In the 2021 Louisiana Regular Legislative Session, the Louisiana Legislature enacted Act 287 making wholesale changes to the Louisiana income tax reporting and audit regime for partners and partnerships. Effective June 2021, the Act’s updated reporting obligations were made applicable to 2021 returns filed in 2022, prompting a need for guidance with respect to how the Louisiana Department of Revenue (the Department) would implement the changes. On February 15, 2022, the Department provided such guidance, issuing its first Revenue Information Bulletin under Kevin Richard’s leadership of the Department: Revenue Information Bulletin 22-007.
RIB 22-007 provides:
- Effective for the 2021 tax year, all partnerships (including state law partnerships and LLCs treated as partnerships for federal income tax purposes) which do business in Louisiana or derive any income from Louisiana sources are required to annually file Form IT-565 , Partnership Return of Income.
- The due date has been extended to May 15th for calendar year partnerships and the 15th day of the fifth month after the close of the fiscal year for fiscal year partnerships.
- There are a handful of exemptions from filing the updated Form IT-565:
- Partnerships classified as a disregarded entity under the Internal Revenue Code and wholly owned by Louisiana resident individuals (including LLCs disregarded pursuant to Proc. 2002-69);
- Partnerships not required to file an IRS Form 1065 with the Internal Revenue Service; and
- Partnerships which elect to be taxed as a corporation and file Form-620 with the Department.
- Given the expanded requirement for filing partnership returns, Louisiana is discontinuing the Composite Partnership Return for partnerships with out of state partners. Similar information to what had been previously reported on the discontinued return will now be included in Schedule 6922 of the Form IT-565.
- For partnerships filing a Form IT-565 for the first time, the Department outlined the procedure for obtaining a Louisiana Partnership Account Number:
- If the partnership has previously filed a Composite Partnership Return with a Department-issued account number, the partnership will continue to use the same number.
- If the partnership has registered with the Department for a non-income tax return, e.g. sales or withholding, then it will need to follow the procedure set out in the RIB for acquiring a partnership account number through LaTAP.
- If the partnership has never filed a Louisiana tax return with the Department, the partnership will file its 2021 Form IT-565 with its FEIN, leaving the Louisiana account number blank. The Department will subsequently issue a partnership account number.
- Partnerships are encouraged to use electronic filing.
- The Department is in the process of implementing additional regulations further reducing eligibility for filing paper returns.
- Partnerships filing a Form IT-565 with the new composite return schedule, Schedule 6922, are required to file electronically.