LATA
Newsletter
Louisiana Association of Tax Administrators Issue II, 2003
Finally …
SB 551 by
Senator Bill Jones, has been signed into law as Act 73. The complete package is
not quite there, yet, but there is still hope. SB 551 standardizes all
definitions, exemptions, and administrative procedures for local sales taxes.
It requires all local taxing authorities to follow a uniform tax code and
provides for development of a single website through which businesses can
report and remit state and local sales taxes. The LATA will do everything in
its power to inform and educate the business public and its general membership
as to this bill’s requirements.
Effective July
1, 2003, Act 73, enacts a Uniform Local sales Tax Code (UTC) to promote
uniformity in the assessment, collection, administration, and enforcement of
local sales and use taxes. Political subdivision imposing local sales and use
taxes approved by their voters at elections after July 1, 2003 must impose,
levy, administer, and collect such taxes by local ordinance in the manner
required by the UTC. Subdivisions that levy local sales taxes before July 1,
2003, are required to collect and administer their taxes in accord with the UTC
on and after July 1, 2003.
The UTC
provides for the creation and implementation of a uniform electronic local
return and remittance system. The Department, with the advice of the Uniform
Electronic Local Return and Remittance Advisory Committee created by the UTC,
is required to design, implement, and operate the system and the required
postings of such related information on the Internet, and to provide the staff
and equipment necessary to receive and transmit the electronic returns and
funds to local collectors.
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The
Department does not acquiesce in the decision in Pumpkin Air and Offshore
Logistics, Inc. v Tarver (3rdCir, 671 So 2nd1131) insofar as
that decision might be interpreted to mean that the numerator of the mileage
ratio by interstate transportation companies to calculate their tax under LA RS
47:306.1 includes only the mileage logged by the carriers on intrastate trips
and not Louisiana mileage logged on interstate trips.
The taxpayer in Pumpkin Air sought a refund of a portion of the taxes that the taxpayer had earlier remitted to the state on purchases for the operation of its business that provided foreign and interstate transportation.
The taxpayer
elected the formula provided by LA RS47:306.1 to determine that tax due on its
purchases of helicopters and related supplies and materials.
The refund claim amount was based on including only
Louisiana mileage on intrastate trips in the numerator of the mileage
apportionment factor and excluding the mileage that was logged on interstate
trips.
That change
resulted in the taxpayer’s claim that sales or use tax was due on only 3% of
its purchase costs, instead of on the 15% figure on which the tax had been
paid.
The
Department’s challenge was primarily on procedural grounds. Believing that by
excluding Louisiana mileage on interstate trips from the numerator of the
fraction, the taxpayer would effectively apportion its tax liability twice, in
contravention of the meaning and purpose of RS47:306.1. Accordingly, the
Department’s position continues to be that the numerator of the mileage
fraction used to calculate the tax liability of interstate and foreign
transportation companies under RS 47:306.1 must include Louisiana mileage on
both interstate and intrastate trips.
(Department of Revenue Statement of Non-Acquiescence,
Sept. 02)
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Farm product
sellers and producers must meet certain requirements in order for their sales
to qualify as exempt sales “direct from the farm.” To be eligible for the tax
exemption: (1) the products sold must be in the state that it was produced on
the farm and not have been processed into different products, and (2) the
products must be sold directly by its producers. On Livestock and poultry
sales, the producers are the persons who raise the livestock or poultry from
the time of its birth or hatching to the time of its sales.
Eggs, milk and other such livestock products, the producers are the persons who own the production livestock. The sale of horticultural products, the producers are the persons who grow the products from seed or seedling, or whose cultivation and care of the products away from a sales display location adds substantial commercial value to the products. Nurseries and garden centers that purchase or acquire horticultural products from others for resale are not considered producers.
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During the
month of July (02), the Nineteenth Judicial District Court, issued a
preliminary injunction to prohibit the application and enforcement of Act 85,
which provides a state and local sales and use tax exclusion for transactions
involving the transfer of cellular, PCS or wireless telephones, and related
devices, that are given away, or sold below cost, in connection with the
purchase of telephone service contracts.
As a result
of the injunction, cellular, PCS or wireless service providers and independent
retailers must file their sales tax returns according to the law that existed
before the enactment of Act 85. For local sales and use taxes, the service
provider must pay use tax on the cost of the equipment furnished to the
customer at below-market prices
Sellers,
lessors, or repair dealers should collect sales tax on sales or leases of
communication towers located on leased land or on repair services to those
structures. The structure of communication towers, and their degree of
attachment to the ground, makes them similar to billboard signs, autoclaves,
lifts, fences, railroad tracks and large production units made up of diaphragm
and mercury cells, which are considered “other constructions” deemed to be
moveable in judicial case decisions that have equated taxable tangible personal
property with the Louisiana Civil Code classification concept of corporeal
moveable property.
Because the communications towers are considered “other constructions” and on leased land, they are taxable movable property, despite their size and secure attachment to the ground.
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The Louisiana
Department of Revenue has adopted a permanent rule which implements its
authority to enter into contracts with debt collection agencies to facilitate
the collection of taxes, interest, penalties and fees due the Department, after
an obligation has become collectible by distraint and sale.
The language
of the permanent rule is identical to a temporary emergency rule adopted
earlier this year on this subject. According to the Department’s introductory
statement issued with the rule, the Department’s request for proposals to award
a contract for the collection of in-state tax liabilities will be advertised in
the official journal of the state and in one or more newspapers for at least 10
days before the last day that proposals are accepted.
The deadline for inquiries will be no less than four weeks after the issuance of the request for proposals. The due date for submission of proposals will be no less than three weeks after the deadline for inquiries. The Secretary will select a committee to evaluate the proposals and make a recommendation.
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The Louisiana
Department of Revenue clarifies the application of Act #31, codified at LA RS
47:305(I), which provided an exemption from state and local sales and use taxes
for materials, services and supplies for the repair, renovation, and servicing
of drilling rigs, and component machinery and equipment, used exclusively for
the exploration or development of minerals outside Louisiana territorial limits
in Outer Continental Shelf waters, effective July, 2002.
According to
the Department, Louisiana sales tax was never imposed on repair services
performed in the OCS to property located there. However, until July (02),
repair services performed in Louisiana to property brought into the state from
drilling rigs in the OCS were taxable under LA RS 47:301(14)(g), even if repair
dealers delivered the property to the OCS.
(continued
from pageIII)
LA RS 47:301(14)(g) defines “the furnishing of repairs
to tangible personal property” as taxable “sales of services,” and specifically
provides that offshore areas are not considered another state for purposes of
the exclusion from tax for repair services to property delivered to customers
in other states.
Effective
July (02), LA RS 47:305(I) supersedes that provision of LA RS 47:301(14)(g).
Accordingly, services rendered in Louisiana to repair, renovate or convert
drilling rigs, or their component machinery and equipment, brought into
Louisiana form Outer Continental Shelf, are not subject to sales tax, if the
repaired property is returned to the OCS rigs and the rigs, machinery and
equipment are used exclusively for the exploration of development of minerals.
This exemption applies regardless of whether the repaired property is delivered to the OCS by the repair dealer, the customer or another person.
Representative
of ______________________________ Dept/Div _________________________
Mailing
Address _______________________ City _______________ State ____ Zip ________
Phone
_____________________ Fax ___________________ E-Mail _____________________
Payable to: Louisiana Association of Tax Administrators, P.O. Box 398, Vidalia, Louisiana 71373
Louisiana Association of Tax Administrators
P.O. Box
398
Vidalia,
Louisiana 71373
VISIT US ON THE WEB…www.laota.com