Manufacturing Machiner And Equipment State Sales Tax Exclusion Fully Phased-In

Effective July 1, 2009, the state sales tax exclusion for manufacturing machinery and equipment has been fully phased-in - meaning that there is no longer a state sales tax on the purchase, use, lease or rental of these items. Qualifying manufacturers should obtain the Application for Certification as a Manufacturer (Form R-1070) from the LDR website at www.rev.state.la.us .

Attorney Fees in Tax Cases

SB 268, Donahue - Provides taxpayer fairness in the payment of private counsel attorney fees in state tax cases. Under R.S. 47:1512, taxpayers are assessed an additional penalty for attorney fees in the amount of 10% o fthe tax, interest, and penalty due, to be paid by the taxpayer directly to the Department of Revenue's private counsel.

On the other hand, if the taxpayer prevails in the litigation, no 10% attorney fees are awarded to the taxpayer. This bill repeals this bad tax policy with the respect to state tax cases. Both the Department of Revenue and taxpayers should have a level playing field in tax litigation. Neither party should have an advantage over the other. There appears to be no other state in the country that imposes a similar burden on its taxpayers.

In an independent review of the fairness of state tax administration. Louisiana received the grade of "D," tied for second worst in the country ("The Best and Worst of State Tax Administration," COST, April 2007). SB 268 also expand the right of taxpayers in local sales tax cases to post bond or other security, in lieu of making a payment under protest. (Act 493; effective 7/10/09.)

Business Utility Tax Sales Tax Exemptions Restored

Effective July 1, 2009, the state sales tax exemption for business utilities has been restored!

Since 1986, the sales tax exemptions for utilities have been “temporarily” suspended, meaning that all taxpayers were paying the state sales tax on their utilities. With the passage of the “Stelly Tax Plan” by the Legislature and the electorate in 2002, the exemption for individuals / residences were restored, leaving only the business community to pay this sales tax.

During the 2005 1^st Extraordinary Session, the Legislature further provided relief in this area by reducing the sales tax on energy sources for businesses from 3.8% to 3.3% beginning January 1, 2006. The 3.3% sales tax rate was reduced to 2.3% last year when the Legislature repealed the permanent 1% portion of the business utility sales tax of July 1, 2008. The remaining “suspended” sales tax rate of 2.3% expired effective July 1, 2009.

In summary, effective July 1, 2009, the state sales tax exemptions for natural gas, electricity, steam and water have been fully restored – meaning that these items are no longer subject to state sales tax. Check your utility bill to make certain that you are not being charged state sales tax on these items for usage on and after July 1, 2009. If you are being charged this tax in error, you should contact your service provider and advise them of this change in the law; have them contact the Louisiana Department of Revenue (LDR) for further clarification.

Corporate Franchise Tax on Long-Term Debt Continues Phase-Out

The corporate franchise tax on borrowed capital will continue to be phased-out by excluding "borrowed capital"" from the definition of "taxable capital" as follows:

Taxable Years Beginning After	Borrowed Capital Percentage Exclusion
December 31, 2008	56%
December 31, 2009	70%
December 31, 2010	100%

In summary, after December 31, 2010, borrowed capital will be excluded from the corporate franchise tax base.

These LABI-backed actions are significant gains in the effort to make Louisiana's business tax system competitive with other states.

Louisiana Tax Amnesty Program Set for Sept. 1 through October 31

The Louisiana Department of Revenue (LDR) announced that the 2009 Louisiana Tax Amnesty Program will run from September 1 through October 31. Governor Bobby Jindal signed into law the Louisiana Tax Delinquency Amnesty Act of 2009, which allows taxpayers to settle account balances overdue audit assessments, and certain tax disputes with no penalties and only half of the interest on what they owe.

The 2009 Louisiana Tax Amnesty Program applies to resident and non-resident individuals, and in-state and multi-state businesses.

The amnesty can be applied to:

All taxes administered and collected by LDR, except for motor fuel taxes:
Taxes that became due on or after July 1, 2001 and before January 1, 2009
Taxes due prior to January 1, 2009 for which LDR has issued a billing notice or demand for payment on or after July 1, 2001 and before May 31, 2009;
Taxes for which the taxpayer and LDR have entered into an agreement to suspend the running of prescription until December 31, 2009:
Taxes due on or before July 1, 2001 but were ineligible for an earlier amnesty program due to civil litigation.

Taxpayers may qualify for amnesty:

If they failed to file a tax return or report:
If they failed to report all income or all tax, interest and penalties that were due:
If they claimed incorrect credits or deductions;
If they misrepresented or omitted any tax due; and
If they are under audit or in administrative or judicial litigation

For more information and a list of frequently asked questions, visit the Louisiana Tax Amnesty Program page at www.revenue.louisiana.gov.