If you are reading this blog post, it is far more likely than not that you have been touched by the greatness of Paul H. Frankel, who passed away overnight between February 27th and 28th. In fact, without Paul’s influence on many SALT professionals over many years, myself included, this very blog and many others like it probably would not exist.

Paul is referred to as “the godfather of SALT.” There could be no better title for Paul as a SALT professional. More importantly, Paul was a friend and colleague for so many of us who call ourselves SALT professionals. Speaking of professionals, Paul was the consummate professional. He practiced what he preached – true professionalism – at all times and in all places.

I always tried to sit in on every presentation that Paul made around the country at countless seminars and forums. Many of us worked with Paul on cases in our “home” jurisdictions. In every presentation I heard Paul make, he was quick to mention the names of fellow SALT professionals who had an impact on SALT matters across the country. There was no better endorsement than to have Paul mention your name in one of his presentations. Paul was fiercely loyal to his many friends, clients, and colleagues.

Years ago, Paul and I were at a seminar together. I do not remember exactly where or when, but I do remember that we both were on the same flight to New Orleans, Paul to present at yet another seminar and me to return home. Paul asked if I could give him a ride to his hotel. Without hesitation, I quickly took on the job as Paul’s New Orleans Chauffeur. I was not going to miss the opportunity to have 30 minutes of uninterrupted time with Paul in a car. From that time on, whenever I knew Paul was coming to New Orleans, I offered to be his chauffeur. We often dined together, too. Paul was my mentor, colleague and, most of all, friend. I was his proud New Orleans Chauffeur!

Paul will be greatly missed the many people he touched, directly and indirectly. Paul’s legacy is and will continue to be far reaching for many years on many levels. We all owe Paul a debt of gratitude for all he did for so many SALT professionals and the industry as a whole.

Our collective thoughts and prayers are with Paul’s family.

Mississippi Lt. Governor: Use Tax Remote Seller Collection Bill “Unconstitutional”, Expected To Die In Senate Committee

iStock_000024072281_LargeMississippi Lt. Gov. Tate Reeves on Monday released a statement that H.B. 480 would not be acted on in the Senate, effectively killing the bill by not advancing it out of the Finance Committee by a February 28 legislative deadline. As previously reported, H.B. 480 would have required remote sellers with over $250,000 of sales to Mississippi customers to collect and remit the state’s use tax. The Lt. Governor was quoted in numerous local media outlets as acknowledging that the bill would violate Quill Corp. v. North Dakota, 504 U.S. 298 (1992), would have unnecessarily entangled the state in protracted and costly litigation, and would be unlikely to produce any new revenue unless and until that litigation was resolved in the state’s favor.

Left unresolved by the demise of the bill is what the state might do to fund road and bridge improvements, as the proposed legislation earmarked 70% of new use tax collections for those purposes. This funding mechanism led to widespread support for passage of the bill throughout the Mississippi business community.

While this announcement appears to doom the Legislature’s efforts to “deputize an out-of-state retailer as its collection agent for a use tax,” (see, National Bellas Hess v. Department of Revenue, 386 U.S. 753, 757 (1967)) the Department of Revenue is expected to proceed with its parallel efforts to enact an identical collection requirement via regulation. The Department has made no new pronouncements refuting its previously stated intent to act independently of the Legislature following its public hearing on the proposed regulation on February 15.

We will continue to monitor and report legislative and regulatory developments on this issue.

It’s King Cake Time!

FotoJet Collage

Our JW SALT Team in New Orleans recently had fun trying out some of the best king cakes the city has to offer.

We sampled cakes from Sucre, Gracious Bakery, Nonna Randazzo’s, Party Palace (from Langenstein’s), and Dong Phuong Bakery, among others.  With so many great king cakes to choose from, it was impossible to have a clear winner.  Luckily, the JW Tax and Corporate Groups were very happy to assist in making sure no cake went unappreciated!

Happy Mardi Gras!



UPDATE – Mississippi Use Tax Remote Seller Bill Advances; Jones Walker Attends Public Hearing on Related DOR Proposed Regulation

Remote use tax collection legislation advances. A Mississippi bill to require use tax collection by remote sellers passed the House of Representatives and was transmitted to the Senate on February 7. The bill, H.B. 480, would require out-of-state sellers lacking a physical presence in Mississippi to register and begin collecting use tax if their prior-year retail sales of tangible personal property to Mississippi customers exceeded $250,000. Those sellers meeting this threshold would be deemed to have a “substantial economic presence” in the state.

Another important aspect of the bill is that it purports to set aside 70% of future use tax collections made by taxpayers covered by the new nexus standard to fund badly needed improvements to Mississippi’s roads and bridges. Also going into that fund would be any collections made by “voluntary taxpayers”, which is defined to mean “a taxpayer that does not have nexus with this state for sales tax purposes but voluntarily collects and remits use tax to this state on behalf of this state.” This roads-funding provision has garnered widespread support throughout the Mississippi business community for passage of the bill.

The next deadline for Senate action on the H.B. 480 should be February 28.

The original Senate companion bill, S.B. 2456, died in committee on January 31.

Public hearing conducted on proposed regulation. On February 15 the Department of Revenue conducted a public hearing on Proposed Regulation 35.IV.3.09 which would closely follow the provisions currently contained in H.B. 480. Prior to the hearing, Jones Walker submitted the following comments and questions to the Department seeking clarification of a number of technical and procedural issues raised by the proposal. The hearing was well attended and generated robust discussion, and the Department provided the informal feedback on these questions noted below.

  • The proposed regulation unambiguously states that the Department can require an out-of-state party to collect Mississippi use taxes even if the seller lacks any in-state physical presence. The United States Supreme Court twice concluded in Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and National Bellas Hess v. Department of Revenue, 386 U.S. 753 (1967) that a state cannot impose a use tax collection requirement on an out-of-state seller, consistent with the Commerce Clause of the United States Constitution, absent a physical presence in the state. Considering the Court has not overturned or otherwise limited these decisions, does the Department intend to suspend enforcement of this proposed regulation unless and until the United States Supreme Court reverses its prior decision in Quill?

A: The Department stated that it fully understood the regulation was in direct defiance of and was a challenge to Quill and National Bellas Hess, and that the Commissioner was personally aware of that fact, but the Department believes the regulation and its requirements are appropriate and authorized based on their perception that the United States Supreme Court might overturn the physical presence standard at some point in the future.

They clearly stated they intended to immediately enforce the regulation upon finalization. When pressed by other attendees as to where the Department or the Commissioner derives its authority to adopt a rule openly defying the Supreme Court, the response was somewhat unspecific and merely referred back to its authority to interpret its existing statutes.

  • Assuming the Department intends to enforce the regulation immediately, does the Department intend to apply the $250,000 sales / nexus rule retroactively to tax periods preceding the adoption of the new regulation?

A: The Department stated that it believes the $250,000 standard is not a new standard, but merely an interpretation and application of the longstanding (but generally unenforced) statute conferring nexus upon whose who have “purposefully and systematically” exploited the Mississippi market. See current Miss. Code Ann. § 27-67-4(2)(e). As such, the Department suggested the standard is more of a safeguard or a “safe harbor” than it is a new nexus standard and will exclude smaller sellers who could otherwise have nexus with lower levels of sales. They clearly stated that the regulation is currently worded to apply the new standard on a retroactive basis, but indicated they were open to comments on the topic and that the final rule may or may not authorize retroactivity.

  • If House Bill 480 is not enacted into law, does the Department intend to finalize and begin enforcing the proposed regulation prior to any statutory change?

A: The Department stated that the proposed regulation “was not proposed in conjunction with” H.B. 480 and the clear indication was that they believe they have authority to proceed to finalization in the absence of any additional legislative action.

  • Section 201 of the regulation states that an out-of-state seller must register to collect Mississippi use taxes if its prior year Mississippi sales exceed $250,000. Section 202, reflecting the historic text of Section 27-67-4(2)(e), then states that nexus exists only if the seller has “purposefully and systematically” exploited the Mississippi consumer market. Please explain how the Department intends to reconcile these two provisions. Specifically, will the Department require both purposeful and systematic exploitation of the Mississippi consumer market in addition to the $250,000 annual sales threshold, or will these sections operate independently of one another such that a taxpayer will have nexus upon separately satisfying either standard?

A: Because the Department views the $250,000 as interpretive of the existing “purposeful and systematic” language in the statute, they believe the sections operate such that both provisions likely have to be satisfied for nexus to exist. They admitted they had not fully considered the circumstances in which one could have a high volume of targeted sales yet not meet the $250,000 threshold, or vice versa, but would consider those scenarios and how those could impact enforcement.

One hearing officer conceded that a single transaction over the threshold may not be sufficient, but they appreciated the constitutional significance of the question and indicated they would take that under consideration as they finalized the regulation.

This led to a follow-up question whether the $250,000 nexus conclusion was rebuttable based on a particular taxpayer’s facts and circumstances (especially in light of recent Due Process Clause decisions by the United States Supreme Court), or if it was a bright-line hard rule. They stated they would take under consideration what criteria they might consider if the standard were viewed as rebuttable.

  • Please explain how the Department intends to construe and apply the term “purposefully” in Section 202. What specific types of online activities will be considered purposefully directed toward the Mississippi consumer market, especially in the context of modern internet-based commerce, and what types would not?

A: The Department indicated it had not fully vetted this question and would take it under consideration and possibly provide illustrative examples.

  • Please explain how the Department intends to construe and apply the term “systematically” in Section 202. By way of example, how many transactions must occur to constitute the systematic exploitation of the Mississippi consumer market, does it depend upon which party initiated the transactions (buyer, seller or third party), and over what period of time must those transactions occur to satisfy this standard?

A: Similarly, the Department indicated it had not fully vetted this question and would take it under consideration and possibly provide illustrative examples.

  •  As currently worded, a new seller having $250,000 of sales in Year 1 would not have a use tax collection obligation until the following Year 2, based on Year 1 sales. If that seller had less than $250,000 in sales in Year 2, he would have no collection obligation in Year 3 and could deregister. If he had sales later in Year 3, he would not have a collection obligation. If this the Department’s interpretation and intended application of the rule?

A: The Department acknowledged that as written, this is probably an accurate interpretation of the proposed regulation but were not entirely certain that was what was intended. They will consider the issue especially in light of taxpayers’ justifiable concerns whether they can rely upon the regulation’s bright-line test as drafted without incurring nexus exposure.

  • If a seller triggers the use tax collection requirement due to the $250,000 prior-year sales threshold, is it the Department’s position that the seller has nexus the following year and is no longer voluntarily collecting the use tax?

A: The Department verified that anyone crossing the $250,000 threshold would have nexus and collection would no longer be voluntary. When asked why satisfying the “doing business” standard would not render them liable for collection of sales tax rather than use tax (i.e., they could at that point be considered an in-state vendor), the Department had difficulty articulating a clear response. Depending upon how a taxpayer reported its collections, there could be significant statute of limitations ramifications if a seller technically qualifies under both chapters.

  • What procedures does the Department intend to implement to ensure use tax assessments are not issued on the same transaction against both the purchaser and an online seller of an item?

A: The Department has not considered any additional policies or procedures to address this issue. While this is already an existing issue under present audit practices, they did acknowledge that the issue would likely occur far more frequently once the regulation goes into effect and would take the question under advisement.

  • How much Mississippi use tax does the Department believe is presently going uncollected each year due to remote sales addressed by the proposed regulation?

A: Based in part on prior studies by the University of Tennessee, the Department estimates that between $100,000,000 and $150,000,000 of use tax is going uncollected per year, but could not identify or even estimate how much of that would be collected as a result of the new rule even assuming full compliance. The phrase “best guess” was used by the Department, but they could not articulate a firm factual basis for that estimate.

  • How many out-of-state sellers does the Department anticipate will be required to collect Mississippi use taxes as a result of this proposed regulation, how many of those does the Department consider to be “small businesses”, and what are the aggregate costs the Department anticipates all sellers will incur to comply with the new collection and remittance requirements?

A: Similarly, the Department did not have an estimate of how many new out-of-state taxpayers would fall within the scope of the rule.

  • What was the Department’s basis for concluding the proposed regulation did not require an economic impact statement pursuant to Section 25-43-3.105?

A: Because the Department considers the $250,000 to be an interpretation of existing law, they appeared to consider all who fall under the new sales threshold to already be subject to the use tax collection responsibility (constitutional limitations notwithstanding). Based on this, they do not consider the rule to impose any new compliance obligations on any out-of-state sellers.

The Department could enact the regulation in its current form or could modify it in response to these questions. We will continue to monitor developments at the Capitol and the Department of Revenue on these issues.

Mantle Quoted in Tax Notes Article Focusing on Louisiana Special Session

JW 105 BIO rd8.inddMatt Mantle, a partner on the firm’s State & Local Tax Team in the New Orleans office, was recently quoted in a Tax Notes article about Louisiana’s budget shortfalls and the special legislative session. The article, “Louisiana Special Session Will Focus on Spending Cuts to Close Budget Hole” Matt comments,

The governor has said he is not going to request any new fees or increases in fees, but he’s opened the door for other legislators to do so. One key take away from that will be whether or not the Legislature attempts to create fees which are really disguised taxes, and there are some clear constitutional problems with that in Louisiana.

He also mentions proposed changes to the local property tax on inventory and corresponding state credits for corporate income and franchise tax purposes as additional items to monitor moving into the regular legislative session. Few jurisdictions across the nation impose a property tax on inventory, and there has been a push in Louisiana to eliminate or scale back the tax, as well as the state’s “subsidy” of the tax by way of the inventory tax credit, he added.

Louisiana Governor Issues Call for Special Session

IMG_5444It’s official.  Louisiana Governor Jon Bel Edwards has now released his Call for a special legislative session to begin February 13th at 6:30 PM and conclude February 22nd at midnight.  The Call, released today, February 3, 2017, is intended to allow the Louisiana Legislature to plug a $304 million budget hole in the state’s FY 2017 budget.

The Call does not provide the Legislature with the power to legislate with regard to any taxes during the special session; thus, tax increases will not be on the table.

The Call, however, does provide the Legislature with the power to legislate with regard to fees.  The Governor has noted that he will not be proposing any new fees during the special session; however, other legislators will be allowed to do so if they wish.  As a result, it is possible (and likely) that legislation will be proposed providing for new, or increased, fees as a means of raising revenue and closing the state’s current short-term budget gap.

The central focus of the Call and the upcoming special session appears to be on state spending cuts, changes to statutory dedications, and the utilization of reserve funds.

A copy of the Governor’s Call can be found here.

Following the special session, a regular fiscal session of the Legislature will convene at noon on Monday, April 10, 2017.  Tax issues will be germane during the regular session, and long-term tax reform will likely be the goal of the Governor and many legislators.  Thus, despite the fact that tax hikes were left off the Call for the special session, taxes will again be front and center at the Legislature in no time.

The Louisiana and multistate business community should follow the upcoming special session (and subsequent regular session) carefully and be prepared to act with regard to any new legislation proposed this year by the Legislature.

The Jones Walker SALT Team will continue to closely follow – and report on – these legislative developments as they occur.

Senate Finance Committee Chairman Orrin Hatch Speaks on Tax Reform


On February 1, 2017, Senate Finance Committee Chairman Orrin Hatch (R-UT) delivered a speech at the U.S. Chamber of Commerce in which he reaffirmed that Republicans are committed to reforming the current tax system. Chairman Hatch noted that there is now an “administration that wants to work with Congress to fix the … problems in our tax code and a Congress that is ready to get it done.”

Chairman Hatch remarked that there are “questions about detail and design” but that there is agreement on fundamental principles, namely, that tax reform should be pro-growth, comprehensive, and should address both the individual and business tax systems.

Although Chairman Hatch’s speech did not allude to many specific areas, it did note that Republicans are in agreement on the need to

(i) reduce, what he termed, “special interest credits and deductions”, (ii) create fewer tax brackets, (iii) reduce corporate rates, and (iv) move to a territorial tax system. However, Chairman Hatch raised significant concerns about the border adjustment proposals floated recently, suggesting those plans may be heavily scrutinized in the Senate.

Chairman Hatch also confirmed that there is significant Republican support for the repeal or reform of the estate tax, implying that a total repeal of the estate tax, as proposed by President Trump, may not have the necessary level of congressional support.

On working with the House of Representatives to accomplish the desired tax reform, Chairman Hatch commented that

[n]o one should expect the Senate to simply take up and pass a House tax reform bill” and that the “Senate will have to work through its own tax reform process.”

Further, he reminded those in attendance that the Republican majority in the Senate is only two votes and that his “preference would be to find a bipartisan path forward.”

Please click here to see the full version of Chairman Hatch’s speech.

Jones Walker LLP and the Business Council of New Orleans & the River Region host Informational Tax Briefing presented by Kimberly Lewis Robinson, Secretary of the Louisiana Department of Revenue

IMG_2856(Bill Backstrom, Jones Walker LLP State & Local Tax Partner and Kimberly Lewis Robinson, Secretary of the Louisiana Department of Revenue)


Jones Walker LLP and the Business Council of New Orleans and the River Region would like to thank Kimberly Lewis Robinson, Secretary of the Louisiana Department of Revenue and Co-Chair, HCR 11 Task Force for her Informational Tax Briefing on Recommendations from the HCR 11 Task Force regarding structural changes in budget and tax policy.

The Jones Walker State & Local Tax Team will continue to monitor the latest developments from the LDR, as well as all of the upcoming activity in the Louisiana Legislature as part of the 2017 fiscal and special sessions.

Backstrom Presents at COST SALT Basics School

Backstrom COST

Bill Backstrom, a partner on the firm’s State & Local Tax Team in the New Orleans office, presented on State Tax Research Tools at the COST 2017 SALT Basics School on January 27, 2017 in Atlanta, Georgia. The COST SALT Basics School is a 5 day educational opportunity for tax professionals which covers income tax theory, sales tax theory, income tax and sales tax compliance, and utilizes case studies.

Louisiana Governor Announces Intent to Issue a Call for Special Session

990px-Flag_of_Louisiana_svgToday, January 27, Louisiana Governor John Bel Edwards announced that he intends to issue a call to bring the Louisiana Legislature into a 10-day special session beginning February 13 and ending February 23. The special session will address a FY 2017 budget deficit estimated to be in excess of $300 million. The Governor has explained that he does not intend to include any revenue raising measures (regarding taxes or fees) in his legislative proposals during the special session. He has, however, indicated that he will include among the items listed in the call certain items that will allow legislators to propose revenue raising measures (such as taxes and fees), in order to provide the legislature with options other than cuts to the State’s budget.

The Louisiana and multistate business community should carefully follow the upcoming special session (and subsequent regular session) and be prepared to provide input or otherwise act with regard to any new legislation proposed this year by the legislature.

The Jones Walker SALT Team will continue to closely follow – and report on – these legislative developments as they occur.