Last week at the NYU Intermediate Summer SALT Seminar, tax department leaders from across the country participated in a roundtable discussion, addressing topics such as department staffing, information sharing among states, and — everyone’s favorite — the fairness of retroactive legislation. My partner, Alysse McLoughlin, moderated the panel.
On the topic of retroactive legislation, Amanda Hiller, the acting tax commissioner and general counsel of the New York State Department of Taxation and Finance, said she is supportive of retroactive legislation because it is often an attempt to clarify legislative intent. “Your retroactive tax legislation is our corrective legislation,” she said. She also pointed out that courts have upheld retroactive legislation against taxpayer challenges.
Alysse responded, noting that,
even if nothing is technically preventing retroactive legislation, retroactive legislation seems inequitable when taxpayers really have no notice.
When it comes to the Department of Taxation and Finance’s Regulations, the acting commissioner said the Department understands “we cannot hold taxpayers accountable for a rule they didn’t know before.”
“Your retroactive tax legislation is our corrective legislation,” Amanda Hiller, New York’s acting tax commissioner and general counsel of the taxation department, said at a New York University tax conference in midtown Manhattan.
Jones Walker SALT Team partner Katie Quinn will present “Where is Your Purchaser (Sourcing) and Why is Obtaining More Information of Increasing Importance” at the Council on State Taxation Workshop for Technology Companies on August 15 in Cupertino, CA.
Jones Walker SALT Team partner Alysse McLoughlin will present “State Tax Implications of Pillar Two for Multinational Companies” at the Council on State Taxation Workshop for Technology Companies on August 14 in Cupertino, CA.
On July 11, 2024, the Secretary of Revenue for the State of Louisiana, Richard Nelson, briefed a joint meeting of the Louisiana House Ways and Means Committee and the Senate Revenue and Fiscal Affairs Committee on the administration’s tax proposals for a potential limited constitutional convention later this summer and the upcoming 2025 Louisiana Legislative Fiscal Session.
Though the Secretary did not detail every item in the legislative package, this briefing offered the clearest view to date of the administration’s plans. The Secretary focused on reducing tax rates across the board while addressing the expiration of the temporary .45% general state sales tax and 2% state sales tax on business utilities on June 30, 2025 (otherwise known as the Fiscal Cliff). In explaining his plans, the Secretary reiterated the need to hold and conclude a constitutional convention to rewrite the state Constitution’s tax provisions before August 23, 2024 so that the public can vote on any constitutional amendments in November and those changes can be implemented by the state’s fiscal year starting July 1, 2025.
Highlights of the tax reform plan include:
Individual Income Tax
Implementing a single, flat rate less than 3.5%
Increasing the standard deduction to $12,500 for individuals and $25,000 for married couples
Increasing the deduction for certain retirement income from $6,000 to $12,000
State Sales Tax
Eliminating or consolidating roughly 100 exemptions and exclusions
Expanding the tax base to include digital goods and certain personal services
Using increased sales tax collections to reduce the state sales tax rate and offset the individual income tax changes
Corporation Income & Franchise Tax
Eliminating the Corporation Franchise Tax
Eliminating some or all of the following credits and incentives to “buy-down” the Corporation Income Tax rate to less than 3.5%:
Inventory Tax Credit
Louisiana Quality Jobs Program
Motion Picture Investor Tax Credit
Historic Structures Tax Credit
Enterprise Zone
Digital Interactive Media & Software Tax Credit
Research & Development Tax Credit
Inventory Tax
Implementing wholesale ad valorem inventory tax reform by:
Eliminating or phasing out the tax through direct payments to local governments;
Allowing local governments to voluntarily exempt inventory from tax, possibly through a state incentive;
Eliminating the Inventory Tax Credit, while keeping the tax; or
Adopting some combination of the above
Severance Tax
Reducing the 12.5% oil severance tax rate
Shifting the oil severance tax base from price to volume
Phasing out exemptions, including the horizontal well exemption
Increasing the local share of severance tax revenue
Taxpayers should keep a close eye on any formal legislative proposals coming from the Secretary’s office. Of particular importance are which Corporation Income Tax credits/incentives and sales tax exclusions/exemptions are in the Secretary’s crosshairs as well as which currently nontaxable services could become subject to Sales Tax.
A copy of the Secretary’s presentation can be found HERE.
Please Save the Date for Jones Walker’s Annual State & Local Tax Seminar!
Be sure to check back for upcoming program details! This program is intended for industry tax professionals and will be recommended for Texas CPE and CLE.
Full brochure coming soon!
Questions? Contact Courtney Farley at cfarley@joneswalker.com
Our SALT Team partners had a great time presenting at the IPT Annual Meeting in San Diego, CA! Chris Lutz presented on taxability of services, Katie Quinn presented on financial transaction taxation, and Jeff Birdsong presented on strategies and tax traps of mergers and acquisitions. We can’t wait to see everyone at the IPT Sales Tax Symposium!
Jones Walker SALT Team partner Jeffrey Birdsong will present “Seaside Mergers & Acquisitions: Navigating the Waves of Strategies and Tax Traps” at the Institute for Professionals in Taxation 2024 Annual Meeting on June 25 in San Diego, CA.
Jones Walker SALT Team partner Katie Quinn will present “Making Sense of the Complex Wave of Financial Transaction Taxation” at the Institute for Professionals in Taxation 2024 Annual Meeting on June 24 in San Diego, CA.
Jones Walker SALT Team partner Chris Lutz will present “Diving Into the Taxability of Services” at the Institute for Professionals in Taxation 2024 Annual Meeting on June 25 in San Diego, CA.
