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S.A.L.T. Select Developments: Louisiana

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Louisiana.

Overview

State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Louisiana.

October 2020

Updates Reported – On October 16, 2020, Governor Edwards signed into law a bill passed during the 2020 Second Extraordinary Session, Senate Bill No. 14, which makes further amendments to the Louisiana New Markets Jobs Act tax incentives. That Act authorizes a state premium tax credit to any entity that makes a qualified equity investment. The entity or subsequent holder of the qualified equity investment shall be entitled to use a portion of the credit on each credit allowance date. The credit is equal to the applicable percentage for the credit allowance date, as determined in the Act, multiplied by the purchase price or the amount paid for the qualified equity investment.

A qualified equity investment is an equity investment in a qualified community development entity which in turn is invested into a qualified active low-income community business that satisfies certain conditions. However, and as a result of the earlier referenced amendment signed by the Governor, a business that otherwise satisfies the definition of a qualified equity investment but for being located in a low-income community, shall satisfy that definition if the business is located in a "recovery zone." Under this amendment, a "recovery zone" means any parish for which the Federal Emergency Management Agency of the U.S. Department of Homeland Security has made a determination that the parish is eligible for both individual and public assistance under the declaration of major disaster for the State of Louisiana. This amendment is effective upon signature by the Governor. More information can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (September 30): On September 24, 2020, Louisiana Governor Edwards signed Proclamation Number 129 JBE 2020, entitled COVID-19 Public Health Emergency/Additional Suspension - Louisiana Workforce Commission. The purposes of this Proclamation is to suspend the imposition of a solvency tax that would otherwise become effective when the balance of the Unemployment Trust Fund for the next four quarters would be less than $100 million. That solvency tax, if implemented, would assist in restoring the current balance of the Fund, which the Proclamation noted to be $49.4 million as of September 24, 2020. However, as also noted in the Proclamation, the solvency tax if triggered in September of 2020 would levy a significant tax increase on employers in April of 2021, before there can be a full recovery of the Louisiana economy from COVID-19. As a result, the Proclamation suspends the requirements of the Secretary of the Workforce Commission to report a balance of the Fund below $100 million for the next four quarters and to assess a solvency tax. The Proclamation states that these provisions are effective from September 24, 2020 to October 9, 2020, or as extended by any subsequent Proclamation, unless terminated sooner. More information can be found here.

August 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (August 20): By Notice of Intent just recently published, the Louisiana Department of Revenue gave notice pursuant to rulemaking procedures that the Department has initiated the regulatory process to finalize a rule which mandates the electronic filing and payment requirements for the Alcoholic Beverage Tax Return, Hazardous Waste Disposal Tax Return, Transportation and Communication Utilities Tax Return, and Report of Inspection and Supervision Fee. Upon finalization of this regulatory process, the electric filing and payment requirements would be mandatory for those particular returns/reports and tax/fee payments effective for all applicable periods beginning on or after January 1, 2021. Interested persons may submit written data, views, arguments or comments regarding this proposed rule to the address as set forth in the Notice of Intent; and written comments will be accepted until 4:30 p.m., September 25, 2020. Further, a public hearing will be held on September 28, 2020 at the location set forth in the Notice. That Notice of Intent can be found here.

July 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (July 27): Within the last several days Governor Edwards has signed into law various bills from the 2020 Special Legislative Session. Included among those recently enacted laws are the following: (i) extending the sunset for the research and development tax credit until December 31, 2025 (more information can be found here); (ii) providing for an extension of the State's Angel Investor Tax Credit Program through June 30, 2023 (more information can be found here); (iii) requiring the Louisiana Department of Revenue to waive penalties and interest for certain taxpayers for tax years 2019 and 2020, provided that the taxpayer meets certain conditions such as the health of the taxpayer or of the tax preparer was impacted by COVID-19 on or after March 11 and on or before July 15, 2020, and provided that this new law does not apply to any tax return filed or any tax payments submitted after November 15, 2020 (more information can be found here); (iv) providing for sales and use tax rebate on the sale of certain fiber-optic cable equipment, which appears to applicable to the winning bidder in the Rural Digital Opportunity Fund Option, and which shall equal 50 percent of the sales/use tax paid by the winning bidder on the fiber-optic cable, together with other applicable conditions (more information can be found here); (v) authorizing various business sectors to participate under certain conditions in the State's Enterprise Zone Incentive Program and the Quality Jobs Program (more information can be found here and here); and (vi) providing for the suspension of the corporation franchise tax and the initial corporation franchise tax for small business corporations for franchise taxable periods beginning between July 1, 2020 and June 30, 2021, as the definition of "small business corporation" is defined in that new law (more information can be found here). Each of these newly enacted tax and related laws include various conditions and requirements.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (June 25): On June 4, 2020, Louisiana Governor Edwards signed a bill into law that would allow the Louisiana Department of Revenue, upon the occurrence of a gubernatorial or presidential declared disaster or emergency, to grant reasonable extensions of time for the filing of returns and reports and payment of taxes, fees or services charges for which the Department has been delegated as the collection authority. These extensions of time shall not exceed six months in the case of income and franchise taxes and three calendar months in the case of any other tax, fee or service charge collected by the Department. Further, whenever an extension is granted pursuant to this new law, the return, report, tax fee or service charge for which the extension is granted shall not become delinquent until the expiration of the extension period, and the Department will suspend the accrual of interest for all or part of the extension period. Separately, effective July 1, 2020, the jurisdiction of the Board of Tax Appeals has been expanded and petitions or pleadings may be filed with Board for any matter within its jurisdiction. That same legislation amends the definition of "dealer" for sales and use tax purposes so as to include any person who operates, maintains or facilitates a peer-to-peer vehicle sharing program and provides that the state sales tax collected by such dealers must be filed and paid electronically. More information can be found here and here.

Coronavirus Tax Payment and Return Filing Responsibilities - Updates Reported (June 2): On May 28, 2020, the Louisiana Legislature passed legislation (S138) providing for sales and use tax collection by marketplace facilitators once they exceed the following economic nexus thresholds: the marketplace facilitator's gross revenue for sales delivered into Louisiana exceeded $100,000 from sales of tangible personal property, products transferred electronically, or services; or the marketplace facilitator sold for delivery into Louisiana tangible personal property, products transferred electronically, or services in 200 or more separate transactions. Once signed by the Governor, S138 will take effect July 1, 2020. (L. 2020, S138, effective 07/01/2020, upon the signature of the Governor.)

Also, by Revenue Information Bulletin No. 20-012, issued May 22, 2020, the Louisiana Department of Revenue stated that it will grant automatic penalty relief to taxpayers under certain conditions with respect to the March and April 2020 sales tax returns and payments that were due April 20 and May 20, 2020. To qualify for the penalty relief according to this Bulletin, the taxpayer must file the March and April 2020 sales tax returns and remit the sales tax and any deficiency interest by June 30, 2020. The Bulletin also states that if a taxpayer is unable to remit the sales tax and any deficiency interest by that date, penalty relief will be granted if a taxpayer submits and enters into an Installment Request for Business Taxes by June 30, 2020. Further, and for the March 2020 sales tax period, the Department stated that it has sent self-assessment bills to taxpayers who have filed a March 2020 sales tax return but did not remit all tax shown as due on that return. Pursuant to this Bulletin, taxpayers are not required to pay the penalties shown on the notice if the tax and interest is remitted by June 30 (or the taxpayer submits and enters into an Installment Request by June 30). More information can be found here.

Lastly, on June 1, 2020 the Louisiana Legislature adopted a resolution suspending the corporate franchise tax responsibility for small businesses beginning July 1, 2020 through June 30, 2021. This suspension applies to businesses subject to the tax that reportedly have up to $500,000 of taxable capital. Also suspended is a first-time initial tax of $110. According to sources, this suspension takes effect immediately without requiring the signature of the Governor, notwithstanding the expected cost to the state being about $6 million. More information not available at present.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Further Updates Reported (May 8): On April 22, 2020, the Louisiana Department of Revenue issued Bulletin No. 20-011 providing that the April 25, 2020 deadline for the February 2020 monthly oil and gas severance tax return, payment, and report has been extended to June 25, 2020. The Bulletin states that this is an automatic extension and that no extension request is necessary; and that no penalties or interest will be assessed provided that the applicable monthly return, payment, and report for this severance tax period is submitted to the Department by the June 25 extension date. Lastly, the Bulletin states that this extension does not apply to severance tax returns, payments, or reports due on any other dates. More information can be found here.

April 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Further Updates Reported (April 3): By Revenue Ruling 20-002 dated March 30, the Louisiana Department of Revenue provided deadline extensions for various tax and tax-related obligations. As stated in this Ruling, the Department (i) will automatically waive any underpayment of estimated tax penalty otherwise due for the April 15 and June 15 individual declaration payments provided that the taxpayer pays the April 15 and June 15 declaration payments timely, the amount paid on April 15 is at least 90 percent of the amount paid on April 15, 2019, and the amount paid on June 15 is at least 90 percent of the amount paid on June 17, 2019; and (ii) shall consider any otherwise late filed election made after April 15 by an S corporation, or by an entity taxed as a partnership for federal income tax purposes, to pay tax on its income, to be filed timely if such election is made for the 2019 tax year on or after April 16 but before July 16; and (iii) extends the deadline for a credit transfer or for the execution of a binding agreement to transfer such credit for 2019 income and franchise tax returns by 30 days in accordance with that Ruling. More information can be found here.

March 2020

Coronavirus Tax Payment and Return Filing Responsibilities - Due Date Changes Reported (March 25): On March 23, 2020, the Louisiana Department of Revenue published Revenue Information Bulletin No. 20-009 in which the Department stated that the deadline for filing various state income and franchise tax returns is being extended to July 15, 2020. Those returns so extended include partnership returns on Form IT-565 due April 15 and on Form R-6922 due May 15; individual tax returns on Forms IT-540, IT-540B, and R-1035 due May 15; fiduciary tax returns on Form IT-541 due May 15; and corporate tax returns on Form CIFT-620 due May 15. The Department stated that this filing extension to July 15 is automatic for eligible taxpayers and no extension request is necessary; and that the Department will not apply penalties or interest to any applicable return or payment submitted by the extended July 15 due date. The Department noted in Bulletin No. 20-009 that an additional extension can be requested from July 16 to November 15, 2020 for individual, fiduciary, and partnership returns and to December 15, 2020 for corporation returns. The Department also stated that, due to the statewide stay-at-home order issued by the Governor of the State of Louisiana, the Department has suspended in-person customer service help and recommends taxpayers take advantage of the online customer service options available on the Department's website. Find more information here.

Coronavirus Tax Payment and Return Filing Responsibilities - No Broad Changes Reported (March 19): Pursuant to a news release issued March 16, the Louisiana Department of Revenue encourages individual taxpayers to make payments and file individual income tax returns through the Louisiana File Online. It also encourages all businesses to pay all state business taxes, file returns for state sales, tobacco, withholding, and several other state taxes, and request corporate income filing extensions through the Louisiana Taxpayer Access Point online. Further, the Department encourages tax professionals to submit inquiries through the contact page of its website regarding topics such as corporate, individual, and sales taxes. Find more information here. Additionally, Governor Edwards issued a proclamation on March 16 suspending legal deadlines for tax appeals and other court cases in Louisiana in response to the coronavirus pandemic.

February 2020

Sales and Use Tax: On January 29, 2020, the Louisiana Supreme Court held that Wal-Mart.com was not a "dealer" under La. R.S. 47:301(4)(l) with respect to sales made by third-party retailers through its online marketplace and, therefore, was not obligated to collect and remit sales tax on these sales. The Court held that under La. R.S. 47:301(4)(l), the third-party retailer, and not Wal-Mart.com, constituted a dealer for purposes of collecting and remitting sales and use taxes on these sales. Essentially, what the Court held is that a taxing authority could not rely on the U.S. Supreme Court's removal of the physical presence requirement (in South Dakota v. Wayfair, Inc.) to change existing state tax law governing which party to a sales transaction is a dealer and, thus, obligated to collect and remit sales tax. Such a change is within the exclusive authority of the state legislature. This case highlights the fact that the impact of South Dakota v. Wayfair, Inc. will continue to evolve largely through the responsive actions of state and local law-making bodies. More information on the decision can be found here.

Sales and Use Tax: The Louisiana Sales and Use Tax Commission for Remote Sellers has adopted Louisiana Administrative Code 61:III.1537 and 61:III.1538, effective January 20, 2020, which require remote sellers to file their Louisiana tax returns electronically and to electronically transfer all tax payments on or before the 20th day following the close of the reporting period. These requirements are effective for tax periods beginning on or after July 1, 2020. Here is the full ruling.

Corporate Income Tax: Effective January 20, 2020, the Louisiana Department of Revenue adopted Louisiana Administrative Code 61:I.1001 which provides procedures for S corporations and other pass-through entities taxed as partnerships for federal tax purposes to elect for Louisiana tax purposes to be taxed as C corporations. The Department of Revenue began accepting elections February 1, 2020 for taxable years beginning on or after January 1, 2019. Enacted into law by Act 442 of the 2019 Regular Session of the Louisiana Legislature, this election is intended to circumvent the federal $10,000 cap on the state and local tax deduction taken by individual taxpayers. The cap does not apply to entity taxpayers. An electing entity may apply to the Department to terminate the election and the Department may grant the termination if a majority of the electing entity's owners vote to terminate the election or if there is a material change in circumstances, including a significant change in federal tax law. However, the law does not provide for an automatic termination and leaves it to the Department's discretion whether to grant the termination. First and foremost, entities considering the election must determine whether the election will, in fact, result in lower taxes based on their own unique circumstances; not all entities will benefit from the election. Additionally, they must also decide whether it is worth the risk of having the Department not allow a termination of the election even if the federal tax law were to change in the future. More information about the Code can be found here.

November 2019

Income and Sales Taxes: On November 8, 2019, the Louisiana Department of Revenue published Legislative and Remote Sellers Commission Updates which included guidance with respect to corporate and personal income tax and sales and use tax. The Updates included guidance on filing net operating income returns, the pass-through entity tax, federal tax reform, a timeline of legislation implementation, remote seller filings, and the definition of "remote seller." For more details, click here.

Return Filing: Because of the ransomware attack that affected the Louisiana Department of Revenue, the Department has extended the due date for all tax returns due on November 20, 2019 to November 25, 2019. Louisiana Revenue Information Bulletin No. 19-017, 11/19/2019.

October 2019

Income Tax: The Louisiana Department of Revenue has issued guidance on how changes to Internal Revenue Code Section 951A under the Tax Cuts and Jobs Act will affect Louisiana state income tax. Louisiana Revenue Information Bulletin No. 19-016, 10/08/2019. Click here for the full bulletin.

Practice and Procedure: On October 12, 2019, Louisiana voters approved Proposed Constitutional Amendment No. 3, thus making Act 675 of the Louisiana Legislature, effective January 1, 2019, operative. This legislation authorizes the Louisiana Board of Tax Appeals (BTA) to determine the constitutionality of a statute or ordinance, authorizes the BTA to provide taxpayers with legal remedies in tax cases involving the alleged violation of an Act of Congress, the U.S. Constitution or the Louisiana Constitution. The legislation also extends the BTA's jurisdiction to petitions for declaratory judgments on the constitutionality of state and local laws and the validity of regulations except for those within the Louisiana Tax Commission's jurisdiction.

August 2019

Document Filing Requirements: In the coming months, taxpayers will be able to electronically sign and submit certain forms directly to the Louisiana Department of Revenue, including (1) Form R-20128 (Request for Waiver of Penalty for Delinquency); (2)) Form R-20131 (Request for Abatement of Interest); (3)) Form R-7004 (Tax Information Disclosure Authorization); (4)) Form R-7006 (Power of Attorney and Declaration of Representative); (5)) Form R-19026 (Installment Request for Individual Income); and (6)) Agreements to Suspend Prescription. Louisiana Revenue Information Bulletin No. 19-014, 07/31/2019.

Sales and Use Tax: In Lafayette General Medical Center, Inc. v. Robinson, the Louisiana Third Circuit Court of Appeal held that the Louisiana Department of Revenue could not impose sales tax on a medical center's sales of medical devices. The Court interpreted the Louisiana Constitution's prohibition on the taxation of prescription drug sales to extend to the sale of medical devices. The Court reasoned that although the issue as to whether "prescription drugs" extends to "medical devices" is not entirely clear, it must apply the interpretation that is most favorable to the taxpayer. Lafayette General Medical Center, Inc. v. Robinson, La. Ct. App., 3rd Cir., Dkt. No. 18-879, 08/14/2019.

July 2019

Sales Tax: On July 2, a Louisiana District Court ruled that Harrah's should be paying state sales taxes on complimentary and discounted hotel rooms provided to its casino patrons. The Louisiana Department of Revenue has paused its audits of other casinos awaiting the outcome of its case against Harrah's. If the Department ultimately prevails in its cases against the casinos where tens of millions of dollars of sales taxes are at stake, what does this mean for countless other businesses that give away otherwise taxable goods and services at no charge as a marketing strategy for generating business? The Department is facing challenges based on the fact that these transactions do not contain the statutorily required elements of a taxable transaction including, among others, a sales price. Also, constitutionally, can the Department pursue the tens of millions of dollars in sales taxes allegedly owed by the casinos on these transactions but turn a blind eye to every other business that offers complimentary goods and services as a means of generating customer goodwill?

June 2019

Rental Tax/New Appeal Procedures: On June 6, 2019, the Louisiana Legislature's 2019 Regular Session ended. During that Session, the Legislature authorized the City of New Orleans, subject to a vote of the City's electorate, to tax rentals of residential dwellings with a duration of occupancy of less than 30 consecutive days; and proposed a jurisdictional expansion of the Board of Tax Appeals to include constitutional challenges to state and local taxes, which proposal will be put to a vote of the State's electorate on October 12, 2019.

For more information about state and local tax developments in Louisiana, please contact:

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