Overview of Exclusions, Exemptions, and Suspensions in Louisiana Tax Laws

This detailed content explores the concepts of exclusions and exemptions in Louisiana tax laws, including constitutionally protected exemptions, suspension of exemptions in response to fiscal crises, and more. It also discusses the distinction between exclusion and exemption, as well as the legislative acts related to tax suspensions and protected exemptions. The content provides insights into how exemptions impact state sales tax transactions, along with specific acts that have influenced tax impositions in Louisiana.

• Louisiana Tax Laws
• Exclusions
• Exemptions
• Fiscal Crises
• Legislative Acts

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1. Exclusions and Exemptions 1 PEGGY PARKER LOUISIANA DEPARTMENT OF REVENUE

2. What is an Exclusion? 2 Usually found in R.S. 47:301 Approximately 114 exclusions

3. What is an Exemption? 3 Most are found in R.S. 47:305 but they do appear in other statutes Approximately 120 exemptions

4. Constitutionally Protected Exemptions 4 Sales of water, electricity and natural gas to residential consumers Sales of food for home consumption Sales of prescription drugs Sales of gasoline when road use tax has been paid

5. Exclusion versus Exemption 5 Burden of proof Economic reasons

6. Suspension of Exemptions 6 In response to a fiscal crises, the legislature passed HCR 55 of the 1986 Regular Session to temporarily suspend the exemptions from the 1% tax imposed by R.S. 47:331.

7. More Suspensions 7 Act 20 of 1994 07/01/94 06/30/96 Act 5 of 1996 07/01/96 06/30/98 Act 1 of 1998 07/01/98 06/30/00 Act 18 of 2000 07/01/00 06/30/02 Act 22 of 2002 07/01/02 06/30/04 Act 4 of 2004 1st E.S. 07/01/04 06/30/09

8. Protected Exemptions 8 Protected exemptions Suspensions and protected exemptions are listed in the tax imposition statutes of R.S. 47:302, 321, 321.1, 331 and Title 51:1286.

9. Results 9 Exemptions are enacted as exclusions (R.S. 47:301) Less transactions are subject to states sales tax

10. Acts 25 & 26 of 2016 First Extraordinary Session 10 Act 25: Uses the impositions of R.S. 47:302, 321, 331 and 51:1286 to tax both exclusions and exemptions Act 26: Imposed a new 1% states sales tax

11. ACT 25 11 Effective April 1, 2016 Taxes exclusions and exemptions All impositions were in place for April 2016 June 2016 Imposition under R.S. 47:302 (2%) continues until June 30, 2018

12. ACT 26 12 Imposes a new 1% sales tax under R.S. 47:321.1 Taxes exclusions and exemptions Expires 6/30/2018

13. True Exclusions 13 Sales for resale Sales in interstate commerce Sales to the federal government Isolated or occasional sales Articles traded in for like items of property

14. Louisiana General Sales Tax Return 14 DANELL GERCHOW LOUISIANA DEPARTMENT OF REVENUE

15. Louisiana General Sales Tax Return 15 July 2015 to March 2016 5 rates 0%, 1%, 2%, 3%, & 4% April 2016 to June 2016 6 rates 0%, 1%, 2%, 3%, 4%, & 5% 4 July 2016 to June 2018* 6 rates 0%, 1%, 2%, 3%, 4%, & 5% Tax Rates Total number of pages for return Number of supporting schedules Number of pages for the instructions 2 6 0 2 5 2 5 10 * Updated through the 2016 First Extraordinary Session of the Louisiana Legislature

16. Return for July 2015 to March 2016 16

17. Return for July 2015 to March 2016 17 2 pages long; return had 17 lines Schedule A is used to report certain allowable deductions

18. July 2015 to March 2016 Schedule A- Allowable Deductions 18 19 separate lines to capture data on exemptions/ exclusions Included Other Category How is it determined what is captured separately on Schedule A? Items taxed at different rates Items where taxes are dedicated Items the LDR is frequently asked about i.e. Sales tax holidays, utilities, food for home consumption

19. Return for July 2015 to March 2016 19 Line on Schedule A for July 2015 - March 2016 Intrastate telecommunication services Reason Different rate (3%); dedicated (Tourism, Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Interstate telecommunication services Different rate (2%); dedicated (Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Electricity and natural gas or energy for non-residential use Steam and bulk or utility water used for other than residential purposes Different rate (1%); dedicated (Tourism) Different rate (1%); dedicated (Tourism)

20. Return for July 2015 to March 2016 20 Line on Schedule A for July 2015 - March 2016 All other transactions subject to 1% Boiler fuel, except natural gas, for nonresidential use Prepaid telephone cards Reason Different rate (1%) Different rate (2%); dedicated (Tourism) Different rate (3%); dedicated (Tourism)

21. Return for April 2016 to June 2016 22

22. Return for April 2016 to June 2016 23 Schedule A is still used to report certain allowable deductions Schedule A-1 is used to capture all totally exempt sales Schedule A-2 is used to capture sales taxed at 4% Most exemptions have been assigned a 4 digit code; similar exemptions have been grouped together i.e. Manufacturing machinery & equipment

23. Return for April 2016 to June 2016 24 Number of Lines or codes on the return Tax rate exemptions/exclusions subject to rate 0% 64 43 codes plus 7 lines 1% 4 2 lines 2% 4 1 line 3% 1 1 line 4% 24 19 codes plus 2 lines 5% 137 4 lines to be used in future

24. Return for April 2016 to June 2016 25 Line on Schedule A for April to June 2016 Reason Intrastate telecommunication services Different rate (4%); dedicated (Tourism; Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Interstate telecommunication services Different rate (3%); dedicated (Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Electricity, natural gas or energy, and boiler fuel for non-residential use Reserved for future use Steam and bulk or utility water used for other than residential purposes Reserved for future use

25. Return for April 2016 to June 2016 26 Line on Schedule A for April to June 2016 Reason Sales/purchases/leases/rentals of manufacturing machinery or equipment Different rate (2%); dedicated (Tourism) Prepaid telephone cards Sales and leases to nonprofit electrical cooperatives Different rate (4%); dedicated (Tourism) Different rate (1%) Sales of diesel fuel, butane, propane and other liquefied petroleum gases to farmers. Different rate (1%)

26. Return for July 2016 to June 2018 27

27. Return for July 2016 to June 2018 28 Schedule A still is used to report certain allowable deductions Schedule A-1 is used to capture all totally exempt sales Schedule A-2 is used to capture sales taxed at 4% Schedule A-3 is used to capture sales taxed at 3% Schedule A-4 is used to capture sales taxed at 2% Schedule A-5 is used to capture sales taxed at 1%

28. Return for July 2016 to June 2018 29 Number of Tax rate exemptions/exclusions subject to rate Lines or codes on the return 0% 1% 56 12 40 codes plus 8 lines 5 codes plus 2 lines 2% 26 18 codes plus 1 line 3% 4% 5% 101 26 13 82 codes plus 1 line 19 codes plus 3 lines 0

29. Return for July 2016 to June 2018 30 Line on Schedule A for April to June 2016 Reason Intrastate telecommunication services Interstate telecommunication services Different rate (4%); dedicated (Tourism; Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Different rate (3%); dedicated (Telephone Company Property Assessment Relief Fund & Telecommunications Fund for the Deaf) Electricity, and natural gas or energy, for non-residential use Different rate (4%); dedicated (Tourism) Steam and bulk or utility water used for other than residential purposes Different rate (4%); dedicated (Tourism)

30. Return for July 2016 to June 2018 31 Line on Schedule A for April to June 2016 Reason Sales/purchases/leases/rentals of manufacturing machinery or equipment Prepaid telephone cards Sales and leases to nonprofit electrical cooperatives Sales of diesel fuel, butane, propane and other liquefied petroleum gases to farmers. Different rate (1%) Different rate (4%); dedicated (Tourism) Different rate (2%) Different rate (2%)

31. QUESTIONS ??? 32