The Louisiana Department of Revenue has now issued Revenue Information Bulletin (RIB) 21-020, which provides certain income tax relief (and notice requirements) relating to Hurricane Ida relief work performed in the State by nonresident businesses or employees.
Louisiana law (Act 358, 2017 Reg. Sess.) provides for an income tax exclusion from either gross income or adjusted gross income for compensation received by either a “nonresident business” or an “out-of-state employee” for the performance of disaster or emergency-related work relating to critical infrastructure within the state during a declared state emergency. The exclusion applies only for income received in exchange for disaster or emergency related work related to critical infrastructure that is performed during the declared disaster period, which begins within 10 days of the first day of the declaration or proclamation made by either the governor, the president, or appropriate local government official and ends 60 days after its conclusion, unless a longer period is subsequently authorized.
As a result of Governor John Bel Edwards’ declared State of Emergency for Louisiana relating to Hurricane Ida, the applicable disaster period for Hurricane Ida commences on August 26, 2021, and extends through November 26, 2021.
A “nonresident business” means a business entity whose services are requested by a “registered business” in the State or by a state or local government for purposes of performing disaster or emergency-related work in the State and that prior to the declared state of emergency, the nonresident business was not registered to do business in the State, had no employees, agents, or independent contractors in the State, was not transacting business in the State, and has not filed and is not required to file any state or local tax return in the State. A “nonresident business” also includes a business entity that is affiliated with a registered business in the State solely through common ownership.
A “registered business” means any business entity which is registered to do business in the State of Louisiana and was registered before the declaration.
An “out-of-state employee” means a nonresident individual who does not provide services or activities in this state, except for disaster or emergency-related work during a disaster period.
The out-of-state employee will not be considered to have established residency or a presence in the State that would require the employee or his/her employer to file and pay income taxes, to be subject to tax withholdings, or to be required to file and pay any other state or local tax or fee during the disaster period. The out-of-state employee and his/her employer will also be exempt from any related state or local employer withholding and remittance obligations.
The performance of disaster or emergency-related work in the State by a nonresident business or out-of-state employee outside of the disaster period for Hurricane Ida remains subject to income tax and receives no exclusion.
Performance of disaster or emergency-related work within the declared emergency period for Hurricane Ida does not create a physical presence or nexus in Louisiana that would otherwise obligate the nonresident business or out-of-state employee to register, file, or remit any income tax otherwise due on the disaster or emergency-related income.
However, the Department also made clear in the RIB that, unless otherwise provided, nonresident businesses and out-of-state employees would remain obligated for all other tax types, including but not limited to sales tax and corporation franchise tax.
The new RIB also provides an official request from the Department to all registered businesses in the State of Louisiana who are requesting any nonresident business to perform disaster or emergency-related work relating to Hurricane Ida to provide written notice to the Department concerning all such requests. The written notice must contain the following information:
- The name, address, and federal tax identification number of the nonresident business;
- The date of the request to the nonresident business to perform disaster or emergency-related work;
- The date and declaration number of the declared state disaster or emergency;
- A general description of the disaster or emergency-related work requested.
The written notice to the Department must include a representative’s contact information (name, phone number, and email address), be signed by an authorized officer, owner, or other official of the resident business, and be submitted on official letterhead of the resident business.
The written notice must be transmitted, as an attachment via email, to the Department at the following email address: Act358.Notices@la.gov.