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Senate Passes Tax Reform Bill
On December 2, 2017, the Senate passed the “Tax Cuts and Jobs Act.” Highlights of the bill are set forth below.
The House and Senate will now begin to reconcile any remaining differences between their two bills, including how to approach pass-through taxation and whether the plan should include an alternative minimum tax. The final product will have to pass both chambers before President Trump can sign the bill into law.
LDR Issues Policy Statement for Net Capital Gains Deduction
The Louisiana Department of Revenue (the “LDR“) recently issued a policy statement regarding calculation and substantiation requirements for the revised net capital gains deduction.
In 2007, the Louisiana Legislature introduced legislation providing an individual income tax deduction for net capital gains resulting from the sale or exchange of an equity interest in or substantially all of the assets of a non-publicly traded corporation, partnership, limited liability company or other business organization commercially domiciled in Louisiana (the “Net Capital Gains Deduction“). See La. R.S. § 47:293(9)(a)(xvii).
However, Act 11 of the 2016 Extraordinary Session of the Louisiana Legislature amended the Net Capital Gains Deduction to provide that the deduction is limited to taxpayers holding equity interests or assets for a minimum of five (5) years immediately prior to the exchange; furthermore, the amount of the applicable deduction varies based on the number of years the taxpayer held the interests or assets.
In Revenue Information Bulletin (“RIB“) No. 16-039, the LDR provided the following guidance regarding calculation and substantiation of the revised Net Capital Gains Deduction:
For the full text of the Revenue Information Bulletin, please click here.
Tax Clearance for State Sales Tax Resale Certificates and State Procurement Contracts
The Louisiana Department of Revenue (the “LDR“) recently issued formal guidance on the newly enacted requirement that taxpayers obtain a Louisiana state tax clearance to be: (1) issued or reissued a Louisiana state sales tax resale certificate and (2) approved for certain Louisiana state procurement contracts.
Effective June 14, 2017, La. R.S. 47:1678 requires applicants for the issuance or renewal of a Louisiana sales tax resale certificate to be current in filing of all tax returns and reports and in payment of all taxes, interest, penalties and fees due to the state and collected by the LDR.
RIB No. 17-020 stipulates that the tax clearance requirement of La. R.S. 47:1678 applies to all requests for issuance or renewal of a Louisiana state sales tax resale certificate submitted on or after October 1, 2017. RIB No. 17-020 further clarifies that the tax clearance requirement applies to all state taxes, including but not limited to sales, income, withholding, excise, severance, tobacco, or automobile rental tax.
In addition, effective June 14, 2017, La. R.S. 39:1624(A)(10) and 47:1678 require applicants for the approval of the central purchasing agency of Louisiana Office of State Procurement for the procurement of personal, professional, consulting, or social services to be current in filing of all tax returns and reports and in payment of all taxes, interest, penalties and fees due to the state and collected by the LDR.
RIB No. 17-021 expounds upon the tax clearance requirement of La. R.S. 39:1624(A)(10) and 47:1678. The tax clearance requirement applies to all requests for approval of contracts submitted on or after October 1, 2017. Conversely, tax clearance is not required to bid on or solicit a procurement contract. Further, if an assessment has become final and collectible for distraint and sale, the proposed contractor cannot be approved until the contractor has filed all returns and reports due, paid or made arrangements with the LDR to pay the delinquent tax liability, and the Secretary notifies the state chief procurement office of the payment or arrangement to pay.
RIB Nos. 17-020 and 17-021 both provide that any taxpayers without tax clearance will not be eligible for issuance or reissuance of a Louisiana state sales tax resale certificate or for approval of certain Louisiana state procurement contracts, unless the items at issue are under formal appeal pursuant to applicable statutes or being paid in compliance with the terms of an installment agreement with the LDR.