The Louisiana legislature and the Louisiana Board of Tax Appeals (the “BTA”) have been busy! On June 12, 2014, Louisiana Governor Bobby Jindal signed into law HB 863 (Act 640), which expands the jurisdiction of the Louisiana Board of Tax Appeals (the “BTA”) and changes a number of state and local tax procedures; most importantly, those regarding appeals of assessments and refund claim denials. The legislation was supported by the Council on State Taxation (“COST”) and is expected to raise Louisiana’s ranking, from a tax perspective, as a favorable place to do business.
A detailed review of the new legislation can be found here; however, a few of the more significant changes resulting from HB 863 are noted below:
- Provides that local-level sales and use tax assessments and refund claim denials may now be appealed directly to the BTA. This right to appeal a local tax assessment to the BTA generally does not require that the taxpayer “pay under protest” (thus no “pay to play”). Should a taxpayer wish to do so, however, the option to pay a local sales/use tax assessment under protest and file suit is still available.
- Repeals the generally unsuccessful mandatory arbitration procedure option.
- Provides that a local sales/use tax collector may unilaterally elect to have a local sales/use tax appeal to the BTA heard and ruled on by the single “Local Tax Division” BTA board member rather than the full three-member panel of the BTA.
- Provides that all denials of local sales/use tax refund claims are to be appealed to the BTA.
- Includes within the local sales/use tax refund claim procedure a new “deemed denial” provision. If a local collector fails to act on a local sales/use tax refund claim within one year, the refund claim is “deemed denied,” and the taxpayer must appeal the collector’s “deemed denial” within 180 days of the end of the one-year period in which the collector failed to act. The taxpayer still only has 90 days to appeal a local collector’s affirmative denial of a local sales/use tax refund claim.
- Provides that, with regard to all currently pending local sales/use tax refund claims where the local collector has failed to act for one year or more, those pending refund claims must be appealed to the BTA before January 1, 2015. This provision therefore provides a 6-month grace period for taxpayers to transition all older “deemed denied” refund claims to the BTA following the introduction of the new “deemed denial” provision in HB 863. ACTION ITEM: During this period, taxpayers with pending local sales/use tax refund claims should consider their procedural rights and responsibilities.
- Provides that a taxpayer’s local sales/use tax refund claim now suspends prescription for the local collector to determine whether there is any underpayment of sales/use tax by the taxpayer for the same tax period.
- Requires that all decisions of the BTA be appealed directly to a Louisiana court of appeal, rather than district court (thereby removing the previously required additional level of appeal to the district court).
Jones Walker Commentary:
Generally, the changes made by the legislature in HB 863 appear to be a step in the right direction. Unfortunately, some of the procedural changes needlessly perpetuate a lack of uniformity in the state and local tax procedures. In addition, taxpayers should be aware of the potential procedural traps lurking in the language of HB 863. For example, taxpayers should remain aware of the following:
- the January 1, 2015 deadline to appeal to the BTA all older refund claims that may now be considered to be “deemed denied” under the new law; and
- the lack of uniformity found in the new provision providing a 180-deadline for a taxpayer to appeal a collector’s “deemed denial” of a local sales/use tax refund claim, while only providing a 90-day deadline for a taxpayer to appeal a collector’s affirmative denial of a refund claim.
The Jones Walker SALT Team will continue to monitor any potential issues that may arise as a result of this new legislation.