Archive for June, 2009

CORRECTION – Income Tax Withholding Formulas

 A CORRECTION has been issued for minor errors in the Louisiana income tax withholding FORMULAS that take effect on July 1, 2009.

Please refer to Revenue Information Bulletin (RIB) 09-012:

 Subsection D of the regulation, which provides the income tax withholding formulas, contained the following errors: if any of the variables are negative, the negative variable should be shown as zero. The errors in the formulas do not affect the withholding tables.

    1. The parentheses are unbalanced in the formula for “B” for both single and married taxpayers.
    2. In the formula for a single taxpayer—the 25,000 should be 12,500 as follows B=.016 ((((X * 4500) + (Y * 1000)) – 12,500) ÷ N).

In addition to these corrections, the amendment to LAC 61:I.1501 will include the instruction that if any of the variables are negative, the negative variable should be shown as zero. The errors in the formulas do not affect the withholding tables.

Additional resources: Notice of Intent – Income Tax Withholding Tables (LAC 61:I.1501)

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Protect financial, tax records during hurricane season

With the 2009 Atlantic hurricane season underway, the Louisiana Department of Revenue (LDR) urges individual and businesses taxpayers to protect financial and tax records in advance of storms and other potential disasters.

Some tips on protecting personal or business information:

Take Advantage of Paperless Media for Financial and Tax Records

Many people receive bank statements and other financial documents by e-mail. Even though most of these records are also retained by banks and corporations, you can back your records up easily and at little cost with CDs and portable memory drives.

“It’s also a good idea to scan important tax records such as W-2s and other pay information, tax returns, and other paper documents into an electronic format,” says Secretary of Revenue Cynthia Bridges.

Document Valuables and Business Equipment

Compile a room-by-room list of your belongings or business equipment. This will help you verify the market value of items for insurance and casualty loss claims. Photograph or videotape the contents of your home or business, especially items of high value.

“Having a record of your valuables can provide proof for an insurance claim. It will also help you remember what you might be able to claim as a loss on state and federal taxes,” Bridges says.

You should store photos or videos on CDs, DVDs, or portable memory drives in a safe location away from the area at risk. 

Count on the Louisiana Department of Revenue

In the event of a disaster – and well after – the Louisiana Department of Revenue stands ready to help. LDR will provide valuable information on approved tax credits, business assistance, calculating losses, etc. Check LDR’s website at www.revenue.louisiana.gov  for news about disaster-related tax matters. As a top priority after a disaster, LDR will update forms and offer explanations of loss-relief programs.

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Report: 'States consider oil and gas levies'; Louisiana goes against the grain

The Wall Street Journal reports that Louisiana is bucking a national trend of states attempting to relieve budget shortfalls by increasing taxes on oil production.
 

Lawmakers in Pennsylvania and California have proposed what are known as severance taxes on oil and natural gas produced in their states. A tax increase took effect in Arkansas at the beginning of the year, and Alaska last year raised its oil-production tax.

Some lawmakers in Louisiana want to take the opposite tack, in a bid to attract more drilling. The state House of Representatives recently approved a package of tax cuts targeted at certain high-cost forms of oil and gas production. Democratic Rep. Nickie Monica, the lead sponsor of one measure in the package, said he hopes to give Louisiana a competitive advantage at a time when other states are raising taxes. “We’re bucking a national trend,” he said.

Mr. Monica’s bill has encountered resistance in the state Senate, however, where lawmakers are concerned about reduced tax revenue.

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IRS: 'Check Withholding to Avoid a Tax Surprise'

NEW ORLEANS — With 2009 nearly half over, the Internal Revenue Service reminds Louisiana and Mississippi residents that there is no better time to check their 2009 federal income tax withholding levels to make sure they do not face any surprises when returns are due next spring.

The  Making Work Pay Credit lowered tax withholding rates this year for 120 million American households. However, particular taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers and pensioners.

Failure to adjust your withholding could result in potentially smaller refunds or may cause you to owe tax rather than get a refund next year. So far in 2009, the average refund amount is $2,675 and 79 percent of all returns received a refund.  

Because retirees typically have withholding from their pension payments, pension plan administrators or pension payors should be aware of the optional adjustment procedure for pension withholding announced in Notice 1036-P, Additional Withholding for Pensions for 2009. 

Social security beneficiaries, supplemental security income (SSI) recipients, disabled veterans and railroad retirees that receive this year’s one-time $250 economic recovery payment should be aware that the Making Work Pay credit will be reduced by the $250 payment amount.  They may also want to review their withholding.

The IRS withholding calculator on IRS.gov can help a taxpayer compute the proper tax withholding. The worksheets in Publication 919, How Do I Adjust My Withholding?, can also be used to do the calculation. If the result suggests an adjustment is necessary, the taxpayer should submit a new Form W-4, Withholding Allowance Certificate, to his or her employer or adjust the amount of quarterly tax paid.

In addition, the IRS reminds unemployed workers that the first $2,400 of unemployment benefits they receive during 2009 are tax-free for federal income tax purposes. People who expect to receive more than that should consider having tax withheld from their benefit payments in excess of $2,400. Use Form W-4V, Voluntary Withholding Request, or the equivalent form provided by the payer to request withholding to begin or end.

Taxpayers should visit IRS.gov for more information about how to adjust federal income tax withholding. The Web site also has details on various tax incentives in the American Recovery and Reinvestment Act as well as downloadable forms and publications. Free tax forms and publications are also available by calling 1-800-TAX-FORM (1-800-829-3676).

Read the rest of this entry »

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Report: 'House advances Chelsea's-friendly bill'

The Louisiana House of Representatives advanced a bill that would loosen state restrictions on restaurants that offer drink specials and late-night entertainment.

The measure came in response to actions by the Bureau of Alcohol & Tobacco Control regarding Chelsea’s Cafe, a restaurant in Baton Rouge.

Senate Bill 136 came in response to a January memo from state Alcohol Tobacco and Control chief Murphy Painter, which indicated that more than 5,000 restaurants could be violating the law.

Painter contends some restaurants turn into bars late at night and do not have the proper license.

Painter’s memo said that businesses operating under restaurant licenses that have bar in their name, offer alcoholic drink specials or implement cover charges for late night entertainment could no longer be considered a restaurant, said state Rep. Jeff Arnold, D-New Orleans.

Arnold said Painter was trying to change the definition of restaurant, which has been “clearly understood by all parties” for many years.

Restaurant licenses are easier to obtain than those that allow bars and entertainment venues to operate.

Chelsea’s Cafe in Baton Rouge ran afoul of Painter, who claimed the restaurant was turning into a bar at night. The restaurant has been fighting a license suspension.

SB136 defines what constitutes a restaurant, including that it must make more than 50 percent of its average monthly revenues in food and non-alcoholic beverage sales. It goes on to say that just because a restaurant has bar in its name, offers alcoholic drink specials or entertainment with a cover charge does not mean they are no longer a restaurant.

The bill has the backing of the Louisiana Restaurant Association. The House voted 68-31 in favor.

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Report: 'Bill advances, would raise limit for cuts'

From The Advocate:

Legislation aimed at increasing the amount of cuts lawmakers can make in a deficit year and being able to make those cuts every year passed the Louisiana House on Monday.

Senate Bills 1 and 2, sponsored by Senate President Joel Chaisson II, D-Destrehan, withstood many questions as the Legislature came up against one of the deadlines for bill consideration.

SB1 is a proposed constitutional amendment that would allow up to 10 percent — rather than the current 5 percent — of each state statutory dedication to be cut when there is a budget deficit. Anything in excess of 5 percent would have to be approved by the Legislature.

If approved by a two-thirds vote of the Legislature, the state’s voters would have to concur in an October 2010 election.

 

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Report: 'Tax amnesty expected'

From the Times-Picayune Briefing Book:

Tax amnesty expected

Delinquent taxpayers would have a two-month amnesty period to settle their overdue state tax bills with all the penalties and half the interest costs waived, under a bill backed by both the House and Senate. House Bill 720 is headed back to the House, which is expected to send it to a legislative compromise committee so lawmakers can decide how they want to spend the estimated $150 million or more that could be brought in during the amnesty period. Lawmakers are considering whether to use the money to plug budget holes and are questioning whether that’s possible, and Gov. Bobby Jindal’s administration is hoping to use a slice of the money for state debts related to Hurricanes Gustav and Ike. A similar tax amnesty program generated $193 million several years ago, said Sen. Rob Marionneaux, D-Livonia, who handled the proposal in the Senate. The tax amnesty period would fall sometime in the upcoming fiscal year that begins July 1, in a two-month period chosen by the state Department of Revenue, under the proposal by Rep. Jane Smith, R-Bossier City.

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Editorial: 'Stretch funds for campuses'

An editorial in the Baton Rouge Advocate urges lawmakers to delay implementation of the expansion of an income tax deduction. The paper’s opinion staff says the state needs the revenue can relieve budget pressure on Louisiana’s institutions of higher learning.

The Baton Rouge Area Chamber is hardly alone in looking down the road and seeing potentially harder times for state colleges and universities. But the chamber deserves credit for tackling the politically sensitive issue head-on, calling for a delay in a scheduled tax cut for three years while the impact of revenue declines can be assessed.

We need more common-sense leadership in this crisis than we’ve been getting from elected officials, from Gov. Bobby Jindal on down. Endless bleating that delaying a tax cut amounts to a tax increase is not only transparently false but ignores the obvious: Legislators phased in the tax cut, and it should properly be reassessed in light of the decline in state revenue.

The chamber’s program for the future includes not only a tough-minded approach to recurring revenue but greater authority for colleges to raise tuition and fees without periodically crawling to the State Capitol for a two-thirds vote of the Legislature.

Read more.

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Report: 'Showdown on cigarette taxes, unemployment benefits today at Capitol'

The Times-Picayune’s Jan Moller previews the action expected Monday in the legislature.

As ever, the question is, “how to fund state government?”

By the time the House adjourns this evening, one of the following will almost certainly be true:
a) The (not so) great tax debate of 2009 will be pretty much done with after House Bill 889, which would raise cigarette taxes by 50 cents a pack, fails to get the 70 votes needed to send it to the Senate.

- Or -

b) The debate will be very much alive after the bill by Speaker Pro Tem Karen Carter Peterson, D-New Orleans, goes to the Senate with enough votes to override an expected veto from Gov. Bobby Jindal.

While most of the smart money is on option (a), the smart money hasn’t always been right this session, as everyone learned Thursday when the House unexpectedly ratified the Senate’s version of the $28.7 billion state budget and threw the state spending picture into the kind of disarray we haven’t seen for several years around the Capitol.

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Get ready now for hurricane season

Ready.gov – The U.S. Government’s hurricane-preparedness website.

Get a Game Plan.org – The State of Louisiana’s hurricane-preparedness website.

Emergency.Louisiana.gov – Where to go during a declared emergency for the latest information.

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