Louisiana Businesses – Pay Attention to the March 29 Vote on Business Inventory Taxes

Louisiana voters will decide on March 29 whether to approve more than 100 pages of revisions to the state constitution related to ad valorem taxes and other fiscal issues. For businesses that operate in Louisiana, one aspect of the proposed reform relates to the taxation of inventory.  

Louisiana is one the few states that imposes a property tax on inventory. Historically, however, the impact of the imposition of the tax on inventory was mitigated as the state provided a credit to businesses that paid inventory tax that could be used to lower or eliminate the business’ Louisiana corporate income or franchise tax liability.  

As part of the tax reform package, that credit has been eliminated for periods after January 1, 2026. One aspect of the new law, if passed, would allow local political subdivisions that have historically levied the tax on inventory to exempt it from their tax base, or lower the value of the inventory for property tax purposes. The result, if passed, will foster a new level of opportunity for businesses in the state to work with local officials to lower taxes on inventory.

The Louisiana legislature last year amended almost every aspect of state taxation, but voters will decide March 29 whether to approve more than 100 pages of tax revisions in the state constitution. C corporations in particular should be aware of the changes that the voter measure would bring in empowering local parishes to decide whether and how much to tax business inventory.

Click here to read our full article on Bloomberg Tax.

Louisiana Department of Revenue Announces an “Extraordinary Measure” to Continue Certain Sales Tax Exemptions for Non-Profits and Educational Institutions

On January 16, 2025, the Louisiana Department of Revenue issued Revenue Information Bulletin No. 25-009 announcing the “extraordinary measure” of continuing to administratively recognize two exemptions related to nonprofits and school-related admissions to athletic and entertainment events that apparently were inadvertently repealed (effective January 1, 2025) during the recent special session of the Louisiana Legislature.  

Even though the Louisiana Legislature could correct these apparent oversights in the 2025 Regular Session, in the interim the Department will continue to recognize the two exemptions. The Bulletin urges Louisiana local tax administrators to recognize the same relief for eligible nonprofit organizations and educational institutions.

The 2024 Third Extraordinary Session resulted in substantive reforms to hundreds of tax–related statutes with an effective date of January 1, 2025. During the legislative process, over two hundred sales tax exclusions and exemptions were modified. * * * Given the scale of these changes, technical oversights are inevitable. In reviewing the repealed exemptions and exclusions, we have identified certain exemptions that appear to have been repealed in a manner inconsistent with legislative intent. As a result, the Department will continue to recognize the following exemptions: 1. La. R.S. 47:305.14 – Certain sales by nonprofits organizations 2. La. R.S. 47:305.6(5) – Admissions to athletic or entertainment events of educational institutions.

French Brown Speaks at Florida Chamber of Commerce 2025 Florida Economic Outlook & Jobs Solution Summit 

Join us on January 30 for the 2025 Florida Economic Outlook & Jobs Solution Summit to hear from expert French Brown, IV of Jones Walker LLP on the potential impact of federal tax changes on Florida businesses.

*Insights on the expiration of key provisions in the federal Tax Cuts & Jobs Act

*Strategies to navigate potential congressional actions affecting your business

*Proven expertise from a leader who’s saved Florida taxpayers billions

Register TODAY: https://flchm.co/EOJ2025

French Brown Presents CLE for Florida Bar Tax Section

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FREE CLE for Tax Section Members! Level up your Florida tax expertise with the Tax Section’s “State and Local Tax Procedure.” This two-hour program is perfect for attorneys preparing for the Tax Law board certification exam or those seeking expert insights into Florida tax laws. Register at bit.ly/Tax_8903

This advanced course dives deep into Florida tax procedure, including both state and locally imposed taxes such as sales and use tax, ad valorem taxes, Florida corporate income tax, and more.

January 29, 12–2 p.m. on Zoom. Course number 8903 is approved for 2.5 CLE, 2.5 Tax Law certification credits.

Presented by French Brown, SALT Team Partner at Jones Walker LLP

Join us! COST presents Louisiana Special Session State & Local Tax Update Webinar

January 16, 2025
3:00 – 5:30 pm ET

Louisiana Special Session State & Local Tax Update Webinar
Live Webinar on Zoom

This Louisiana Special Session State & Local Tax Update Webinar will cover the changes made by the Louisiana Legislature in its Special Session in November 2024. This will include detailed changes to the State’s income tax, franchise tax, tax credits and incentives, corporate income tax, property taxes, and sales/use taxes. This webinar will also include work that the Louisiana Legislature will likely need to address in 2025, including tax credits. This webinar is designed to cover the basics, with detail on the tax changes, of Louisiana’s state and local tax structure and is geared for both beginners and experts in state and local taxes. No advance preparation is needed. The webinar is open to tax professionals from industry (including both COST member and non-COST member companies). Practitioners are not eligible to attend except for those sponsoring the webinar.

Curriculum:  This session will cover the tax changes made by the Louisiana Legislature in its special session last year. The changes to the State’s income tax, including its franchise tax, corporate income tax, and tax credits/incentives, along with property tax and sales tax changes will be addressed. The session will also cover what steps will likely happen next in Louisiana to further modify Louisiana’s tax structure. This webinar is designed for both experts and beginners in SALT to cover the changes made in Louisiana’s state and local tax laws.  

Moderators

Leonore Heavey, COST Sr. Tax Counsel

Arthur Parham, Retired General Tax Advisor of Entergy Services LLC

Instructors

Advantous

Jones Walker

Registration for the Louisiana Special Session State & Local Tax Update Webinar can be done online at any time prior to 2:00 pm, January 16th.

Registration Fees

COST Industry Member $50
All Other Attendees   $100

 
Continuing Education:

COST will assist you in applying for Continuing Education credit for the Louisiana Special Session State & Local Tax Update Webinar. COST is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org

For More Information:

Please contact Karen Galdámez, COST, 122 C Street, NW, Suite 330, Washington, DC 20001, fax: 202.484.5229, e-mail: TFrazier1@cost.org.

Virginia is Prohibited from Attributing Non-Unitary Partnership’s Factors to a Minority Partner

In Department of Taxation v. FJ Management, Inc.the Virginia Court of Appeals recently concluded that the apportionment factors of a partnership in which a taxpayer held a minority interest could not flow up to the partner because there was no unitary relationship between the partner and the partnership. As state scrutiny over apportionment of corporate partners increases, this is an important case in understanding the guardrails the US Constitution requires. 

FJ Management, Inc. is a corporation with its principal place of business in Utah and was qualified to do business in Virginia. Prior to 2008, the company operated approximately 220 interstate travel centers in the US and Canada. It also had subsidiaries that operated oil refineries in Utah and California, oil pipelines in Texas, and a bank that provided banking services to truckers. In 2008, as part of a bankruptcy process, FJM sold the travel centers to a third party in exchange for cash and a minority ownership interest in the third party purchaser. The agreement between the two parties also resulted in FJM’s refineries supplying the travel centers a fuel supply for a period of 20 years. 

On its Virginia amended returns for the 2013-2015 tax years, FJM reported the distributions from its minority partnership interest as allocable non-unitary business income and excluded the partnership’s receipts, property, and payroll entirely from its Virginia apportionment factor. These amendments would have reduced FJM’s Virginia tax due in 2013 and 2014, but increased taxes due for 2015. The Department denied the amended returns, concluding that FJM’s ownership minority ownership interest was insufficient to render the income non-unitary and the apportionment factors of the partnership should flow up to FJM.

In a bread-and-butter analysis of the unitary business principal that all SALT professionals should read as a refresh on unitary case law, the Virginia Court of Appeals held that there was no functional integration between FJM and the partnership, no centralized management, and that the parties did not derive any economies of scale through their relationship with one another. The court also addressed whether despite the lack of a unitary relationship, FJM’s minority interest served an operational purpose under Allied-Signal, 504 U.S. 768 (1992) but concluded that “there is no evidence in the record before this Court on appeal suggesting that FJM used the income it earned… as part of FJM’s own working capital or for any other operation purpose related to FJM’s independent business activities.” 

As we see states look to incorporate income and tax attributes of partnerships to their corporate partners, taxpayers would do well to familiarize themselves with a case like Department of Taxation v. FJ Management, Inc. There remain limits to what states can do. 

Under the unitary-business principle, the Department would be constitutionally permitted to apply PTC’s apportionment factors to FJM’s out-of-state business activity only if FJM and PTC formed a unitary business. We hold that the trial court correctly found that FJM and PTC did not form a unitary business, as the evidence sufficiently established that the three unitary-business factors of functional integration, centralized management, and economies of scale did not exist between FJM and PTC.

Join Chris Lutz at the WVCPA 2024 Legislative Seminar in Charleston, WV

Join Christopher Lutz, a partner on the state and local tax team, for his presentation “Tax Landscape Across the States” at the WV Society of CPAs‘ 2024 Legislative Seminar in Charleston, West Virginia, on December 9.

The seminar will provide CPE and CLE credits and allow participants to meet with and hear updates from local leaders.

Find more information and register at the link below.
https://bit.ly/493mmsK

Jeff Birdsong Presents at Tulane University Law School’s 73rd Annual Tax Institute

Jeffrey Birdsong presented at Tulane University Law School‘s 73rd Annual Tax Institute on November 13.

Jeff’s presentation “State & Local Tax Rundown” discussed key updates and recent topics in Louisiana SALT, including the 2024 Regular Legislative Session, tax reform, transfer pricing, ITEP developments, and litigation.

Hillsborough County Sales Tax Changes: What Businesses (and Consumers) Need to Know

Effective January 1, 2025, Hillsborough County businesses face critical sales tax adjustments following a Florida Supreme Court ruling and legislation passed during the 2024 Regular Session.

This issue arose in November 2018, when Hillsborough County voters approved a 1% transportation surtax. In 2021, the Florida Supreme Court invalidated the surtax due to constitutional issues. During the time the surtax was in place, nearly $570M was collected. Ultimately, the legislature decided to return these excess collections to purchasers in Hillsborough County through a temporary reduction of its other surtaxes.

Effective next year, all retail dealers must stop collecting both the 0.5% indigent care surtax as well as the 0.5% local government infrastructure surtax for sales made to customers into Hillsborough County. Dealers must continue collecting the 6% state sales tax and 0.5% school capital outlay surtax in Hillsborough County.

The surtax suspension impacts all dealers doing business in Hillsborough County, including those located outside the county and out-of-state remote sellers.

The suspension impacts sales of retail goods, admissions, electricity, nonresidential cleaning, transient rentals, rentals of items, and the business rent tax. Businesses must carefully adjust their tax collection processes to ensure compliance. Erroneously collected surtaxes during the suspension period must be remitted to the state, with options available for customer refunds.

Consumers should note that the new Hillsborough County state and local tax rate of 6.5% will be lower than many surrounding counties including Pinellas (7%), Polk (7%), Pasco (7%), DeSoto (7.5%), Manatee (7%), Hardee (7%), Sarasota (7%), and Sumter (7%).

The Department of Revenue will issue future guidance on when surtax collection will resume. Businesses and consumers should monitor official communications and prepare for potential tax collection changes. If you have questions, please contact Jones Walker’s State and Local Tax Attorneys for a comprehensive review of how these changes may impact your business’s tax strategy and compliance obligations.

The TIP is available at the following website: https://floridarevenue.com/taxes/tips/Documents/TIP_24A01-15.pdf

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