Two New Proposed Regulations Issued by the Louisiana Department of Revenue

The Louisiana Department of Revenue has now issued two new proposed regulations regarding:

  • Electronic filing and payment requirements for consolidated sales tax returns; and
  • Mandatory electronic filing requirements and electronic payment requirements relating to the Industrial Hemp-Derived CBD and Consumable Hemp Products Tax.

 

Consolidated Sales Tax Returns – Electronic Filing and Payment Requirements:

The Department is proposing to adopt rules in Louisiana Administrative Code (“LAC”) 61.III.1547 and 1548 to require electronic filing and payment requirements for “consolidated filers” who are filing the Louisiana Sales Tax Return (Form R-1029).

According to the proposed regulation, “consolidated filers” are taxpayers who are approved, according to LAC 61:I.4351(A)(1)(a), to file consolidated sales tax returns to report sales from multiple locations on one consolidated monthly return.

The purpose of the proposed regulation is to require consolidated filers to electronically file all sales tax returns and electronically submit all related sales and use tax payments.  According to the Department’s proposed regulation, recent legislative changes have required more specific tracking of sales tax revenues, and requiring consolidated filers to file returns and make payments electronically allows for targeted tracking while maintaining convenience for consolidated filers.

A copy of that proposed regulation can be found here.

 

Industrial Hemp-Derived CBD and Consumable Hemp Products Tax:

The Department is also proposing to amend LAC 61.III.1535 and 1536, regarding mandatory electronic filing and payment requirements for the Industrial Hemp-Derived CBD Tax Return.  Act 336 of the 2021 Regular Session (“Act 336”) changed the name of the tax to Consumable Hemp Products Tax and expanded its applicability.  The purpose of the new proposed regulation is to revise the terminology in the regulation consistent with the changes to the tax statutes made by Act 336.

A copy of that proposed regulation can be found here.

 

 

 

Former Barclays Capital and IRS Veteran Alysse McLoughlin Joins Jones Walker’s State & Local Tax Team

Jones Walker LLP announced today that Alysse McLoughlin has joined the firm as partner in the Tax Practice Group on the State & Local Tax (SALT) Team.

Alysse has a particular skill working with financial services companies, litigating state tax matters, and advising on tax planning opportunities.

Bill Backstrom, leader of Jones Walker’s Tax Practice Group, said, “We have known Alysse and have respected her professionalism and talent for years. We are thrilled to welcome her to our team. Her background at a multinational investment bank, a global financial services firm, and the IRS is a huge asset to our SALT team. We look forward to working with her and seeing her immediate impact in support of our clients’ interests.”

Alysse joins Jones Walker from an international law firm and previously served as head of state tax at Barclays Capital. Among other responsibilities, she established the company’s tax-return filing positions and reserves, participated in the development of financial statements and reports, consulted on the structuring of commodity transactions, and responded to audits conducted by state tax authorities. Prior to joining Barclays Capital and after leaving the Internal Revenue Service (IRS), Alysse was state tax counsel for Lehman Brothers.

“The ability to attract a nationally-recognized professional in the tax arena speaks to the caliber of our SALT team. We are pleased to have Alysse join the firm and look forward to continued strategic growth across our footprint,” added Bill Hines, managing partner of Jones Walker.

“Given Covid and the tumultuous past year and a half, clients need more professional tax support than ever to deal with states that are expected to be more creative and aggressive both in imposing taxes that are currently on the books and in enacting new taxes that will expand their tax base,” explained Alysse. “I’m delighted to join the firm alongside Jones Walker’s prominent tax team and eager to help clients navigate these ‘new world’ complexities.”

A recognized authority on state and local tax law, Alysse has been ranked in Chambers USA since 2017, among other honors. Committed to legal scholarship and education, she has served in leadership positions for a number of legal and industry organizations, including co-chairing the New York University School of Professional Studies Summer Institute on Taxation (State and Local Tax Programs) and serving on the planning/advisory committees for the Georgetown Law Advanced State and Local Tax Institute, the National Multistate Tax Symposium, the Paul J. Hartman State and Local Tax Forum, and the New York University School of Professional Studies Annual Institute on State and Local Taxation.

Alysse earned her LLM from New York University School of Law in 1997 and her JD from Fordham University in 1993.

One Bourbon, One Scotch and One Appraisal. . . It’s Time to Inspect the Property Tax Rolls!

Not that Louisiana property tax issues will make one want to imbibe, but it is that time of the year when the assessment rolls are open for review in Louisiana. The open book dates are currently published on the website of the Louisiana Tax Commission. Most of the rolls will be open the last two weeks in August for review and inspection.  Check with the individual assessor to determine if the in-person visits are permitted.  The open roll period offers a great opportunity for taxpayers to meet with the Assessor and their staffs to discuss the assessed value of any property located within that parish. Importantly, the open roll period offers taxpayers the opportunity to provide data to the Assessor regarding the fair market value of property and the taxpayer’s opinion of value. Importantly, best practices dictate that any data or evidence that a taxpayer has regarding obsolescence related to its property be provided to the Assessor during the open roll period. This will become even more important starting in 2022 when Act 343 of the 2021 Regular Session becomes effective (more on that in an upcoming post).

If after meeting with the Assessor, and providing additional data regarding fair market value and obsolescence the taxpayer still is not satisfied with the assessed value, there is no reason to cry in your beer, as the Assessor’s value can be appealed to the local Board of Review. The appropriate appeal form is on the Louisiana Tax Commission’s website, Form 3101, and must be submitted to the Board of Review no later than seven (7) prior to the public hearing set by the Board of Review.  See La. R.S. 47:1992. Luckily, the hearing dates are also mostly available on the Tax Commission’s website. It is important to note that usually the Parish Policy Jury or other parish wide body acts the Board of Review in reviewing appeals of property tax assessments. As such, ensure that your appeal documents are submitted to the Police Jury’s office and not just to the Assessor or Sheriff. The Board of Review can increase or decrease an assessment.

If the taxpayer disputes the Board of Review’s decision, an appeal maybe filed with the Louisiana Tax Commission by submitting Appeal Form 3103A within ten (10) business days after receipt of the certified mailing of the Board of Review’s written determination. Although beyond the scope of this post, it is important to keep in mind that the Tax Commission is where a taxpayer will put on additional evidence and testimony (including appraisers and other experts) in support of its opinion of fair market value for the property at issue.

If you follow best practices, and provide your Assessor with the data to support your opinion of fair market value, you will hopefully get the assessed value you seek and be “bad to the bone”!

If you have any questions regarding any of the forgoing, please contact Jay Adams.

Cheers!

Louisiana Governor Has Now Signed Law Removing 20-Year Carryover Limitation on Net Operating Loss (NOL) Deduction for Corporate Income Tax Purposes

Louisiana’s Governor, John Bel Edwards, has now signed into law SB 36 (enacted as Act 459), which eliminates the prior 20-year carryover period limitation imposed on the available deduction for net operating losses (NOLs) for Louisiana corporate income tax purposes.

Act 459 amends La. R.S. 47:287.86(B) to provide that all NOL deductions claimed on any corporate income tax return filed on or after January 1, 2022 for NOLs relating to loss years on or after January 1, 2001 may be carried forward to each taxable year following the loss year until the loss is fully recovered, without restriction.

All other prior requirements of La. R.S. 47:287.86 are still applicable.

A copy of the full text of Act 459 can be found here.

I Feel a Change Comin’ On: Louisiana’s 2021 Regular Session Legislative Wrap-Up

The Louisiana Legislature’s 2021 Regular Session has now concluded, and after a long and particularly contentious session, the Legislature was able to get substantial portions of its tax reform package across the finish line.

Prior to the start of the 2021 Regular Session, Louisiana’s legislative leadership identified four main tax reform measures to be addressed, including:

  • Centralizing state and local sales/use tax collection/administration;
  • Eliminating the current federal income tax deduction for individual and corporate income tax purposes, and modifying individual income and corporate tax rates;
  • Reducing/repealing (and/or simplifying) the Louisiana corporate franchise tax; and
  • Phasing out local property tax on inventory.

In the deliberation of these measures, the Legislature was faced with the additional challenge of balancing net tax revenue decreases to the State given the anticipated federal aid the State would receive through the American Rescue Plan Act of 2021  (ARPA).  ARPA prohibits states from using funds disbursed under the act to directly or indirectly offset a reduction in the net tax revenue of a state through legislative or regulatory changes, or by administrative interpretation.  Therefore, any tax-related action by the Louisiana Legislature that reduces revenue could be deemed by the Federal Treasury to have contravened the act, thus exposing the State to ARPA’s statutory consequences.

Ultimately, and as predicted by Senator R.L. “Bret” Allain, II, Chairperson of the Senate Revenue and Fiscal Affairs Committee during Jones Walker’s Louisiana Legislative Update 2021 Webinar, the Legislature was unable to pass legislation related to phasing out local property tax on inventory and a complete repeal of the corporate franchise tax.  However, the Legislature was able to make substantial progress towards a more simplified and economically competitive state and local tax regime.

What Tax Reform Measures Ultimately Passed?

  • Centralization of state and local sales/use tax collection/administration – HB 199 provides for the State and Local Streamlined Sales and Use Tax Commission (the Commission).  The Commission, which is to be comprised of eight Senate-confirmed members, will provide for the streamlined electronic filing, electronic remittance, and the collection of all sales and use taxes levied against sales made in/into the state of Louisiana.  As HB 199 impacts the autonomy of local tax collectors, HB 199 requires an amendment of the Louisiana Constitution.  A statewide election where all bills that would amend the Constitution (if passed) is scheduled for October 9, 2021.
  • Continuation of the suspension of the franchise tax for small businesses and reduction of the franchise tax rate – SB 161 makes several changes to the Louisiana corporation franchise tax, including: (1) continuation of  the suspension of the tax on the first $300,000 for small business corporations to July 1, 2023, (2) reduction of the rate of the tax from $3.00 to $2.75 per $1000 of taxable capital above $300,000 and (3) further rate reductions based on future corporation income and franchise tax collections.  The rate reduction provisions must be adopted in the state wide election occurring on October 9, 2021 in order to be enacted, and the bill is also contingent on the enactment of HB 278 and HB 292, which are discussed below.
  • Simplification of corporate tax rates and elimination of the federal income tax deduction –  HB 292 repeals the federal income tax deduction (FIT Deduction) pursuant to La. R.S. 47:287.85 and related statutes, and reduces the Louisiana corporation income tax brackets from 5 to 3 with rates of 3.5%, 5.5% and 7.5%.  However, the ultimate effectiveness of HB 292 is contingent on several other enactments from the 2021 Regular Session.
    • First, either HB 275 or SB 159 must be adopted in a statewide election to be held on November 8, 2022, to amend Art. VII, Section 4 of the Louisiana Constitution.  While both HB 275 and SB 159 proposed to essentially eliminate the FIT Deduction for Louisiana corporate income tax purposes, SB 159 passed while HB 275 did not.  SB 159 was approved by a 2/3rds vote by both the Senate and the House of Representatives and now must be adopted in the statewide election occurring on October 9, 2021.  The bill eliminates the constitutional mandate for the FIT deduction, essentially eliminating it in conjunction with the related legislation.
    • Second, HB 278 and SB 161 (see above) must also be enacted for HB 292 to become law.  HB 278 was passed by the Legislature and is currently awaiting approval by the Governor.  HB 278 reduces the rates for calculating individual income tax from 2% to 1.85%, 4% to 3.5%, and 6% to 4.25%.  As noted above, although SB 161 was passed, the franchise tax rate reduction provisions included in SB 161 must be adopted in the state wide election occurring on October 9, 2021.

Because multiple pieces of this legislative package include constitutional amendments, Louisiana’s voting public will ultimately determine the success of the Legislature’s tax reform plan.

Other Notable Tax Legislation

In addition to the “big four” tax reform measures discussed above, the following notable tax bills were passed by the Legislature and sent to the desk of Governor John Bel Edwards (D) for review and signature (or veto):

Although the 2021 Regular Session has now concluded, many expect that Governor Edwards will call the Legislature into a special legislative session later this year in order to address numerous issues that were not covered during this session.

The Jones Walker SALT team will continue to monitor and report on the ongoing efforts relating to the 2021 Regular Session and the future legislative sessions to come.

Louisiana’s Proposed Sales Tax Centralization Constitutional Amendment Has Passed the Legislature and Now Goes to a Vote of the People

Louisiana House Bill 199, which would create a more centralized state and local sales tax collection system in Louisiana, has now been adopted by the House and Senate after negotiation in conference committee.

The legislative information regarding HB 199 can be found here.

The applicable  conference committee report proposed by the appointed conference committee conferees, and subsequently adopted by the Legislature, can be found here.

The proposed constitutional amendment will now go to a vote of the people.

This is a good first step in order to move the State toward constitutional validity in its state and local sales tax systems. There is, of course, more work to do.

Jones Walker’s SALT Team will continue to follow and report on this proposed constitutional amendment, as well as the other major Louisiana tax reforms being undertaken this legislative session.

New Louisiana De Minimis Mobile Workforce Exemption Bill Goes to Conference Committee

The Louisiana Legislature has now sent to conference committee proposed legislation (SB 157) that would exempt the wages of certain nonresident employees from Louisiana individual income taxation, and their employers from withholding and reporting requirements, if the employees only worked in Louisiana for fewer than 25 days in a calendar year.

If SB 157 becomes law, beginning in 2022, the exemption would apply to wages paid to an employee who performed work-related duties in Louisiana for fewer than 25 days in a calendar year. If, however, the employee worked in the state for more than 25 days in a year, the employer would be required to withhold and remit tax to Louisiana for the entire year, including the first 25 days.

The bill originally had a threshold of 30 days but was amended on the Senate floor before approval.  Subsequent House amendments to the bill were rejected by the Senate; thus the bill was sent to conference committee for further discussion and negotiation among the following six appointed members of the Legislature as conferees:  Rep. Bishop (Chair of the House Ways & Means Committee), Rep. Stefanski, Rep. Beaullieu, Sen. Allain (the bill’s author, and Chair of the Sen. Revenue & Fiscal Affairs Committee), Sen. McMath, and Sen. Smith.

Specifically, the Senate’s reengrossed version of the bill generally provides that, beginning January 1, 2022, wages paid to nonresident employees are exempt from individual income tax if all of the following conditions apply:

(1) the employee’s wages are paid for employment duties performed by the individual in Louisiana for 25 or fewer days in the calendar year;

(2) the employee performed employment duties in more than one state during the calendar year;

(3) the wages are not paid for employment duties performed by the employee in his/her individual capacity as a professional athlete, staff member of a professional athletic team, professional entertainer, public figure, or qualified production employee; and

(4) the employee’s income is exempt from taxation by Louisiana under the United States Constitution or federal statute, or the nonresident employee’s state of residence either provides a substantially similar exemption (a reciprocity requirement) or does not impose an individual income tax.

Also, importantly, the exemption would not apply if the nonresident employee has any other income derived from sources within Louisiana for the taxable year.

Under the bill, the employee would be considered present and performing employment duties in Louisiana for a day if the employee performs more of the employee’s employment duties in Louisiana than in any other state during that day.  Also, any portion of a day during which the employee is in transit would not be considered in determining the employee’s location of employment duties.

The bill also provides some relief for employers who do not properly follow the proposed law. Specifically, no interest or penalties would be imposed on an employer’s failure to properly deduct and withhold income taxes for a nonresident employee who does not qualify for the exemption, if the employer meets any of the following conditions:

  • The employer maintained a time and attendance system designed to allocate wages for income tax purposes among all taxing jurisdictions where its employees perform their employment duties, and the employer relied on data from that system;
  • The employer did not maintain a time and attendance system, but the employer relied on its own records of the employee’s location, with such records maintained in the regular course of the employer’s business; or
  • The employer did not maintain a time and attendance system, but the employer relied on the employee’s reasonable determination of the time the employee expected to spend performing employment duties in Louisiana, provided (1) the employer did not have actual knowledge of fraud on the part of the employee, and (2) the employer and employee did not collude to evade taxation in making the determination.

This proposed state-level mobile workforce de minimis exemption follows prior unsuccessful efforts by stakeholders at the federal level in Congress to address growing concerns over burdens of state income tax administration and compliance with an ever-increasing remote and mobile workforce, exacerbated most recently by the COVID-19 pandemic. Several mobile workforce bills have been introduced in the United States Congress in past years, including a Senate bill in 2020 with a similar limitation on the taxation and remuneration of nonresident employee wages in any taxing jurisdiction where an employee worked for 30 days or less. Given prior lack of passage of such legislation at the federal level, groups such as the Council on State Taxation (COST) who have been proponents of federal legislation are now also pushing for similar legislation at the state level.  In addition, almost half of all states have now passed some form of de minimis exemption on wages from nonresident employees who only work occasionally in the state.

The Jones Walker SALT Team will continue to monitor and provide updates on the progress and ultimate language of SB 157, as well as other notable bills in Louisiana’s current legislative session.

Louisiana Tax Commission Issues Hearing Notice for 2022 Rulemaking Sessions

The Louisiana Tax Commission issued its Hearing Notice for its 2022 Rulemaking Sessions. Unlike many agencies, the Tax Commission invites anyone with suggestions for amending current regulations or even adopting new regulations to participate by presenting a proposal for consideration. If you have an issue with the property tax regulations as adopted by the Tax Commission, now is your chance to make a proposal to remedy your issue.

The deadline to file a proposal is June 25, followed by presentation of the written proposals. If you disagree with any proposal made by someone else, you can submit a rebuttal to explain why you disagree. If you have any questions about the process or have a proposal you would like to discuss, call Jay Adams on the Jones Walker SALT Team.

 

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