Louisiana Tax Topics

Louisiana Tax Topics

Legislative Update & Policy Statements 1st Extraordinary & Regular Sessions 2016 David M. Hansen Attorney Policy Services Division Louisiana Department of Revenue Telephone 225-219-2686 Facsimile 225-219-2759 E-mail [email protected] 1 David M. Hansen Attorney Policy Services Division

Louisiana Department of Revenue David Hansen is a staff attorney in the Policy Services Division of the Louisiana Department of Revenue. Mr. Hansen previously served as a staff attorney in the Litigation Division of the Louisiana Department of Revenue, Hearing Officer in the Audit Protest Bureau of the Louisiana Department of Revenue, and Appeals Officer in the Office of Appeals of the Internal Revenue Service. Mr. Hansen received his B.S. in Management from the Louisiana State University Ourso College of Business and his J.D. from the Louisiana State University Hebert School of Law. Mr. Hansen is a member of the Louisiana State Bar Association (Tax Section) and the Baton Rouge Bar Association. 2

INFORMAL ADVICE This communication constitutes informal advice from the Policy Services Division of the Louisiana Department of Revenue as contemplated by LAC 61:III.101 and is not binding on the Department of Revenue or the person seeking the advice. 3 Louisiana State Capitol 4

Legal Requirements for the State Budget Pursuant to La. R.S. 39:53 D., the state governments fiscal year is July 1st through June 30th Article VII, Section 11(A) of the Louisiana Constitution requires the Governor to submit a proposed budget to the Legislature La. R.S. 39:37 requires the budget to be submitted 45 days before the Regular Session (30 days before the Regular Session in the first year of a new term) Article VII, Section 11(A) of the Louisiana Constitution requires that the budget shall not exceed the official forecast of the Revenue Estimating Conference 5

Revenue Estimating Conference Created by Article VII, Section 10 of the Louisiana Constitution Comprised of four members (Governor, Senate President, House Speaker, and a university economist) Unanimous vote needed to adopt estimates Appropriations for a fiscal year shall not exceed the official revenue forecast Pursuant to La. R.S. 39:26, the Revenue Estimating Conference meets at least four times per year. (October, January, March, August) 6 Legislative Sessions

As prescribed by Article III, Section 2 of the Louisiana Constitution Regular Session held every March/April through early June Fiscal Session in odd-numbered years Non-Fiscal Session in even-numbered years Extraordinary Session (also known as Special Session) Limited to 30 days May be called by the Governor or the Legislature (requires a majority of each house) Limited to items in the call (technically the Proclamation) 7 Legislative Sessions

Emergency Session The governor may convene the legislature in extraordinary session without prior notice or proclamation in the event of public emergency caused by epidemic, enemy attack, or public catastrophe. Organizational Session Held for the primary purpose of judging the qualifications and elections of the members, taking the oath of office, organizing the two houses, and selecting officers. No matter intended to have the effect of law shall be introduced at an organizational session. 8 Legislative Sessions

Veto Session (Article III, Section 18) A bill vetoed and returned and subsequently approved by two-thirds of the elected members of each house shall become law. The legislature shall meet in veto session in the state capital at noon on the fortieth day following final adjournment of the most recent session, to consider all bills vetoed by the governor. No veto session shall exceed five calendar days, and any veto session may be finally adjourned prior to the end of the fifth day upon a vote of two-thirds of the elected members of each house. 9 2016 First Extraordinary Session Governor Edwards released the call for the Extraordinary

Session on February 5th By law, the Extraordinary Session was limited to those items included in Proclamation No. 10 JBE 2016 (referred to as the call) Held February 14th through March 9th Stated goal of the 1st Special Session was to fill the $870 million dollar budget deficit for the 2015-2016 fiscal year and the $2 billion dollar budget deficit for the 2016-2017 fiscal year which runs from July 1st 2016 through June 30th 2017 After the 1st Special Session, the Governor stated that the 2015-2016 budget was $30 million dollars short and the 2016-2017 budget was $800 million dollars short. 10

2016 First Extraordinary Session Sales Tax 11 Act 26 of the 2016 First Extraordinary Session 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. 12 Act 26 of the 2016 First Extraordinary Session For the period April 1, 2016 through June 30, 2018, 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. See Revenue Information Bulletin No. 16-013 See LDR Publication R-1002A (04/16) Acts 25 and 26 - Taxable Rate of Transactions for Exemptions and Exclusions This table explains the changes enacted by Act 25 and 26 of the 2016 First Extraordinary Session of the Louisiana Legislature 13 Post new penny state sales tax rate State Sales Tax Rates 2% imposed by La. R.S. 47:302 (state general sales tax)

1% imposed by La. R.S. 47:321 (state general sales tax) 1% imposed by La. R.S. 47:321.1 (state general sales tax) 0.97% imposed by La. R.S. 47:331 (state general sales tax) 0.03% imposed by La. R.S. 51:1286 (tourism promotion district) Total 5% 14 Act 26 of the 2016 Extraordinary Session Surviving sales tax exemptions for 1% imposed by La. R.S. 47:321.1 (1) Food for home consumption, as defined in La. R.S. 47:305(D)(1)(n) through (r) on January 1, 2003, as provided in Article VII, Section 2.2 of the

Constitution of Louisiana. (2) Natural gas, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (3) Electricity, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (4) Water, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (5) Prescription drugs, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. 15 Act 26 of the 2016 Extraordinary Session (6) Gasoline and other motor fuels subject to the state excise tax on fuel. (7) Sales to the United States government and its agencies, as

provided in La. R.S. 301(10)(g). (8) Other constructions permanently attached to the ground, as provided in La. R.S. 47:301(16)(l). (9) Installation charges on tangible personal property, as provided in La. R.S. 47:301(3)(a). (10) Installation of oil field board roads, as provided in La. R.S. 47:301(13)(c). 16 Act 26 of the 2016 Extraordinary Session (11) Transactions involving the construction or overhaul of United States Navy vessels, as provided in La. R.S. 47:301(7)(c) and (14)(h). (12) Property purchased for exclusive use outside the state, as

provided in La. R.S. 47:305.10. (13) Sale, lease or rental of tangible personal property paid by or under the provisions of Medicare, as provided in La. R.S. 47:315.3. (14) Sales of human tissue transplants, as provided in R.S. 47:301(10)(d). (15) Sales of raw agricultural products, as provided in La. R.S. 47:301(10)(e) and 305(A)(3). 17 Act 26 of the 2016 Extraordinary Session (16) Sales of food by youth serving organizations chartered by Congress, as provided in La. R.S. 47:301(10)(h). (17) Tangible personal property sold to food banks as provided in La. R.S. 47:301(10)(j).

(18) Materials used in the collection of blood as provided in La. R.S. 47:301(16)(j). (19) Aphaeresis kits and leuko reduction filters as provided in La. R.S. 47:301(16)(k). (20) Donation to schools and food banks from resale inventory as provided in La. R.S. 47:301(18)(a). 18 Act 26 of the 2016 Extraordinary Session (21) Manufacturers rebates on new motor vehicles as provided in La. R.S. 47:301(3)(e) and (13)(b). (22) Lease or rentals of railroad rolling stock as provided in La. R.S. 47:301(4)(k). (23) Purchases and leases by free hospitals as provided in La.

R.S. 47:301(7)(e), (10)(p) and (18)(c). (24) Purchases by nonprofit entities that sell donated goods as provided in La. R.S. 47:301(8)(f). (25) Tangible personal property for resale as provided in La. R.S. 47:301(10)(a)(i). 19 Act 26 of the 2016 Extraordinary Session (26) Purchases of property for lease or rental as provided in La. R.S. 47:301(10)(a)(iii) and (18)(a)(iii). (27) Isolated or occasional sales of tangible personal property as provided in La. R.S. 47:301(1) and (10)(c)(ii)(bb). (28) Use of motor vehicles in Louisiana by active duty military as provided in La. R.S. 47:303(A) and 305.48.

(29) Purchases made with food stamps and WIC as provided in La. R.S. 47:305.46. (30) Articles traded in on purchases of tangible personal property as provided in La. R.S. 47:301(13)(a). 20 Act 26 of the 2016 Extraordinary Session (31) Donations of toys as provided in La. R.S. 47:301(10)(z)(aa) (i) and (18)(m). (32) Stocks, bonds, notes or other obligations or securities as provided in La. R.S. 47:301(16)(b)(i). (33) Credit for sales and use taxes paid to other states on tangible personal property imported in Louisiana as provided in La. R.S. 47:303(A)(3)(a).

(34) Work product of certain professionals as provided in La. R.S. 47:301(16)(e). (35) Purchases by regionally accredited independent educational institutions as provided in La. R.S. 47:301(8)(b). 21 Act 26 of the 2016 Extraordinary Session (36) Sales through coin-operated vending machines as provided in La. R.S. 47:301(10)(b)(i). (37) Purchases by a private postsecondary academic degreegranting institution as provided in R.S. 47:301(10)(cc) and as provided in La. R.S. 47:301(18)(n). (38) Purchases of food items for school lunch or breakfast programs by nonpublic elementary or secondary schools as provided in La. R.S. 47:301(10)(dd). (39) Repair services performed in Louisiana when the repaired

property is exported as provided in La. R.S. 47:301(14)(g)(i)(bb). 22 Act 26 of the 2016 Extraordinary Session (40) Funeral directing services as provided in La. R.S. 47:301(14)(j). (41) Feed and feed additives for animals held for business purposes as provided in La. R.S. 47:305(A)(4). (42) Farm products produced and used by farmers as provided in La. R.S. 47:305(B). (43) Sales of fertilizers and containers to farmers as provided in La. R.S. 47:305(D)(1)(f). (44) Sales of seeds for planting crops as provided in La. R.S. 47:305.3.

(45) Sales of pesticides for agricultural purposes as provided in La. R.S. 47:305.8. 23 Act 26 of the 2016 Extraordinary Session (46) The cost price for the printing of a news publication as provided in La. R.S. 47:301(3)(h). (47) Vehicle rentals to warranty customers as provided in La. R.S. 47:301(7)(h). (48) Lease or rental of a crane and related equipment with an operator as provided in La. R.S. 47:301(7)(k). (49) Sales by and to the state and its political subdivisions as provided in La. R.S. 47:301(8)(c). (50) Sales of materials for further processing as provided in

La. R.S. 47:301(10)(c)(i)(aa). 24 Act 26 of the 2016 Extraordinary Session (51) The sales price for new farm equipment used in poultry production as provided in La. R.S. 47:301(13)(c). (52) A factory built home as provided in La. R.S. 47:301(16)(g). (53) Any advertising service rendered by an advertising business as provided in La. R.S. 47:302(D). (54) The sale of livestock, poultry, and other farm products direct from a farm as provided in La. R.S. 47:305(A)(1). (55) The sale of livestock at public sales sponsored by breeders' or registry associations or livestock auction markets as provided in La. R.S. 47:305(A)(2).

25 Act 26 of the 2016 Extraordinary Session (56) The sale of agricultural products by a person other than the producer for use in further processing as provided in R.S. 47:305(A)(3). (57) Transactions in interstate commerce and tangible personal property imported into this state, or produced or manufactured in this state, for export as provided La. in R.S. 47:305(E). (58) Ships, vessels, barges, and related supplies as provided in La. R.S. 47:305.1. (59) The sales price for new farm equipment as provided in La. R.S. 47:305.25. 26

Act 26 of the 2016 Extraordinary Session (60) Trucks and trailers if used at least eighty percent of the time in interstate commerce as provided in La. R.S. 47:305.50(A). (61) Freight cars, piggy-back cars and rolling stock, and railroad ties as provided in La. R.S. 47:305.45 and 305.50(F). (62) Councils on Aging as provided in La. R.S. 47:305.66. (63) Sales of pharmaceuticals administered to livestock for agricultural purposes as provided in R.S. 47:301(16)(f). (64) Materials used in the production of crawfish and catfish as provided in La. R.S. 47:305(A)(5) and (6). (65) Beginning July 1, 2016, manufacturing machinery and equipment as provided in La. R.S. 47:301(3)(i), (13)(k), and (28)(a). 27

Act 25 of the 2016 First Extraordinary Session Act 25 (HB 61) 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. 47:302, 321, and 331. The effective date of Act 25 is April 1, 2016. Act 25 attempted to clean the (4) four existing state sales tax pennies By cleaning the pennies, the Legislature suspended all exclusions and exemptions except a specific list of 32 exclusions/exemptions Act 25 suspends most sales tax exclusions/exemptions for all 4% of the existing state sales tax for the period of April 1, 2016 through June 30, 2016. Act 25 suspends most sales tax exclusions/exemptions for 2% of the existing state sales tax for the period of July 1, 2016 through June 30, 2018.

28 Act 25 of the 2016 First Extraordinary Session Act 25 retained only 32 of the approximately 250 sales tax exclusions and exemptions from the 4% sales tax Act 25 subjects over 200 previous exemptions and exclusions to 4% state sales tax 29 Act 25 of the 2016 First Extraordinary Session See Revenue Information Bulletin No. 16-012 Surviving sales tax exemptions for 4% imposed by La. R.S. 47:302, 321, 331, and 51:1286: (1) Food for home consumption, as defined in La. R.S.

47:305(D)(1)(n) through (r) on January 1, 2003, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (2) Natural gas, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (3) Electricity, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (4) Water, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. 30 Act 25 of the 2016 First Extraordinary Session (5) Prescription drugs, as provided in Article VII, Section 2.2 of the Constitution of Louisiana. (6) Gasoline and other motor fuels subject to the state excise tax on fuel.

(7) Sales to the United States government and its agencies, as provided in La. R.S. 301(10)(g). (8) Sales of raw agricultural products, as provided in La. R.S. 47:301(10)(e) and 305(A)(3). (9) Lease or rentals of railroad rolling stock as provided in La. R.S. 47:301(4)(k), piggyback trailers as provided in La. R.S. 47:305.45, and certain trucks and trailers in interstate commerce as provided in La. R.S. 47:305.50(A) and (B). 31 Act 25 of the 2016 First Extraordinary Session (10) Tangible personal property for resale as provided in La. R.S. 47:301(10)(a)(i). (11) Feed and feed additives for animals held for business purposes as provided in La. R.S. 47:305(A)(4).

(12) Farm products produced and used by farmers as provided in La. R.S. 47:305(B). (13) Sales of fertilizers and containers to farmers as provided in La. R.S. 47:305(D)(1)(f). (14) Sales of seeds for planting crops as provided in La. R.S. 47:305.3. 32 Act 25 of the 2016 First Extraordinary Session (15) Sales of pesticides for agricultural purposes as provided in La. R.S. 47:305.8. (16) Purchases, use and lease of Manufacturing machinery and equipment as provided in La. R.S. 47:301(3)(i), (13)(k), and (28) (a).

(17) Sales of materials for further processing as provided in La. R.S. 47:301(10)(c)(i)(aa). (18) Sale of 50-ton vessels and new component parts and sales of certain materials and services to vessels operating in interstate commerce as provided in La. R.S. 47:305.1(A) and (B). (19) Louisiana Tax Free Shopping Program for international visitors as provided in La. R.S. 51:3101. 33 Act 25 of the 2016 First Extraordinary Session (20) Sales of farm equipment used in poultry production as provided in La. R.S. 47:301(13)(c). (21) Sales of pharmaceuticals administered to livestock for agricultural purposes as provided in La. R.S. 47:301(16)(f). (22) Sales of livestock, poultry, and other farm products direct

from the farm and livestock at public sales as provided in La. R.S. 47:305(A)(1) and (2). (23) Materials used in the production of crawfish and catfish as provided in La. R.S. 47:305(A)(5) and (6). (24) First fifty thousand dollars of farm equipment as provided in La. R.S. 47:305.25. 34 Act 25 of the 2016 First Extraordinary Session (25) Fuel used on the farm as provided in La. R.S. 47:305.37. (26) Taxation of electrical cooperatives as provided in La. R.S. 12:425. (27) Overhaul of naval vessels as provided in La. R.S. 47:301(7) (c) and (14)(h). (28) Purchases by state and local governments as provided in La.

R.S. 47:301(8)(c). (29) Transactions in interstate commerce and tangible personal property imported into this state, or produced or manufactured in this state, for export as provided in La. R.S. 47:305(E). 35 Act 25 of the 2016 First Extraordinary Session (30) Parish councils on aging as provided in La. R.S. 47:305.66. (31) Articles traded in on purchases of tangible personal property as provided in La. R.S. 47:301(13)(a). (32) A factory built home as provided in La. R.S. 47:301(16)(g). Act 25 also repeals the credit provided for by Act No. 386 of the 1990 Regular Session of the Legislature that allowed dealers to claim up to $25 per register to recoup costs incurred to reprogram

cash registers due to changes in the sales tax rate or base. 36 Act 25 of the 2016 Extraordinary Session For the period beginning April 1, 2016 through June 30, 2018, only 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. (2%) For the period April 1, 2016 through June 30, 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. (1%)

37 Act 25 of the 2016 Extraordinary Session For the period April 1, 2016 through June 30, 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.

38 Act 25 of the 2016 Extraordinary Session 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. See RIB 16-012 39

How to Register for a Sales Tax Account Nonprofit organizations that are not registered with the Louisiana Department of Revenue for sales tax should complete and submit an application for a Louisiana sales tax account. Form R-16019 (Application for Louisiana Revenue Account Number) should be submitted. The Department is encouraging nonprofit organizations with isolated sales tax collection and remittance obligations to register as "casual filers". This will eliminate the need to file monthly or quarterly sales tax returns. To register as a "casual filer", applicants should write "casual filer" at the top of Form R-16019. The completed Form R-16019 may be submitted to the Department via e-mail at [email protected] 40

Taxability of Dues Revenue Information Bulletin No. 16-014 Taxability of Dues Paid to Nonprofit, Civic Organizations Which Entitle the Member to Receive Access to Clubs or the Privilege of Having Access to or the Use of Amusement, Entertainment, Athletic, or Recreational Facilities Membership fees or dues paid to nonprofit, civic organizations such as the Young Men's Christian Association, which grant members the privilege of having access to workout facilities, clubs, and swimming pools will be subject to state sales tax. Membership fees or dues that entitle the member to use the organization's clubs, or amusement, entertainment, athletic, or recreational facilities will be subject to state sales tax. 41

Taxability of Dues Revenue Information Bulletin No. 16-014 Membership fees or dues paid to a club such as the Rotary Club, which does not grant members access to a club or the privilege of accessing amusement, entertainment, athletic, or recreational facilities will not be subject to state sales tax. Beginning April 1, 2016, membership fees or dues paid to a nonprofit, civic organization which provides access to clubs or the privilege of having access to amusement, entertainment, athletic, or recreational facilities will be subject to state sales tax as follows: Effective 4/1/2016 - 6/30/2016 State Sales Tax Rate 5% Effective 7/1/2016 - 6/30/2018 State Sales Tax Rate 3% Effective 7/1/2018 - 3/31/2019 State Sales Tax Rate 0% 42

Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Pursuant to La. R.S. 47:301(14)(b)(i), one of the specifically enumerated services subject to sales tax in Louisiana is the sale of admissions to places of amusement, athletic entertainment, and recreational events. Prior to the effective date of Act 25 and Act 26, numerous exclusions and exemptions pertaining to the sale of admissions were in effect. However, these numerous exclusions and exemptions were not included in Act 25 or Act 26.

43 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Therefore, as listed in the Department's Publication R-1002A (04/16), the following previously exempt admissions are now subject to Louisiana sales tax: Exemption Admission Charges to Athletic Events of Schools, Colleges, and Universities Statute La. R.S. 47:301(14)(b)(i) Sales Tax Rates 4/1/2016-6/30/2016 5%

7/1/2016-6/30/2018 3% 7/1/2018-3/31/2019 0% 44 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Admissions to Art, History, and Scientific Museums, Aquariums, Zoological Parks, Botanical Gardens, Arboretums, Nature Centers, Planetariums, etc. Statute La. R.S. 47:301(14)(b)(ii)

Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 3% 7/1/2018-3/31/2019 0% 45 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Receipts from Camp and Retreat Facilities Owned and Operated by Nonprofit Organizations Statute La. R.S. 47:301(14)(b)(iv) Sales Tax Rates

4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 3% 7/1/2018-3/31/2019 0% 46 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Sales of Admission Tickets by Little Theater Organizations Statute La. R.S. 47:305.6 Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 4%

7/1/2018-3/31/2019 1% 47 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Tickets to Musical Performances by Nonprofit Musical Organizations Statute La. R.S. 47:305.7 Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 4% 7/1/2018-3/31/2019 1%

48 Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Sales of Admissions to Entertainment by Domestic Nonprofit Charitable, Educational, and Religious Organizations. Statute La. R.S. 47:305.13 Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 4% 7/1/2018-3/31/2019 1% 49

Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Sales of Tangible Personal Property at or Admissions to Events Sponsored by Certain Nonprofit Groups Statute La. R.S. 47:305.14(A)(1) Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 3% 7/1/2018-3/31/2019 0% 50

Taxability of Admissions to Places of Amusement, Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Outside Gate Admissions & Parking Fees at Fairs, Festivals & Expositions Sponsored by Nonprofit Organizations Statute La. R.S. 47:305.18 Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 4% 7/1/2018-3/31/2019 1% 51 Taxability of Admissions to Places of Amusement,

Athletic Entertainment, and Recreational Events Revenue Information Bulletin No. 16-020 Exemption Tickets to Dance, Drama, or Performing Arts Presentations by Certain Nonprofit Organizations Statute La. R.S. 47:305.42 Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 4% 7/1/2018-3/31/2019 1% 52 Taxability of Meals for Schools Participating in the National School Lunch and School Breakfast Programs

Revenue Information Bulletin No. 16-024 No sales tax will be due upon the purchase and sale of food items under the National School Lunch and School Breakfast Programs. (public and private schools) For private schools that do not participate in the National School Lunch and School Breakfast Programs, food service provided to students by nonprofit private schools and residential child care institutions as a part of tuition is a part of the educational services provided by the school. An educational service is not one of the defined sales of services pursuant to

La. R.S. 47:301(14); therefore, it is a non-taxable service. For those schools where food service is billed separately and the school does not participate in the National School Lunch and School Breakfast Programs, the meals would be taxable under Act 25 of the 2016 First Extraordinary Session and the school would be required to collect the four percent state sales tax on meals from April 1, 2016 through June 30, 2016 and the two percent state sales tax from July 1, 2016 through June 30, 2018. 53 Taxability of Food Items Donated to a Food Bank Revenue Information Bulletin No. 16-026 Act 26 retains the use tax exclusion provided by La. R.S. 47:301(18)(a)(i) for food items donated to a food bank as

defined in La. R.S. 9:2799(B). Act 25 does not retain the exclusion. Typically, a retail dealer, such as a grocery store, will donate unmarketable food items to a food bank in order to help provide for those in need. The food items would have been purchased free from sales tax pursuant to the sale for resale exclusion. Once the food items became unmarketable, for various reasons, the retail dealer could be liable for use tax on the food items. 54 Taxability of Food Items Donated to a Food Bank Revenue Information Bulletin No. 16-026 Pursuant to La. R.S. 47:302, 321, and 331, the use tax is

imposed on the "cost price" of the tangible personal property. Pursuant to La. R.S. 47:301(3)(a), "cost price" is defined as the lesser of the actual cost of the tangible personal property or the reasonable market value of the tangible personal property at the time it becomes susceptible to the use tax. Since the food items become susceptible to the use tax at the point in time when the food items become unmarketable, there is no reasonable market value of the food items. Thus, the cost price would be $0.00 and there would be no use tax due. Therefore, no Louisiana state use tax is due on food items donated to a food bank. 55 Admissions to Public School Athletic/Entertainment Events and the Sales of Food and Tangible Personal Property at Events

Frequently Asked Questions Revenue Information Bulletin No. 16-027 What is the change in the law regarding admissions to school athletic/entertainment events and the sales of food and tangible personal property at these events? Previously, there was a sales tax exclusion from state sales tax for admissions to amusement events, athletic entertainment events, and recreational events of schools, colleges, and universities. The new law imposes state sales tax on these events of schools, colleges, and universities at the following rates: Period State Sales Tax Rates 4/1/2016-6/30/2016 5% 7/1/2016-6/30/2018 3% 7/1/2018-3/31/2019 0% State sales tax should be charged upon the sales of concessions and other

items of tangible personal property as well. 56 Admissions to Public School Athletic/Entertainment Events and the Sales of Food and Tangible Personal Property at Events Frequently Asked Questions Revenue Information Bulletin No. 16-027 What events qualify as amusement events, athletic entertainment events, and recreational events? Qualifying events include but are not limited to school plays, band performances, choir performances, dances, and sporting events. Who is required to pay this tax? The individual who is paying for the admission to the athletic or entertainment event will pay the state sales tax due on the ticket/admission charge. The public

school should collect the state sales tax along with the money paid for a ticket or admission. Individuals attending a sporting or entertainment event are the "taxpayers", who are liable for paying the tax. The school board and its public school hosting the events are "dealers" within the meaning of La. R.S. 47:301(4) and are responsible 57 Admissions to Public School Athletic/Entertainment Events and the Sales of Food and Tangible Personal Property at Events Frequently Asked Questions Revenue Information Bulletin No. 16-027 for collecting and remitting the state sales taxes to the Louisiana Department of Revenue (hereafter LDR).

If a public school or school board requires a student to attend a school play, band performance, choir performance, or sporting event, and the school purchases the tickets and then resells the tickets to the students, there is no sales tax due on the price of admission, because the school and school board are exempt from state sales tax pursuant to La. R.S. 47:301(8)(c). 58 Admissions to Public School Athletic/Entertainment Events and the Sales of Food and Tangible Personal Property at Events Frequently Asked Questions Revenue Information Bulletin No. 16-027 How does the tax increase impact the price of a ticket to a

sporting event or admission to entertainment? The price charged for a ticket or admission is at the public schools discretion. A public school may continue to charge the same amount for admission to sporting or entertainment event but the state sales tax would be included in the price. For example, if the price for a ticket remains $4.00, the school would remit $0.19 in state sales tax (at 5%) and retain $3.81 as the price of the ticket. However, a school may opt to charge full price and charge state sales tax upon that amount. If a ticket costs an individual $4.00, then the school would need to collect $0.20 in state sales tax for a total of $4.20. 59 Admissions to Public School Athletic/Entertainment Events and the Sales of Food and Tangible Personal Property at Events

Frequently Asked Questions Revenue Information Bulletin No. 16-027 What happens if the school/school board does not collect and remit the sales tax to the Louisiana Department of Revenue? Any school board that does not collect and remit the state sales tax will owe the sales tax itself. Who is required to register with the Department of Revenue? Every school board must register with the Department of Revenue for the purpose of remitting the sales tax collected by the schools within their district. Each school board is required to submit an excel file containing the boards name and withholding account number to [email protected] with the subject line RIB 16-027. The department will create the account for the remittance of the sales tax due and set the filing frequency.

60 Act 22 of the 2016 First Extraordinary Session Act 22 (HB 30) of the 2016 First Extraordinary Session of the Louisiana Legislature expands the definition of dealer by defining 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). The provisions of Act 22 apply to tax periods beginning on and after April 1, 2016. Expands dealer to include out of state vendors who use in state affiliates/agents to facilitate sales Also known as affiliate nexus 61

Act 22 of the 2016 First Extraordinary Session "Dealer" expanded to include: Any person who solicits business through an independent contractor or any other representative pursuant to an agreement with a Louisiana resident or business under which the resident or business, for a commission, referral fee, or other consideration of any kind, directly or indirectly, refers potential customers, whether by link on an

internet website, an in-person oral presentation, telemarketing, or otherwise to the seller. 62 Act 22 of the 2016 First Extraordinary Session Any person who sells the same or a substantially similar line of products as a Louisiana retailer under the same or substantially similar business name, using the same trademarks, service marks, or trade names that are the same or substantially similar to those used by the Louisiana retailer. 63 Act 22 of the 2016 First Extraordinary Session Any person who solicits business and develops and maintains

a market in Louisiana through an agent, salesman, independent contractor, solicitor, or other representative pursuant to an agreement with a Louisiana resident or business, hereinafter referred to collectively as an "affiliated agent", under which the affiliated agent, for a commission, referral fee, or other consideration of any kind engages in activities in this state that inure to the benefit of the person in the person's development or maintenance of a market for its goods or services in the state, to the extent that those extent that those activities of the affiliated agent are sufficient to satisfy the nexus requirement of the United States Constitution. 64 Act 22 of the 2016 First Extraordinary Session

Any person who holds a substantial ownership interest, directly or through a subsidiary, in a retailer maintaining sales locations in Louisiana, or to any person who is owned in whole or in substantial part by a retailer maintaining sales locations in Louisiana, or by a parent or subsidiary thereof. Substantial ownership interest" means affiliated persons with respect to each other where one of such persons has an ownership interest of more than five percent, whether direct or indirect, in the other, or where an ownership interest of more than five percent, whether direct or indirect, is held in each of such persons by another person or by a group of other persons which are affiliated persons with respect to each other. 65 Act 22 of the 2016 First Extraordinary Session

Smaller sellers with sales in Louisiana less than $50,000 are excluded, per determination of the Secretary of Revenue. Act 22 provides that qualifying as a dealer does not automatically mean that you owe Louisiana income or franchise tax 66 Act 17 of the 2016 First Extraordinary Session Act 17 (HB 59) amended La. R.S. 47:301(6)(a) relative to expanding 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. See RIB 16-036 67 Act 17 of the 2016 First Extraordinary Session 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 expanded 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 Impacts companies such as Airbnb Hotel expanded to include any establishment furnishing 1 room (previously 6 rooms) including residential homes. The provisions of this Act shall become effective on July 1, 2016. 68 Acts of the 2016 First Extraordinary Session 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 ($1,500) 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. No vendors compensation for new penny 69 Acts of the 2016 First Extraordinary Session 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. Keeps the rate at 2% instead of the scheduled reduction to 1%. See Revenue Information Bulletin No. 16-022

70 Acts of the 2016 First Extraordinary Session Excise Tax 71 Acts of the 2016 First Extraordinary Session 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. See RIB 16-008 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. See RIB 16-008 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. See RIB 16-009 72 Acts of the 2016 First Extraordinary Session Act 13 (HB 27) [R.S. 26:341(A) and 342] increases the tax levied on beverages of high and alcoholic content. Effective April 1, 2016. See RIB 16-009. 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. The effective date for Act 14 is April 1, 2016. Imposes state tax of 2.5% and local tax of 0.5% 73 Acts of the 2016 First Extraordinary Session Income Tax Franchise Tax 74

Acts of the 2016 First Extraordinary Session One Proposed Constitutional Amendment was successfully approved by the Legislature for voter approval. Act 31 (HB 31) (Corporation Income Tax) 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 for tax years beginning on or after January 1, 2017 if approved by the voters 75

Acts of the 2016 First Extraordinary Session Act 30 (HB 95) (Corporation Income Tax) Is the companion Act to Act 31 Act 30 removes the FIT deduction from the corporation income tax in Title 47 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 the corporation income tax. Effective January 1, 2017 if the voters approve the Constitutional Amendment to repeal the FIT deduction for the corporation income tax 76

Acts of the 2016 First Extraordinary Session Act 8 (HB 29) (Corporation Income Tax) Is also contingent upon the FIT repeal for corporations Amends La. 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.

77 Acts of the 2016 First Extraordinary Session Present law provides that the tax to be assessed, levied, collected, and paid on the La. taxable income of every corporation shall be computed at the following rates: (1) 4% on the first $25,000 of La. taxable income. (2) 5% on La. taxable income above $25,000 but not in excess of $50,000. (3) 6% on La. taxable income above $50,000 but not in excess of $100,000. (4) 7% on La. taxable income above $100,000 but not in excess of $200,000. (5) 8% on all La. taxable income in excess of $200,000 78

Acts of the 2016 First Extraordinary Session Act 1 (HB 7) (Corporation Income Tax) Amends La. R.S. 47:287.71(B)(6) to increase the amount of the exclusion for dividend income received from banking corporations organized under the laws of Louisiana, from national banking corporations doing business in Louisiana, and from capital stock associations whose stock is subject to ad valorem taxation from 72% to 100%. Serves to repeal the provisions of Section 3 of Act 123 of the 2015 Regular Session of the Louisiana Legislature that previously reduced the deduction for dividends received from banking institutions from 100% to 72% of the dividends received. Purpose of Act 1 is to avoid double taxation since the wholly owned bank pays the bank shares tax pursuant to La. R.S. 47:1967.

Effective for any corporation income tax return filed on or after January 1, 2015, regardless of the taxable year to which the return relates. See LDR RIB 16-011 79 Acts of the 2016 First Extraordinary Session Act 6 (HB 20) (Corporation Income Tax) Amends La. R.S. 47:47:287.86 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. Applies to any corporation income tax return filed on or after July 1, 2015, regardless of the taxable year to which the return relates. Effectively means corporations will pay income tax on at least

28% of taxable income 80 Acts of the 2016 First Extraordinary Session Act 24 (HB 116) (Corporation Income Tax) Amends La. R.S. 47:287.86 Requires that net operating loss deductions be applied in order, beginning with the most recent taxable year to be applied first. Prior to Act 24, net operating loss was required to be applied in order, beginning with the earliest taxable year. Effective for all tax years beginning on or after January 1, 2017.

81 Acts of the 2016 First Extraordinary Session Act 24 (Corporation Income Tax) Excerpt from the Legislative Fiscal Offices Fiscal Note Current law allows net operating losses from as far back as twenty years ago to be deducted from net income on a current tax return. This reduces current taxable income, tax liabilities, and tax receipts. Current law also requires that the oldest losses be deducted from current net income first. This facilitates the maximum utilization of the stock of available losses lover time. This bill will require that the newest losses be utilized. This is not likely to change the aggregate amount of loss deduction on current returns for the next few years, it may work to reduce the total stock of losses available to use over time as the oldest losses expire without being utilized. However, newer losses will continue to

be accumulated and a twenty year stock of losses will always be allowed to be utilized. The effect of the bill on the amount of losses available to deduct will depend on the relative size of newer versus older losses. 82 Acts of the 2016 First Extraordinary Session Act 12 (HB 19) (Corporation Franchise Tax) Amends La. R.S. 12:1368 and La. R.S. 47:601(A)(3), (C)(1) and (3), 602(G) and (H), and 611 Expands the corporation franchise tax to all business entities taxed as C corporations (previously only corporations were subject to CFT) 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.

Expands the definition of taxable incidents to include corporations using property in Louisiana through any business entity, not just through corporations as the law previously held. 83 Acts of the 2016 First Extraordinary Session Act 12 (Corporation Franchise Tax) 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. 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 corporations franchise tax. 84 Acts of the 2016 First Extraordinary Session

Act 12 (Corporation 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. Taxpayers becoming subject to the tax must pay the actual franchise tax if in existence and doing business in Louisiana during the year before becoming subject to the tax. Effective for taxable periods beginning on or after January 1, 2017. 85

Acts of the 2016 Extraordinary Session Purpose of Act 12 is to expand the corporation franchise tax to all business entities taxed as C corporations Previously, the corporation franchise tax only applied to corporations After Act 12, the corporation franchise tax applies to all corporations plus all entities taxed as C corporations For reference, the corporation income tax applies to all corporations and all entities taxed as corporations (C corps and S corps) Also, Act 12 legislatively overrules the UTELCOM decision and expands what will subject a corporation to the CFT 86 Acts of the 2016 First Extraordinary Session

UTELCOM, Inc. v. Bridges, 77 So. 3d 39 (La. 1st Cir. App. 2011), review denied, 83 So. 3d 1046 (La. 2012) The Court of Appeal held that the holding of a limited partnership interest in a partnership conducting business in Louisiana was not sufficient to subject a foreign corporation to the Louisiana corporation franchise tax. Court relied on La. R.S. 47:601 A.(3): (Taxable incident) (3) The owning or using any part or all of its capital, plant, or other property in this state in a corporate capacity. Since UTELCOM used its property in Louisiana through a partnership and not a corporation, the court ruled that there was no taxable incident. 87 Acts of the 2016 First Extraordinary Session

Act 12 amends La. R.S. 47:601 A.(3) as follows: (3) The owning or using any part or all of its capital, plant, or other property in this state in a corporate capacity. whether owned directly or indirectly by or through a partnership, joint venture, or any other business organization of which the domestic or foreign corporation is a related party as defined in R.S. 47:605.1. 88 Acts of the 2016 First Extraordinary Session

Act 12 (HB 19) (Corporation Franchise Tax) Proposed Regulation published; amended LAC 61:I.301, 302, and 311 To be qualified and eligible for Subchapter S status, the corporation must meet the following requirements: the corporation must be a domestic corporation; the corporation must have only allowable shareholders, including individuals, certain trusts, and estates, not partnerships, corporations or non-resident alien shareholders; the corporation must have no more than 100 shareholders; the corporation must have only one class of stock; and the corporation must not be an ineligible corporation, such as certain financial institutions, insurance companies, and domestic international sales corporations. 89

Acts of the 2016 First Extraordinary Session Act 12 (HB 19) (Corporation Franchise Tax) Proposed Regulation published; amended LAC 61:I.301, 302, and 311 Examples of interpretation of new law Corporation A is not subject to Louisiana corporation franchise tax pursuant to the provisions of R.S. 47:601(A). Corporation A owns an interest in Partnership B, which is qualified to do business in Louisiana. Corporation A would be subject to Louisiana corporation franchise tax. 90 Acts of the 2016 First Extraordinary Session

Corporation A is not subject to Louisiana corporation franchise tax pursuant to the provisions of R.S. 47:601(A). Corporation A owns an interest in Limited Liability Company B, which is doing business in Louisiana and owns property located in Louisiana. Corporation A would be subject to Louisiana corporation franchise tax. Subsidiary is a domestic corporation and is a one hundred percent owned subsidiary of Parent. Parent is a domestic limited liability company and elects to be taxed as an S corporation pursuant to I.R.C. 1362 for federal income tax purposes. Subsidiary is a QSub, as provided for in I.R.C. 1361(b)(3). For Louisiana corporation franchise tax purposes, Parent would not be subject to the franchise tax, because Parent is a limited liability company, eligible to be taxed as an S corporation. Subsidiary would be subject to the franchise tax, because Subsidiary is a corporation. 91

Acts of the 2016 Extraordinary Session Act 16 (HB 55) (Corporation Income Tax) Enacts La. R.S. 47:287.82 Requires that certain deductible interest expenses, intangible expenses, and management fees be added-back when computing corporation income tax liability. Requires corporations to add-back otherwise deductible interest expenses and costs, intangible expenses and costs, and management fees paid to a related member unless: the corresponding item of income was in the same taxable year either subject to a tax based on or measured by the related member's net income in Louisiana or any other state, or was subject to a tax based on or measured by the related member's net income

by a foreign nation which has an enforceable income tax treaty with the United States, if the recipient was a "resident" as defined in the income tax treaty with the foreign nation; or 92 Acts of the 2016 First Extraordinary Session Act 16 (Corporation Income Tax) (exceptions to add-back continued) the transaction giving rise to the interest expenses and costs, the intangible expenses and costs, or the management fees between the corporation and the related member did not have as a principal purpose the avoidance of any Louisiana tax. If the transaction giving rise to the interest expenses and costs, intangible expenses and costs, or the management fees has a substantial business

purpose and economic substance and contains terms and conditions comparable to a similar arm's length transaction between unrelated parties, the transaction shall be presumed to not have as its principal purpose tax avoidance, subject to rebuttal by the Secretary of the Department of Revenue. Act 16 is effective for all tax years beginning on or after January 1, 2016. 93 Add-Back Proposed Regulation published: LAC 61:I.1115 "Intangible Expenses" includes but is not limited to: expenses, losses, and costs for, related to, or directly or indirectly in connection with the acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition

of intangible property. "Intangible property" includes stocks, bonds, financial instruments, patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, "know how", and similar types of intangible assets. Losses related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions. Royalty, patent, technical, and copyright fees. Licensing fees. Other similar expenses, losses, and costs. 94 Add-Back Proposed Regulation published: LAC 61:I.1115 "Management Fees" includes but is not limited to expenses and costs, including intercompany administrative charges, pertaining to accounts receivable, accounts payable, employee

benefit plans, insurance, legal matters, payroll, data processing, purchasing, taxation, financial matters, securities, accounting, or reporting and compliance matters or similar activities. Related Member includes but is not limited to any corporation that is included in the taxpayers federal consolidated corporation income tax return or any disregarded entity or subchapter K entity or other business entity a majority of whose income is included in the taxpayers federal income tax return (separate or consolidated). 95 Add-Back Proposed Regulation published: LAC 61:I.1115 Exceptions. The corporation shall make the add-back unless:

The corporation shows, in a written statement and/or other document attached to the corporations Louisiana Corporation Income Tax Return, that the add-back is unreasonable. The add-back will be considered unreasonable if the taxpayer establishes that, based on the entirety of the taxpayer's particular facts and circumstances, the adjustments would increase the taxpayer's Louisiana income tax liability to an amount that bears no reasonable relation to the taxpayers Louisiana presence. *there are others also included in the proposed regulation 96 Acts of the 2016 First Extraordinary Session

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.

97 Acts of the 2016 First Extraordinary Session Act 21 (HB 2) [R.S. 47:6039] repeals the Student Assessment for a Valuable Education (SAVE) credit program in its entirety. 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. 98 Acts of the 2016 Extraordinary Session 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 (new penny) of the 2016 First Extraordinary Session of the Legislature of Louisiana. Effective April 1, 2016. (links sunset of the income tax credit reductions to the sunset of the new penny) 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. 99 Task Force on Structural Changes in Budget and Tax Policy House Concurrent Resolution No. 11 Creates task force to study Louisianas tax structure and to make recommendations for improvements Mission Statement: To review the current structure and design of the state budget together with state tax policies as modified by the provisions adopted by the Legislature in the 2016 Special Session and make recommendations to the Governor and Legislature by September 1, 2016 as to ways to: 1) continue to improve and modernize the state's tax laws; 2) enhance the efficiency and fairness of the those

laws for the benefit of both individuals and businesses; 3)generate cost savings through more efficient and effective state operations; and 4) make long-term reforms in the state budgeting process in an effort to make the state a model for fiscal policy and operational efficiency. 100 Task Force on Structural Changes in Budget and Tax Policy Task Force Subscription Service Receive notice of meetings and materials www.louisiana.revenue.gov Click on Laws and Policies Then click on Task Force Subscription

Service 101 2016 Regular Session Corporation Income and Franchise Tax 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. CIT and CFT return due date changed from April 15th to

May 15th Partnership return due date changed from May 15th to April 15th Composite stays at May 15th 102 2016 Regular Session 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. Annual WH return due date changed from February 27th to January 31st Motion picture salary/wage payments subject to WH 103 Thank you. 104

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