On October 16, 2020, the attorney representing the Louisiana Association of Tax Administrators presented a proposal for centralized local sales and use tax collection in Louisiana (the “Localities’ Proposal”) to the Centralized Sales and Use Tax Administration Study Group (the “Study Group”).  The Study Group was created by the Legislature earlier this year (HR 31, 2020 1st Ext. Sess.) to make recommendations to the 2021 Legislature on the best method for centralizing local sales and use tax collection.  The Study Group is required to submit a report to the speaker of the House of Representatives and the president of the Senate by November 1, 2020.  The Localities’ Proposal was the first step in formulating a general framework to consolidate the current sales and use tax collection systems into a single collector system.

The Localities’ Proposal would create a new, yet to be named, single sales tax board (the “Sales Tax Board”) that would serve as a single point of electronic filing, registration (including a single registration number), payment, and policy advice.  A de minimis exception to the electronic filing requirement would be included for certain small dealers that desire to continue to prepare and file paper returns or remit tax in person.  The Sales Tax Board would be created through a constitutional amendment as a statewide political subdivision outside of the Executive Branch to recognize its status as a joint state and local authority.  The proposed Sales Tax Board would consolidate currently existing sales and use tax authorities and mechanisms.  Specifically, Parish E-File System and the Louisiana Sales and Use Tax Commission for Remote Sellers (the “Remote Sellers Commission”) would be relocated under the Sales Tax Board, and the Board would be vested with all statutory duties and obligations of the Louisiana Uniform Local Sales Tax Board.

The proposed Sales Tax Board would be composed of three divisions: (1) the Remote Sellers Division; (2) the State Division; and (3) the Local Division.  The State and Local Divisions would have sole authority over state-only or local-only issues or guidance, such as state-only or local-only exemptions.  The entire Sales Tax Board would be responsible for addressing issues or issuing policy guidance on issues that affect both the state and the localities.  The Sales Tax Board would have the authority to promulgate rules and regulations under the Administrative Procedure Act, the power to issue binding policy advice to the Department and local collectors, to issue private letter rulings, to promulgate and develop rules and standards for a state-wide voluntary disclosure program, a single refund claim, and multi-jurisdictional audits.  If the Louisiana Department of Revenue (the “Department”) or a local collector objected to policy advice the Board proposed to promulgate, the aggrieved  party would have the right to appeal to the Louisiana Board of Tax Appeals.  The proposed Sales Tax Board would also be permitted to procure the development of software and enter into agreements with the Louisiana Department of Revenue (the “Department”) and local collectors.

In addition to having the power to promulgate binding policy guidance, the proposed Sales Tax Board would develop and implement an electronic filing and remittance system similar in function to the existing Parish E-File system.  The Sales Tax Board would not own taxes remitted to it by dealers.  Rather, all taxes remitted to the Board would remain the property of the relevant taxing authority and would be distributed to the appropriate taxing authority daily.  Local distributions would be disbursed on a parish-wide level.  Data the Department and local collectors receive through the current electronic filing software systems would continue to be collected and would also be distributed to the relevant taxing authority daily.

Under the Localities’ Proposal, the Department and the local collectors would retain all of their collection and enforcement powers, including all audit rights (e.g., the right to determine which dealers are audited and who conducts the audit).  Similarly, the Department and the local collectors would retain their existing powers to issue assessments or file summary or ordinary proceedings.  Local collectors would also retain the responsibility for disbursing funds to the various sub-parish local taxing authorities.

In recognition of the fact that creation of the Sales Tax Board would be an inherently political process, the Localities’ Proposal intentionally avoided specifics regarding the composition of the proposed Sales Tax Board and its funding.  However, for discussion purposes, the Localities’ Proposal outlined a seven member Board to be composed of the executive directors (or their proxies) of four local associations (the Louisiana Sheriff’s Association, the Louisiana Municipal Association, the Police Jury Association of Louisiana, the Louisiana School Board Association).  Similarly, the proposal did not suggest the state sources of revenue to be used to fund the Sales Tax Board but did propose to use existing local sources of funding to fund the Proposed Board’s local activities.

The Localities’ Proposal also included several “other considerations” that were not relevant to the creation or mission of the proposed Sales Tax Board.  Those considerations included abolishing the distinction between tax exemptions and tax exclusions in favor of only exemptions.  The localities also proposed the elimination of optional exemptions.  Finally, the proposal suggested that the Sales Tax Board be tasked with tracking the job creation and economic activity associated with tax exemptions to review an exemption’s effectiveness.

The Localities’ Proposal is endorsed by the Louisiana Sheriff’s Association, the Louisiana Municipal Association, the Police Jury Association of Louisiana, the Louisiana School Board Association, and the Louisiana Association of Tax Administrators.

During the Study Group meeting, the Localities’ Proposal was subject to vigorous questioning by Study Group members representing a variety of interests.  Members representing the business community were concerned that the proposal retained the existing tax enforcement mechanisms, which can result in a taxpayer being continually subject to audit by different local collectors.  Members representing localities were concerned about whether ceding the right to directly collect tax to the proposed Sales tax Board would impact a locality’s bond ratings.  Concerns were also raised about the composition of the proposed Sales Tax Board, e.g., the number of members, and how funding would be divided between the state and the localities.  Specific concerns related to the composition of the proposed Sales Tax Board revolved around whether the state would be willing to cede is regulatory authority to the Sales Tax Board, especially if local representatives made-up the majority of the Board’s members.  Concerns were also raised regarding whether the proposed Sales Tax Board would actually result in a cost savings to the state and local taxing authorities.


The Localities’ Proposal appears to represent a good-faith effort by the local associations to work towards centralized sales and use tax collection.  However, many obstacles remain in the path of a true centralized sales and use tax regime.  In the past those obstacles have proved to be insurmountable but the fact that the local associations were able to agree on a proposed framework is a significant development.

As pointed out during the meeting, while the Localities’ Proposal does address the administrative issues related to filing returns and has the potential to result in more certainty through uniform guidance, it is only a partial solution and does not sufficiently address the most significant taxpayer concern: the lack of centralized enforcement and collections.  As a result, even if the proposed Sales Tax Board were to come to fruition, a multi-jurisdictional taxpayer would still be subject to seemingly unending local audits, which oftentimes require legal representation and litigation to resolve.  The cost incurred to defend multiple state and local audits can be significant and the threat of those audits is an impediment to doing business in the state.  At a minimum a mechanism for streamlining the audit process should be considered.  For example, as proposed during the meeting, when one taxing authority initiates an audit the Sales Tax Board could notify all other taxing authorities of the audit and give them a window for initiating an audit of the same taxpayer for the periods at issue.  Under this proposal, a taxing authority that chose not to initiate an audit during this window would be prohibited from later auditing the same taxpayer for the same tax periods.

There are also significant political hurdles to overcome related to the composition of the proposed Sales Tax Board and its funding.  As noted during the meeting, the state in particular may be unwilling to cede its regulatory authority to the Sales Tax Board if the Board’s membership is composed of a majority of local representatives.  It is possible this hurdle could be overcome by lowering the bar for appeals to the Board of Tax Appeals by an aggrieved taxing authority.  Under the current Uniform Local Sales Tax Board Rules, the Board of Tax Appeals may only overrule a proposed private letter ruling appealed by a local taxing authority if the “ruling is contrary to law or a controlling ordinance, conflicts with pre-existing jurisprudence, or otherwise is clearly arbitrary and capricious.”[1]  This standard is difficult for the aggrieved taxing authority to overcome and rarely results in a successful appeal.

The “other considerations” in the Localities Proposal, are not relevant to the Study Group’s mandate and appear to represent an attempt by the local taxing authorities to exert more control over exemptions and prejudice tax litigation in favor of the taxing authority.  The proposal to abolish the distinction between tax exemptions and tax exclusions is particularly egregious.  The taxing authorities are likely seeking to remove this distinction because the burden to prove taxability when an exclusion is at issue is on the taxing authority.  In contrast, the taxpayer has the burden of proving an exemption applies.  Because “exclusions” from tax are essentially those transactions which are not taxed in the first instance (for example, transactions involving sales of immovable property, sales of services or sales to governmental entities and the United States government), it is unclear how the distinction between exclusions and exemptions could be accomplished short of making all transactions taxable and subsequently exempting certain transactions from tax.  This would be a significant departure from the current system in Louisiana and create substantial additional complexity in Louisiana’s already overly complex sales tax laws.

It is not certain that the centralization effort will ultimately be successful, or whether it will provide much needed certainty and uniformity to taxpayers and the business community, but the effort is a significant step forward because, historically, the localities refused to consider centralized collection in any form.  While the proposal has been formulated with input from, and has been well received by, local government, it is clear that such a significant overhaul of the Louisiana sales and use tax system will require extensive coordination to facilitate the day-to-day operations and consolidation of the various taxing authorities collection operations.  This will not be accomplished quickly.

For additional information, please contact: Jaye Calhoun at (504) 293-5936, Willie Kolarik at (225) 382-3441, or Michael McLoughlin at (504) 620-3351.


[1] La. R.S. 47:337.102(D)(3).


On Wednesday, October 21, 2020, the CDC issued an expanded definition of who is considered a “close contact” for purposes of determining who should self-quarantine for 14-days following an exposure to a COVID-19 confirmed individual.  Previously, the CDC defined “close contact” as someone who was within six feet of a confirmed COVID-19 positive individual for a prolonged period, which the CDC indicated was generally 15 continuous minutes or more.

Now, the CDC provides that a person can become infected even if they were within 6 feet of a confirmed COVID case for only a short period if they were around them a cumulative total of 15 minutes or more over a 24-hour period.  In other words, short intervals of being around someone who is later confirmed to be a COVID positive case can still make that person a “close contact” if the individual exposures added together over the work day or shift equal or exceed 15 minutes total.

This broader definition significantly expands the universe of those who may have to self-quarantine when the employer learns of a laboratory confirmed COVID-19 case in the workplace.  Many employers are having to do contact tracing on their own without the assistance of public health agencies.  That task just got harder in light of this expanded definition.  Employers will now have to account for all short duration contacts over the work day or 24-hour period for your employees, sometimes having to go back more than a week depending on when the COVID positive individual first had symptoms or was tested.

On October 20, 2020, the Louisiana Supreme Court issued a major decision in an ad valorem (property) tax case involving oil and gas wells.  D90 Energy, LLC v. Jefferson Davis Parish Board of Review, 2020-C-200 (La. 10/20/2020).

D90 Energy, an independent oil and gas operator, purchased from Goldking two gas wells and one salt-water disposal well for $100,000.  Facing an assessment of over $3 million, the producer paid over $100,000 in taxes under protest for two of the tax years and appealed the Assessor’s decision.  The Louisiana Tax Commission reduced the assessed value to $235,000, considering a Tax Commission regulation that allows recent, valid sales that are properly documented to be a measure of fair market value.  The District Court for Jefferson Davis Parish affirmed the Tax Commission’s correction of the Assessor’s valuation, but the Third Circuit Court of Appeal reversed, reasoning that the Tax Commission should have afforded “much discretion” to the Assessor’s determination of value.  The Louisiana Supreme Court granted D90 Energy’s application to review the Third Circuit’s decision.

In a unanimous decision, the Supreme Court reversed the Court of Appeal’s decision and reinstated the Tax Commission’s decisions in favor of D90 Energy.  The Supreme Court found that the Tax Commission properly corrected the Assessor’s market value determination by considering the recent arms-length sale from Goldking to D90 Energy.  The Supreme Court found that the Tax Commission possessed the authority to correct the Assessor’s valuation, and the record evidence supported the correction.  The recent sale, as opposed to regulatory tax tables, was a proper measure of value for D90 Energy’s wells under the facts.  The Supreme Court also found that the Tax Commission was not limited to reviewing just the information provided to the Assessor, but could take evidence, hear testimony, and consider the administrative record established before it in an appeal of an Assessor’s determination.  Finally, the Supreme Court addressed the effect of a taxpayer’s failure to pay under protest when it is successful at a Tax Commission hearing, finding that such payment is not required when the taxpayer prevails before the Tax Commission.

This ruling is a key Louisiana tax decision on the scope of authority possessed by Assessors in ad valorem (property) tax matters and for the Louisiana Tax Commission as a reviewing body.

** Kyle Polozola and Phyllis Sims of Kean Miller LLP represented D90 Energy, LLC in this litigation.


Kean Miller’s oil and gas and tax attorneys stand ready to assist on matters of ad valorem (property) tax that affect energy companies and other businesses.

In the aftermath of hurricanes Laura and Delta, Southwest Louisiana is faced with a widespread reconstruction project the size of which it has not seen in quite a while.  While never afraid to roll up the sleeves and get to work, this time the demand for contractors exceeds the local supply.  Welcoming help from each other is nothing new for our two great states in times of trouble and once again, many Texas based construction companies have begun or are considering getting involved with Southwest Louisiana’s “renovation.”

The purpose of this piece is to remind all involved that construction law in Louisiana has an important distinction from construction law in Texas.  In Texas, a general contractor is not required to have a license to enter a contract for construction or to perform construction activities.  With very few exceptions, the opposite is true in Louisiana.

The Louisiana contractors licensing law is found at La. R.S. § 37:2150-2192.  In general, it requires all contractors performing commercial projects to be licensed by the Louisiana State Licensing Board for Contractors.  The statute contains different licensure requirements for different types of construction primarily based on value of the project or the relative difficulty involved.  For example, a commercial license is required for all commercial projects of $50,000 or more.  A residential license is required for all projects exceeding $75,000.

Within these two broad categories, there are certain subgroups that have varying dollar amount thresholds.  For example, if your commercial project involves any hazardous materials, a license is required if the project value exceeds $1.00, which is to say, you must be licensed.  The same one-dollar threshold is true for mold remediation, which is in particularly high demand following back-to-back hurricanes.

For our friends who are looking for contractors, we encourage you to go to www.lacontractor.org which provides a list of all licensed contractors.  Understandably everyone wants to get back on their feet as fast as possible, but it only takes a second to confirm that the business you may be dealing with is in fact licensed in Louisiana.

To our friends in Texas looking to lend a hand to its neighbors to the east, we likewise encourage you to visit www.lacontractor.org to review the requirements, schedule a test, and get licensed before contracting for or performing any construction work in Louisiana.

It is our understanding that the Louisiana State Licensing Board for Contractors has been inundated with applications from Texas based construction firms seeking licensure for some component of the South Louisiana rebuild.  We understand that due to COVID-19 restrictions, the normal testing locations cannot accommodate the demand for tests and that alternative sites have been offered at various places throughout the state.

For more information on the Kean Miller Construction Law Team, click here.

It has become a somewhat unpleasant autumn ritual for many taxpayers:  should we agree to a request from the Louisiana Department of Revenue (the “Department”) for more time to audit.  Once the decision to agree to an extension has been made, thanks to the COVID-19 pandemic, signing that waiver has become more complicated.  Traditionally, the Department requests that a taxpayer under audit sign a waiver of prescription each fall for any tax period that will prescribe at the end of the year (for non-Civil Code aficionados, prescription is analogous to the statute of limitation).  Unless it has been interrupted or suspended, the prescriptive period for assessing taxes in Louisiana, except real property tax, is three years from December 31 of the year the tax is due.  Hence, the push in the fall to get the necessary waivers signed before the end of the year.  As discussed below, the Department now requires prescription waivers to be signed electronically and many taxpayers have found the Department’s procedures associated with electronic signatures challenging.

For its part, the Department’s anxiety over the accuracy of prescription waivers is the result of a couple of losses in court related to prescription waiver signings, including the Louisiana Court of Appeals of the Fifth Circuit’s decision in Bridges v. X Communications, Inc.[1]  At the time of that case, the procedures followed by auditors responsible for getting waivers signed on time seemed to be slightly less formal, with the auditor determining the correct person at the company to sign a waiver in any audit in the auditor’s inventory.  In X Communications, the Department’s auditor accepted a signed prescription waiver from a person unauthorized to act for the company.  As a result, the court found that the waiver did not stop prescription from running and the Department was forced to drop the case for the prescribed year.

To ensure that waivers are executed correctly, the Department instituted a more general policy of requesting Agreements to Suspend Prescription each fall from all taxpayers in audits covering tax periods set to prescribe that year end.  Because of X Communications and similar cases, the Department has become very meticulous about making sure the waivers are properly executed by a person vested with the authority to sign and that all the instructions have been properly followed.  If the waiver is not executed exactly in accordance with the Department’s exact instructions, the waiver will be rejected and sent back to the taxpayer for re-execution.  Issues with properly executing a waiver typically arise when a busy corporate officer does not follow the Department’s instructions to the letter.    Those issues can result in the corporate officer having to re-execute the waiver in a manner that complies with the Department’s instructions.

Because many corporate officers and Department personnel are now working remotely due to the pandemic, the Department now requires all prescription waivers be executed electronically through DocuSign.   Affected taxpayers will receive an email request from “LDR DocuSign Team via DocuSign” that includes a secure link to the DocuSign “Default Waiver” for each tax type in the audit(s).  A person with the authority to bind the company must properly complete and electronically sign the DocuSign Waiver within five business days of receiving the email containing the document.

If the waiver request is emailed to someone at the taxpayer’s business who is not an authorized signer, the recipient must send the document to a person authorized to execute this document.  This can be done by opening the document and clicking “Other Actions” and then selecting “Assign to Someone Else” and then, after the appropriate information is entered, the “Default Waiver” or prescription agreement will be sent to that person to complete, sign and “Finish” the submission of the document.  To mitigate issues that arose related to the Department’s DocuSign procedures earlier in the year, the Department has stated that it is willing to work with taxpayers that do not wish to file electronically or are not capable of doing so.  Those taxpayers will need to reach out to the Department after receiving the email for instructions on how to file manually.

In many instances, executing a waiver can prevent the issuance of an artificially inflated or arbitrary assessment and allow the taxpayer additional time to work with an auditor to complete the audit, which may result in resolution of the audit. If the taxpayer does not respond to the Department’s request for the electronic waiver, the Department may issue an assessment or file suit to collect tax.  However, before agreeing to a prescription waiver a taxpayer should carefully consider their specific facts and circumstances of doing so because it may be neither necessary nor advisable to agree to a prescription waiver in the taxpayer’s specific circumstances.  The decision as to whether or not to sign a waiver in the first place should be made on a case-by-case basis.

For additional information, please contact: Jaye Calhoun at (504) 293-5936; Willie Kolarik at (225) 382-3441, or Mike McLoughlin at (504) 620-3351.


[1] Bridges v. X Communications, Inc., 03–441 (La. App. 5th Cir. 11/12/03), 861 So.2d 592, writ denied, 03–3431 (La.2/20/04), 866 So.2d 830.

The Louisiana Legislature called itself into a second extraordinary session to address several issues confronting the state. The Second Extraordinary Session, which began on September 28th, was called by the legislature, and not the governor, and will focus primarily on addressing the continuing negative economic effects of the coronavirus on Louisiana and the damage caused by the hurricane that struck the southwest portion of the state.  However, among the 70 topics that are included on the list of items to be addressed in the Extraordinary Session are several tax related issues including the state unemployment trust fund, sales and use tax imposed on items leased or rented for re-lease or re-rental, severance taxes, the classification of workers as independent contractors vs. employees, and business tax incentives and credits, including an inventory tax credit carryforward.

This will be the third legislative session in Louisiana for 2020.  The Regular Session ended on  June 1st and the First Extraordinary Session ran from June 1st until June 30th.[1]  In the first two sessions, the legislature enacted several tax changes including suspension of the capital stock portion of the corporation franchise tax for small businesses, imposition of a sales tax collection obligation on marketplace facilitators, and changes to several of the state’s procedural rules related to tax cases.  This article briefly discusses what we anticipate that the legislature will consider based on the Proclamation issued on September 21st and highlights a few significant tax developments in the prior two sessions.

Unemployment Insurance Trust Fund

The most immediate and pressing tax related concern of the Second Extraordinary Session is the need to address the anticipated shortfall in the state’s unemployment insurance trust fund.  Absent a change in the law, the significant increase in the state’s unemployment rate, and resulting claims, could trigger a surtax, i.e., an unemployment insurance trust fund solvency tax, on employers.  As in other states, Louisiana law requires employers to pay into an unemployment insurance fund to cover the cost of state unemployment benefits. The employer’s contribution is based on a rate that increases or decreases with the company’s experience with unemployment, i.e., how many of the company’s former employees claim unemployment benefits.

Prior to the pandemic, Louisiana’s unemployment insurance trust fund balance was significant, over a billion dollars, and had been projected to grow even more.  However, with the significant increase in state unemployment claims in 2020, as of September 25, 2020, the balance in the fund is was $49.4 million.  Because the balance in the fund is now below $100 million, the fund’s administrator is required by law to levy a solvency tax on employers.[2]

On September 24, 2020, Governor Edwards issued an executive order suspending the sections of Louisiana law that require the additional solvency tax through October 9, 2020.[3]  In a letter to the Senate President and Speaker of the House dated September 25, 2020, Governor Edwards also requested that the Louisiana Legislature reallocate $75 million in money unspent in the Main Street Recovery Grant Program to the unemployment insurance trust fund during the Second Extraordinary Session.  It is not yet clear whether the Legislature will honor the Governor’s request or whether an additional executive order suspending the solvency tax provision will be required.

Independent Contractors vs. Employees

Another issue affecting state and federal unemployment tax collections is the recent growth in the use of independent contractors.   If a company’s workers are independent contractors, the company does not have to withhold personal income taxes or pay into federal and state unemployment insurance funds on payments made to those contractors for services rendered. Legislation is being proposed that would significantly increase penalties for misclassifying employees as independent contractors, that is, if a business is found to have misclassifed employees for a second time, the penalty would be increased from a maximum of $250 per individual to a maximum of $10,000 per individual.

Sales Tax Exemption for Re-rentals

One of the issues that may be addressed in the upcoming Extraordinary Session is a unique tax imposition that has long created an unnecessary cost for some lessees of tangible personal property in the state.[4] Louisiana imposes sales and use tax on both the sale of tangible personal property and the rental of such goods.[5] Like other states that impose sales and use tax, Louisiana provides a resale exemption from tax for purchases of taxable goods that will subsequently be resold, with tax then being collected on the sale to the ultimate consumer.[6] This prevents pyramiding of tax when goods are sold multiple times prior to the final sale to the consumer.

However, Louisiana differs from most states in that it does not provide an exemption for the lease or rental of tangible personal property for re-lease or re-rental to a third party.[7] Thus, for example, if a company in the business of renting tangible property to third parties does not have sufficient equipment on hand to meets its customer’s needs and has to rent property from third parties to fulfill contracts, the company would have pay tax on its rental of the goods and then have to collect tax again from the customer on the rental payments for the re-rented property.  The lack of an exemption, comparable to the sale for resale exemption, unnecessarily increases the cost of renting tangible personal property by businesses in Louisiana and does not achieve any significant tax policy goals.  There is no reason for the legislature not to relieve these types of transactions from tax other than the loss of revenue, which may be enough to prevent the legislature from remedying the problem.

First 2020 Extraordinary Session

Suspension of capital stock stack for small businesses

Act 15 (S.B. 6), 2020 1st. Ext. Sess., effective July 13, 2020, enacted La. R.S. 47:601.1, which suspends corporation franchise tax on small business corporations. However, based on the changes to the original bill made by the legislature this suspension will likely not have a significant impact on taxpayers.  Effective July 1, 2020, the corporate franchise tax levied on small business corporations is suspended, including the initial tax levied on corporations or other entities for the first accounting period in which the entity becomes subject to the corporation franchise tax.[8] This suspension applies to small business corporations for taxable franchise periods beginning between July 1, 2020 and June 30, 2021.

This Act defines a “small business corporation” as a business exercising its charter, or qualified to do business or actually doing business in Louisiana, or a business-owning or using any part of all of its capital, plant or any other property in the state of Louisiana. The business must be subject to the corporation franchise tax and have taxable capital of $1,000,000 or less to qualify as a small business. The franchise tax is imposed at a rate of $1.50 for each $1,000, or major fraction of the first $300,000 of taxable capital.[9] The legislation originally called for the suspension of the capital stock tax for all taxpayers but the revenue impact was determined to be too substantial and, ultimately, the provision was watered down prior to enactment.

2020 Louisiana Regular Session

Marketplace facilitators

Act 216 (S.B. 138), 2020 Reg. Sess., effective July 1, 2020, required marketplace facilitators to collect sales and use tax.  Beginning July 1, 2020, Louisiana requires a “marketplace facilitator” to register with the Louisiana Sales and Use Tax Commission for Remote Sellers and to collect and remit applicable sales and use tax for sales delivered into Louisiana. This brings Louisiana into line with other states that impose sales tax and have acted to require marketplace facilitators such as Amazon and E-Bay to begin collecting state taxes after the Supreme Court’s decision in Wayfair[10] which overturned the physical presence requirement for nexus set out in Quill.[11] A “marketplace facilitator “is defined in the new law as any person that facilitates a sale for a marketplace seller through a marketplace by doing either of the following:

  1. Offering for sale through a marketplace seller, tangible personal property or services for delivery into Louisiana; or,
  2. Collecting payment from the purchaser and transmitting all or part of the payment to the marketplace seller, regardless of whether the facilitator receives compensation or other consideration in exchange for facilitating the sale.

A “marketplace seller” is defined as a person who sells or offers for sale tangible personal property or the sale of services for delivery into Louisiana through a marketplace that is owned, operated, or controlled by a marketplace facilitator. Marketplace facilitators are required to register and collect and remit state and local sales and use tax on all taxable remote sales for delivery into Louisiana that the marketplace facilitator transacts on its own behalf or facilitates on behalf of a marketplace seller.

An exception is provided for marketplace facilitators with fewer than 200 sales or less than $100,000 of gross sales into Louisiana for the prior or current calendar year. All remote sales into Louisiana, including exempt sales, are considered in determining if either of these thresholds are met. Once a threshold is met, however, the registration, filing and collection obligations commence and a marketplace facilitator is required to register within 30 days of meeting the threshold and to begin collection of sales and use tax within 60 days. Marketplace facilitators are relieved from any liability for failure to collect sales and use tax if the failure is due to insufficient information from the marketplace seller in which case the marketplace seller will then be liable for any tax due.

This effort to force marketplace facilitators to be tax collectors in Louisiana presents several potential problems.  It appears that under the proposed definitions of “marketplace,” “marketplace facilitator,” “marketplace seller” a third-party that does not have any control over the sales proceeds or knowledge of the terms of a transaction could nonetheless be considered a dealer and required to remit tax, even though it may not have access to the necessary information to do so.  The legislation also places significant administrative burdens on both marketplace sellers and marketplace facilitators.

For example, it appears each party has the responsibility for making a taxability determination (for both state and applicable local taxes) and the parties may disagree as to what is properly taxable.  This could create issues where a marketplace facilitator rejects a marketplace seller’s characterization of a transaction as an excluded isolated or exempt sale.  Because the marketplace facilitator has an incentive to take a conservative position and would likely have significantly more power than the marketplace seller, a marketplace facilitator could, in theory, adopt a position that all sales are taxable, regardless of information provided by the marketplace seller. The legislation provides no method for dealing with such differences in interpretation.

The class action provision in the legislation appears to be designed to mitigate this issue to some extent but because Louisiana state and local sales and use tax laws can be difficult to interpret, it is not clear how effective the class action provision would be in motivating the marketplace facilitator and marketplace seller to reach an agreement on taxability.  Further, it now appears that both the marketplace seller and the marketplace facilitator must maintain documentation to support the taxability of transactions on audit.

Definition of Final Determination

Act 234 (S.B. 205) 2020 Reg. Sess., effective January 1, 2021, amended  La. R.S. 47:287.614(C) to add a new provision that provides helpful guidance to taxpayers who are audited by the Internal Revenue Services (“IRS”) and must report any audit findings to the Department.  New section La. R.S. 47:287.614(C)(2) provides a legal definition for the term “final determination” of the IRS as used in subsection C(1), which requires the taxpayers to file an amended state tax return within 180 days of the final determination of any adjustments made by IRS to their federal tax returns.  A final determination is defined as:

  • the taxpayer’s execution of federal Form 870, or its equivalent, agreeing to the final and complete disposition of all outstanding issues;
  • the expiration of the statutory period to petition the United States Tax Court for a redetermination;
  • the execution of a signed closing agreement between the taxpayer and the IRS that results in a final determination of all items in the federal audit;
  • the issuance of a final, non-appealable decision of the United States Tax Court, the United States Court of Federal Claims, a United States District Court, a United States Court of Appeals; or a decision of the United States Supreme Court; or
  • the filing by the taxpayer of an amended federal income tax return that changes state taxable income.

This provision is welcome as it adds clarity to an issue that has caused confusion for taxpayers.

Local sales and use tax adjudication

Act 309 (S.B. 164), 2020 Reg. Sess., effective July 1, 2020, amends La. R.S.  47:337.61 to limit the use of summary proceedings by local tax collectors to situations in which:

(1) The collection of a tax assessment that has become final, a bankruptcy receiver has been appointed for the taxpayer, or the taxpayer self-assessed the amount shown due on the return;

(2) A jeopardy assessment has been or could be issued against the taxpayer;

(3) A rule to cease business has been or is concurrently brought against the taxpayer;

(4) The matter involves the collector’s authority to enforce collection of taxes collected from others; or,

(5) A taxpayer or dealer has failed to make and file any required return or report where the collector estimates the tax due to be less than $100,000.

In addition, Act 309 amended R.S. 47.337.51(A)(2) to extend from 30 days to 60 days the time period in which a nonfiler that receives an assessment may either pay an assessment outright or pay the assessment under protest and contest the determination.  It also permits a remote vendor that has never filed a return in a parish and is assessed over $100,000 dollars to file a petition with the Board of Tax Appeals under R.S. 47.337(A)(1) rather than have to pay the amount of an assessment under protest. In addition, Act 118 (S.B. 283), 2020 Reg. Sess., effective January 1, 2021, extends the time for a nonfiling taxpayer to respond to a local notice of determination from 15 to 30 days. Also, all taxpayers now have 60 days instead of 30 to take action after the local collector issues a notice of assessment issued under R.S. 47.337.51(A)(1).

Net operating losses

House Committee Resolution (“HCR”) 76 of the Regular Session was aimed at any future 2020 extraordinary sessions and requested that the governor include in the call for any future 2020 session changes to the state net operating loss (“NOL”) carryback provisions of the corporate income tax similar to the changes to the carryback provisions of NOL deduction adopted in the federal CARES Act.[12] Even though Louisiana a federal conformity state, it has not adopted the federal NOL provisions of IRC Section 172. Thus, the CARES act changes to Section 172 are not automatically adopted. The House resolution requests that appropriate changes to the Louisiana carryback provisions be included in any proclamation convening an extraordinary session of the legislature in 2020 to help businesses with losses due to the pandemic. However, none of the 70 items included in the Proclamation announcing the second extraordinary session appear to address NOLs.

For additional information, please contact: Jaye Calhoun at (504) 293-5936; Willie Kolarik at (225) 382-3441, or Mike McLoughlin at (504) 620-3351.


[1]  Because it is an even-numbered year, tax increases or exemptions cannot be addressed in a Regular Session of the legislature and an Extraordinary Session must be called La. Const. Art. 3 section 2.

[2] La. R.S. 23:1536(E)(1).

[3] 129 JBE 2020, Section 2(b) (September 24, 2020).

[4] See, Gulf Coast Rental Tool Service v. Collector of Revenue, 98 So 2d 704 (1957).

[5] La. R.S. 47:302(A).

[6] La. R.S. 47:301(10)(A).

[7] La. R.S. 47:301(7).  In St. Gabriel Industrial Enterprises, Inc. v. Broussard,  602 So 2d 1087  (1992), the court held that the tax on the re-rental of tangible personal property did not apply to intercompany transactions. A specificexclusion is provided for the lease or rental for the purpose of re-lease or re-rental of casing, tools, pipe, drill pipe, tubing, etc., used in connection with the operating, drilling, completion, or reworking of oil, gas, sulphur, or other mineral wells. La. R.S. 47:301(7)(b).

[8] La. R.S 47:611(A).

[9] La. R.S. 47:601(A)

[10] South Dakota v. Wayfair Inc., 138 S. Ct. 2080 (2018).

[11] Quill Corp. v. North Dakota, 504 U.S. 298 (1992).

[12] P.L. 116-136, 03/27/2020.

In a recent decision disagreeing with the First Circuit, the Louisiana Court of Appeal, Fifth Circuit held that (subject to certain exceptions) the Louisiana Construction Anti-Indemnity Act (La. R.S. 9:2780.1) (the “LCAIA”) is applicable to contracts awarded pursuant to the Public Works Act and prohibits a public entity from requiring a contractor to purchase insurance that would provide coverage for the public entity’s own acts or omissions.   The LCAIA generally nullifies provisions in construction contracts that (1) require the indemnitor (i.e., the person required to indemnify the other) to indemnify the indemnitee (i.e., the person entitled to indemnity) for the indemnitee’s own negligence or fault and (2) require the indemnitor to purchase insurance covering the indemnitee’s acts or omissions.  In addition, a provision in the Louisiana Public Works Act (La. R.S. 38:2216(G)), among other things, nullifies any provision in a public contract (“other than a contract of insurance”) that requires the contractor to hold harmless or indemnify the public entity for damages arising from the negligence of the public entity (emphasis added).

In Salathe v. Parish of Jefferson through Dept. of Sewerage, 19-303 (La. App. 5th Cir. 7/15/20) ___ So. 3d ___ (2020 WL 3987985), a contractor entered into an agreement with the Jefferson Parish Department of Sewerage (the “Parish”) to perform work on a sewer line.  An employee of the contractor was injured on the job and sued the Parish, the Parish’s insurer, and the contractor’s insurers alleging that the Parish’s negligence caused the injury.  The contract at issue contained two relevant provisions.  The first required the contractor to indemnify the Parish for any damage occasioned by the Parish’s own fault or negligence.  The parties all agreed that this provision was clearly null and void under either or both Section 38:2216(G) or the LCAIA.

But the second relevant contractual provision required the contractor to purchase insurance naming the Parish as an additional insured and required insurance coverage for the contractor’s indemnity obligations.  The Parish argued that this second provision was enforceable because the LCAIA was inapplicable because Section 38:2216(G) provided the more specific legislative pronouncement by excepting “contract[s] of insurance” from its general prohibition of certain indemnity obligations.  But the Fifth Circuit disagreed, holding first that the LCAIA was generally applicable to contracts let under the Public Works Act.  It also specifically stated that to the extent Section 38:2216(G) would otherwise allow for such a contractual provision requiring the procurement of insurance, the LCAIA controlled and generally prohibited an insurance provision such as the one at issue here.  The Court noted that the LCAIA provided certain exceptions to this prohibition—primarily allowing certain indemnification and insurance procurement provisions in construction contracts if the indemnitor recovered the cost of the required insurance in the contract price—but found none to be applicable in this case.  In its ruling, the Fifth Circuit acknowledged its disagreement with the First Circuit’s holding in an earlier decision that Section 38:2216(G) provided the more specific pronouncement and allowed public bodies to require contractors to procure insurance that covered the acts and omissions of the public body (see Jeff Mercer, L.L.C. v. State, Dept. of Transp. and Development, 13-1108 (La. App. 1st Cir. 11/19/13), 2013 WL 12123235).[1]  The Salathe case creates a circuit split on the issue, which may ultimately lead to an opinion by the Louisiana Supreme Court or legislative amendment to specifically address the issue.


[1] This case involved a contract with the Department of Transportation and Development, which contracts are governed by certain provisions found in Title 48 of the Louisiana Revised Statutes and to which it is generally understood that the provisions in Title 38 do not apply.

On August 8, 2020, President Donald Trump issued an executive order directing the Centers for Disease Control (“CDC”) to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 …”.  On September 1, 2020, the CDC, using its quarantine authority, has opined that evictions would lead to homelessness and spread of COVID-19 because evictions would lead to individuals going to homeless shelters or living with extended family.  In the opinion of the CDC, those close living quarters would lead to more spread of COVID-19.   Based upon the CDC’s advice, President Trump is expected to issue an executive order issuing a nationwide moratorium to prohibit evictions of qualified tenants.

The Executive Order would set forth four criteria that a tenant must meet in order to be eligible for the moratorium relief. A tenant must:

  • Have an income of $198,000 or less for couples filing jointly, or $99,000 for single filers;
  • Demonstrate they have sought government assistance to make their rental payments (the one-time stimulus payment issued early this year satisfies this criteria);
  • Affirmatively declare they are unable to pay rent because of COVID-19 hardships; and
  • Affirm that they are likely to become homeless if they are evicted.

This moratorium would provide tenants with temporary relief through December 31, 2020.  However, the moratorium does not forgive the obligation to pay the rent.  If the tenant was laid off in March, it could owe nine months of accrued rent by the time the moratorium ends.

Absent a Federal financial aid package, many tenants will not be able to pay the accrued rent.  An impecunious tenant makes the odds of recovering that accrued rent from the tenant pretty low.   The tenant could be evicted upon the expiration of the moratorium, but are there going to be any tenants in the market to occupy that unit?  Lease amendments could be a solution – if properly drafted, a lease amendment could address payment of the accrued rent over time with acceleration of the accrued rent in the event that the tenant receives any financial aid or rental assistance, and other terms to address this unprecedented pandemic and economic uncertainty.  The collaboration of the landlord and tenant could benefit both parties by giving the tenant an opportunity to get back on his/her feet, and giving the landlord better odds of collecting the accrued rent and keeping its apartment units occupied.

Just a quick reminder that in 2007, the Louisiana State Police (“LSP”) adopted regulations requiring special reporting requirements for persons “engaged in the transportation of hazardous materials by railcars, vessels, or barges, or the temporary storage of hazardous materials in any storage vessel not permanently attached to the ground” if that activity is within “a parish affected, or projected to be affected, by a Category 3 or higher hurricane for which a mandatory evacuation order has been issued.”  LAC 33:V.11103.  Hazardous materials are those materials listed in 40 C.F.R. Part 355, Appendix A.  Temporary storage is defined as storage in a portable container, and excludes any storage in pipelines or any other storage vessel permanently attached to the ground.

At the present time (August 25, 2020 at 11:00 AM), Hurricane Laura is a Category 1 storm; however, it is projected by the National Hurricane Center that Hurricane Laura will become a Category 3 storm with maximum sustained winds of 110 to 130 mph.  Landfall is currently projected to occur between Morgan City, Louisiana and San Luis Pass, Texas, as early as the evening of August 26, 2020.  It is projected that the hurricane will affect much of western and central Louisiana parishes.  Hurricane Laura closely follows on the heels of Tropical Storm Marco, which caused  significant rainfall in south Louisiana on Monday, August 24, 2020.  The Governor of Louisiana has issued an executive order that puts the entire State of Louisiana under a declaration of emergency.  On August 23, 2020 three parishes, Jefferson, Lafourche and Plaquemines, issued mandatory evacuation orders for portions of their parishes due to imminent combined impacts from Marco and Laura.  On Monday August 24, Cameron Parish issued a mandatory evacuation order and Calcasieu Parish issued a voluntary evacuation order that may be upgraded to mandatory. We are not aware of any mandatory evacuation orders for any other Louisiana parishes at this time.  The following is a link to all parish emergency response offices which will provide contact information to inquire about any orders issued: http://gohsep.la.gov/about/parishpa.

If a mandatory evacuation order is issued for any Louisiana parishes due to a Class 3 or higher category hurricane, the rules (LAC 33:V.11105) require the following:

  • Notification shall be given to the DPS, via electronic submittal, to the 24-hour Louisiana Emergency Hazardous Materials Hotline email address at emergency@la.gov within 12 hours of a mandatory evacuation order issued by the proper parish authorities (if the storm is not projected Category 3 yet, the LSP indicate that the report should be made “as soon as practical” after the National Hurricane Center upgrades to Category 3).
  • For persons engaged in the transportation activities noted above, the report must include the following information:
    • the exact nature of, and the type, location, and relative fullness of the container (i.e., full, half-full, or empty) of all hazardous materials that are located within a parish subject to the evacuation order;
    • the primary and secondary contact person’s phone, e-mail, and fax number; and
    • whether the facility will be sufficiently manned such that post-event assessments will be performed by company personnel (as soon as safely practicable) and that any releases and/or hazardous situations will be reported in accordance with existing Louisiana Department of Environmental Quality (LDEQ) and State Police reporting requirements.

State Police FAQs concerning this rule are posted at the following link: http://www.lsp.org/pdf/ReportingRequirementsFAQ.pdf.

For those materials that are stored, it shall be necessary to only report those hazardous materials that were not reported in the annual SARA inventory report (40 CFR Parts 312/313) and those that are in excess of what is typically stored at the facility.

In addition to the notification to the LSP, “within a reasonable period of time” persons subject to the rule “shall perform a post-event assessment of those hazardous materials that were actually present in the affected area and to what degree, if any, those materials were compromised by said event and their current condition.”  Such information must be available for review by both the LSP and the LDEQ shall have access to this information.

Louisiana law (the Private Works Act – La. R.S. 9:4801, et seq.) does not require project owners to obtain lien waivers or to obtain a clear lien certificate from the clerk of court, but many construction contracts require lien waivers and a clear lien certificate before the contractor will be entitled to final payment.  The basic use of both lien waivers and the clear lien certificate is to as nearly as possible eliminate the risk that a lien could be filed (for which the owner would have personal liability) before the owner pays out retainage to the contractor.  So long as there is a risk of a lien filing, generally the owner wants to have retainage available to satisfy that lien.

Lien waivers and the clear lien certificate approach the issue from different directions.

Lien waivers are an agreement/admission by the party granting the waiver that they have been paid in full and that they will not/cannot file a lien.  It would be possible for a party that has given a lien waiver to still file a lien, but a properly crafted lien waiver should pave the way for the lien to be quickly disposed of by a court as unfounded (based on the admissions in the lien waiver that the party that gave the waiver has already been paid in full).  Some states, such as Texas, restrict lien waivers to certain government-approved forms.  Louisiana law, on the other hand, leaves the form and content of a lien waiver up to the parties.

Lien waivers are common, and most every construction contract has some requirement that the contractor collect lien waivers from most (if not all) of their subcontractors, equipment lessors, material suppliers and other potential lien claimants with each pay application and in conjunction with final payment.  Whether it is reasonable to relax that requirement will depend on: (i) how comfortable the owner is that anyone that has not given a lien waiver might file a (significant) lien; and (ii) the outcome of the clear lien certificate (discussed below).

A clear lien certificate is simply a statement by the clerk of court enumerating all liens (otherwise known as “Statements of Claim or Privilege”), mortgages, and other filings impacting the property at issue as of the date of issuance.  If that statement is issued after the lien filing period has closed for the project (typically 60 days of the filing of a Notice of Termination for that Work), the owner can be reasonably comfortable that any lien that might be filed in the future would be untimely, and subject to cancellation.  This certificate from the clerk is understood to be “clear” if it confirms the absence of any uncancelled liens.

Legally, it makes no difference whom the clerk issues the certificate to.  The important thing is to know what liens (if any) were preserved by a timely filing of a statement of claim or privilege, and when the lien filing period has closed.  If the owner is comfortable that the lien filing period has closed and that a potential lien claimant has not preserved its lien rights by filing a statement of claim or privilege timely, getting a lien waiver for that person probably does not serve much purpose.

For more information on the Kean Miller Construction Law Team, click here.