State and Local Taxation

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The Louisiana Third Circuit Court of Appeal caused quite a stir in the Louisiana business community in December, 2005 when it rendered its decision in Doland v. ACM, 921 So.2d 196 (La.App. 3 Cir. 12/30/05). In Doland, the Court was called upon to resolve a heated dispute over the termination of a lease of video poker machines. The video poker machines were being leased by ACM [FN1] for use in the Pat’s of Cameron Restaurant. Upon the expiration of the original three year term, written notice had been given of the restaurant’s desire to retain possession of the machines on a day-to-day basis, and to continue as such until the restaurant was able to obtain different machines, either through direct purchase or through another lessor. The restaurant had the machines disabled by the Louisiana State Police after ACM refused to remove the machines after removal was requested by the restaurant. Because of ACM’s refusal to remove them, the video poker machines remained disabled but on the premises of the restaurant, preventing the installation of new video poker machines, for roughly three months. During this time, the restaurant experienced a decrease in revenue not only from the lack revenue generated from the video poker machines themselves, but also from a decline in restaurant sales due to a lack of patronage.
Continue Reading A Sigh of Relief: Business Entities Enjoying Pass-Through Taxation Can Now Breathe a Little Easier Following the Initial Scare of Decision

The Gulf Opportunity Zone Act of 2005 (“GO Zone”) created a number of business incentives to help Louisiana and the other areas impacted by Hurricane Katrina. One of the key elements of the GO Zone legislation is the 50 percent bonus depreciation provision. This provision has been getting a great deal of coverage in the media and among the various investment circles. However, until guidance is issued by the IRS, there are some areas of uncertainty in this legislation.
Continue Reading Go Zone and Bonus Depreciation

The Louisiana Supreme Court has ruled that interstate airplanes and other interstate transportation equipment will be subject to Louisiana state and local use taxes if a taxable moment outside of use in interstate commerce is found. The Court overruled cases which had previously found that transportation equipment used in interstate commerce would not be subject to use tax unless the equipment was used for intrastate transportation.
In Word of Life Christian Center vs. Mark West, Administrator, Ascension Parish Sales and Use Tax Authority, 04-1484 (La. 4/17/2006), _____ So.2d______, the Louisiana Supreme Court reviewed the taxability of airplanes purchased by the Word of Life Christian Center.
Continue Reading INTERSTATE AIRPLANES OTHER TRANSPORTATION EQUIPMENT SUBJECT TO LOUISIANA USE TAX

Many C-Level executives and small business owners have heard of the Gulf Opportunity Zone (the GO Zone Act) and know that it does something for Louisiana businesses, but they do not know if or how the new law can help them and their employees. Kean Miller has prepared a comprehensive summary of the GO Zone Act and its sister law, the Katrina Emergency Tax Relief Act of 2005 (“KETRA”). This summary describes the key legislative provisions and explains how Louisiana-area businesses, both large and small, can maximize the GO Zone benefits available to them.
Continue Reading What is the Gulf Opportunity Zone?

The annual gift tax exclusion for the federal gift tax has increased to $12,000 for 2006. The annual exclusion had been $11,000. The annual exclusion is the amount any individual can give another individual per year without triggering a taxable gift for federal gift tax purposes.
Continue Reading Annual Gift Tax Exclusion Increased for 2006

The Senate Revenue and Fiscal Affairs Committee has reported to the full Senate HB 148 (Rep. Arnold), which appears to be a compromise between the assessors and local government on the revaluation of property due to damage or destruction because of the hurricanes.

HB 148 (Rep. Arnold) must now be voted on by the full Senate and the House must vote to accept the Senate amendments or to send the bill to a conference committee.

HB 148 as amended would preserve the revaluation provisions dealing with flooded property (immovable and corporeal movable (i.e. real estate and tangible personal property) in current law, La. R.S. 47:1978. That is, flooded property must be revalued. Property destroyed, uninhabitable, or non-operational due to other hurricane related causes will be revalued as follows: If the local taxing jurisdictions vote to use pro-ration, the tax bill will be prorated for 2005 based on the number of days the property was “habitable”. This pro-ration provision cannot be used by Jefferson, Orleans, Plaquemines, and St. Bernard. If the local taxing jurisdictions do not vote to use pro-ration and in Jefferson, Orleans, Plaquemines, and St. Bernard the property will be revalued in its damaged state for the entire year.
Continue Reading Update on HB148 – Property Revaluation Due to Hurricane Damage

Three different bills dealing with revaluations because of hurricane damage are working their way through the Legislature.

Existing law, La. R.S. 47:1978 requires the revaluation of flooded property in the year of the flood even if the assessment rolls have been certified.

HB 148 (Rep. Arnold)

Revaluations

Creates a new La. R.S. 47:1978.1 that complements La. R.S. 47:1978. It expands on La. R.S. 47:1978 by requiring revaluation not only in the case of floods, but also in the case of property damaged or destroyed during a declared disaster or emergency.
Continue Reading Pending Bills on Property Revaluations Because of Hurricane Damage

The Senate versions of the Sales Tax on Machinery and Equipment and Corporate Franchise Tax bills are better than the House versions:

SB 39 (Sen. Mount) – Providing for a full state sales tax exclusion for equipment purchased to replace or repair equipment damaged in connection with the hurricanes, including damage from water, wind, fire, or criminal acts. Unlike HB 39 (Rep. Hammett), this bill does not require that the damaged equipment be uninsured or under insured.

Reported favorably by the Senate Revenue and Fiscal Affairs Committee and awaiting action on the Senate floor.
Continue Reading Update on Tax Legislation

Here are summaries of some of the important tax bills currently under consideration in the 2005 First Extraordinary Legislative Session. With the breadth of the agenda before the legislators and the limited time available, expect daily changes in the composition and/or fate of these bills.

HB 24 (Rep. Hammett)-Makes modifications to the individual and corporation income taxes to adjust the federal income tax deduction so that the amount of the deduction is not reduced because of federal income tax credits enacted as a result of the hurricanes. This bill insures that Louisiana income taxes do not increase as a result of the federal credits enacted because of the hurricanes.

Reported favorably from the House Ways & Means Committee and awaiting action on the House floor.
Continue Reading Tax Bills Pending in the Special Legislative Session