Transcript and Audio of United States Supreme Court Oral Arguments in Wayfair Case Available Online

Now that the fascinating oral argument has concluded at the United States Supreme Court in the case of South Dakota v. Wayfair, copies of both the transcript and audio recording of the oral argument are available to the public for download and/or streaming on the Court’s website.

Stay tuned to Cooking with SALT for more on this landmark case.

Jay Adams Gives Back with Hogs for the Cause

Hogs For The Cause is an annual New Orleans BBQ festival with food, music, and fundraising. First and foremost, this festival has a very important charitable purpose: helping families fighting pediatric brain cancer. This year, all of the competing teams raised a combined $1.45 million for the cause.

JW SALT Team member, Jay Adams, has been a member of Team Fleur de Que for the past eight years and has helped the team to become the top fundraisers of the festival for the 6th year in a row.

In addition to cooking some great food, we have the opportunity to truly make a difference in the lives of children fighting brain cancer and help their families during their most trying times. I am proud of what our cooking team has been able to contribute to the cause. – Jay Adams

GAME ON: Louisiana Department of Revenue and Other State Agencies Look to Even the Score on Employee Misclassification

The Louisiana Department of Revenue (DOR) has joined forces with other Louisiana agencies to crackdown on employee misclassification and failure to withhold payroll taxes. The GAME ON (Government Against Misclassified Employees Operational Network) Task Force is an interagency network made up of members of the Louisiana Workforce Commission’s (LWC) Unemployment Insurance and Office of Workers’ Compensation divisions and the DOR. The task force also collaborates with the IRS and the U.S. Department of Labor’s (DOL) Wage and Hour Division.

Most employee misclassifications involve employers improperly labeling employees as independent contractors. In an October 25, 2017 press release, the LWC touted that it has led the nation in audit-based discoveries of misclassified employees over the last several years and plans to ramp up its efforts in 2018.

After the task force determines that an employer has misclassified employees, the DOR can readily determine if the employees paid income tax on their wages. If not, the DOR can seek to collect the tax from the employer, whose failure to withhold payroll taxes in accordance with the law renders the employer responsible for those taxes. The employer’s liability, however, is not limited to back taxes. The DOR can seek to collect interest and both delinquent payment penalties and delinquent withholding penalties.

The DOR has all of its tax collection remedies at its disposal, including filing lawsuits. On January 30, 2018, the DOR issued a press release serving notice to employers that the DOR recently filed three lawsuits against businesses it accuses of evading taxes by not withholding and remitting payroll taxes from their employees’ earnings. The lawsuits seek almost $250,000 in taxes, penalties and interest. The DOR says several other audits are currently in progress.

The GAME ON Task Force also has some non-tax related focuses. Each member of the GAME ON Task Force has different interests in the misclassification of workers as independent contractors. For example, the LWC wants to ensure that the state’s Unemployment Insurance Trust Fund is being properly funded. Companies do not pay into the Trust Fund for independent contractors. The LWC’s Office of Workers’ Compensation governs whether a company is maintaining adequate workers’ compensation coverage for its employees, and if a company is classifying a worker as an independent contractor, it is likely not maintaining adequate coverage. Finally, the DOL has an interest in ensuring that workers are being paid minimum wage and overtime, which is often not considered when using independent contractors.

This continued focus by the GAME ON Task Force is important to any company that regularly uses independent contractors. All companies should review their use of independent contractors to ensure they are not being misclassified. As an example, in making its determination as to whether an individual is actually an employee, the LWC considers whether the individual is subject to the direction and control of the company, whether the services of the individual are within the usual course of business of the company and are performed at the company’s usual place of business, and whether the individual has his/her own established business independent of the company’s business.

For more information, please contact Andre B. Burvant or David K. Theard.

COST Issues Call to Action…: Tell Congress to Pass the Mobile Workforce Act As Soon As Possible

A call to action from our friends at COST:

COST and the Mobile Workforce Coalition urge you and your company leadership to send letters during the week of March 5 asking the House and Senate leadership to enact the Mobile Workforce State Income Tax Simplification Act as soon as possible. The Coalition is working to add the Mobile Workforce legislation to one of the funding bills currently before Congress. The House version of the Mobile Workforce Act (H.R. 1393) passed the full House via voice vote on June 20, 2017, and the Senate version (S. 540) currently has 60 Senate cosponsors, including Senators John Thune (R-SD) and Sherrod Brown (D-OH) as lead sponsors. Please use this sample letter as a template to draft a letter on your formal letterhead to the following four offices, plus to your home-state Senators. Of course, feel free to tailor your letters to reflect your company’s unique issues, including number of employees affected, costs of compliance, and other relevant and applicable data.

  • House Speaker Paul Ryan
    H-232 The Capitol
    Washington, DC 20515
    SEND EMAIL TO: Casey Higgins, Assistant to the Speaker for Policy, casey.higgins@mail.house.gov
  • House Majority Leader Kevin McCarthy
    H-107 The Capitol
    Washington, DC 20515
    SEND EMAIL TO: Brandon Consolvo, Senior Policy Advisor, brandon.consolvo@mail.house.gov
  • House Majority Whip Steve Scalise
    H-329 The Capitol
    Washington, DC 20515
    SEND EMAIL TO: Dan Sadlosky, Policy Director, dan.sadlosky@mail.house.gov
  • Senate Leader Mitch McConnell
    S-230 The Capitol
    Washington, DC 20515
    SEND EMAIL TO: Brendan Dunn, Policy Advisor & Counsel, brendan_dunn@mcconnell.senate.gov

The Mobile Workforce Act would greatly reduce the current nonresident personal income tax compliance burden imposed both on employees who travel for short periods outside of their state of residence and on their employers by setting a uniform 30-day threshold. COST and over 300 companies and organizations in the Mobile Workforce Coalition have worked tirelessly for over 10 years to get this common sense and bipartisan solution enacted. COST and the Mobile Workforce Coalition will also send letters to the Congressional leadership next week to ask them to place the Mobile Workforce Act on any viable legislative vehicle and support its passage as soon as possible. You can also use this grassroots portal on the Coalition website to send letters of your own to your Senate offices.

For more information or help with getting your message to the Congress, please contact Aziza Farooki or Liz Malm with the Mobile Workforce Coalition.

 

Help us kick off the COST Sales Tax Conference at the historic New Orleans Rock ‘n’ Bowl

Join us as we kick off the COST Sales Tax Conference at the world famous New Orleans Rock ‘n’ Bowl – a truly unique New Orleans landmark not to be missed! This N’awlins institution is famous for its food, drinks, music, dancing, and of course, bowling. Whether you are looking for some classic New Orleans food, great music, or are in need of a few bumpers for your bowling game, come on out and kick back with fellow COST registrants for a great time! Laissez les bons temps rouler!

Admission open to all Council on State Taxation Sales Tax Conference participants. 

Questions or to RSVP: cfarley@joneswalker.com

 

Louisiana Governor Calls Special Legislative Session to Address Tax Issues and Looming “Fiscal Cliff”

It’s now official.  Louisiana Governor Jon Bel Edwards (D) has finally released his Call for a special legislative session to begin February 19th and conclude March 7th.  The Call, released today, February 9, 2018, is intended to allow the Louisiana legislature to address the long-term issue of its current taxing and spending structure, as well as the short-term issue of the $1 billion “fiscal cliff” looming in the upcoming fiscal year.

A copy of the Governor’s Call can be found here.

In a corresponding “Plan of Action,” … the Governor has again proposed taxing measures consistent with those previously recommended by the legislative Task Force on Structural Changes in Budget and Tax Policy.

It was anticipated that Governor Edwards would call a special legislative session in either February 2018 or later in 2018 (after the regular legislative session) to solve the fiscal cliff and again discuss long-term tax reform.  The Governor previously cautioned, however, that he would not call a special session unless he felt those issues could (and would) be resolved following discussions with legislative leadership.  Is seems now the Governor is confident that there is enough of a “growing consensus” among the legislature to warrant a February special session.

The fiscal cliff in next year’s budget results from the scheduled roll-off of incoming revenue from the additional 1% “clean penny” state-level sales tax, as well as the sunset of several temporary haircuts to various exemptions and credits.  These measures, which were put in place during the 2015 and 2016 legislative sessions, were considered “temporary” while the legislature worked toward longer-term taxing and spending reform.

The 2018 regular session is a non-fiscal session; thus, tax legislation is not germane.  As a result, the Governor (or the legislature) is required to call a special session either before or after the regular session if any new tax bills are to be entertained by the legislature in 2018.  If no special session was called, then the legislature would have been forced to address the upcoming fiscal cliff solely with budget cuts.

In a corresponding “Plan of Action,” the Governor explains that he is “not calling for net new tax revenue,” but rather is advocating to replace the temporary revenue measures enacted in 2015 and 2016.

The Governor’s issued Plan of Action is taken directly from his draft 2018 Tax & Budget Priorities (see prior post here), and the Governor has again proposed taxing measures consistent with those previously recommended by the legislative Task Force on Structural Changes in Budget and Tax Policy.

The Governor’s self-described “aggressive but balanced approach” to address the upcoming fiscal cliff and enact long-term tax reform includes:

  • Making permanent reductions to tax credits, deductions and rebates (Act 109, Act 123, and Act 126, of the 2015 regular session).
  • Compressing individual income tax brackets and reducing the excess itemized deduction to 50%.
  • Cleaning all four pennies of the state-level sales tax based on the currently available “clean penny” exemptions.
  • Taxing business utilities at 4% (full state-level permanent sales tax rate) and industrial utilities at 2% (50% state-level rate).
  • Expanding the sales tax to certain services.

Specifically, the Governor’s current Plan of Action proposes the following:

Make Permanent Reductions to Tax Credits, Deductions, and Rebates

  • Act 109 of the 2015 regular session provided limitations on the credit for taxes paid to other states to those states that provide a similar tax credit for Louisiana income taxes paid on certain sources of income.  These limitations would be made permanent.
  • Act 123 of the 2015 regular session temporarily reduced the value of several corporate income tax exclusions and deductions, including depletion and dividend income.  These would be made permanent.
  • Act 126 of the 2015 regular session temporarily reduced the value of the following rebate programs:  Quality Jobs Program, Corporate Headquarters Relocation Program, and the Competitive Projects Payroll Incentive Program.  These reductions would be made permanent.

Compress Individual Income Tax Brackets and Reduce Excess Itemized Deductions to 50%

  • Current law allows and individual income tax deduction for 100% of excess federal itemized personal deductions.  Excess federal itemized personal deductions are defined as the amount by which the federal itemized personal deductions exceed the amount of the federal standard deduction.
  • The Governor’s proposal would reduce the amount of the deduction from 100% to 50%.  The proposal would also compress individual income tax brackets.

Clean All Four Pennies of State-Level Permanent Sales Tax Based on Currently Available “Clean Penny” Exemptions

  • The Governor’s proposal would expand the sales tax base on the permanent 4% state-level sales tax (the “permanent pennies”) by mirroring the current sales tax base of the temporary additional 1% “clean penny” state-level sales tax.

Tax Business Utilities at 4% and Industrial Utilities at 2%

  • Under Act 25 of the 2016 first special session, business utilities are currently subject to state-level sales tax at the rate of 3% through June 30, 2018 and 1% through March 31, 2019.
  • Business utilities are subject to the 1% “clean penny” state-level sales tax through June 30, 2018, pursuant to Act 26 of the 2016 first special session.  The total state-level sales tax rate for business utilities through June 30, 2018 is 4% and then 1% through March 31, 2019.
  • The proposal will tax business utilities at 4% and create a “special rate” for industrial users at 2%.

Expand Sales Tax to Services

  • The Governor’s plan would expand the sales tax base (likely the state and local sales tax base) to include services such as:
    • Debt collection services
    • Insurance services
    • Data processing services (similar to Texas)
    • Information services (similar to Texas)
    • Cable and satellite services
    • Repairs to real property (immovables)

As previously noted, 2019 is a gubernatorial election year in Louisiana. Therefore, budget issues, tax reform, and the raising of taxes will surely continue to be infused with a heavy dose of politics from all sides.

The Jones Walker SALT Team will continue to closely follow – and report on – these legislative developments as they occur.  The Louisiana and multistate business community should follow the upcoming special session carefully and be prepared to act with regard to any new legislation proposed this year by the legislature.

SALTy and Sweet at Washington D.C. Mardi Gras

Jones Walker SALT Team members Bill Backstrom and Jay Adams danced the night away at the Washington D.C. Mardi Gras Mystick Krewe of Louisianians Carnival Ball. This year’s theme, ‘One Love for Louisiana’ marked the organization’s 66th year of celebration.

Bill and Jay also had the pleasure of meeting Louisiana Strawberry Queen XLVII, Gina Recotta.

Fletcher Presents at MS Tax Institute

John Fletcher, a partner on the State and Local Tax team, conducted two joint presentations with officials with the Mississippi Department of Revenue at the Mississippi Tax Institute on December 7, 2017 in Jackson, Mississippi. John’s sessions updated attendees in the areas of multi-state taxation of pass-through entities, potential Mississippi consequences of the recent federal income tax changes, and Mississippi sales and use tax regulatory developments.

Louisiana Governor Provides Draft of 2018 Tax & Budget Priorities to Address Looming Fiscal Cliff and Long-Term Tax Reform

Louisiana Governor John Bel Edwards (D) recently met with leaders from the Louisiana Legislature to discuss his draft 2018 Tax & Budget Priorities, including recommendations for how the State should address the long-term issue of its current taxing and spending structure, as well as the short-term issue of the $1 billion “fiscal cliff” looming in the upcoming fiscal year.

The Governor has explained that his draft plan is “not calling for net new tax revenue,” but rather is meant to replace the temporary revenue measures enacted in 2015 and 2016.

Currently, it is anticipated that Governor Edwards will indeed call a special legislative session in February 2018 to solve the fiscal cliff and again discuss long-term tax reform.  The Governor cautioned, however, that he would not call a special session unless he felt that these issues could (and would) be resolved.

The 2018 regular session of the legislature is a non-fiscal session; thus, tax legislation is not germane.  As a result, the Governor would need to call a special session either before or after the regular session if any new tax bills are to be entertained by the legislature in 2018.  If no special session is called, then the legislature would be forced to address the upcoming fiscal cliff solely with budget cuts.

The fiscal cliff in next year’s budget results from the scheduled roll-off of incoming revenue from the additional 1% “clean penny” state-level sales tax, as well as the sunset of several temporary haircuts to various exemptions and credits.  These measures, which were put in place during the 2015 and 2016 legislative sessions, were considered “temporary” while the legislature worked toward longer-term taxing and spending reform.

The Governor has explained that he is not in favor of merely extending the “clean penny” sales tax increase past its current 2018 expiration date, unless it is a “bridge” to a more permanent solution.

This story may sound familiar, because it is.

Numerous long-term tax reform measures were proposed by the Governor’s administration during the legislature’s 2017 regular session.  Ultimately, however, much of that proposed legislation was largely rejected by the legislature, leaving questions unanswered as to how the state would address its short-term and long-term fiscal issues.

As was the case during the 2017 regular session, in his new draft 2018 Tax & Budget Priorities, the Governor has again proposed taxing measures consistent with those previously recommended by the legislative Task Force on Structural Changes in Budget and Tax Policy.

The Governor’s self-described “aggressive but balanced approach” to address the upcoming fiscal cliff and enact long-term tax reform includes:

  • Making permanent reductions to tax credits, deductions and rebates (Act 109, Act 123, and Act 126, of the 2015 regular session).
  • Compressing individual income tax brackets and reducing the excess itemized deduction to 50%.
  • Cleaning all four pennies of the state-level sales tax based on the currently available “clean penny” exemptions.
  • Taxing business utilities at 4% (full state-level permanent sales tax rate) and industrial utilities at 2% (50% state-level rate).
  • Expanding the sales tax to certain services.

The Governor has explained that his draft plan is “not calling for net new tax revenue,” but rather is meant to replace the temporary revenue measures enacted in 2015 and 2016.

Specifically, the Governor’s draft 2018 Tax & Budget Priorities propose the following:

Make Permanent Reductions to Tax Credits, Deductions, and Rebates

  • Act 109 of the 2015 regular session provided limitations on the credit for taxes paid to other states to those states that provide a similar tax credit for Louisiana income taxes paid on certain sources of income.  These limitations would be made permanent.
  • Act 123 of the 2015 regular session temporarily reduced the value of several corporate income tax exclusions and deductions, including depletion and dividend income.  These would be made permanent.
  • Act 126 of the 2015 regular session temporarily reduced the value of the following rebate programs:  Quality Jobs Program, Corporate Headquarters Relocation Program, and the Competitive Projects Payroll Incentive Program.  These reductions would be made permanent.

Compress Individual Income Tax Brackets and Reduce Excess Itemized Deductions to 50%

  • Current law allows and individual income tax deduction for 100% of excess federal itemized personal deductions.  Excess federal itemized personal deductions are defined as the amount by which the federal itemized personal deductions exceed the amount of the federal standard deduction.
  • The Governor’s proposal would reduce the amount of the deduction from 100% to 50%.  The proposal would also compress individual income tax brackets.

Clean All Four Pennies of State-Level Permanent Sales Tax Based on Currently Available “Clean Penny” Exemptions

  • The Governor’s proposal would expand the sales tax base on the permanent 4% state-level sales tax (the “permanent pennies”) by mirroring the current sales tax base of the temporary additional 1% “clean penny” state-level sales tax.

Tax Business Utilities at 4% and Industrial Utilities at 2%

  • Under Act 25 of the 2016 first special session, business utilities are currently subject to state-level sales tax at the rate of 3% through June 30, 2018 and 1% through March 31, 2019.
  • Business utilities are subject to the 1% “clean penny” state-level sales tax through June 30, 2018, pursuant to Act 26 of the 2016 first special session.  The total state-level sales tax rate for business utilities through June 30, 2018 is 4% and then 1% through March 31, 2019.
  • The proposal will tax business utilities at 4% and create a “special rate” for industrial users at 2%.

Expand Sales Tax to Services

  • The Governor’s plan would expand the sales tax base (likely the state and local sales tax base) to include services such as:
    • Debt collection services
    • Insurance services
    • Data processing services (similar to Texas)
    • Information services (similar to Texas)
    • Cable and satellite services
    • Repairs to real property (immovables)

As we move closer to a 2019 gubernatorial election year in Louisiana, budget issues, tax reform, and the raising of taxes will surely continue to be infused with a heavy dose of politics from all sides.

The Louisiana and multistate business community should continue to carefully follow the upcoming special session (if ultimately called) and be prepared to provide input or otherwise act with regard to any new legislation proposed this year by the legislature.

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

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