Tax Topics

The Louisiana Department of Revenue has released Revenue Information Bulletin (RIB) 11-006 addressing the taxation of certain digital transactions.

The Louisiana Department of Revenue announces the formation of a working group to assist the department in developing policy regarding the taxation of certain digital transactions, including the taxation of transactions addressed in Revenue Ruling 10-001 and Revenue Information Bulletin 10-015. The working group will be composed of department employees, industry representatives and taxpayer representatives.

Visit revenue.louisiana.gov to read the full text of RIB 11-006: Working Group Regarding the Taxation of Certain Digital Transactions.

BATON ROUGE – A few simple steps can help to avoid unnecessary delays for state income tax refunds, the Louisiana Department of Revenue (LDR) announced Wednesday.

Many refunds are delayed unnecessarily because of common errors and omissions.  One leading cause of a delayed refund is the taxpayer’s failure to check the change of address box on the tax return.  Any refund sent to an incorrect address is returned to LDR by the post office.  If you have moved since you last filed your taxes, be sure to update your address.

Steps to avoid delayed refunds include:

1. File electronically.  The average processing time for refunds is about ten days when you use electronic options such as Louisiana File Online, the state’s free tax filing web application.  For paper returns, the processing time is 12 to 16 weeks.  Visit Louisiana File Online at www.revenue.louisiana.gov/fileonline.
2. Check and double-check the accuracy of your return.  Ensure that all social security numbers and tax computations are correct.  Math errors and incorrect tax table information are leading causes of delayed refunds.
3. Be sure to sign the return (spouses also, if applicable).
4. Include all supporting documentation, such as W-2s.  Use paperclips, not staples, if filing a paper return.
5. Apply for extensions in a timely manner.  This year’s deadline for a state filing extension application is May 16, 2011. You must apply separately for a state filing extension.  It will not be granted automatically with a federal filing extension request.
6. If additional tax is due, include the remittance coupon to ensure proper posting.
7. Make checks or money orders payable to the Louisiana Department of Revenue.  Do not send cash.
8. Update your personal information if you have moved or changed your name during the tax year.
9. Attach the proper label to the mailing envelope.
10. Do not include copies of the federal return with the state return.

To check the status of your Louisiana state income tax refund, visit “Where’s My Refund?” at www.revenue.louisiana.gov/refund  or call 888-829-3071.

BATON ROUGE – The Louisiana Department of Revenue’s Audit Protest Bureau (APB) has expanded the list of taxes it will consider.

Effective February 15, 2011 APB will begin accepting audit protests of all tax types.

APB is an independent unit of the Department of Revenue staffed and managed by tax administration experts trained in dispute resolution.  APB’s mission is to resolve tax-audit disputes as an alternative to immediate litigation. 

Any taxpayer who wishes to dispute a proposed assessment issued as the result of an audit must file a written protest with APB within 30 days of the date of assessment.  The protest petition form is available online at http://ldr.ritetrack.net/.

More information about the Audit Protest Bureau is available at www.revenue.louisiana.gov/auditprotest.

From the IRS:

LA/MS-2011-05

NEW ORLEANS – The Internal Revenue Service will hold three one-day workshops in New Orleans, Louisiana on March 1, 2, and 3 to help small and mid-sized tax-exempt organizations along the Louisiana and Mississippi Gulf Coast comply with their tax obligations and maintain their tax-exempt status. The workshops are designed for board members, officers, volunteers and staff of these organizations and for the tax preparers and stakeholders who work with them.

IRS revenue agents and tax law specialists, experienced with tax-exempt organizations, will lead the workshops which will cover the “nuts and bolts” of tax compliance for exempt organizations. Workshop topics include an in-depth discussion of activities that can jeopardize 501(c)(3) status, unrelated business income, gaming and employment issues. Particular emphasis will be given to explaining the revised Form 990 and 990-EZ annual information returns that tax-exempt organizations submit to the IRS.

The workshops will be held at the Doubletree Hotel New Orleans Airport, 2150 Veterans Memorial Blvd. in Kenner, LA. The workshop cost is $45 per person and includes a handbook and relevant IRS forms and publications.

Pre-registration is required. For more information or to register, visit IRS.gov. Information and registration is also available by calling Events by Design, Inc, IRS’s registration services provider, at 800-521-3980 or 703-579-1496.

The IRS has posted an updated list of FAQs regarding the 2010 Gulf of Mexico oil spill.

It is available at IRS.gov.

BATON ROUGE – Louisiana families can deduct part of the cost of their children’s education when they file their 2010 state income taxes.  The Louisiana School Tuition & Expense Tax Deduction allows an exemption for 50 percent of the cost of eligible expenses, up to $5,000 per student.

The deduction applies to elementary and secondary school tuition, in addition to expenses for uniforms, textbooks, equipment, and supplies required by the school.  It applies to some home schooling expenses, as well.

To claim the deduction, the taxpayer must claim the student as a dependent on their Louisiana Individual Income Tax Return.

Visit www.revenue.louisiana.gov/schooldeduction for more information.

The Louisiana Department of Revenue has issued Revenue Ruling 11-001, which discusses the treatment of interest income from Build America Bonds for Louisiana individual income tax purposes.

Build America Bonds (BABs) are a financing tool for state and local governments that were created in the American Recovery and Reinvestment Act of 2009. Unlike traditional state and local bonds, interest from these bonds is included in the investor‟s federal gross income.

Conclusion

Income from interest and credits from BABs issued by the state of Louisiana or its local governments is not subject to Louisiana individual income tax. Income from interest and credits from BABs issued by states and local governments other than the state of Louisiana or its local governments is subject to Louisiana individual income tax.

Click here to read the entire ruling.

A Revenue Ruling is issued under the authority of LAC 61:III.101(C). A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the department’s position and is binding on the department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

The Louisiana Department of Revenue has issued Emergency Rule LAC 61:III.1525 concerning the Electronic Filing Requirements for Oil or Gas Severance Tax.

Under the authority of R.S. 47:1511, which authorizes the secretary of revenue to prescribe rules and regulations to carry out the purposes of Title 47 of the Louisiana Revised Statutes of 1950 and the purposes of any other statutes or provisions included under the secretary’s authority, and in accordance with the provisions of the AdministrativeProcedure Act, R.S. 49:950 et seq., and specifically the emergency provisions of R.S. 49:953(B), the Department of Revenue, Policy Services Division, hereby issues the following Emergency Rule to amend LAC 61:III.1525 to mandate the electronic filing of the applications for reduced oil or gas severance tax rates, Forms 0-2 and G-2.

Due to winter weather conditions, Commissioner of Administration Paul Rainwater announced that state government offices will be closed on Friday, February 4, in the following parishes:

Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Concordia, DeSoto, East Baton Rouge, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis, Lafayette, LaSalle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Ouachita, Pointe Coupee, Rapides, Red River, Richland, Sabine, St. Helena, St. James, St. Landry, St. Martin, St. Mary, Tangipahoa, Tensas, Union, Vermilion, Vernon, Washington, Webster, West Baton Rouge, West Carroll, West Feliciana, Winn

State officials continue to monitor weather conditions across the state, and this announcement may be updated.

All agency heads are responsible for determining those essential personnel who should remain on duty or those who should report to alternative work sites if necessary.

State government employees should be aware of the following phone numbers to call, which will be updated with information regarding office closures: 1-800-360-9660 or 225-342-0498.

An op-ed in Tuesday’s Shreveport Times reminds readers that hundreds of thousands of Louisiana residents lose billions of dollars each year by failing to claim the federal earned income tax credit (EITC):

The federal Earned Income Tax Credit (EITC) is something every working, low-income family can claim on their tax return, allowing them to get back an average of $2,600 of their earnings. This is money that can be used to start or grow a savings account for a rainy day or to pay down debt. Regardless of how it is used, the tax credit lets eligible families keep more of what they earn and injects extra cash into local economies.

Each year, more than 860,000 Louisiana residents lose out on about $2.2 billion from their tax returns because they did not claim the EITC. One way to change this is to ensure people in our community know what the credit is.

First, tax filers have to be employed; the tax credit is not a handout. For instance, working families earning less than $40,000 a year are eligible. Secondly, there are no additional requirements or forms to make it difficult to file. The EITC form is included in Form 1040.