any new revenue proposals that might be considered as part of this special session. One of the more heavily debated bills during the regular session was H.B. 480, a proposal to enact sales and use tax collection requirements on remote sellers deemed to have “economic nexus” with the state.

(See Jones Walker’s prior coverage here and here and here.) Various forms of that proposal would have diverted new use tax collections to badly needed road and bridge improvements throughout the state, which the local business community strongly supported. The bill died after the Lt. Governor publicly stated that he considered the use tax collection aspect of the bill to be unconstitutional. It is unclear whether the Legislature will reconsider this proposal or other new revenue sources as it completes the 2018 budget.

In January, the Department of Revenue proposed to adopt a similar remote use tax collection requirement through regulation, but no formal action has been taken on that proposal since the Department held a public hearing on February 15.

Jones Walker will continue to monitor these legislative and regulatory developments.

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