Archive for February, 2013

Many school expenses eligible for Louisiana tax breaks

BATON ROUGE – Tuition, uniforms, supplies and other education expenses paid during the 2012 tax year may be eligible for deductions on the Louisiana individual income tax return. The Louisiana School Tuition and Expense Tax Deductions apply to public, private and parochial education costs, as well as home-schooling.

There are three separate deductions:

  • Elementary and Secondary School Tuition – Applies to 100 percent of eligible expenses paid during the tax year, limited to $5,000 per dependent child enrolled in a nonpublic elementary or secondary school. Eligible expenses include tuition, fees, uniforms, textbooks and other supplies required by the school.
  • Education Expenses for Home-schooled Children – Applies to 50 percent of eligible expenses paid during the tax year, limited to $5,000 per dependent. Eligible expenses include amounts paid for the purchase of textbooks and curricula necessary for home-schooling. To qualify for the deduction, you must be approved for home-schooling by the Louisiana Board of Elementary and Secondary Education (BESE).
  • Educational Expenses for a Quality Public Education – Applies to 50 percent of eligible expenses paid during the tax year, limited to $5,000 per dependent child enrolled in a public elementary or secondary school, including Louisiana Department of Education-approved charter schools. Eligible expenses include uniforms, textbooks and other supplies required by the school.

To claim any of these deductions, you must be able to claim the student as a dependent on your Louisiana Individual Income Tax Return.  You must provide documentation of expenses paid.

The Louisiana state income tax filing deadline is May 15.

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KNOW THE FACTS: Tax proposal critiques ignore crucial facts

BATON ROUGE – Today, both the Baton Rouge Advocate and Gannett News printed stories concerning the Governor’s ideas for tax reform that were one-sided and lacked fact-checking and opposing views of how the reforms could benefit Louisiana. The stories were based on comments made by a special interest group. 

Both stories simply cited the group’s comments as facts and lacked an opposing view about how eliminating the personal and corporate income tax could help Louisiana’s economy grow. For instance, multiple studies show that companies and people move to places where taxes are lower.  Additionally, the Gannett article cited as fact a report issued by the Institute on Taxation and Economic Policy (ITEP) that erroneously claims the effects income tax reform would have on Louisiana by ignoring many key factors and making false assumptions.

Below are a number of key facts and figures that were left out of the Advocate and Gannett stories:

Studies Show That States Without An Income Tax Create More Jobs:

Studies Show That Between 2002 And 2012, 62% Of The Three Million New Jobs In America Were Created By The Nine States Without An Income Tax. “A new analysis by economist Art Laffer for the American Legislative Exchange Council finds that, from 2002 to 2012, 62% of the three million net new jobs in America were created in the nine states without an income tax, though these states account for only about 20% of the national population.”  (Editorial, “The State Tax Reformers,” Wall Street Journal, 1/29/13)

“The No-Income Tax States Have Had More Stable Revenue Growth, While States Like New York, New Jersey And California That Depend On The Top 1% Of Earners For Nearly Half Of Their Income-Tax Revenue Suffer Wide And Destabilizing Swings In Their Tax Collections.” (Editorial, “The State Tax Reformers,” Wall Street Journal, 1/29/13)

Reporting Based On A Debunked Institute on Taxation and Economic Policy (ITEP) Study:

Gannett News Bases Reporting On An ITEP Study That Is Greatly Flawed And Has Been Debunked. “A previous study of what’s known about the governor’s plan said it appears to present a tax increase for 80 percent of Louisiana taxpayers but a significant tax break for the top 20 percent of wage earners and businesses.” (Mike Hasten, “Studies Question Wisdom Of Swapping Taxes,” Gannett , 2/13/13)

The ITEP Study Is Deeply Flawed:

ITEP Uses “Worst-Case Scenario” Figures To Conduct Their Study, Figures That Are Not Under Consideration For the Plan.“ITEP’s numbers do not reflect reality. ITEP falsely assumes a ‘worst-case scenario’ in which every dollar in state revenue lost from the elimination of the personal income tax (PIT) and the corporate income and franchise taxes (CIFT) is restored solely by increasing the state sales tax rate. Under those conditions, the state sales tax rate would need to be 7.94% to make up the lost revenue. No scenario currently under consideration requires a sales tax rate nearly that high.” (“Know the Facts: ITEP Sidesteps the Truth,” Louisiana Department Of Revenue, 1/23/13)

ITEP Does Not Factor In To Its Study Offsets For Low-Income Groups That Are Being Considered, Including An Earned Income Tax Credit. “ITEP’s financial scope is distorted. ITEP does not factor in an offset (such as an Earned Income Tax Credit [EITC] or some other mechanism). News reports available to ITEP reveal that a variety of offset mechanisms for low-income people are currently being discussed and analyzed.  The state is determined to ensure that the final proposal will make no Louisiana citizen worse off.” (“Know the Facts: ITEP Sidesteps the Truth,” Louisiana Department Of Revenue, 1/23/13)

ITEP’s Study Ignores Key Factors, Such As The Fact That Many Essential Goods Are Exempt From State Sales Tax. “ITEP’s scheme ignores key facts. Food for home consumption, prescription drugs, and residential utilities are exempt from state sales tax. Expenditures such as rent or housing costs, insurance costs, etc. are also not subject to state sales tax. So, in order for ITEP’s study to be remotely accurate, a taxpayer with an income of $25,000 must spend $23,500 per year on things like clothing, restaurants, electronics, home supplies (cleaning supplies, home maintenance supplies, etc.), some forms of entertainment, etc.  It is extremely unlikely that the average person with income at $25,000 exhibits such exorbitant spending habits.” (“Know the Facts: ITEP Sidesteps the Truth,” Louisiana Department Of Revenue, 1/23/13)

The Non-Partisan Tax Foundation Said The Louisiana Tax Reform Plan Would Greatly Improve The State’s Standing Nationally:

The Tax Foundation, A Non-Partisan Tax Research Group, Stated That If The Louisiana Tax Reform Plan Is Passed, The State Would Move From 32nd To 4th Overall On The List Of Best State Tax Structures. “For now though, all told, the changes would bounce Louisiana from 32nd to 4th overall on our list of tax structures (assuming the changes were in place as of July 1, 2013).” (Richard Morrison, “Louisiana Tax Reform: Sizing up the Jindal Plan,” The Tax Foundation, 1/18/13)

Tax Foundation: “This Plan Is A Step In The Right Direction. Corporate And Individual Income Taxes Are Generally Considered The Most Destructive Taxes To Economic Growth, And Both Have A Great Deal Of Complexity And Compliance Costs Associated With Them. Elimination Yields A Perfect Score In Those Components Of The Index.”(Richard Morrison, “Louisiana Tax Reform: Sizing up the Jindal Plan,” The Tax Foundation, 1/18/13)


Louisiana taxpayers have choices for state income tax refunds

BATON ROUGE – Louisiana taxpayers can choose between three methods of payment for state income tax refunds. 

Taxpayers who file their state income taxes electronically can select direct deposit, a paper check, or the Louisiana MyRefund Card, a pre-loaded debit card that can be used to withdraw cash at ATMs or bank teller windows, shop and pay bills online, or make purchases and get cash back at retail registers.

New to the paper state income tax return (Form IT-540) this year is the option of selecting a paper check for your refund, in addition to the MyRefund Card.  Taxpayers who do not select a refund method on the paper form will receive the debit card.

The Louisiana Department of Revenue (LDR) encourages electronic filing for all income tax returns.  It is the method that provides the fastest processing time for refunds.  Electronic filers receive their refunds within an average of ten business days.  Paper filers can expect to wait at least three months.  Electronic filing options include commercially-available tax preparation software and Louisiana File Online, the state’s free tax filing web application.  Visit


State announces plan for tax credit transfer registry

Legislation in 2013 will enhance security and transparency of transfers of state tax credits

BATON ROUGE —The Louisiana Department of Revenue (LDR) and Louisiana Economic Development (LED) announced plans Tuesday to create a transferable tax credit registry that will be managed by LDR. The purpose of the registry is to enhance the security and transparency of transfers of state tax credits.

“Louisiana’s tax credits have stimulated a tremendous amount of new business activity in our state and are responsible for helping to secure new investment and jobs in our economy,” LDR Executive Counsel Tim Barfield said. “Most transferable tax credits are transferred in a safe and lawful manner. However, we want to further ensure that the State of Louisiana receives all the revenue to which it’s entitled and to ensure that taxpayer money is protected at all times. This tax credit registry will help on all those counts.”

Only 13 of Louisiana’s more than 460 tax exemptions involve transferable tax credits, representing less than five percent of the $6.8 billion in tax exemptions in Fiscal Year 2011. These transferable tax credits incentivize entertainment, business investment, research and development, and other economic and community development activities.

The proposed tax credit registry would apply to any transferable tax exemption programs that continue to exist following consideration of tax reform legislation this year. The registry would be used also to address any final transfers of existing transferable tax credits associated with tax exemption programs that may be eliminated during the legislative session.

The state’s proposed tax credit registry would provide a central registration system managed by LDR. It would require also timely reporting for the transfer of tax credits, including sales by the original holder of the credit and subsequent sales. Transfers would not be effective until reported. Currently, state law requires only that a notice of transfer be filed with LED and LDR within 30 days of a transfer, allowing a time lapse. The registry would give investors assurance by enabling them to verify the status of a tax credit in a central place.
LDR’s Barfield added, “This transferable tax credit registry will give us more certainty about the validity of the tax credit in addition to giving taxpayers confidence that they are indeed acquiring a valid tax credit.”

Among other safeguards, the state registry would confirm when tax credits have been used and are no longer valid. Therefore, the public would have access to records documenting the amount of credits issued, transferred and claimed (that is, used), and the dates and identities of the parties involved in these transactions.

“This is a common-sense mechanism to provide taxpayers and the state with transparency and security when dealing with tax credit transfers,” LED Secretary Stephen Moret said.

Under this proposal, tax credit transfer fees currently collected by LED would be collected by LDR to pay for the administrative costs necessary to operate the transferable tax credit registry.