Louisiana will offer a tax amnesty from November 16, 2015 to December 15, 2015. Taxpayers that agree to pay delinquent taxes will receive a waiver of 33% of penalties and 17% of interest. The 2015 program applies to taxes due prior to January 1, 2015, for which the Louisiana Department of Revenue has issued an individual or business a proposed assessment, a notice of assessment, a bill, a notice, or a demand for payment no later than May 31, 2015. The 2015 program will be the last amnesty program until at least 2025 and taxpayers that do not participate in it may face increased penalties.
Background
In 2013, the Louisiana Legislature enacted House Bill 456, referred to as the Louisiana Tax Delinquency Amnesty Act of 2013, which directed the Louisiana Department of Revenue to develop and implement a tax amnesty program in three phases in 2013, 2014 and 2015. House Bill 633, which the Legislature passed in 2014, modified the 2014 and 2015 programs by expanding the outstanding taxable periods eligible for amnesty and increasing the penalty and interest relief provisions. The 2014 bill also provided for installment payment plans, compromise amnesty and double penalties.
The 2015 Amnesty Program
The 2015 amnesty program applies to all taxes administered by the Department (except for motor fuel taxes) due prior to January 1, 2015, for which the Department has issued an individual or business a proposed assessment, a notice of assessment, a bill, a notice, or a demand for payment no later than May 31, 2015.1 Taxpayers approved under the 2015 program will receive a 33% penalty waiver and a 17% interest waiver.2 Although the 2015 program’s penalty and interest waivers are less favorable than that offered under the 2014 amnesty program, the Department may consider compromising disputed tax liabilities in conjunction with amnesty.
Sutherland Observation
The Louisiana Tax Delinquency Amnesty Act of 2013 requires taxpayers undergoing audits or litigation that participate in the 2015 program to follow the Department’s interpretation of the law with respect to issues involved in the audit or litigation resolved through amnesty for taxable periods beginning January 1, 2016, January 1, 2017, and January 1, 2018.3 Taxpayers that fail to follow the Department’s interpretation of the law for these periods will be subject to a negligence penalty.4 Whether or not they seek to compromise disputed tax liabilities in conjunction with amnesty, taxpayers are strongly encouraged to consider the extent to which applying for amnesty could bind them on substantive legal issues in future tax periods. |
Compromise Amnesty
A taxpayer that disputes a portion of an assessed tax may be eligible to apply for amnesty by remitting a “compromise amount” before the end of the 2015 amnesty program.5 The Department will have 30 days to determine if the taxpayer will be granted amnesty based on the compromise amount.6 If the Department rejects the taxpayer’s compromise amount, the Department will not grant amnesty, and the taxpayer will be responsible for the full amount of the tax deficiency, penalty, interest and fees (if any). Moreover, the Department will retain the compromise amount and apply it towards the taxpayer’s outstanding balance.7
Post-Amnesty Penalties Doubled
Taxpayers that fail to participate in the 2015 amnesty program, and that have final judgments rendered against them or have exhausted all rights to protest taxes owed to Louisiana, will be assessed double penalties.8
Sutherland Observation
Taxpayers in several states, including California, Illinois and New Jersey, have challenged the legality of amnesty penalty provisions on constitutional and other grounds; however, courts largely have upheld these provisions against taxpayer challenges.9 It should be noted, however, that taxpayers have successfully challenged the application of these penalties.10 |
1 H.B. 663, § 3(C)(5) (2014).
2 Id. § 3(G)(1).
3 H.B. 456, § 3(E)(1) (2013).
4 Id.
5 Id. § 3(G)(2).
6 Id.
7 Id.
8 Id. § 3(G)(1).
9 See, e.g., Microsoft Corp. v. Franchise Tax Bd., No. CGC-08-471260 (Cal. Super. Ct. Feb. 17, 2011), rev’d on other grounds, 212 Cal.App.4th 78 (Cal. Ct. App. 2012); Advanced On-Site Concrete, Inc. v. Dep’t of Revenue, No. 1-06-3426 (Ill. Ct. App. May 22, 2008) (unpublished), cert. denied, No. 107011 (Ill. Nov. 26, 2008); Metro. Life Ins. Co. v. Hamer, 990 N.E.2d 1144 (Ill. 2013); Praxair Tech., Inc. v. Director, Div. of Taxation, No. 7445-05, 2010 WL 3517037 (N.J. App. Div. Sept. 1, 2010) (unpublished). See Sutherland’s coverage of the Praxair decision.
10 See, e.g., United Parcel Serv. Gen. Servs. Co. v. Director, Div. of Taxation, 25 N.J. Tax 1 (N.J. Tax Ct. 2009), aff’d, 61 A.3d 160 (N.J. App. Div. 2013), aff’d, 103 A.3d 260 (N.J. 2014). See Sutherland’s prior coverage of the Appellate Division’s United Parcel Service decision.
