Cooking with SALT Goes Back to the Future

Great Scott! The Jones Walker LLP State & Local Tax team is back with a day-long program on October 10, 2018, titled Cooking with SALT Goes Back to the Future! In honor of the 10th anniversary of the Cooking with SALT seminar, our SALT scientists travel back in time to provide some old twists to fresh topics. Morning classes begin with a lesson in Louisiana state and local procedure taught by two docs too hip to be square. Then…you know that new sound you’re looking for? Well, listen to this! – A riff of legislative and administrative updates. Next, we provide the scientific formula to add the perfect amount of SALT to your contract documents. Lunch is then served in the principal’s office with a round table discussion featuring some principals of state tax administration for Louisiana, Mississippi, and Texas.

  • Kimberly Robinson, Secretary, Louisiana Department of Revenue
  • Meg Bartlett, Associate Commissioner, Mississippi Department of Revenue
  • Karey Barton, Associate Deputy Comptroller for Tax, Texas Comptroller of Public Accounts

These principals will provide the administrative prospective on recent tax developments to ensure you’re not left stranded in the near future.

View the full brochure.

When: Wednesday, October 10, 2018 | 8:00 AM–5:30 PM

Where: Hilton Americas-Houston | 1600 Lamar St | Houston, TX 77010

Fee: $150 per registrant
Company group rate: $150 for first registrant, $100 for each subsequent registrant

To register: Contact Courtney Farley at cfarley@joneswalker.com

Jones Walker SALT Team Members to Present at 25th Annual Paul J. Hartman State and Local Tax Forum

Jones Walker SALT Team members Bill Backstrom and John Fletcher will present at the 25th Annual Paul J. Hartman State & Local Tax Forum October 17-19, 2018 in Nashville, TN.

The Professor Paul J. Hartman State and Local Tax (SALT) Forum, sponsored in conjunction with the Vanderbilt University Law School, provides industry, practitioners and state revenue employees the opportunity to participate in a quality forum exploring significant national developments and trends in state and local taxation. The Forum welcomes your participation. Please click here to register for the forum.

Bill will speak on a panel focusing on ‘Forgotten Favorites for Attacking Economic Nexus.’ With economic nexus spreading throughout the states, it is time to dust off some classic arguments to fight back against the long arm of Johnny Law. This panel will examine well-worn concepts like due process, doing business, and the safe harbor provided by P.L. 86-272 and discuss how those protections can be used to defend against a state’s attempt to impose tax under its economic nexus provisions.

John’s panel will focus on ‘Best Practices in SUT Audits.’ Even though no company wants to be audited, SUT audits are an unavoidable part of doing business. This presentation will help taxpayers, government auditors, and practitioners avoid, deal with, and resolve audit issues at all stages of the audit.

Louisiana Remote Seller Commission Issues First Information Bulletin Addressing Impact of Wayfair

The Louisiana Sales and Use Tax Commission for Remote Sellers (the “Commission”) has now issued its first information bulletin – Remote Sellers Information Bulletin (“RSIB”) 18-001 – regarding the impact of the U.S. Supreme Court’s South Dakota v. Wayfair, Inc. decision on remote sellers selling to Louisiana purchasers.

A copy of RSIB 18-001 can be found here: http://revenue.louisiana.gov/LawsPolicies/RSIB%2018-001%20-%20Remote%20Sellers%20Impact%20of%20Wayfair.pdf

A few items to note regarding RSIB 18-001 are:

  • The RSIB opines that due to the Wayfair decision, the Commission is now authorized to act as the single entity for the administration and collection of sales and use taxes with respect to remote sellers. However, it should be noted that it remains unclear if this jurisdictional expansion of the Commission under Act 5 of the 2018 Second Extraordinary Session was actually triggered by Wayfair.  As we mentioned in our previous blog post, Not So Fast: Louisiana State and Local Sales Taxes in a Post-Wayfair World:

“Act 5 does not become applicable unless/until the U.S. Supreme Court rules in the Wayfair case that the South Dakota statute/regime is “constitutional.”  Although the Court in Wayfair ruled that there is no longer a “physical presence” nexus test for Commerce Clause purposes, the Court did not rule that South Dakota’s scheme was constitutional.  Rather, the Court remanded the case to address whether South Dakota’s regime was constitutional taking into account other issues (such as any other undue burdens upon, or discrimination against, interstate commerce).  Thus, as of right now, Act 5 in Louisiana is not yet applicable (and may never be).”

  • The RSIB also opines that a flat adoption of the Streamlined Sales and Use Tax Agreement was not a requirement found by the Court in Wayfair in order to meet Commerce Clause standards. Some, however, have disagreed with this notion, and the ultimate answer on this issue is currently unclear.
  • The RSIB provides that the Louisiana Department of Revenue will not be seeking any retroactive application of the Wayfair decision, and instead will begin enforcing collection from remote sellers for any taxable period beginning on or after January 1, 2019.
  • The RSIB also notes that the Louisiana Uniform Local Sales Tax Board will issue guidance to local collectors recommending that they also do not seek any retroactive application of the Wayfair decision.
  • The RSIB reminds remote sellers that those who have voluntarily registered with the Department of Revenue and are currently collecting and remitting sales and use tax using a Form R-1301, Direct Marketer Sales Tax Return, should remain collecting and remitting in such manner until further guidance is issued by the Commission.
  • The RSIB also reminds taxpayers that the current information reporting requirements in Louisiana are still in effect; thus, remote sellers who are not currently collecting and remitting sales and use taxes must file applicable information reports as required under current law.

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

 

Not So Fast: Louisiana State and Local Sales Taxes in a Post-Wayfair World

As word spread about the Supreme Court’s opinion in South Dakota v. Wayfair, Inc., Dkt. No. 17-494, 485 U.S.        (June 21, 2018), tax administrators around the country popped open bottles of champagne and began toasting the end of the “physical presence” substantial nexus standard.  The sounds of celebration were, at least initially, particularly deafening in Louisiana, with its sixty-three (63) autonomous parish taxing jurisdictions that levy, administer and collect local sales and use tax on behalf of numerous cities, towns, districts and other local jurisdictions.  Remote sellers might have considered downing a drink or two to drown their sorrows at the thought of potentially having to navigate the complex systems of state and local sales taxes in Louisiana.

As tax administrators continued to read the Wayfair opinion, however, a sobering reality began to set in that, at least in the short term, Louisiana’s various taxing jurisdictions are in no better position to force remote sellers to collect and remit state and local sales taxes than they were before the Wayfair decision (and perhaps even a worse one). Continue Reading

The Taxman Cometh: Mississippi Sales and Use Taxes in a Post-Wayfair World

In December 2017, the Mississippi Department of Revenue finalized a new sales and use tax regulation addressing remote sellers and establishing a $250,000 bright-line nexus standard. The department began that process in January 2017 by issuing a proposed regulation and refined it following a public hearing held in February. The regulation positioned the state to take advantage of any repeal of Quill’s physical presence test, but the department stated it would not enforce the new rule until the Supreme Court took that step. Now that Quill’s physical presence rule has been invalidated in Wayfair, taxpayers should expect the department to move forward with these remote-use tax collection efforts. The following information should help summarize Mississippi’s current rules and identify several important details and questions that have yet to be answered.

Statutory Background

Mississippi law [Section 27-67-4(2)(e)] has long required remote sellers to collect use tax if they have nexus with the state by “purposefully or systematically exploiting the consumer market provided by this state.” This could be accomplished “by any media-assisted, media-facilitated or media-solicited means, including, but not limited to, direct mail advertising, unsolicited distribution of catalogues, computer-assisted shopping, television, radio or other electronic media, or magazine or newspaper advertisements or other media.” This collection obligation is contained within the use tax code, not the sales tax code as may be the case in some other states.

Regulatory Bright-Line Rule

The final regulation specifies that sellers have a “substantial economic presence” if their sales into the state exceed $250,000 for the prior 12 months. The original proposed regulation would have based the sales threshold on the prior calendar year, so this change means sellers should track Mississippi transactions on a rolling, monthly basis if they are not otherwise registered. Unlike other states, Mississippi does not specify any minimum number of transactions to create nexus, and Department of Revenue officials have stated informally that a single transaction may meet the requirement when coupled with the other “market exploitation” criteria discussed below. Continue Reading

When Things Get Hot, Put the Bugs in the Pot!

 

It is July in South Louisiana and it is hot and muggy. But that did not stop last weekend’s crawfish boil.  Lately, I have become weary of reading about Wayfair, Kraft, repatriation, BEAT, FDII, GILTI, retroactivity, the slow erosion of the Chevron doctrine, and all of the other hot topics boiling in our SALT world.

To escape the relentless reading, my family hosted a few of our son’s friends for a traditional crawfish boil. Many would question this decision because we are late in the crawfish season and the heat and humidity are oppressive. Forging ahead, however, we enjoyed the successful crawfish boil and highly competitive games of beer pong and water basketball. All in all, a great Saturday afternoon in New Orleans!

Space (and probably protected intellectual property rights) does not allow me to publish the entire recipe for the pots of mudbugs and other fixings we enjoyed. But I will share my favorite part of the recipe we used to conjure up the crawfish concoction. The recipe was broken into detailed steps. At the beginning of each step, the creator of the recipe reminded the user of the recipe the importance of cold beer to the process. No, everyone knows you don’t put beer in the crawfish boil. Instead, an ice cold beer at the beginning of each step is a great refresher, but also chills any anxiety for messing up the preceding step in the recipe. I think you get the picture.

It is now the middle of the week and the Jones Walker SALT Team has returned their sights to the pressing SALT topics of the day. Writing this story, however, makes me smile thinking about the mudbugs (and cold beverages) that were consumed on a hot and sultry South Louisiana Saturday evening. Come on down, ya’ll, and we will boil some mudbugs!

Remember, everything is better with a little SALT. Enjoy your week!

Louisiana Department of Revenue Issues New “Taxable Rate” Chart to Explain State Sales Tax Changes Following Enactment of Recent Tax Revenue Bill

The Louisiana Department of Revenue has now issued a revised “Taxable Rate” chart (Form R-1002) to provide the Department’s understanding of the new Louisiana state-level sales/use/lease tax rates following the Louisiana legislature’s enactment of the sales tax revenue measure Act 1 (HB 10) in the recently-concluded third special session of the legislature, effective July 1, 2018.

A copy of the Department’s new 21-page “Taxable Rate” chart can be found here:

http://revenue.louisiana.gov/Publications/R-1002(07-18).pdf

CAUTION:  Taxpayers should  be mindful that the rates noted in the new “Taxable Rate” chart represent the Department’s interpretation of the applicable rate looking at each specific exemption or exclusion separately and in a vacuum, without taking into account the potential availability of various overlapping exemptions and exclusions that may be applicable to the same type of product, service, or transaction.  Also, as this chart is very new, the chart has not yet been exhaustively reviewed by practitioners and business and industry groups to determine/confirm accuracy.

These state-tax rate changes are the direct result of the highly contentious sales tax revenue measure (Act 1) that was finally agreed upon among the Louisiana legislators late last week following three special legislative sessions in 2018 alone.  Act 1 was enacted to address and offset the looming “fiscal cliff” revenue shortfall that was going to take effect in Louisiana on July 1, 2018.  Act 1 generates the revenue by continuing the imposition of 0.45% of the expiring 1% “clean penny” state sales tax and also imposing a temporary suspension/repeal of the availability of certain exemptions and exclusions to all 4.45% of the state sales tax as of July 1, 2018.  It should also be noted that business utilities will be taxed at a lower state sales tax rate of 2% during this time period.  These new changes are to be effective for 7 years and will sunset on June 30, 2025.

The state-level sales tax revenues approximated to be generated from Act 1 (per the enrolled bill’s fiscal note) are:  $466 mil for the 2018-2019 fiscal year, and $502 mil for each of the 2019-2020, 2020-2021, 2021-2022, and 2022-2023 fiscal years (total of $2.474 billion over the first five years).

 

 

JW SALT Partners Head to Vancouver for the IPT Annual Conference

JW SALT partners Jay Adams and John Fletcher are attending the IPT Annual Conference in Vancouver. Jay is presenting “What the ‘L’ Local Taxes?” about the differences between state and local taxing jurisdictions and uniformity issues. This is highly relevant in the wake of the recent Wayfair decision. Please contact Jay for more information on this presentation.

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