Louisiana Department of Revenue Operational and Tax Policy Initiatives
Louisiana Department of Revenue (LDR) is focused on efficiently collecting state tax revenue, regulating charitable gaming, alcohol, and tobacco sales, and supporting state agencies in debt collection. The LDR's leadership team is dedicated to various aspects of revenue management and compliance, with a strong emphasis on tax enforcement and audit review. Key officials include Secretary of Revenue Kimberly Lewis Robinson, Deputy Secretary Kevin Richard, and Assistant Secretary Luke Morris overseeing legal affairs. The agency also encompasses offices such as Tax Collection Program, Office of Alcohol and Tobacco Control, and Office of Charitable Gaming.
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Operational and Tax Policy Initiatives Presented by: Kevin Richard, Deputy Secretary Luke Morris, Assistant Secretary of Legal Affairs Annual Liaison Meeting Louisiana State Bar Association November 3, 2017 1
The LDR Mission To fairly and efficiently collect state tax revenue to fund public services; to regulate charitable gaming and the sale of alcoholic beverages and tobacco; and to support state agencies in the collection of overdue debts. 2
Agency Overview Tax Collection Program Office of Alcohol and Tobacco Control Office of Charitable Gaming 3
LDR Leadership Kimberly Lewis Robinson, Secretary of Revenue Public Affairs Office of the General Counsel Legislative Affairs Kevin Richard, Deputy Secretary Agency Compliance Office of Charitable Gaming Tax Free Shopping Commission 4
LDR Leadership Clarence Lymon, Undersecretary Office of Management and Finance Revenue Processing Center Budget and Financial Services Human Resources Office of Debt Recovery Velecial Rodman, Assistant Secretary Group 1 Collections Customer Service Business Tax Enforcement 5
LDR Leadership Danell Gerchow, Assistant Secretary Group 2 Criminal Investigations Taxpayer Compliance Income Taxpayer Compliance Sales, Severance, Excise, Withholding Raymond Jay Frost, Assistant Secretary Group 3 Audit Review & Appeals Field Audit Income Tax Field Audit Sales Tax Field Audit Excise Tax 6
LDR Leadership Luke Morris, Assistant Secretary of the Office of Legal Affairs Litigation Director: Antonio Ferachi Policy Services Director: Vanessa LaFleur 7
LDR Leadership JuanaMarine-Lombard, Commissioner Office of Alcohol and Tobacco Control MichaelLegendre, Director Office of Charitable Gaming 8
LDR Organization After carefully reviewing and analyzing the organizational structure of the agency to ensure optimal effectiveness and efficiency, LDR leadership has recently launched a business reorganization. The reorganization will result in a centralization of human resources in order to more closely align tax types and agency functions. 9
LDR Organization Major reorganization changes Consolidation of Tax Administration and Policy Services Reallocation of Audit Intelligence Division Creation of tax units in Litigation Division 10
LDR Organization The budget passed during the 2017 Second Special Session has also allowed LDR to hire additional audit staff and additional attorneys in the Policy and Litigation Divisions. 11
Customer Service During the fiscal year that ended on June 30, 2017, LDR received 541,480 taxpayer phone calls. This is an increase of over 12% from the 2015-2016 fiscal year. These 541,480 calls received in FYE 17 are broken down as follows: Business Services 130,073 calls Call Center 243,258 calls E Customer Service 49,988 calls Enforcement 90,181 calls Policy Services 854 calls Special Collections 27,126 calls 12
Revenue Processing During the fiscal year that ended on June 30, 2017, LDR s Revenue Processing Center processed 750,650 paper returns. The average time for processing paper returns was 5.47 days. This marks a 30 percent decrease in processing time from FY 16, when the average processing time was 7.89 days. For the same time period, the average deposit processing time was 2.41 days. This marks a 46 percent decrease in processing time from FY 16, when the average processing time was 4.49 days. 13
Fraud Prevention In FYE 2017, LDR s Criminal Investigations Division (CID) prevented the loss of $8.6 million taxpayer dollars through crimes of fraud. During the 2016-17 fiscal year, CID: Completed 162 field visits; Opened 602 files; Made 7 arrests; Collected $186,516.15 in restitution; and Collected $7,768.33 as a result of criminal investigations. 14
Litigation Caseload During the Fiscal Year 2016-2017, the LDR Litigation Division resolved 1,396 cases. The average age of these closed cases is 528 days. The average age of current inventory is 491 days. Less than 1% of current inventory is 5 or more years old. 15
Solar Tax Credits In the 2017 Regular Legislative Session, the Legislature passed Act 413 to create a remedy for taxpayers who were denied a solar tax credit due to the caps imposed by Act 131 of the 2015 Regular Legislative Session. Act 413: Grants the solar tax credit at the full amount that a purchased system is eligible, based on an original claim (for systems purchased and installed before December 31, 2015). Provides for payout of this credit over a three year period: the state is limited to an aggregate payout of $5 million per fiscal year, beginning in fiscal year 2017- 2018 and ending in fiscal year 2019-2020. Any remaining balance of the tax credit shall be paid in fiscal year 2020-2021 Allowed taxpayers who claimed a credit in 2016 to complete an incomplete claim by November 1, 2017 Allowed taxpayers who did not claim a credit in 2016, to submit a claim by August 31, 2017 16
Solar Tax Credits Act 413 payment schedule: Installment refund 1: Installment refund 2: Installment refund 3: Installment refund 4*: Please visit LDR s website for answers to frequently asked solar tax credits www.revenue.louisiana.gov/SolarCredit December 2017-January 2018 August 2018-September 2018 August 2019-September 2019 August 2020-September 2020 *if necessary 17
Film Tax Credits The annual $180 million cap for fiscal year 2016-2017 was exceeded on July 1, 2016. Taxpayers who claimed the credit after the cap was met were notified by mail that their claims would have priority in the 2017-2018 fiscal year. The annual $180 million for fiscal year 2017-2018 was exceeded in late June of 2017 An estimated $16.5 million of claims will rollover to the cap for fiscal year 2018-2019 18
Film Tax Credits Act 309 of the 2017 Regular Legislative Session extends the annual $180 million back annual $180 million back- -end cap end cap and also establishes a front end cap end cap that limits the amount of credits authorized by the limits the amount of credits authorized by the Department of Economic Development (LED) to $150 million Department of Economic Development (LED) to $150 million per fiscal per fiscal year year Act 309 also defines legacy credit legacy credit as a certified credit that is evidenced by a final certification letter issued before July 1, 2017 2017, that has: Not expired Not been claimed as a credit against state income tax on a tax return before July 1, 2017 Not been transferred to LDR before July 1, 2017 extends the also establishes a front- - July 1, 19
Film Tax Credits Owners of legacy credits now have the opportunity to sell back these credits to the state at 85% The legacy credit must be registered in the Tax Credit Registry December 31, 2017 December 31, 2017, in order for a buyback to take place Owners of legacy credits that were certified prior to the creation of the Tax Credit Registry (January 1, 2014) must submit Form R Registration of Legacy Motion Picture Credit Registration of Legacy Motion Picture Credit to LDR by December 31, 2017 Legacy credits which were certified after the creation of the Tax Credit Registry (and already registered) do not need to re-register 85% of face value Tax Credit Registry by Form R- -6175 6175 20
Policy Services & Tax Administration LDR s Tax Administration Division provided the resources for over 125 fiscal notes during the 2017 legislative sessions. LDR s Policy Division drafted, provided technical information, or actively monitored over 260 legislative instruments during the 2017 Regular Legislative Session. 21
Louisiana Tax Institute Established by Act 568 of the 2016 Regular Legislation Session Housed within the Department of Revenue Act 568 requires the Institute to: serve as the official advisory tax law revision and reform agency of the state promote and encourage the clarification and simplification of tax laws of the state and its political subdivisions submit reports or make recommendations to the Legislature, subject to approval by of the governing board members 22
Louisiana Tax Institute Institute membership: Kimberly Lewis Robinson Secretary, Louisiana Department of Revenue Cade R. Cole member appointed by the Louisiana Board of Tax Appeals Jaye A. Calhoun member appointed by Loyola University College of Law Brandon DeCuir member appointed by Southern University Law Center Dr. Steven M. Sheffrin, Ph.D. member appointed by Tulane University Law School William C. Potter, CPA, JD member appointed by Society of Louisiana Certified Public Accountants Jason M. DeCuir member appointed by Louisiana State Bar Association Philip Hackney member appointed by Paul M. Hebert Law Center Dr. James R. Alm, Governor s designee 23
Louisiana Tax Institute The areas of study before the Louisiana Tax Institute are: Combined reporting The Institute has studied the potential impact and best practices by reviewing the practices of other states through written and live presentations on: Pro forma reporting experiences of other states Corporate tax studies from other studies Multistate Tax Commission model legislation Combined reporting legislation from other states 24
Louisiana Tax Institute Recodification of the Sales Tax Law Using LDR staff as a resource, the Institute is endeavoring to recodify the sales tax statutes in the Louisiana Revised Statute. The purpose of the recodification is to organize the statutes in a manner that facilitates ease of use and understanding, with no impact to intent or meanings. Corporate Franchise Tax The work of the Institute will include a study of the potential phase-out or restructuring, and replacement, of the corporate franchise tax 25
New Regulations Act 12 2016 First Extraordinary Session Expansion of corporation franchise tax to all entities taxed as C corporations Exception: LLCs qualified and eligible to make S corp election Initial franchise tax extended to entity in existence and actually conducting business in Louisiana Original NOI published in October 2016 Public hearing held November 30, 2016 26
New Regulations Act 16 2016 First Extraordinary Session Requires certain expenses paid to a related member be added-back when calculating corporation income tax Certain interest expense and costs Certain intangible expenses and costs Certain management fees Original NOI published in October 2016 Public hearing held November 30, 2016 27
New Regulations Act 8 2016 Second Extraordinary Session Amends the apportionment formula for most industries to implement a single sales factor formula Requires sales other than sales of tangible personal property to be sourced to Louisiana if the taxpayer s market for the sales is in this state Original NOI published in October 2016 Public hearing held November 30, 2016 28
New Regulations Additional regulations Criminal history record checks for LDR employees (Anticipated effective date January 20, 2018) Electronic filing and payment mandates (Act 150) Small Town Doctor credit (Act 342) Sales tax exemption for agricultural inputs (Act 378) Filing requirements for informational returns Inventory tax credit Historic structures tax credit 29
New Revenue Information Bulletins Act 413 regarding payment of solar credit claims Act 413 regarding payment of solar credit claims Act 211 regarding tax clearances for state contractors Act 211 regarding tax clearances for state contractors and sales tax resale certificates and sales tax resale certificates Acts 325 and 403 regarding the alternative fuel credit Act 309 regarding motion picture production tax credits Act 270 regarding disabled individuals Act 125 (2015 Regular Session) regarding recovery of reduction credits in 1/3 increments in 2017, 2018, and 2019 Act 11 (2016 Second Extraordinary Session) regarding the deduction for net capital gains 30
Multistate Tax Commission The Department is working closely with the MTC s Partnership Work Group in the development of model legislation to address changes in the federal partnership audit process. Additionally, the Department has representatives on the MTC s Audit Program, Nexus Program, and Uniformity Committee. 31
Policy Information Center Tax Policy Inquiry Email Boxes Corporate Income and Franchise Tax PracCIFTPolicyInquiries@la.gov Individual Income PractitionersIndividual.TaxPolicyInquiries@la.gov Sales PractitionersSalesTax.PolicyInquiries@la.gov Excise/Severance/Miscellaneous PracExcSevTaxPolicyInquiries@la.gov 32
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