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2016 First Extraordinary Legislative Session Review Louisiana Department of Revenue

2016 First Extraordinary Legislative Session Review

March 31, 2016 Page 1 of 6

Administrative Act 3 (SB 4) [R.S. 39:91(A), (B)(introductory paragraph), (D), and (E)] dedicates the first $200 million of the Deepwater Horizon litigation to the Fiscal Year 2015-2016 Deficit Elimination Fund. Money in the fund can be appropriated and used only to provide a source of funds to eliminate all or a portion of the Fiscal Year 2015-2016 budgetary deficit. Effective March 3, 2016. Act 11 (HB 111) [R.S. 32:8(B) and R.S. 47:1676(E)(1) and to repeal R.S. 47:1676(E)(2) and (3)] eliminates the Debt Recovery Fund; provides that monies in the fund will revert to the agency which referred the debt and nullifies current fiscal year appropriations from the fund to the Dept. of Transportation and Development. Effective March 9, 2016. Credits and Incentives Act 2 (SB 1) [R.S. 51:2365.1(A)(5) and (7)(a)] includes a college tournament or championship in the definition of a qualified event or qualified major event for purposes of the Major Events Incentive Program. Effective March 3, 2016. Act 18 (HB 71) [R.S. 51:1787(A)(1)(c), (A)(2)(a) and (3), (B)(3)(c) and (d), (5), (6), and (7), and (K)] caps the amount of the rebate of sales and use taxes and the investment income tax credit available under the Enterprise Zone Program at $100,000 per net new job created. Each net new job can only be counted once. For projects with an advance notification form filed on or after April 1, 2016, the amount of the credit will be $1,000 per net new employee, unless either the net new employee for which the credit is claimed was receiving Supplemental Nutrition Assistance Program (SNAP), Women, Infants, and Children (WIC), Medicaid, unemployment benefits, or any other benefits from a similar public assistance program during the six month period prior to employment or the net new employee is hired by a participating business located in an enterprise zone. The amount of the credit will be $3,500 for each new employee meeting the above qualifications. Effective March 10, 2016.

Act 21 (HB 2) [R.S. 47:6039] repeals the Student Assessment for a Valuable Education (SAVE) credit program in its entirety. Effective March 14, 2016.

Act 23 (SB 15) [R.S. 47:1675] changes the ordering of the application of tax credits and requires that refundable credits, other than the credit provided for in R.S. 47:6006, be applied before all other credits and payments of tax except for nonrefundable credits with no carry forward which will be applied first. Further provides that credits be applied against income tax first before being applied against franchise tax. Finally, provides that transferable credits with an effective date of transfer, as reflected in the Tax Credit Registry pursuant to R.S. 47:1524, on or before the due




date of the tax return, without regard to extensions, may be claimed on the return while transferable credits with an effective date of transfer after the due date of the return, without regard to extensions, may be used as a payment. Effective March 10, 2016 and applicable to taxable periods beginning on or after January 1, 2016.

Act 28 (HB 22) [Act 125 of the 2015 Regular Legislative Session] Extends the reductions made to tax credits in Act No. 125 of the 2015 Regular Session through the sunset date of the provisions of the Act that originated as House Bill No. 62 of the 2016 First Extraordinary Session of the Legislature of Louisiana. Effective April 1, 2016.

Act 29 (HB 24) [Act 126 of the 2015 Regular Legislative Session] Extends the sunset of reductions to certain rebate programs made in Act No. 126 of the 2015 Regular Session through the sunset date of the provisions of the Act that originated as House Bill No. 62 of the 2016 First Extraordinary Session of the Legislature of Louisiana. Effective April 1, 2016.

Corporation Income and Franchise Tax Act 1 (HB 7) amends and reenacts R.S. 47:287.71(B)(6); relative to corporation income tax; increases the exclusion for dividend income received from certain banking institutions from 72% to 100% of the amount of dividend income received. Effective March 3, 2016. Act 6 (HB 20) [R.S. 47:287.86] Clarifies that the deduction for net operating losses is limited to a deduction equal to the lesser of 72% of net operating loss carryovers to a taxable year or 72% of Louisiana net income. Effective January 1, 2016 and applicable to all returns, regardless of the taxable year to which the return relates, filed on or after July 1, 2015.

Act 8 (HB 29) [R.S. 47:287.12] Changes the corporate income tax rate from a graduated schedule of rates dependent on the taxable income of the taxpayer to a flat rate of 6.5%. The flat corporate rate of 6.5% is contingent on and becomes effective upon approval by the voters of Louisiana of a constitutional amendment to be presented on the November 8, 2016 statewide ballot to repeal the corporate income tax deduction for federal taxes paid. If the repeal of the corporate income tax deduction for federal taxes paid is approved by the voters of Louisiana on the November 8 statewide ballot, the flat corporate rate of 6.5% will be applicable to tax years beginning on or after January 1, 2017.

Act 12 (HB 19) [R.S. 12:1368 and R.S. 47:601(A)(3), (C)(1) and (3), 602(G) and (H), and 611] changes the definition of the term “domestic corporation” to include all entities taxed as corporations pursuant to 26 U.S.C. Subtitle A, Chapter 1, Subchapter C for federal income tax purposes. Such entities will be treated and taxed in the same manner that such entities are treated and taxed for federal income tax purposes. Franchise tax liability will not extend to any limited




liability company that is qualified and eligible to make an election to be taxed in accordance with the provisions of 26 U.S.C. Subtitle A, Chapter 1, Subchapter S on the first day of its fiscal or annual year or to any other entity that was acquired before January 1, 2014, but not earlier than January 1, 2012, by an entity that was taxed pursuant to 26 U.S.C. Subtitle A, Chapter 1, Subchapter S. Act 12 provides for a holding company deduction for any corporation, as defined in R.S. 47:601(C), that is subject to the franchise tax imposed by R.S. 47:601(A) and that is not subject to R.S. 47:602(B), (C), (D), (E), or (F), that have one or more subsidiaries. Such a corporation will be allowed to deduct from taxable capital, its investments in and advances to one or more subsidiaries, whether made directly or indirectly, when computing the corporation’s franchise tax. “Subsidiaries” are defined as any corporation, as provided for in R.S. 47:601(C), that is subject to the franchise tax imposed by R.S. 47:601(A), in which at least eighty percent of the voting and nonvoting power of all classes of stock, membership, partnership, or other ownership interests are owned, directly or indirectly, by a corporation that is subject to the franchise tax as imposed by R.S. 47:601(A). Act 12 also increased the initial tax paid by every corporation or other entity subject to the franchise tax from $10 to $110. Effective March 10, 2016 and applicable to taxable periods beginning on or after January 1, 2017.

Act 16 (HB 55) enacts R.S. 47:287.82; relative to corporation income tax; requires that certain deductible interest expenses, intangible expenses, and management fees be added-back when computing corporation income tax liability. Effective March 10, 2016. Act 24 (HB 116) [R.S. 47:287.86] Requires that net operating loss deductions be applied in order of the year of loss, beginning with the most recent taxable year to be applied first. Effective January 1, 2017.

Act 30 (HB 95) amends and reenacts R.S. 47:93(A) and (B), 241, 287.69, 287.442(B)(1), 300.6(A), and 300.7(A), enacts R.S. 47:55(6), and repeals R.S. 47:287.79, 287.83, and 287.85; relative to corporation income tax; repeals deductibility of federal income taxes paid for purposes of calculating corporation income tax. Effective January 1, 2017 if the electors of the State of Louisiana at the statewide election to be held on November 8, 2016 approve an amendment to Article VII, Section 4(A) of the Louisiana Constitution to eliminate the deductibility of federal income taxes paid in computing Louisiana corporation income taxes. Excise Tax Act 4 (HB 14) [R.S. 47:841(B)(7)] increases the tax levied on cigarettes by one and two-twentieths of one cent per cigarette or 22¢ per package of twenty cigarettes. Effective April 1, 2016, the excise tax on cigarettes increases to $1.08.




Act 5 (HB 18) [R.S. 47:843(B) and (C)(3) and 851(B)(4)(b)] reduces the discounts for the reporting and remitting of excise taxes on certain tobacco products, the discount for stamping cigarettes and the discount for the reporting and remitting of excise taxes and the stamping of cigarettes to five percent. Effective April 1, 2016. Act 7 (HB 28) [R.S. 26:345 and 354(D)] reduces the amount of the discount for accurately reporting and timely remitting on beverages of low alcoholic content to one and one-half percent and to two and one-half percent on beverages of high alcoholic content. Effective April 1, 2016. Act 13 (HB 27) [R.S. 26:341(A) and 342] increases the tax levied on beverages of high and low alcoholic content. Effective April 1, 2016, the following excise tax is imposed:

Liquor - $0.80 per liter Sparkling wine - $0.55 per liter Still wines with 14-24 percent alcoholic volume - $0.35 per liter Still wines with more than 24 percent alcoholic volume - $0.55 per liter Malt beverages - $12.50 per barrel Low alcoholic content beverages - $12.50 per barrel

Act 14 (HB 39) amended La. R.S. 47:551 to reenact a state and local tax levied upon the rental of an automobile. The Automobile Rental Tax is levied upon the gross proceeds derived from a lease or rental contract of an automobile, less any sales and use tax included in the contract. The Automobile Rental Tax is in addition to any tax, fee, or license imposed directly or indirectly. This is a separate and distinct tax from the state sales tax imposed by La. R.S. 47:301(7) on leases and rentals of tangible personal property, which includes motor vehicles. Effective April 1, 2016.

Sales Tax Act 9 (HB 72) [R.S. 47:302(C) and 331(C)] repeals provisions that would have reduced the tax rate on interstate and international telecommunications services from two percent to one percent. Effective April 1, 2016. Act 15 (HB 43) [R.S. 47:306(A)(3)(a)] limits the total vendors compensation for a dealer who operates one or more business locations within Louisiana to one thousand five hundred dollars per calendar month. Mandates that calculation of the deduction is to be based only on the taxes levied by R.S. 47:302, 321, 331, and R.S. 51:1286. Prohibits vendors compensation for taxes accounted for and remitted pursuant to R.S. 47:321.1 or any other sales tax levied by the state. Effective April 1, 2016.




Act 17 (HB 59) amended La. R.S. 47:301(6)(a) relative to the definition of "Hotel" to include any establishment or person engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where such establishment consists of sleeping rooms, cottages, or cabins at any of the following: (i) A single business location or (ii) A residential location, including but not limited to a house, apartment, condominium, camp, cabin, or other building structure used as a residence. Hotel does not include any establishment or person leasing apartments or single family dwelling on a month-to-month basis. The definition of dealer pursuant to La. R.s. 47:301(4) was also amended to include any person engaged in collecting the amount required to be paid by a transient guest as a condition of occupancy at a residential location as provided in La. R.S. 47:301(6)(a)(ii). The definition of dealer excludes persons leasing apartments or single family dwellings on a month to month basis. Effective July 1, 2016. Act 22 (HB 30) of the 2016 First Extraordinary Session of the Louisiana Legislature defines remote dealers and requires remote dealers to file all applicable sales and use tax returns and remittances electronically. This applies to sales and use taxes levied pursuant to La. R.S. 47:302(K)(5). A vendor who qualifies as a dealer in this state as defined in La. R.S. 47:301(4) is prohibited from collecting the tax imposed under La. R.S 47:302(K)(5) in lieu of collecting the sales and use tax imposed by a political subdivision, which is required to be remitted directly to the political subdivision. The provisions of Act 22 apply to tax periods beginning on and after April 1, 2016. Effective March 14, 2016. Act 25 (HB 61) of the 2016 First Extraordinary Session of the Louisiana Legislature enacted La. R.S. 47:302(V), 321(L), and 331(S) which provide that certain state exclusions and exemptions are operative and in effect for the purposes of the imposition of state sales taxes pursuant to La. R.S. 47:301, 321, and 331. The effective date of Act 25 is April 1, 2016.

For the period beginning April 1, 2016 through July 1, 2018, certain state sales tax exemptions and exclusions will continue to be in effect with regard to the state sales tax levied pursuant to La. R.S. 47:302. For the period April 1, 2016 through July 1, 2016, only those sales tax exemptions and exclusions provided for in La. R.S. 47:321(L) will be operative and in effect purposes of the one percent (1%) tax levied pursuant to La. R.S. 47:321. For the period April 1, 2016 through July 1, 2016, only those sales tax exemptions and exclusions provided for in La. R.S. 47:331(S) will be operative and in effect purposes of the ninety-seven on hundredths of one percent (.97%) tax levied pursuant to La. R.S. 47:331 and the Louisiana Tourism Promotion District tax in the amount of three one hundredths of one percent (.03%) levied pursuant to La. R.S. 51:1286. State sales, purchases, use, leases or rental tax exemptions and exclusions not listed in Act 25 for the sale, use, consumption, lease or rental of tangible personal property and the sales of services will be subject to tax.

Louisiana Revised Statute 47:331(P) provides that the exemptions for sales of steam, water, electric power, or energy, and natural gas for business utilities will be inapplicable, inoperable and of no effect for the period beginning April 1, 2016 through April 1, 2019, as it applies to the taxes levied by La. R.S. 47:331.

Louisiana Revised Statute 47:331(Q) provides that the exemption in La. R.S. 47:305.51 for utilities used by Steelworks and Blast Furnaces shall be applicable, operable and effective for all




taxable periods beginning on or after July 1, 2007 through March 31, 2016 and for all taxable periods on or after April 1, 2019. These utilities shall be subject to state sales tax levied in La. R.S. 47:331 for the period April 1, 2016 through March 31, 2019. Act 26 (HB 62) of the 2016 First Extraordinary Session of the Louisiana Legislature enacted La. R.S. 47:321.1, which imposes an additional state sales tax in the amount of one percent (1%). This additional state sales tax is levied upon the sale at retail, the use, the consumption, the distribution and lease or rental of an item of tangible personal property and upon sale of services. The new state sales tax is in addition to the sales taxes already levied pursuant to La. R.S. 47:302, 321 and 331. This tax is to be collected by the dealer and wholesaler as provided by Chapter 2 of Title 47. The provisions of Act 26 shall become effective on April 1, 2016 and shall be inapplicable, inoperative and of no effect after June 30, 2018.

For the period April 1, 2016, sixty-five state sales, purchase, use, lease or rental tax exemptions and exclusions will continue to be operative and in effect with regard to the additional state sales tax levied pursuant to La. R.S. 47:321.1. The sales tax exclusion for the purchases, use and lease of manufacturing machinery and equipment as provided in La. R.S. 47:301(3)(i), (13)(k), and (28)(a) shall not be operative and in effect until July 1, 2016. Act 31 (HB 31) proposes to amend Article VII, Section 4(A) of the Louisiana Constitution; relative to corporation income tax; resolves to submit to the electors of the State of Louisiana at the statewide election to be held on November 8, 2016 an amendment to Article VII, Section 4(A) of the Louisiana Constitution to eliminate the deductibility of federal income taxes paid in computing Louisiana corporation income taxes. Effective January 1, 2017, if approved by the electors of the State of Louisiana at the statewide election to be held on November 8, 2016.

2016 Regular Legislative Session Summary

Policy Services Division

2016 Regular Legislative Session Summary Louisiana Department of Revenue

August 9, 2016 Page 1 of 6 Policy Services Division

Administrative Act 335 (HB 978) [R.S. 47:302(K)(7)(b) and (W)(1), (2), and (4), 351, 351.1, 1403(C), 1418(4)(b), (c), and (7)(d) and (e), 1431(A), 1432(B), 1435(D), 1437(C), 1484(A) and (C)] provides for the administration, disposition, enforcement, and adjudication of state and local taxes under the jurisdiction of the Board of Tax Appeals. When the Board of Tax Appeals has approved a claim against the state for erroneous payments of corporate franchise tax and the claim is not paid within one year of the date the board’s approval of the claim becomes final, the secretary and the claimant can agree that the payment of the claim can be taken as an offset against the claimant’s state corporate income or franchise tax liability. Up to 25 percent of the total claim approved by the board will be allowed as an offset in each of the four taxable years immediately following the agreement between the secretary and the claimant. For each taxable year in which an offset is taken, the amount of the offset cannot exceed the amount of the state corporate income or franchise tax liability, after application of all income or corporation franchise tax credits. If payment of the amount of the total claim is not satisfied after four years, the secretary will authorize an extension of time, not to exceed two years, within which an offset can be taken. A party for which the secretary has approved an offset can transfer the offset to a member of the party’s affiliated group, included in the federal consolidated return. Effective June 5, 2016. Act 446 (HB 756) [R.S. 47:1520.2] requires the electronic filing of all schedules and invoices for all claims for refunds of $25,000 or more or if the refund claim is made by a tax preparer on behalf of the taxpayer, regardless of the amount of the refund claim. The Act allows the secretary to exempt only the taxpayer from the electronic filing requirements if the taxpayer can prove electronic filing would create an undue hardship. The Act does not apply to the Louisiana Tax Free Shopping Program or cases of bad debt. Effective June 9, 2016; applicable to tax years beginning on and after January 1, 2016. Act 461 (HB 1103) [R.S. 47:103(D)] provides that the secretary may accept a physical copy of a taxpayer’s Internal Revenue Service form requesting an extension of time to file a federal income tax return as an extension of time to file a Louisiana income tax return without the necessity of an additional state form. Effective August 1, 2016. Act 590 (HB 678) [R.S. 33:9109.1(A) through (D), (F), and (G) and 9109.2] provides for the assessment of a surcharge fee on prepaid 911 services. Effective October 1, 2016. Act 654 (HB 81) [R.S. 44:33.1] “C.B. Forgotston Act” Provides that each public body that has a custodian of public records shall make the contact information of the custodian available to the public in a manner that will allow a member of the public to quickly determine the appropriate person to whom a public record request should be submitted, including by placing such information on the internet. Effective August 1, 2016. Act 666 (HB 819) [R.S. 30:82, 83(F)(2), 83.1, 84(A)(1), 86(B), (C), (E)(1) and (2), and (F), 87(A), (E), and (F)(1), and 95(A)] provides definitions and authority for the issuance of bonds for certain purposes concerning the Oilfield Site Restoration Fund. This Act also changes the amount at which the secretary of the Department of Revenue will resume collecting the oilfield



site restoration fee from $6 million to $10 million. The secretary will resume collecting the fee upon receipt of a certification from the treasurer that the Oilfield Site Restoration Fund has fallen below $10 million and will continue to collect the fee until the balance in the fund equals or exceeds $14 million. Effective June 17, 2016. Alcohol & Tobacco Control Act 63 (HB 692) [R.S. 26:80(C)] adds a federal identification number to the list of qualifications which the officers, directors and all stockholders owning at least five percent of membership interest in a corporation or limited liability corporation must possess and provide when applying for permits to possess and sell alcoholic beverages. Exempts any officer, director, stockholder of a corporation and any manager or member of a limited liability corporation from the requirement that an applicant for alcoholic beverage permits be a citizen and resident of Louisiana. Effective May 10, 2016. Act 354 (HB 182) [R.S. 14:12(B)(1) and (2)] repeals law that provided a penalty of up to six months of imprisonment for persons found guilty of violating the provisions of law that prohibit persons younger than twenty-one years of age from possessing alcoholic beverages. Further provides that citations issued for violations of such provision shall not be included on a person’s criminal history record. Effective August 1, 2016. Act 380 (SB 205) [R.S. 26:901(34)] extends the definition of “wholesale dealer” of tobacco to provide that in order to meet the legal definition for “bona fide wholesale dealer,” at least fifty percent of a wholesale dealer’s tobacco sales must be to retail dealers who are neither subsidiaries of the wholesale dealer nor subsidiaries of any parent company of the wholesale dealer. Effective June 5, 2016. Act 386 (SB 255) [R.S. 26:802(A)(4), (15) and 813)] provides a definition for “successor” of a supplier, importer, broker, or wholesaler of beer or light wine. Obligates successors to the same terms and conditions of the agreement in effect at the time of the succession; further provides the successor with the right to enforce any rights held by the importer, broker, or wholesaler at the time of the succession. Effective August 1, 2016. Act 477 (SB 215) [R.S. 26:920(B) and (C)] reduces to ten days the time period in which a person subject to a permit denial, suspension, or revocation by the commissioner of the office of alcohol and tobacco control may seek a suspensive or devolutive appeal in district court; provides for a fine of up to $5,000 in the event that the court finds the appeal frivolous and declines to reverse the commissioner’s permit denial, suspension, or withdrawal. Reduces to ten days the time period in which the commissioner may seek a suspensive or devolutive appeal of a district court ruling. Effective June 13, 2016. Act 637 (HB 667) [R.S. 26:75(C)(1), 275(B)(1), and 359(B)(1)(h)-(i) and (2)-(4) and (C)-(F)] authorizes the direct shipment of wine from an out-of-state manufacturer or producer to a Louisiana consumer in either of the following circumstances:



(1) The Louisiana consumer perfected the sale on the manufacturer or producer’s

premises. (2) The wine bears a properly registered label that the manufacturer or producer has not

assigned to a Louisiana wine wholesaler. Provides for a permit application and creates an annual permit fee for manufacturers, producers, and retailers. Annual permit fees for manufacturers shall be $1,000; annual permit fees for producers and manufacturers shall be $250. Further requires out-of-state wine retailers, producers, and manufacturers to remit monthly statements indicating the amount of wine shipped into the state. Effective July 1, 2016. Act 640 (HB 710) [R.S. 47:843(D)(1), 847(A), (D)(1), 849(B)-(C) and 851(D)] modifies stamping requirements for tobacco dealers with stamping agent designation. Whereas prior law required dealers to cause unstamped cigarettes to be stamped immediately upon receipt, such dealers must now stamp any unstamped cigarettes prior to selling or offering the cigarettes for sale.

Requires tobacco dealers with an exporter license to stamp, within 72 hours of receipt, any unstamped cigarettes with the tax stamp of the state into which the cigarettes will be imported. In the event that the state does not issue tax stamps, alternately requires exporting dealers to pay that state’s excise tax prior to selling cigarettes or roll-your-own tobacco into that state. Effective August 1, 2016. Collections Act 76 (SB 469) (Substitute for SB 290) [C.C. Art. 3367] mandates the recorder of mortgages, upon receipt of a written signed application, to cancel the recordation of a mortgage, pledge, or privilege that has prescribed by lapse of time under R.S. 9:5685. Effective August 1, 2016. Act 607 (HB 1134) (Substitute for HB 433) [R.S. 32:414(R)(3)] authorizes the Department of Public Safety and Corrections, Office of Motor Vehicles, to issue an economic hardship license to an individual whose driver’s license has been suspended and not renewed for failure to pay delinquent taxes, interest, penalties, and costs owed to the Department of Revenue. The license may be issued for a period of one year or until the individual pays or makes arrangements to pay the delinquent taxes, interest, penalties, and all costs owed, whichever occurs first. Effective August 1, 2016. Corporation Income and Franchise Tax Act 187 (SB 40) [R.S. 47:120.37(B) and 120.131(D)] provides that the income tax checkoff for the Friends of Palmetto Island State Park, Inc. will remain on the individual income tax return through January 1, 2020, regardless of whether donations exceed $10,000 for two consecutive years. Effective May 26, 2016.



Act 661 (HB 735) [R.S. 47:103(A), 287.614(A)(1), 287.651(A)(1), 609(A), and 1675(H)(1)(e), (f), and (g)] changes the deadline for the payment and filing of corporation income tax returns, partnership tax returns, and partnership composite returns. Effective for income tax periods beginning on and after January 1, 2016 and corporation franchise tax periods beginning on and after January 1, 2017. Act 662 (HB 737) [R.S. 47:114(E) and 164(D)(2)] changes the due date for filing annual returns from the first business day following February 27th of each year to January 31st of each year. The Act also provides that any individual receiving payments for the performance of services used directly in a production activity, which can be claimed as a production expenditure for purposes of certification for the motion picture investor tax credit are subject to the withholding requirements of state and federal law and regulations. Effective for all taxable years beginning on and after January 1, 2016. Credits and Incentives Act 663(HB 783) [R.S. 51:2456(B), 2457(A)(1), (B), and (C), and 2461 and to enact R.S. 51:2457(A)(5) and (6), (D), (E), and (F)] provides for the option of either a sales and use tax rebate for the purchases of materials used in the construction, addition or improvement of a building used to house the business or its equipment or a project facility expense rebate equal to 1.5% of the qualified capital expenditures for the facility when participating in the Louisiana Quality Jobs Program. Also, extends the termination date of the program to July 1, 2018. Effective July 1, 2016. Act 664 (HB 794) [R.S. 51:3121(C)(3)(a)(ii) and (4)] provides for the option of a sales and use tax rebate for the purchases of materials used in the construction, addition or improvement of a building used to house the business or its equipment when participating in the Competitive Projects Payroll Incentive Program. Also, extends the termination date of the program to July 1, 2018. Effective July 1, 2016. HCR 54 [R.S. 47:6007] provides for the legislative intent regarding the definition of a “broker” as provided in Act No. 451 of the 2015 Regular Session relative to the public registry of motion picture investor tax credit brokers. Provides that the term “broker” shall mean those persons who facilitate the sale of a tax credit issued pursuant to R.S. 47:6007 between a transferor and transferee in exchange for consideration. Further, the HCR provides that the term "broker" shall not include a tax return preparer, or an employee of or partner affiliated with the tax return preparer, who facilitates the sale of tax credits for the benefit of his or her client. Local Taxes

Act 13 (SB 32) [R.S. 47:338.24.3] authorizes the City of Carencro to impose an additional one percent sales and use tax. Requires voter approval and subsequent city ordinance. Effective May 9, 2016.



Act 198 (SB 99) [R.S. 47:360(H)] provides for an exemption from occupational license tax for minors engaging in business with sales of less than five hundred dollars per year. Effective August 1, 2016. Act 555 (HB 880) [R.S. 47:338.138.1] authorizes the Lafourche Parish School Board to levy an additional sales and use tax not in excess of one percent. Requires voter approval and ordinance by the school board. This Act is effective July 1, 2016.

Sales Tax Act 25 (HB 236) [R.S. 47:303(B)(1)(b), (B)(3)(b)(vi), and 502.3] provides an extended period of time for a person separating from active military service in the U.S. armed forces to secure a Louisiana motor vehicle license registration and remit the registration tax on a vehicle with a foreign registration. The military person or their spouse will have ninety days from the date of separation from the armed services in which to obtain the Louisiana registration and pay the sales tax. Further provides that interest and penalties will not accrue during this ninety day period. Provides that neither the extension, nor the waiver of interest and penalties shall apply when the foreign license plate or registration on the vehicle expired prior to or during the 90 day period following the service person’s separation from active service. Effective May 9, 2016. Act 443 (HB 722) [R.S. 47:306.4] provides that the secretary of the Department of Revenue shall promulgate rules and regulations in accordance with the Administrative Procedures Act to provide for registration with the department by dealers as defined in R.S. 47:301(4)(f)(ii), when the transactions giving rise to the dealer’s obligation to collect state sales and use tax for occupancy at a residential location is facilitated through an online forum. Louisiana Revised Statute 47:301(4)(f)(ii) defines dealer to include a person engaged in collecting the amount required to be paid by a transient guest as a condition of occupancy at a residential location as provided in La. R.S. 47:301(6)(a)(ii), which is the definition of “hotel”. This Act is effective July 1, 2016. Act 569 (HB 1121) [R.S. 47:302(U) and 309.1] requires certain notifications regarding use tax to be provided to purchasers of property and services sold by remote retailers. Revised Statute 47:309.1(B)(2) provides that a remote retailer means a retailer which has purposefully availed itself of the benefits of the economic markets in Louisiana, or who has any other minimum contacts with the state, and is not required to register as a dealer in Louisiana and thus is not required to collect Louisiana sales and use taxes. The remote retailer must make retail sales of tangible personal property or taxable services and the property is delivered into Louisiana or the beneficial use of the service occurs in Louisiana. The cumulative annual gross receipts for the remote retailer and its affiliates from sales of tangible personal property and services must exceed $50,000 per calendar year.

At the time of sale, the remote retailer must notify the Louisiana purchaser that the purchase is subject to Louisiana use tax, unless specifically exempt and that the item is not exempt because it was purchased over the internet, by catalog or other remote means. The sales notice must include



a statement that Louisiana law requires that the use tax liability be paid annually on the individual income tax return or through other means as may be required by administrative rule promulgated in accordance with the Administrative Procedure Act.

By January 31st of each, a remote retailer is required to send each Louisiana purchaser who has purchased property or services from the retailer in the immediately preceding calendar year an annual notice containing the total amount paid by the purchaser for purchases in the preceding calendar year. If available, the notice shall include a listing of dates and amount of purchases and whether the property itself is exempt or not, if the retailers has this information. The annual notice shall disclose the name of the retailer and shall state that Louisiana use tax may be due upon the purchases made from the retailers and that Louisiana use tax may be due on the purchases made from the retailer and that the use tax must be paid either on the individual’s income tax return or through other means. This notice must be sent via first class mail, certified mail, or electronically at the purchaser’s choice. The notice cannot be included with any other shipment or mailing from the retailer. The envelope in which the notice is sent shall include the words “IMPORTANT TAX DOCUMENT ENCLOSED”.

By March 1st of each year, a remote retailer who has made retail sales of tangible personal property or taxable services to Louisiana purchasers in the preceding calendar year shall file an annual statement for each purchaser with the department. The annual statement must include the total amount paid by the purchaser to that retailer in the preceding calendar year. The statement shall not contain detail as to the specific property or services purchased but it will include the total amount paid. The statement shall be submitted on forms to be developed and provided by the secretary. The secretary is authorized to require the electronic filing of statements by a remote retailer who had sales in Louisiana in excess of $100,000 in the immediately preceding calendar year.

The Secretary may by subpoena, compel witnesses and the production of documents for purposes of enforcement of the requirements relative to the required notices and annual statements concerning taxable transactions occurring in Louisiana involving a remote retailer. The Secretary may request that the subpoena be enforced by court order. Any dealer or remote retailer selling property or services to a Louisiana resident is considered to have consented to the jurisdiction of the courts of Louisiana and the Board of Tax Appeals. This Act shall become effective July 1, 2017.

2016 Second Extraordinary Legislative Session Summary

Policy Services Division

2016 Second Extraordinary Legislative Session Summary Louisiana Department of Revenue


Individual Income and Corporation Income and Franchise Taxes Act 1 (HB 35) [R.S. 22:842, 270 (repealed)] established an annual tax on health maintenance organizations on the gross amount of their receipts from contracts and other evidences of coverage at a rate of $550 for every $10,000 of gross annual premiums collected. Act 2 (HB 47) [R.S. 47:287.86] clarifies that the provisions of Act 123 of the 2015 Regular Session and Act 6 of the 2016 First Extraordinary Session which reduced the amount of the net operating loss deduction for corporate income taxes shall not apply to an amended return filed on or after July 1, 2015, provided that the amended return relates to a claim for a net operating loss deduction properly claimed on an original return filed prior to July 1, 2015. Effective June 22, 2016. Act 4 (SB 6) [R.S. 47:6006(B)] provides that taxpayers whose ad valorem taxes are less than or equal to $500,000 will be refunded all of the excess credit. Taxpayers whose ad valorem taxes are more than $500,000, but less than or equal to $1,000,000 will be refunded 75 percent of the excess credit, with the remaining 25 percent being carried forward as a credit against subsequent tax liability for up to five years. Taxpayers whose ad valorem taxes are more than $1,000,000 will be refunded 75 percent of the first $1,000,000 of the excess credit, with the remaining amount of the credit being carried forward as a credit against subsequent tax liability for up to five years. Effective June 28, 2016. Act 5 (SB 10) [R.S. 47:2327 and 6006(B)(3) and (C)(3)] changed the definition of manufacturer for inventory tax credit purposes to create a specific subset of persons who meet the definition of manufacturer and have claimed the industrial ad valorem tax exemption. For this subset of manufacturers, if the amount of the inventory tax credit claimed on a tax return exceeds the amount of tax liability due on the return, the excess credit is not eligible for refund, but can be carried forward against subsequent Louisiana income or corporation franchise tax liability for up to five years. Effective June 28, 2016. Act 7 (HB 24) [R.S. 22:832(A)(3), (C)(6), and (F)] exempts health maintenance organizations from the five percent reduction to the insurance premium tax credit made in Act No. 10 of the 2016 First Special Session. Effective June 24, 2016. Act 8 (HB 20) [R.S. 47:287.95] amends the formulas used to calculate the Louisiana apportionment percent for multistate corporations which derive part of their income from Louisiana sources. Amends the apportionment formula for most industries to implement the single sales factor formula. Provides for sourcing rules for the purpose of attributing sales other than sales of tangible personal property. Provides for the exclusion of sales from the sales factor if the taxpayer is not taxable in a state to which a sale is sourced or if the state of assignment cannot be determined or reasonably approximated. Effective June 28, 2016. Applicable to all tax periods beginning on or after January 1, 2016. Act 9 (HB 25) [R.S. 47:6025(A)(1)] changes the amount of the Louisiana Citizens Property Insurance Corporation tax credit from 72 percent to 25 percent of the Citizens Assessment paid. Effective June 28, 2016.



Act 10 (HB 29) [R.S. 47:115(A)(3) and (C) and 1624; R.S. 47:287.657, 617, and 1624.1 are repealed] provides that interest on refunds will begin ninety days after the due date of the return, the filing date of the return or claim for refund on which the overpayment is claimed, or the date the tax was paid, whichever is later. Effective for any refunds issued on or after September 1, 2016, notwithstanding the tax period to which the claim relates. Act 11 (HB 50) [R.S. 47:293(9)(a)(xvii)] limits the individual income tax deduction for certain net capital gains. Limits the deduction to net capital gains resulting from the sale or exchange of an equity interest or assets held by the taxpayer for a minimum of five years immediately prior to the sale or exchange. Provides that the amount of the deduction is based on the number of years the entity was domiciled in Louisiana. Effective June 28, 2016. Applicable to sales or exchanges of equity interests or assets that occur on or after June 28, 2016. Sales Tax Act 3 (HB 27) [R.S. 47:301(c)(i)(aa)] provide that sale at retail does not include the sale of materials for further processing into articles of tangible personal property when all of the following criteria are met:

1. The raw materials become a recognizable and identifiable component of the end product.

2. The raw materials are beneficial to the end product.

3. The raw materials are materials or further processing and as such, are purchased for the purpose of inclusion into the end product.

The term “sale at retail” shall not include the purchase of raw materials for the production of raw or processed agricultural, silvicultural, or aquacultural products. If the materials are further processed into a byproduct for sale, such purchases shall not be deemed to be sales for further processing and shall be taxable. The term “byproduct” shall mean any incidental product that is sold for a sales price less than the cost of the materials. In the event, a byproduct is sold at retail in Louisiana for which a sales and use tax has been paid by the seller on the cost of the materials, which materials are used partially or fully in the manufacturing of the byproduct, a credit against the tax paid by the seller shall be allowed in an amount equal to the sales tax collected and remitted by the seller on the taxable retail sale of the by the byproduct. The Act is intended to clarify and be interpretative of the original intent of R.S. 47:301(10)(c)(i)(aa). The provisions of the Act are retroactive and applicable to all refund claims submitted or assessments of additional taxes due which are filed on or after the effective date of this Act. The Act is not applicable to any existing claim for refund filed or assessment of additional taxes due issued prior to the effective date of this Act for any tax period prior to July 1, 2016, which is not barred by prescription. Effective date is June 23, 2016.

Act 6 (SB 15) [R.S. 47:306.4] requires dealers to provide an annual reporting of the annual gross sales of tangible personal property and services, which are subject to a state sales tax exclusion or exemption for the sales of room rentals under R.S. 47:301(6)(b), room rentals by a homeless shelter under R.S 47:301(6)(c); sales by a nonprofit entity which sells donated goods under R.S.



47:301(8)(f); sales by a youth organization charted by Congress under R..S. 47:301(10)(h); sales by parochial or private elementary and secondary schools complying with the Dodd Brumfield court order and IRC Section 501(c)(3) under R.S. 47:301(18)(e); sales of admissions to athletic and entertainment events by elementary and secondary schools under R.S. 47:301(14)(b)(i); sales of meals by an educational or medical organization under R.S. 47:301(D)(2); sales of admissions to entertainment events by little theater organizations under R.S. 47:305.6; sales of admissions to musical performances by nonprofit organizations under R.S. 47:305.7; sales of admissions to entertainment events sponsored by a domestic nonprofit charitable or educational organization under R.S. 47:305.13; sales to admissions, parking fees charged at and tangible personal property sold at events sponsored by a nonprofit organization under R.S. 47:305.14(A)(1); and sales of admissions to and parking fees charged at fairs and festivals sponsored by a nonprofit organization under R.S. 47:305.18. This annual statement must be submitted electronically to the Department by September 30th. These annual reporting requirements do not apply to nonprofit entities and their affiliates which have been granted an exemption from federal income tax pursuant to 501(c)(3) of the Internal Revenue Code. Effective July 1, 2016. Act 12 (HB 51) [R.S. 47:302(AA) and 321.1(F)(66)] provide for sales tax exemptions and exclusions to be operable and in effect for purposes of R.S. 47:302 and 321.1 beginning July 1, 2016. Under the provisions of R.S. 47:302(AA), the following sales tax exclusions and exemptions are now also effective:

(1) Sales of room rentals by a camp or retreat facility owned by a nonprofit organization as provided in R.S. 47:301(6)(b).

(2) Sales of room rentals by a homeless shelter as provided in R.S. 47:301(6)(c).

(3) Sales, leases, and rentals of tangible personal property and sales of services necessary to operate free hospitals as provided in R.S. 47:301(7)(e), (10)(p), and (18)(c).

(4) Sales, leases, or rentals of tangible personal property to Boys State of Louisiana, Inc. and Girls State of Louisiana, Inc. as provided in R.S. 47:301(7)(g) and (10)(r).

(5) Sales by nonprofit entities that sell donated goods as provided in R.S. 47:301(8)(f).

(6) Isolated or occasional sales of tangible personal property by a person not engaged in such business as provided in R.S. 47:301(10)(c)(ii)(bb).

(7) Sales of human tissue transplants as provided in R.S. 47:301(10)(d).

(8) Sales of food items by a youth-serving organization chartered by the United States Congress as provided in R.S. 47:301(10)(h).

(9) Sales and donations of tangible personal property by food banks as provided in R.S. 47:301(10)(j) and (18)(a)(i).

(10) Sales or purchases of fire-fighting equipment by volunteer fire departments as provided in R.S. 47:301(10)(o).

(11) Sales to, and leases, rentals, and use of educational materials and equipment used for classroom instruction by parochial and private elementary and secondary schools that comply with the court order from the Dodd Brumfield decision and Section 501(c)(3) of the Internal Revenue Code as provided in R.S.47:301(7)(f), (10)(q)(ii), and (18)(e)(ii).



(12) Sales by parochial and private elementary and secondary schools that comply with the court order from the Dodd Brumfield decision and Section 501(c)(3) of the Internal Revenue Code as provided in R.S. 47:301(10)(q)(i) and (18)(e)(i).

(13) Sales, as provided in R.S. 47:301(14)(b)(i), but only of admissions to athletic and entertainment events held for or by an elementary or secondary school and membership fees or dues of nonprofit, civic associations.

(14) Sales or use of materials used directly in the collection of blood as provided in R.S. 47:301(16)(j).

(15) Sales or use of apheresis kits and leuko reduction filters as provided in R.S. 47:301(16)(k).

(16) Sales or use of orthotic devices, prosthetic devices, hearing aids, eyeglasses, contact lenses, and wheelchairs prescribed by physicians, optometrists, or licensed chiropractors used exclusively by the patient for personal use as provided in R.S. 47:305(D)(1)(k).

(17) Sales or use of ostomy, colostomy, and ileostomy devices and equipment as provided in R.S. 47:305(D)(1)(l).

(18) Sales or use of adaptive driving equipment and motor vehicle modifications prescribed for personal use as provided in R.S. 47:305(D)(1)(u).

(19) Sales of meals by educational institutions, medical facilities, mental institutions, and occasional meals furnished by educational, religious, or medical organizations as provided in R.S. 47:305(D)(2).

(20) Purchase or rental of kidney dialysis machines, parts, materials, and supplies for home use under a physician's prescription as provided in R.S. 47:305(G).

(21) Sales of admissions to entertainment events by Little Theater organizations as provided in R.S. 47:305.6.

(22) Sales of admissions to musical performances sponsored by nonprofit organizations as provided in R.S. 47:305.7.

(23) Sales of admissions to entertainment events sponsored by domestic nonprofit charitable, religious, and educational organizations as provided in R.S. 47:305.13.

(24) Sales of admissions, parking fees, and sales of tangible personal property at events sponsored by domestic, civic, educational, historical, charitable, fraternal, or religious nonprofit organizations as provided in R.S. 47:305.14(A)(1).

(25) Sales of admissions and parking fees at fairs and festivals sponsored by nonprofit organizations as provided in R.S. 47:305.18.

(26) Purchases of fishing vessels, supplies, fuels, lubricants, and repairs for the vessels of licensed commercial fishermen as provided in R.S. 47:305.20.

(27) Sales of butane, propane, or other liquefied petroleum gases for private, residential consumption as provided in R.S. 47:305.39.

(28) Sales and purchases by certain organizations that provide training for blind persons as provided in R.S. 47:305.15.



Beginning July 1, 2016, the provisions of R.S. 47:321.1(F)(66) state that the following exclusions and exemptions are applicable to the tax levied.

(1) Sales of room rentals by a camp or retreat facility owned by a nonprofit organization as provided in R.S. 47:301(6)(b).

(2) Sales of room rentals by a homeless shelter as provided in R.S. 47:301(6)(c).

(3) Sales, leases, or rentals of tangible personal property to Boys State of Louisiana, Inc. and Girls State of Louisiana, Inc. as provided in R.S. 47:301(7)(g) and (10)(r).

(4) Sales or purchases of fire-fighting equipment by volunteer fire departments as provided in R.S. 47:301(10)(o).

(5) Sales to, and leases, rentals, and use of educational materials and equipment used for classroom instruction by parochial and private elementary and secondary schools that comply with the court order from the Dodd Brumfield decision and Section 501(c)(3) of the Internal Revenue Code as provided in R.S.47:301(7)(f), (10)(q)(ii), and (18)(e)(ii).

(6) Sales by parochial and private elementary and secondary schools that comply with the court order from the Dodd Brumfield decision and Section 501(c)(3) of the Internal Revenue Code as provided in R.S. 47:301(10)(q)(i) and (18)(e)(i).

(7) Sales, as provided in R.S. 47:301(14)(b)(i), but only of admissions to athletic and entertainment events held for or by an elementary or secondary school and membership fees or dues of nonprofit, civic associations.

(8) Sales or use of orthotic devices, prosthetic devices, hearing aids, eyeglasses, contact lenses, and wheelchairs prescribed by physicians, optometrists, or licensed chiropractors used exclusively by the patient for personal use as provided in R.S. 47:305(D)(1)(k).



(11) Sales or use of adaptive driving equipment and motor vehicle modifications prescribed for personal use as provided in R.S. 47:305(D)(1)(u).

(12) Sales of meals by educational institutions, medical facilities, mental institutions, and occasional meals furnished by educational, religious, or medical organizations as provided in R.S. 47:305(D)(2).

(13) Purchase or rental of kidney dialysis machines, parts, materials, and supplies for home use under a physician's prescription as provided in R.S. 47:305(G).

(14) Sales of admissions to entertainment events by Little Theater organizations as provided in R.S. 47:305.6.

(15) Sales of admissions to musical performances sponsored by nonprofit organizations as provided in R.S. 47:305.7.

(16) Sales of admissions to entertainment events sponsored by domestic nonprofit charitable, religious, and educational organizations as provided in R.S. 47:305.13.



(17) Sales of admissions, parking fees, and sales of tangible personal property at events sponsored by domestic, civic, educational, historical, charitable, fraternal, or religious nonprofit organizations as provided in R.S. 47:305.14(A)(1).

(18) Sales of admissions and parking fees at fairs and festivals sponsored by nonprofit organizations as provided in R.S. 47:305.18.

(19) Purchases of fishing vessels, supplies, fuels, lubricants, and repairs for the vessels of licensed commercial fishermen as provided in R.S. 47:305.20

(20) Sales of butane, propane, or other liquefied petroleum gases for private, residential consumption as provided in R.S. 47:305.39.

(21) Sales and purchases by certain organizations that provide training for blind persons as provided in R.S. 47:305.15.

Act 12 is effective June 28, 2016.

Act 13 (HB 53) [R.S. 39:467 and 468] exempts sales of certain items of tangible personal property and services at publicly owned domed stadium facilities or baseball facilities from sales tax. R.S. 39:468 has been amended to exempt sales of tangible personal property and certain services at certain publicly owned facilities from sales tax. This Act is effective September 1, 2016.

2016 First E xtraordinary Legislative Session Revie. Lunch Presentation...2016 First Extraordinary...

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