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Louisiana State Tax Updates

For the latest news and updates on Louisiana state and local tax

July 2, 2021

Louisiana Work Opportunity Tax Credit Enacted and Earned Income Tax Extended

Louisiana has now added participants in work-release programs to the Louisiana work opportunity tax credit. The credit for work-release participants is effective retroactive to January 2, 2021. The credit’s purpose is to reduce barriers to employment for individuals participating in work-release programs. The non-refundable credit is equal to 5% of the total wages paid to eligible employees in an eligible job for 12 consecutive months, subject to a $2,500 per-employee cap. Any unused credit may be carried forward for five years and the credit program will sunset on June 30, 2027.

Louisiana’s legislation also extended the 5% benefit rate for qualified wages for the earned income tax credit to December 31, 2030. The credit benefit rate was previously subject to a scheduled drop to 3.5% of qualified wages after December 31, 2025. As such, this scheduled reduction has now been postponed until 2031.

Louisiana Enacts Youth Jobs Tax Credit and Apprenticeship Tax Credits 

As of June 23, 2021, Louisiana has enacted a Youth Jobs Tax Program credit and an Apprenticeship Tax credit. The Youth Tax credit provides a non-refundable tax credit that is allowed against income and corporation franchise tax for a business that hires one or more eligible youth on or after July 1, 2021. The credit requires the eligible employee to work at least three consecutive months in a full-time or part-time position. The potential credit is $1,250 per full-time hire and $750 per part-time hire. The total amount of credits claimed by all taxpayers is limited to $5 million per year and the Department will establish a first come first served system for allocating credits. Any unused tax credits may be carried forward up to five years. The Youth Jobs Tax credit will sunset on December 31, 2025.

The Apprenticeship Tax Credit is also a non-refundable tax credit (effective Jan 1, 2022) taken against the Louisiana income tax or corporation franchise tax for the employment of eligible apprentices. Each eligible apprentice that is employed for a minimum of 250 hours during the taxable period generates a $1.25 per hour tax credit up to $1,250 per eligible apprentice. The total amount of tax credits claimed by all taxpayers is limited to $2.5 million per year and the Department will establish a first come first served system for allocating credits. Any unused credits may be carried forward up to five years. This credit will sunset on December 31, 2028.

March 23, 2021

Louisiana Update on Extension of Filing Deadline

The Louisiana Department of Revenue is granting automatic filing and payment extensions to taxpayers whose homes, principal places of business, critical tax records, or paid tax preparers are located in the parishes declared federal disaster areas following the severe winter storm that occurred February 11, 2021, to February 19, 2021, and in Texas counties that are designated by FEMA as eligible for both individual and public assistance. The declared disaster area for Louisiana includes all 64 parishes. For individual income, corporation income, franchise, fiduciary income, partnership, and partnership composite tax returns and payments with original or extended due dates on or after February 11, 2021, and before June 14, 2021, the automatic extended due date is June 15, 2021. For purposes of income and franchise tax only, this extension will apply to all taxpayers and paid tax preparers in Louisiana and Texas regardless of parish or county, respectively. Tax returns and payments for the 2020 income tax year and 2021 franchise tax year are extended to June 15, 2021. For sales, severance, and excise tax returns and payments with original or extended due dates on or after February 11, 2021, and on or before February 28, 2021, the automatic extended due date is March 31, 2021. (Louisiana Revenue Information Bulletin No. 21-007, 03/18/2021.)

March 21, 2020

Statewide Public Health Emergency

Governor John Bel Edwards declared a statewide public health emergency as a result of the imminent threat posed to Louisiana citizens due to COVID-19. The Department of Revenue (“Department”) issued guidance with respect to the filing and payment extension relief for February 2020 sales tax taxes due on March 20, 2020, and to share other important updates. For purposes of the guidance issued by the Department, February 2020 sales tax includes the following taxes: General Sales and Use Tax, Direct Marketer Sales Tax, Automobile Rental Excise Tax, Hotel Occupancy Tax, Ernest N. Morial New Orleans Exhibition Hall Authority Food and Beverage Tax, and Ernest N. Morial New Orleans Exhibition Hall Authority Tour and Service Contractor Taxes.

Sales Tax Returns

The filing and payment deadline for the February 2020 sales tax return deadline is extended to May 20, 2020. This is an automatic extension and no extension request is necessary. The Department will waive delinquency penalties and compromise interest associated with delinquent sales tax remittances as long as the return and payment are received by the extended due date of May 20, 2020. While taxpayers cannot utilize the Parish E-File or Sales Tax Online filing systems to take advantage of this filing and payment extension relief, taxpayers can file sales tax returns and payments via LaTAP or by paper filing. All electronic filing and payment mandates with respect to sales tax are temporarily suspended. No penalties will be assessed for a taxpayer’s failure to file a sales tax return electronically or remit sales tax by electronic funds transfer.

Excise Tax Returns

The February 2020 excise tax returns and payments for (1) Wine Shipped Direct to Consumers and (2) Louisiana State and Parish and Municipal Beer Tax are due on March 20, 2020. The filing and payment deadline for these February 2020 excise tax periods is extended to May 20, 2020. This is an automatic extension and no extension request is necessary. The Department will waive delinquency penalties and compromise interest associated with delinquent excise tax remittances as long as the return and payment are received by the extended due date of May 20, 2020.

Assessments, Audits, and Litigation

Effective March 16, 2020, all tax assessments (i.e. income, sales, and excise tax) issued by the Department are suspended until April 13, 2020. This suspension is applicable to the time delay for a taxpayer’s petition to appeal for redetermination of an assessment with the Louisiana Board of Tax Appeals and for the time delays for appeals in Louisiana courts filed by taxpayers and the Department. The Department will grant an automatic extension for any outstanding audit or litigation matter, including but not limited to, proposed assessments, protests, requests for information, discovery requests, and continuances. Except for system-generated assessments on self-assessed returns, the Department will take no action in issuing formal assessments on audited accounts until at least April 13, 2020.

Collection Activity

The Department temporarily suspended collection activity on delinquent taxpayer accounts. However, delinquency interest and penalties will continue to accrue on unpaid balances. Learn more here.

February 2020

Louisiana Issues Guidance for Pass-Throughs Electing C-Corp Status

The Louisiana Department of Revenue recently issued guidance regarding the new corporate income tax regulations for pass-through entities electing to be taxed as a C corporation. The Department has begun accepting elections as of February 1, 2020, for taxable years beginning on or after January 1, 2019.[1] Elections can be made in the prior taxable year that the election was in effect. The election can also be made on or prior to the 15th day of the fourth month after the close of the taxable year the election is initially in effect. Pass-through entities electing to be taxed as a C corporation must meet specific requirements. On election day, members with more than a 50% interest in the entity, based upon capital accounts, must do the following:

  1. Approve the election
  2. Inform the Department in writing of this approval at the time of the election
  3. File Form R-6980, Tax Election for Pass-Through Entities, with the Department

Subsequently, the entity must electronically file Louisiana Form CIFT-620, Corporation Income Tax and Franchise Tax Return, for the taxable year in which the election was made as well as all tax years thereafter until the election is terminated.

[1] U.S. Department of Revenue Policy Services Division. Internal Revenue Service. (2020). Election of Pass-Through Entities (LAC 61.I.1001). Retrieved from https://revenue.louisiana.gov/LawsPolicies/NOI%20LAC%2061.I.1001%20(Proposed%20Regulation).pdf.

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