Tax on Talking...

The “judicial interest rate” applicable to refunds and credits of Louisiana tax overpayments has been set at 5.75 per annum for calendar year 2002. The interest rate is statutorily required to be revised annually. The rate is determined to be an amount equal to the sum of the amount of the approved discount rate of the Federal Reserve Board in effect on October 1 of the previous year, plus 3,25%.

(Louisiana Register, Volume 27, No. 12, 12/2001)

 

The Department of Revenue adopted a rule on the taxability of “Native Americans” income. The state income tax does not apply to the income of an enrolled member of a federally recognized Indian tribe residing on that tribe’s reservation, if the income is derived from sources on that reservation.

The tax does, however, apply to income derived from sources outside the reservation. Tax also applies to the income of an enrolled member of a federally recognized Indian tribe residing in Louisiana off of that tribe’s reservation, regardless of the income source. When I was in the Air Force, I remember the Indian guys always seemed to have more money than the rest of us…the reason…military compensation paid to an enrolled member of a federally recognized tribe is exempt, if the enrolled member resided on that tribe’s reservation when joining the military and he or she has not abandoned a residence on that reservation.

(Louisiana Register, Volume 27, No.12, 12-2001)

----------------------------

Sorry, I know the caption leaves a lot to be desired, our friend Rufus F. can explain it all to you…

----------------- LATA --------------------------

In an effort to clarify this sales tax issue the Department has issued a ruling relative to the services of cleaning carpets and the cleaning and restoration of furniture contents.

The ruling indicates that sales tax does not apply to the services of installing carpets, the cleaning and restoration of the contents of miscellaneous items, and structural cleaning, or the rental of drying, if certain conditions are met and the charge for each of the services is separately stated.

Tax applies to the rental of drying equipment if the use of the equipment is outside of the continuous control of the owner. Tax will also apply to the fees charged for the services of storing clothing, furs or rugs or cold storage for the customer during the cleaning process.

                                  (Ruling 01-006, 12-2001)

 

----------------- LATA --------------------------

The Board of Tax Appeal has eliminated any state tax burden caused by the federal Economic Growth and Tax Relief Act. Under the Act, many taxpayers were issued an advance payment of a tax credit that would have been taken when filing a federal return.

Because the state allows a deduction on its income tax return for federal income taxes paid, the advance payment received would have increased the taxable income by the amount of the advance payment.

The Secretary requested the approval of the Board of Tax Appeals to increase taxpayers’ federal income tax deduction by the amount of the advance payment received.

The Board concurred with the request. The Department has added a worksheet to compute a modified federal income tax deduction for Line 9 on the Individual Income Tax Return.

                            ( Tax Topics, Volume 22, 1-2002)

 

----------------------- LATA -------------------------

Refinery Gas Valuation...

For calendar year 2002, the cost price of refinery gas for state and local use tax calculation purposes is decreased to 30.4 cents per 1,000 cubic feet (MCF), from the prior year figure of 58 cents.

The cost price figure is adjusted annually by the Department according to a formula set  by statute. The 2002 figure is based on the average posted price of West Texas Intermediate Crude Oil for the months of November & December.

The Department has adopted a rule to clarify the apportionment of compensation paid for personal services in the state to nonresidents, including professional athletes and entertainers. The rule provides guidelines for apportioning compensation received by Salaried employees paid at a constant rate or by commissions, part-year employees,  transportation service employees, entertainers, athletes and other members of professional athletic teams and self-employed athletes.

The rule also provides for an optional team composite return and composite payment, to allow professional athletic teams to report Louisiana income tax for their nonresident team members.

                       (Admin Code 61:I.1303, 1/2002)

--------------------- LATA -------------------------

State Vendor's Compensation...

The Department has issued a ruling intended to clarify the effect of an extension of time to file a sales tax return on the vendor’s compensation discount and the application of penalties and interest.

The ruling clarifies that an extension of time to file a sales tax return also applies to the associated payment. A sales tax return filed by a taxpayer who has received an extension is not considered delinquent until the period of time granted in the extension has expired.

A payment received by the extension deadline is also considered timely made. Accordingly, sales tax filers who file and pay the total tax due within the extension period should not be assessed a late payment penalty nor lose their vendor’s compensation discount. However, interest is due from the original due date until the date the tax is paid.

 

--------------------- LATA -------------------------

State rebates, not just yet...

Secretary Bridges is withholding, for the time being, the scheduled rebates of state sales and use taxes to buyers of new and used mobile homes.

These rebates are due as a result of the Avant Case and will cover a period of January 1998 through June 2001. The delay appears to be a result of an appeal of a decision by the trial court, in the original litigation to award attorneys a 28% fee from the rebates of mobile home buyers who were not part of the original suit.

The Secretary noted that  there were some home buyers who filed valid claims on their own and did not retain the services of an attorney. Therefore, they should not be subjected to the 28% fees.

 

--------------------- LATA -------------------------

Non-Profit exemption...

The Department has amended a rule to provide guidelines for the exclusion from the definition of a taxable person for various nonprofit entities.

The amendment is intended to clarify that all purchases by the Society of the Little Sisters of the Poor are exempt from state and local sales and use tax.

Also covered in the amendment, the limited exemption applicable to qualified  independent institutions of higher education in the State, as well as churches and synagogues.

Independent institutions of higher education are exempt from state sales and use taxes on their purchases directly related to their educational mission.

Churches and synagogues are exempt from state and local sales tax only on their purchases of bibles, songbooks and other religious instructional literature.

--------------------- LATA -------------------------

Administrative provisions...

The Department has adopted a rule to establish guidelines for the filing and cancellation of liens. The rule provides that a tax lien must be filed on liabilities when the tax due involves a jeopardy assessment.

The tax lien can be filed when liabilities reach the warrant-for-distraint status, the taxpayer is on the verge of bankruptcy, a corporation is in the process of dissolving or withdrawing from Louisiana, the taxpayer’s filing history indicates an effort to avoid the payment of taxes, the taxpayer is in the process of selling movable or immovable property, warrants are determined currently not collectible, or a formal installment agreement has been negotiated with the taxpayer.

The rule allows the Secretary to authorize a release of a lien, when the tax, penalty, fees or interest secured by the lien have been paid, the taxpayer executes a proper surety bond in favor of the Secretary in an amount not less than one and one-half times the amount of the obligation due, the lien on the taxpayer’s remaining real property is valued at not less than the amount of the remaining tax obligation plus the amount of all prior liens on the released property, or the amount paid in partial satisfaction of the liability is not less than the value of the State’s interest in the part of the property released.

The Secretary can compromise judgments of  $500,000 or less, including assessment amounts that are equivalent to judgments, if there is doubt as to the ability to collect  or there is doubt as to the taxpayer’s liability for the outstanding judgment, or if the collection cost would exceed the amount outstanding.

                                                                                                                               (LA Admin Code 61:I.5302, 2/2002)

 

--------------------- LATA -------------------------

MEMBERSHIP INVITATION AND APPLICATION Name _________________________________________ Title ___________________________ Department/Division ____________________________________________________________ Representative of __________________________ Mailing Address _______________________ City ____________________________ State __________________ Zip ___________________ Phone _____________________ Fax ____________________ E-Mail _____________________ Annual Dues: $80.00 Payable to : Louisiana Association of Tax Administrators P.O. Box 398 Vidalia, LA 71373 Attn: Tom O’Neal, Secretary/Treasurer

 

Louisiana Association of Tax Administrators
P.O. Box 398
Vidalia, Louisiana 71373