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Society of Louisiana
Certified Public Accountants
2400 Veterans Blvd.,
Suite
500
Kenner,
LA 70062
(504) 464-1040
1-800-288-5272
Fax (504) 469-7930
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Important
Tax Alerts
Updated May 2, 2012
Composite
List of IRS FAQs for Hurricane Victims
Federal | State
1099s for Federal Filings
We have received inquiries concerning the questions on the 2011 Federal
tax forms concerning filing 1099 forms. Certain 2011 tax forms including
Schedules C, E, and F in the 1040 series include the following questions:
• Did you make any payments in 2011 that would require you
to file Form(s) 1099?
If yes, did you or will you file all required Forms 1099?
• We direct you to Code Section 6041(a), and the increased penalties
under Code Section 6721 on this subject:
Code Section 6041(a): Payments of $600 or More
All persons engaged in a trade or business and making payment in
the course of such trade or business to another person, of rent,
salaries, wages, premiums, annuities, compensations, remunerations,
emoluments, or other fixed or determinable gains, profits, and income
(other than payments to which section 6042(a)(1), 6044(a)(1), 6047(e)[d],
6049(a), or 6050N(a) applies, and other than payments with respect
to which a statement is required under the authority of section 6042(a)(2),
6044(a)(2), or 6045), of $600 or more in any taxable year, or, in
the case of such payments made by the United States, the officers
or employees of the United States having information as to such payments
and required to make returns in regard thereto by the regulations
hereinafter provided for, shall render a true and accurate return
to the Secretary, under such regulations and in such form and manner
and to such extent as may be prescribed by the Secretary, setting
forth the amount of such gains, profits, and income, and the name
and address of the recipient of such payment.
There has been much confusion and discussion on this subject as a
consequence of the repeal of Code Section 6041(h) and AICPA
has addressed this subject.
Rental Properties & 1099-MISC Requirements
As a result of the repeal, there is a misconception that landlords
do not have a 1099-MISC filing requirement. However, the historical
1099 reporting rules continue unchanged. Furthermore, the increased
penalties for failing to file Form 1099 are still applicable.
To clarify, in 2010, The Patient Protection
and Affordable Care Act (PPACA) expanded the 1099 reporting requirements to all payments
for goods and services from businesses totaling $600 or more to a
single vendor, including corporations. The Small Business Jobs Act
(SBJA) extended the requirement that landlords, no matter how passive
the activity, must issue Forms 1099 to vendors for payments totaling
$600 or more beginning in 2011. The SBJA also increased penalties
for not filing a 1099.
On April 14, 2011, the Comprehensive 1099
Taxpayer Protection and Repayment of Exchange Subsidy Overpayments
Act of 2011 repealed both
the expanded Form 1099 information reporting requirements mandated
by the PPACA and the 1099 reporting requirements imposed on landlords
by the SBJA.
However, under Sec. 6041(a) "All persons engaged in a trade
or business and making payment in the course of such trade or business
to another person of rent, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments, or other fixed or determinable
gains, profits, and income" of $600 or more must report the
amount, the name and address of the recipient of such payment.
New to the 2011 Schedule E (Form 1040) are
questions A & B. Question
A asks: "Did you make any payments in 2011 that would require
you to file Form(s) 1099?" Question B asks: "If yes, did
you or will you file all required Forms 1099?" A landlord, regardless
of the repeal, could easily have a Form 1099 filing requirement making
these questions relevant.
For example, a landlord who pays an attorney $1,000 to collect unpaid
rent on their behalf would need to file a Form 1099-MISC. In this
case, the taxpayer would have to answer YES to question A on Schedule
E and should file Form 1099. There are some exceptions (e.g., certain
payments made with a credit card where the merchant has assigned
a Merchant Category Code (MCC) indicating that reporting is not required)
allowing the taxpayer to answer no to both questions A and B, on
Schedule E.
In general, a taxpayer or tax practitioner should reference the 2011
Instructions
for Form 1099-MISC to answer questions A & B
correctly and to be aware that rental property owners are not excluded
from having a Form 1099-MISC filing requirement.
The SBJA also included increased penalties for failure of file information
returns effective January 31, 2011. Code Section 6721 provides information
penalties as follows:
Penalty |
Filing Date |
Amount |
Per Payee |
1st Tier |
w/in 30 days of due date |
$30 |
$30 |
2nd Tier |
Before Aug. 1 |
$60 |
$60 |
3rd Tier |
On or after Aug. 1 |
$100 |
$100 |
Intentional Disregard |
|
$250 |
$250 |
You should evaluate the needs of your practice and determine if
this affects the returns you are filing.
We have received inquiries from members who have received one of
the approximately 21,000 return preparer letters as part of the 2011-12
IRS Preparer Compliance Initiative.
The IRS has indicated the purpose of these annual letters is to remind
preparers nationwide of their obligation to prepare accurate tax
returns on behalf of clients. These letters are sent to preparers
who completed large numbers of returns with Schedule A, C, or E.
The IRS has indicated the selection was based on “returns prepared
for clients during the most recent filing season having a high percentage
of attributes associated with returns typically containing inaccuracies
and misinterpretation of tax law.”
The IRS has also indicated they will visit approximately 2,100 tax
return preparers who received these letters to further discuss their
responsibilities as a return preparer and to verify their compliance
with existing return preparer and e-file requirements.
This is the third year of the IRS preparer compliance program. The
LCPA and AICPA are continually monitoring this program, maintaining
contact with IRS officials, conveying your concerns, and will continue
to do so.
Additional information on this program is available at the IRS and
AICPA websites at:
IRS
Letters and Visits to Return Preparers – 2012 Filing Season
AICPA:
IRS Preparer Compliance Initiative
IRS
has issued proposed regs phasing in the requirement in Code Sec.
6011(e)(3), as amended by the Worker, Homeownership, and Business
Assistance Act of 2009, that after 2010 “specified tax return
preparers” who expect to file more than 10 individual, estate,
or trust returns must file them electronically. For calendar year
2011, the proposed regs would define a specified tax return preparer
as a tax return preparer who reasonably expects to file – or
if the preparer is a member of a firm, the firm’s members
in the aggregate reasonably expect to file – 100 or more
individual income tax returns during the year. Under the proposed
regs, beginning Jan. 1, 2012 a specified tax return preparer would
be a tax return preparer who reasonably expects to file 11 or
more individual income tax returns in a calendar year.
The
U.S. Senate this week voted to reject repeal of the expanded Form
1099 reporting requirements enacted in Sec. 9006 of the Patient
Protection and Affordable Care Act. The amendments were considered
as part of the FDA Food Safety Modernization Act. Senate Amendment
4713 to fully repeal the rules without budgetary offset failed
by a vote of 44-53. A competing amendment to repeal the rules
but with a cost offset failed by a vote of 35-61.
In general, under current law, information returns must be made to
IRS by every person engaged in a trade or business who makes payments
for services, aggregating $600 or more, in any tax year to another
person (other than corporations) in the course of the payor’s
trade or business. Effective for payments made after 2011, Sec. 9006
of the Patient Protection and Affordable Care Act would add payments
of amounts in consideration for property and gross proceeds – i.e.,
it would add payments for goods – to the list of payments subject
to reporting. In addition, it provides that starting in 2012, payments
to corporations (that are not tax-exempt) – which had previously
been exempt from the reporting requirement – would be subject
to information reporting.
The
IRS recently issued guidance providing relief to homeowners who
have suffered property losses due to the effects of certain imported
drywall installed in homes between 2001 and 2009.
Revenue Procedure 2010-36 enables affected taxpayers to treat damages
from corrosive drywall as a casualty loss and provides a “safe
harbor” formula for determining the amount of the loss.
It provides the following relief:
• Individuals who pay to repair damage to their personal residences
or household appliances resulting from corrosive drywall may treat
the amount paid as a casualty loss in the year of payment.
• Taxpayers who have already filed their income tax return
for the year of payment generally have three years to file an amended
return and claim the deduction. The amount of a loss that may be
claimed depends on whether the taxpayer has a pending claim for reimbursement
(or intends to pursue reimbursement) of the loss through property
insurance, litigation or otherwise.
• In cases where a taxpayer does not have a pending claim for
reimbursement, the taxpayer may claim as a loss all unreimbursed
amounts paid during the taxable year to repair damage to the taxpayer’s
personal residence and household appliances resulting from corrosive
drywall.
• If a taxpayer does have a pending claim (or intends to pursue
reimbursement), a taxpayer may claim a loss for 75 percent of the
unreimbursed amount paid during the taxable year to repair damage
to the taxpayer’s personal residence and household appliances
that resulted from corrosive drywall.
For
more information, please click on the following link to Revenue
Procedure 2010-36: http://www.irs.gov/pub/irs-drop/rp-2010-36.pdf
Consumers
should be aware of a scam in which recipients receive an e-mail
that claims to come from the Electronic Federal Tax Payment System
(EFTPS). The e-mail states that tax payments made by the e-mail
recipient through EFTPS have been rejected. The e-mail then directs
recipients to a bogus website containing malicious software (malware)
that infects the intended victim’s computer. To avoid the
bogus website and malware, do not click on any links, open any
attachments or reply to the sender for any e-mail you may receive
that claims to come from EFTPS.
The IRS and the Financial Management Service (the Treasury bureau
that owns EFTPS) does not communicate payment information through
e-mail.
The
recently enacted 2010 Small Business Jobs Act contains significant
tax changes for both businesses and individuals. Many of these
changes take place in 2010 and require that tax practitioners
immediately understand and apply these new rules in order to maximize
the benefits their clients will receive from these new legislative
changes.
The major provisions are:
• New Section 179 and bonus depreciation rules
• Qualified small business stock changes
• Business credit carryback rule changes
• New, more favorable, built-in gains tax rules for S corporations
• Ability to deduct self-employed individuals’ health
insurance on Schedule C
• New opportunity to roll over qualified plan balances to Roth
accounts
• Cell phones no longer listed property
• More favorable deduction for start-up business expenses
• More extensive Form 1099 reporting for renters of real estate
The LCPA is offering several CPE opportunities to cover the wide-ranging
assortment of tax breaks and incentives included in the new small
business bill.
Thousands of
small Louisiana nonprofit organizations could lose their tax-exempt
status if they fail to file overdue federal income tax returns
before October 15, 2010.
The Internal Revenue Service (IRS) has initiated a one-time relief
program under which more than 5,000 Louisiana nonprofits can preserve
their tax-exempt status by filing late federal returns that were
due in 2007, 2008, and 2009.
Louisiana-based nonprofits that lose their federal tax-exempt status
will also lose their tax-exempt status under Louisiana’s tax
code. They will have to reapply with the IRS to regain their tax-exempt
status, and any income received between the revocation date and the
renewed exemption may be taxable.
The IRS has established a special webpage (http://www.irs.gov/charities/article/0,,id=225705,00.html)
to guide organizations through the process of preserving their status
as tax-exempt nonprofits. The full IRS list of Louisiana organizations
at risk of losing their tax-exempt status is available at the webpage.
The
Internal Revenue Service (IRS) has issued final regulations requiring
paid tax return preparers to register with the IRS to obtain a
Preparer Tax Identification Number (PTIN). A new online application
system to obtain a PTIN is now available.
All paid tax return preparers who prepare all or substantially all
of a tax return are required to use the new registration system to
obtain a PTIN.
Access to the online application system is available at: http://www.irs.gov/taxpros/article/0,,id=210909,00.html?portlet=1.
Individuals who currently possess a PTIN will need to reapply under
the new system but generally will be reassigned the same number.
The IRS has established a special toll-free telephone number, 1-877-613-7846,
that tax professionals can call for technical support related to
the new online registration system.
Applicants will pay a $64.25 fee to obtain a PTIN, which will be
valid for one year. Receipt of a PTIN will be immediate after successful
online registration. Or a paper application may be submitted on Form
W-12, IRS Paid Preparer Tax Identification Number Application, with
a response time of four to six weeks. Before registration, applicants
should consider that the date the PTIN is assigned is established
as the annual renewal date.
PTINs are required by January 1, 2011 to be able to prepare returns
after that date.
For more information, please click on the following link to the IRS
frequently asked questions (FAQs) on the PTIN system: http://www.irs.gov/taxpros/article/0,,id=218611,00.html.
The
Internal Revenue Service has announced the locations of Taxpayer
Assistance Centers in seven Gulf Coast cities that will be open
this Saturday, July 17, to provide help to taxpayers impacted
by the BP oil spill.
The following locations will be open from 9 a.m. to 2 p.m. Central
time:
• 2600 Citiplace Centre, Baton Rouge, La.
• 423 Lafayette St., Houma, La.
• 1555 Poydras Street, New Orleans, La.
• 11309 Old Highway 49, Gulfport, Miss.
• 1110 Montlimar Drive, Mobile, Ala.
• 651-F West 14th St., Panama City, Fla.
• 7180 9th Ave. North, Pensacola, Fla.
Individuals who have questions about the tax treatment of BP claims
payments or who are experiencing filing or payment hardships because
of the oil spill will be able to work directly with IRS personnel
at any of these locations on Saturday.
Last week, the IRS announced the opening of a dedicated phone line
for victims of the Gulf oil spill – 866-562-5227. This special
toll-free line is open weekdays from 7 a.m. to 10 p.m. and will also
be open to callers on Saturday, July 17, from 9 a.m. to 2 p.m. Central
time.
In certain cases, IRS staff can assist oil spill victims by suspending
collection and examination actions. Taxpayers who need this assistance
must request it. Others may decide to continue making payments because
interest will continue to accrue on outstanding balances, even if
some penalties are abated.
In addition to postponing collection actions, the IRS continues to
have a number of other ways to help taxpayers deal with oil spill
issues or other economic hardships, including:
• Added flexibility for missed
payments on installment agreements and offers in compromise for previously
compliant individuals.
• Consideration of a taxpayer’s current income and potential
for future income when negotiating an offer in compromise.
• Accelerated levy releases.
• Assistance of the Taxpayer Advocate Service for those experiencing
economic harm and seeking help resolving tax problems that have not
been resolved through normal channels.
IRS
Provides Tax Help, Guidance to Gulf Oil Spill Victims; Special
Assistance Day Planned for July 17
The Internal Revenue Service today provided guidance to individuals
and businesses affected by the oil spill in the Gulf of Mexico and
announced a number of new efforts to help affected taxpayers, including
a special Gulf Coast Assistance Day on July 17.
“This is a very difficult time for many people affected by
the oil spill in the Gulf of Mexico. As residents of the region
cope with the evolving situation, I want to assure them that the
IRS will be doing everything it can to provide tax help to those
who need it,” IRS Commissioner Doug Shulman said. “We
encourage anyone who has an issue with the IRS to contact us and
explain their hardship, and we will work with them to find a solution.
We’ll do everything we can under current law to help taxpayers.”
The guidance released today is based on current law, and it explains how
recipients of payments from BP should treat the payments for tax
purposes. According to the current law, BP payments for lost income
are taxable in the same way that the wages or business income these
payments are replacing would have been. The law treats compensation
for lost wages or income differently for tax purposes than compensation
for physical injuries or property loss, which generally are nontaxable.
Every person can have unique financial circumstances, so the IRS
encourages taxpayers to review their tax situation or talk with
their tax preparers about the implications of payments or compensation
from the oil spill.
The new information is available in a question-and-answer format
on a special section of the IRS website, IRS.gov. The IRS is closely
monitoring the situation in the Gulf, and additional information
will be added to IRS.gov as it becomes available.
To help people in the Gulf Coast area dealing with tax issues, the
IRS also announced a special assistance day on July 17 in seven
cities. Taxpayers and tax preparers will be able to work directly
with IRS employees to resolve tax issues, including specific topics
related to the oil spill. The IRS will hold the Gulf Coast Assistance
Day in four states:
Alabama: Mobile.
Florida: Panama City and Pensacola.
Louisiana: New Orleans, Houma and Baton Rouge.
Mississippi: Gulfport.
Times and specific locations will soon be announced and will be
available on IRS.gov.
In addition, taxpayers with problems related to the Gulf spill will
soon be able to reach IRS personnel through an IRS toll-free telephone
line. Specially trained IRS personnel will be available
to help people with tax questions related to the oil spill. More
information will be available soon about this telephone line.
The IRS encourages taxpayers in the Gulf struggling with payment
or collection issues to contact the agency. The IRS continues to
have a number of ways to help taxpayers dealing with oil spill issues
or other economic hardship issues, including:
• Assistance of the Taxpayer
Advocate Service for those taxpayers experiencing
particular hardship navigating the IRS.
• Postponement of collection actions in certain hardship cases.
• Added flexibility for missed payments on installment agreements
and offers in compromise for previously compliant individuals having
difficulty paying.
• IRS employees will be permitted to consider a taxpayer’s
current income and potential for future income when negotiating
an offer in compromise.
• Accelerated levy releases for taxpayers facing economic hardship.
Related Information:
Gulf
Oil Spill Information Center
Gulf
Oil Spill: Questions and Answers
Access
to disaster help and resources
The Internal
Revenue Service reminded eligible homeowners who received federal
reimbursement grants stemming from Hurricanes Katrina, Rita or
Wilma that there is still time to take advantage of last year’s
tax law change. Eligible homeowners have until July 30th to take
advantage of a new law that allows homeowners to adjust previously
claimed casualty loss deductions they suffered on their main home
from Hurricanes Katrina, Rita or Wilma.
The Housing and Economic Recovery Act, enacted in 2008, included
the new provision, aimed at helping grant recipients who previously
claimed hurricane-related disaster-loss deductions. “Notice
2008-95 provides specific guidelines to homeowners who received these
grants, including the Louisiana Road Home Grants and the Mississippi
Development Authority Hurricane Katrina Homeowner Grants,” said
IRS Spokesperson Dee Harris.
The notice explains how eligible taxpayers can amend prior-year returns
to reduce the casualty loss deduction by the amount of the grant.
Taxpayers have one year to pay back any resulting tax due, penalty-free
and interest-free. To qualify for this relief, these amended returns
must be filed by July 30, 2009, and the entire resulting tax due
must be paid by July 30, 2010, in most cases. Before this change,
homeowners who claimed casualty loss deductions and received grants
in a later tax year as reimbursement for the loss were required by
law to pay tax on part or all of the grant to compensate for the
tax benefit of the prior deduction. While individual circumstances
varied, this meant that some taxpayers ended up paying more tax on
the grant than they saved by claiming the deduction.
The IRS cautions that, although filing an amended return may be a
good option for many, it would not necessarily be the right choice
for everyone. “Affected taxpayers and their representatives
should consider carefully which option is best under their particular
circumstances,” advised Harris.
For more information and additional guidance, access Notice 2008-85
at the following link:
http://www.irs.gov/irb/2008-44_IRB/ar09.html.
This Wednesday, April 1, the LCPA will hold a conference call to
provide timely tax information relative to the Madoff and Stanford
investment schemes. Robert S. Keebler, CPA, MST, DEP of Virchow,
Krause & Company, LLP of Appleton (Green Bay), Wisconsin,
will lead the discussion for the conference call.
Printed material is now available that you should find informative
and helpful, whether or not you plan to participate in Wednesday’s
conference call. Please click here to
access the material.
According to Mr. Keebler, “The key issue, for Louisiana CPAs,
is the malpractice risk associated with the 2005 returns that need
protective claims. Under the Internal Revenue Service rules, tax
returns can’t be amended after three years so the returns must
be filed by April 15th.”
The LCPA has scheduled an informative conference call for Wednesday,
April 1, 2009 from 10:00 a.m. until 11:00 a.m. with Robert Keebler
and interested LCPA members regarding information relative to filing
protective claims by April 15, 2009 regarding the Madoff and Stanford
investment schemes.
Speaker: Robert S. Keebler, CPA, MST, DEP ~ Virchow,
Krause & Company, LLP of Appleton (Green Bay), Wisconsin
"Income Tax Issues Related to the Stanford Financial Group's
Situation"
Time: 10:00 a.m. – 11:00 a.m.
Format: Call in Conference Call (please call in at least
5 minutes before the start of the program) Space is limited to the
first 125 people who call in.
According to Keebler, "The key issue, for Louisiana CPAs,
is the malpractice risk associated with the 2005 returns that need
protective claims. Under the Internal Revenue Service rules, tax
returns can't be amended after three years so the returns must be
filed by April 15."
This program is for information purposes only and not designed
for CPE, therefore no CPE credits will be available. If you have
questions to submit prior to the call, please send them to djones@lcpa.org
prior to March 31, 2009.
Call in information:
Diane Jones will serve as the phone conference moderator. The moderator
is responsible for beginning and ending the conference call.
To get connected to the conference call, simply dial the toll-free
telemeeting phone number and enter the meeting number prefixed and
followed by the * key.
TeleMeeting Phone Number: 866-309-0490
Meeting Number *2917024*
If the moderator has already dialed in to begin the conference,
you will automatically be connected directly to the other participants.
If the moderator has not yet dialed in to start the telemeeting,
you will hear music until he/she does so.
If you get disconnected, please redial the telemeeting phone number
and you will be connected to the phone conference once again.
When the telemeeting is concluded, hang up to end your call.
We have received inquiries concerning the statute dates for 2005
returns for taxpayers affected by Hurricane Katrina who have not
filed their original 2005 return. The following is a response from
the Internal Revenue Service regarding the statute of limitations
and return filing due dates.
Practitioners should calculate three years from the extended due
date.
1. A refund/offset of prepaid credits is allowed if an original
return is postmarked within three years of the Return Due Date (RDD)
plus extensions [IRC Section 6511(b)(2)(A)].
2. If an original return is received more than three years after
the RDD, a refund/offset is limited to tax paid within three years
immediately preceding filing of the return plus extensions.
Additionally, individual and business filers are notified when
the Refund Statute Expiration Date (RSED) is within six months of
expiration and a return has not been filed. The notice coincides
with annual news and press releases to remind taxpayers that a return
has not been filed, the time to claim an overpayment/ credit is about
to expire, and a return/claim must be filed to claim the overpayment
before the RSED.
Practitioners should probably inquire of their affected clients
to see if they have received the notices. The notices would reflect
the due date.
There are so many variables when dealing with extensions, Return
Due Dates, and statutes that the IRS cannot provide a blanket specific
date. There could be some circumstances that may prohibit one taxpayer
from claiming a refund due to expired credits; for example, pre-paid
credits from a prior year. Just because a credit exists, doesn’t
mean it is refundable to the taxpayer during a statute period in
all situations. A credit may be used to pay tax owed but any excess
may not be refundable if the statute is in question.
Practitioners who are unsure about a specific taxpayer may call
or have the taxpayer call. The RSED is shown on all tax accounts
so a Customer Service Representative could easily provide this information.
We have also received inquiries regarding a claim for refund for
Katrina related years, specifically a net operating loss (NOL) that
arises in 2005.
The IRS has issued the following response.
According to IRC 6511(d)(2), a claim for refund related to an overpayment
in 2002, 2003, or 2004 that is attributable to a NOL carryback that
arises in 2005, is timely if it is filed 3 years after the due date
for the 2005 return, the taxable year in which the NOL arises, including
extensions thereof.
The 2005 return for affected taxpayers (Hurricane Katrina) are
subject to the Katrina-related postponement periods. As a result,
the 2005 return was due, without extension, 10/16/06 or, with extension,
4/17/07. So, the 3-year period for filing an amended return for years
2002, 2003, and 2004, is either 10/16/09 or 4/17/10, depending on
whether the taxpayer filed for an extension.
If the taxpayers at issue were located in Jefferson, Orleans, or
St. Martin Parish, the severe storms and tornadoes that struck on
February 12-13, 2007 are also at issue. These taxpayers were granted
additional time to file and pay until April 24, 2007, for returns
and payments due on or after February 12, 2007 and before April 24,
2007. This additional time to file applies to those Hurricane Katrina
2005 returns that were previously postponed to October 16, 2006,
and granted an extension of time to file until April 17, 2007. So,
for these taxpayers, they must file the amended returns for 2002,
2003, or 2004 by April 24, 2010.
Form 8850, Pre-Screening Notice and Certification Request for the
Work Opportunity Credit, is currently being revised. Because there
were two recent and separate tax laws passed that made it necessary
to revise the form, the IRS decided to incorporate all necessary
changes on one revision, rather than doing two revisions. The current
revision of the form will take both tax laws that passed into account.
The IRS is working to release a revised version of Form 8850 as soon
as possible.
Attribution and thanks are extended to Van Auld of Lafayette for
pointing out that the last revision was in June 2007 and was misleading
if you wanted to take the Work Opportunity Credit, which was extended.
It has come to our attention that there may be confusion on the
extension period granted for the filings interrupted by Hurricanes
Gustav and Ike included in IR 2008-100. IR 2008-100 allowed an interrupted
period under Code Section 7508A for filings that had either an original
or extended due date occurring on or after September 1, 2008 and
on or before January 5, 2009.
The information from IRS could affect some of the extensions you
may have filed on or before January 5, 2009.
IRS has informed us that the normal extended due dates apply for
all returns affected by IR 2008-100.
For example, a June 30, 2008 fiscal year corporation return would
have an original filing date for an extension of time to file this
return of September 15, 2008, which is within the period indicated
in IR 2008-100. An extension would have to be filed for this entity
on or before January 5, 2009. According to the IRS, this extension
would be valid only until March 15, 2009 (six months from the original
due date of September 15, 2008), not July 5, 2009 (six months from
January 5, 2009).
A July 31st fiscal year corporation return would have an original
filing date for an extension of time to file this return of October
15th which is within the period indicated in IR 2008-100. An extension
would have to be filed for this entity on or before January 5th.
This extension would be valid until the original extended due date
of April 15th.
We are continuing our discussions with IRS on this subject and
will inform you if there is any change in their position.
The Internal Revenue Service lockbox payment address is changing
for individual taxpayers in five states, including Louisiana. Some
balance due taxpayers must send their voucher, payment and sometimes
their return to a designated location (a lockbox bank).
On Jan. 1, 2009, Treasury's Financial Management Service (FMS)
and the IRS discontinued operations at the Dallas lockbox facility.
Payments for individual taxpayers that were previously sent to Dallas
should now be mailed to the lockbox site in Charlotte, N.C.
If your client lives in Louisiana, Kentucky, Mississippi, Tennessee
or Texas and files form 1040, 1040A, or 1040EZ, payments should be
sent to: P.O. Box 1214; Charlotte, NC 28201-1214.
According to the IRS Lockbox Coordinator, no problem is anticipated
with payments sent to the Dallas address. Arrangements have been
made with the postal service to ship all payments overnight to the
new lockbox. Payments should be posted correctly to the taxpayer’s
account, according to the IRS.
Another lockbox address change will affect business taxpayers in
23 states. Louisiana is not one of the affected states. For more
information, please click on the following link: http://www.irs.gov/taxpros/article/0,,id=201502,00.html
State
The Louisiana Department of Revenue (LDR) has issued a new emergency
rule relative to the Alternative Fuel Credit. In addition, the LDR
has issued Revenue Information Bulletin No. 12-025, Frequently Asked
Questions Relating to the Emergency Rule on the Alternative Fuel
Credit.
The new emergency rule and frequently asked questions can be accessed
at the following links:
LAC 61:I.1912 Alternative Fuel Tax Credit http://www.rev.state.la.us/forms/lawspolicies/Emergency%20Rule%20-%20Alternative%20Fuel%20Credit.pdf
Revenue Information Bulletin No. 12-025 - Frequently Asked Questions
Relating to the Emergency Rule on Alternative Fuel Credit http://www.rev.state.la.us/forms/lawspolicies/RIB%2012-025.pdf
There has been significant confusion surrounding the state Alternative
Fuel Tax Credit. Hopefully, this new guidance from the LDR will provide
clarity on the issue.
If there are any questions or concerns, please feel free to contact
the LDR Call Center at (225) 219-0102
Just a reminder that the Louisiana Department of Revenue (LDR)
is no longer accepting federal extensions to request an extension
for 2011 Louisiana individual income tax returns.
Individual taxpayers who need additional time to file their Louisiana
individual income tax returns will need to request a specific state
individual income tax filing extension. All extension requests must
be made on or before the return's due date. The return's due date
is May 15th for calendar year filers, and the 15th day of the fifth
month following the close of the taxable year for fiscal year filers.
LDR's
Online Tax Extensions (Individual & Corporation)
TIP: Those not registered for LDR's bulk extension program
may wish to consider using this online option if you don't have a
significant number of Louisiana extensions. You will receive a confirmation
back to the email address specified on the request.
State No Longer Accepts Federal Extensions
We previously informed you in our alert of February 2nd, the Louisiana
Department of Revenue (LDR) is no longer accepting federal extensions
to request an extension for 2011 Louisiana individual income tax
returns or the 2011 corporation income and 2012 franchise tax returns.
Individual taxpayers who need additional time to file their Louisiana
individual income tax returns will need to either request a specific
state individual income tax filing extension or request an extension
via an electronic application. Regardless of which option is used, all
extension requests must be made on or before the return's due date.
The return's due date is May 15th for calendar year filers, and the
15th day of the fifth month following the close of the taxable year
for fiscal year filers.
Beginning with 2011 corporation income and 2012 franchise tax returns,
corporate taxpayers who need additional time to file their Louisiana
corporation income and franchise tax returns will need to request
a specific state filing extension, or request an extension via an
electronic application. Regardless of which option is used, all
extension requests must be made on or before the return's due date.
The 2011 return's due date is April 15th for calendar year filers,
and the 15th day of the fourth month following the close of the taxable
year for fiscal year filers.
Below is a link to LDR’s online extension system for individuals
and corporations. Those not registered for LDR’s bulk extension
program may wish to consider using this if you do not have a significant
number of Louisiana extensions. You will receive a confirmation back
to the e mail address specified on the request.
LDR's
Online Tax Extensions (Individual & Corporation)
Other State Tax Notes
Louisiana Tax Account Number – The Louisiana Department
of Revenue has been routinely receiving numerous tax returns submitted
without tax account numbers. Withholding tax is the prevalent item.
Most of the affected returns come in with “Applied For” indicated
in the account number field. The LDR’s experience is that many
of the affected taxpayers are registered and have an account number.
The LDR asks that taxpayers and preparers pay particular attention
to including the account number for any tax return or payment field.
Failure to do so significantly delays the process.
Also, please remember to include a Louisiana tax account
number on all paper filed extension requests. Extensions
cannot be processed without the account numbers.
We also urge you to check your tax software now to determine if it
will process electronic Louisiana extensions and to evaluate the
needs of your practice for filing extensions.
Louisiana Due Date -- The due date for filing Louisiana
returns that would be due on April 15th is Monday, April 16th.
This would include calendar year Corporation Income and Franchise
tax returns and other returns that would be due on April 15th.
Please note this since there could be confusion with the filing
date for US Individual income tax returns of April 17th. Louisiana
does not piggy back the Federal filing date.
Software Compatibility -- Please evaluate your tax software
used for filing corporation returns now. We are informed not all
software packages are approved for Louisiana at the present time.
Many wish to electronic file Louisiana returns on March 15th when
the Federal returns are due. It is possible the software may not
be approved yet for Louisiana electronic filing of returns, payments,
and extensions.
Please click on the following link to the list of approved Corporation
e-file vendors:
http://www.revenue.louisiana.gov/sections/business/corpefile.aspx
Withholding Billings -- More than 400 billings were recently
issued by the LDR for L-3 adjustments on both the 2010 and 2011 withholding
filing periods. These bills are a result of L-3 submissions where
the submitter of the information did not place the decimal in the
correct position causing an overstatement of the withholding tax
reported. The overstatement will appear to be somewhat large in many
cases. The LDR is currently in the process of correcting these accounts.
Safeguards are currently being developed to prevent this type of
adjustment from occurring in the future without first being reviewed.
In late February or early March, approximately 400 taxpayers received
a Notice of Tax Due pertaining to the Withholding Tax Period 12/31/11.
These notices were for additional interest and penalties assessed
for semi-monthly filers who paid their 12/31/11 withholding tax electronically.
The LDR is reviewing these accounts and will adjust accordingly.
If there is an outstanding liability after the LDR’s review,
taxpayers will receive an updated notice.
In both cases above, the LDR regrets any inconvenience that these
billings may have caused you and your clients.
Form 8453 – The LDR has announced that tax preparers
only need one signed copy of the LA 8453 if they are e-filing both
an extension and the return. If this is the case, the tax preparer
may have the LA 8453 signed when the return is e-filed. The LA 8453
must be retained by the preparer and not mailed to the LDR unless
requested to do so.
Interest and dividend income earned directly by a trust or estate
(not passed through to the trust from a Louisiana domiciled partnership,
LLC, or S Corporation) and distributed to a non-resident beneficiary
is not Louisiana income, and therefore not taxable to the non-resident
beneficiary for Louisiana individual income tax purposes.
In response to a notice of tax due related to this type of income,
or in response to a letter requesting documentation related to income
reported on a Louisiana Fiduciary Income Tax return, a non-resident
beneficiary should send a copy of:
1. the beneficiary’s Schedule K-1 of the federal form
1041; and
2. either:
(a) all Schedule K-1’s of Form 1065, received by the
trust or estate as a partner, or
(b) a statement that the trust or estate did not receive and should
not have received Schedule K-1’s of Form 1065 as a partner;
and
3. either:
(a) all Schedule K-1’s of Form 1120S, received by
the trust or estate as a shareholder, or
(b) a statement that the trust or estate did not receive and should
not have received Schedule K-1’s of Form 1120S as a shareholder.
When filing fiduciary income tax returns for trusts or estates
in the future, please include:
1. a copy of the Schedule K-1 of federal form 1041 for each
non-resident beneficiary of the trust or estate;
2. a copy of pages 1 and 2 of the federal form 1041 – Federal
income tax return for Estates and Trusts; and
3. either:
a) all Schedule K-1’s of Form 1065, received by the
trust or estate as a partner, or
b) a statement that the trust or estate did not receive and should
not have received Schedule K-1’s of Form 1065 as a partner;
and
4. either:
a) all Schedule K-1’s of Form 1120S, received by the
trust or estate as a shareholder, or
b) a statement that the trust or estate did not receive and should
not have received Schedule K-1’s of Form 1120S as a shareholder.
State Tax Developments
We have received numerous calls concerning notices LDR has issued
for prior years' withholding tax periods.
We have contacted LDR and have been informed some of these notices
have been issued in error. LDR will start issuing letters cancelling
the notices on Monday, February 14, 2012 for periods prior to 2008. You
should inform clients who received these notices that the cancellation
letter should be coming from LDR.
We understand there are many other Louisiana matters affecting your
practice. LCPA maintains an open and constant dialogue with LDR on
these issues and will continue to keep you abreast of these matters
going forward.
Attribution and thanks are extended to Gerard H. Schreiber, Jr.,
CPA, who contributed content for this alert.
The Louisiana Department of Revenue (LDR) is no longer accepting
federal extensions to request an extension for 2011 Louisiana individual
income tax returns or the 2011 corporation income and 2012 franchise
tax returns.
Individual taxpayers who need additional time to file their Louisiana
individual income tax returns will need to either request a specific
state individual income tax filing extension or request an extension
via an electronic application. Regardless of which option is used,
all extension requests must be made on or before the return's due
date. The return's due date is May 15th for calendar year filers,
and the 15th day of the fifth month following the close of the taxable
year for fiscal year filers.
Beginning with 2011 corporation income and 2012 franchise tax returns,
corporate taxpayers who need additional time to file their Louisiana
corporation income and franchise tax returns will need to request
a specific state filing extension, or request an extension via an
electronic application. Regardless of which option is used, all extension
requests must be made on or before the return's due date. The 2011
return's due date is April 15th for calendar year filers, and the
15th day of the fourth month following the close of the taxable year
for fiscal year filers.
Also, please remember to include a Louisiana tax account number on
all paper filed extension requests. Extensions cannot be processed
without the account numbers.
A “Notice of Adjustment to Your Tax Return” is sent
to taxpayers when LDR adjusts one or more line items on a tax return.
It provides notification that a return line item as reported conflicts
with information on file. The notice will also show any differences
in estimated payments, refundable credits, overpayments and credit
carry forwards.
It is not a bill and is generated automatically when a return is
posted to a Louisiana tax account and differences are noted.
The notice is designed to explain why a refund or bill might be for
a different amount than the taxpayer expected.
The notice does not reflect payments submitted with the return. It
will show the amount of tax that is owed after adjustments, but before
payment submitted with the return. If the taxpayer owes an additional
amount as a result of the adjustments, a bill will be generated after
the due date of the return.
• We have received numerous inquiries concerning delinquent
penalty notices from the Louisiana Department of Revenue for withholding
L-3 forms going several years back. The LDR has announced that all
notices for periods prior to 2008 are being reversed and liability
cancellation letters will be issued. Taxpayers should disregard these
notices. All notices for period 2008 and later are still valid.
• The LDR has established a new e-file help line. If you have
any questions relative to e-filing, contact the Help Desk at (225)
219-2492.
• The LDR recently introduced the new prepaid MyRefund card
for state income tax refunds. Louisiana taxpayers who do not choose
direct deposit for their refunds will receive those refunds
in the form of a prepaid debit card. The LDR has made one change
to the program. For refunds more than $6,999 involving taxpayers
who do not choose direct deposit, checks will be issued instead of
prepaid debit cards because “federal banking regulations limit
the amount banks can dispense in cash at one time” to cardholders,
according to LDR Press Secretary Byron Henderson.
The switch to the prepaid debit cards was a cost-cutting measure
by the LDR. More than 40,000 MyRefund accounts have been created.
The implementation of the mandatory electronic filing of extensions
and extension payments for Individual Income Tax Payments will be
deferred one more year, until January 1, 2013, Cynthia Bridges, Secretary
of the Louisiana Department of Revenue (LDR), has announced.
The LDR intends to proceed in 2012 with promulgating a rule which
will mandate e-filing of extensions and extension payments for individual
returns for filing periods beginning January 1, 2013. The LDR has
prepared draft rules for the mandate, which can be found at http://www.rev.state.la.us/sections/Preparer/ProposedPolicies.aspx.
Tax preparers will have an opportunity to comment on these draft
rules in 2012.
August 15, 2011 is the deadline for all filing extension requests
related to 2010 Louisiana individual income tax and 2010 Louisiana
Corporation Income and Franchise tax returns that were returned due
to the failure to include a Louisiana tax account number, the Louisiana
Department of Revenue (LDR) has announced.
LDR requires a Louisiana tax account number on all paper filing extensions
submitted via state form CIFT-620EXT or IRS Form 7004. Extensions
cannot be processed without the account numbers.
LDR will waive delinquent filing penalties for 2010 filing extension
resubmissions that meet the August 15 deadline. Those that fail to
meet the deadline will be subject to delinquent filing penalties.
The resubmission should include only the extension request, not the
full tax return.
For more information, contact:
Carl Reilly
Director, Tax Administration Division
Louisiana Department of Revenue
(225) 219-2690
Carl.Reilly@la.gov
Some Louisiana businesses have recently received an “Annual
Meeting Disclosure Statement” from the Louisiana Corporate
Compliance Business Services Division. Louisiana business entities
should be aware that the Louisiana Corporate Compliance Business
Services Division is not affiliated or associated with Louisiana
state government in any way, according to the Louisiana Secretary
of State’s website.
The Annual Meeting Disclosure Statement is an official-looking form
which appears similar to the “Annual Report” disclosure
form that, in the past, was mailed by the Louisiana Secretary of
State and required to be completed by all registered corporations
and limited liability companies. Apparently the purpose of the form
and a $125 document fee is the filing of annual meeting minutes,
which is not required under the Louisiana Business Corporation Laws.
The Louisiana Department of Revenue (LDR) has provided notice of
its intention to proceed with rulemaking to implement mandatory electronic
filing of certain extension requests and payments beginning with
tax year 2011 with return and payment due dates in 2012.
The LDR Office of Legal Affairs, Policy Services Division is requesting
comments from tax preparers, industry, and the public on the following
issues regarding Mandatory Electronic Filing of Corporate and Individual
Income Tax Extensions and Extension Payments:
Implementation dates;
Implementation for fiscal year filers;
Phase-in of the mandatory requirements;
Income and payment thresholds;
Hardship and religious exceptions;
Opt-out provisions;
Telefile and IVR options;
Filing needs of preparers with multiple clients;
Filing needs of taxpayers with multiple accounts;
Signature documents and preparer authorization for electronic extensions
and payments;
Penalties.
Written comments addressing these issues are due no later than July
1, 2011, and should be submitted to:
Leonore Heavey
Policy Services Division,
Office of Legal Affairs
Louisiana Department of Revenue
P.O. Box 44098
Baton Rouge, LA 70804-4098
Alternatively, comments can be sent via fax to (225) 219-2759.
Persons commenting should reference this document as “Electronic
Extensions and Payments.”
The LCPA encourages members to submit comments by the July 1, 2011
deadline. LCPA leadership and management will be drafting a comment
letter on the proposal.
The LCPA has learned from the Louisiana Department of Revenue (LDR)
that a high volume of Louisiana Corporate Income and Franchise Tax
extension requests have been received without account numbers. Consequently,
those extension requests are being returned to the preparer to provide
the account number. According to the LDR, the Department lacks the
resources to research the account number for each extension request.
Please see our tax alert from March 4, 2011 (http://www.lcpa.org/importanttaxalerts.html#state),
which notes that when submitting a paper copy of IRS Form 7004, be
sure to include the Louisiana Corporation Income and Franchise tax
account number at the top of the form.
Have you used the LDR’s online Bulk Extension Filing application?
If you have used it and had problems or find it unsatisfactory, please
provide us feedback.
When responding to or commenting about this message, please reply
directly to asuffrin@lcpa.org (do not use the reply button on your
toolbar).
The Louisiana Department of Revenue (LDR) reminds taxpayers and
tax preparers that April 15, 2011 is the filing deadline for state
corporation tax returns and for estimated tax payments from individuals.
Due to a Washington, D.C. area holiday, the IRS has pushed the federal
income tax filing deadline to April 18, 2011. However, the State
of Louisiana is not postponing its deadline for corporation income
tax returns and individual estimated tax payments.
The general filing deadline for Louisiana individual income tax returns
is May 16, 2011.
The LDR advises tax preparers that taking a few precautionary steps
when preparing printed tax returns can avoid unnecessary processing
delays.
LDR’s Return Processing Center has received a number of printed
returns that are too light to be read by imaging equipment. Preparers
are advised to print returns in black ink only. Other colors, including
gray, do not provide readable images.
Unreadable returns cause long delays in processing income tax refunds
when the returns are suspended pending verification of information.
For more information, call the LDR Return Processing Center at (225)
219-2340.
The LDR reminds tax preparers that the most efficient, effective
method of requesting an extension to file 2010 Louisiana income tax
returns is do so electronically.
For corporation returns, you can use commercially available tax preparation
software that supports the electronic filing of the Louisiana Application
for Extension to file Corporation Income and Franchise Tax (Form
CIFT-620EXT). If your software does not allow for preparation of
Form CIFT-620EXT, the following options are available:
Requesting the extension with LDR’s online Bulk Extension Filing
application, submitting a paper copy of Form CIFT-620EXT, or submitting
a paper copy of the IRS Automatic Extension of Time to File Certain
Business Income Tax, Information, and Other Returns (Form 7004).
For individual returns, use one of the following methods:
Request an extension using commercially available tax preparation
software, file an extension request with Louisiana File Online, request
an extension through the Bulk Extension Filing application, submit
a paper copy of Louisiana Form R-2868, or submit a paper copy of
IRS Form 4868.
For more information, refer to the March 4, 2011 tax alert, which
is available on the LCPA website at the following link:
http://www.lcpa.org/importanttaxalerts.html#state
Please be aware of the documentation required to be filed and retained
to claim the Louisiana Citizens Insurance Credit.
For paper returns:
A copy of the property’s insurance declaration page and supplemental
page, if needed, that shows the separate charges for the LA Citizens
assessments must be attached to the paper corporation income tax
returns. A substitute document issued by the insurance company that
contains the line item LA Citizens assessments will be accepted if
the original declaration page is not available.
Documents showing proof that the LA Citizens assessments were paid
such as cancelled checks, an image of a check, or an itemized escrow
statement should be retained for four years and produced in the case
of an audit.
For returns filed electronically:
If the return was filed electronically, the declaration page and
supplemental page that show the separate charges for the LA Citizens
assessments and proof of payment must be retained for four years
and produced in the case of an audit.
For tax returns prepared by a paid preparer:
If the return was prepared by a paid tax preparer, a copy of the
property’s insurance declaration page and supplemental page
that shows the separate charges for the LA Citizens assessments and
proof of payment must be provided to the preparer. A preparer may
not claim this credit without documentation of payment of the assessment.
If the return is filed electronically, the preparer must keep a copy
of this documentation.
The most efficient, effective method of requesting an extension
to file 2010 Louisiana income tax returns is to do so electronically,
the Louisiana Department of Revenue (LDR) announced Friday.
For corporation income tax returns, you may use commercially available
tax preparation software that supports the electronic filing of the
Louisiana Application for Extension to File Corporation Income and
Franchise Tax (Form CIFT-620EXT). If your software does not allow
for preparation of Form CIFT-620EXT, the following options are available:
- Requesting the extension with LDR’s online Bulk Extension
Filing application at www.revenue.louisiana.gov/bulkextension
- Submitting a paper copy of Form
CIFT-620EXT. This fillable form is available at revenue.louisiana.gov/taxforms.
- Submitting a paper copy of the IRS Automatic Extension of Time
to File Certain Business Income Tax, Information, and Other Returns
(Form 7004 ). When
using this method, be sure to include the Louisiana Corporation
Income and Franchise tax account number at the top of the form.
To make a payment with an extension request, you must do so through
the commercial software electronic option; the Louisiana Taxpayer
Access Point (LaTAP) at www.revenue.louisiana.gov/latap ;
or with paper copies of Form CIFT-620EXT or IRS Form 7004. The online
Bulk Filing Extension application does not accommodate electronic
payments.
Corporation income extension requests for 2010 calendar year returns
are due no later than Friday, April 15, 2011.
To request an extension to file a Louisiana Individual Income Tax
Return, use one of the following methods:
- Request an extension using commercially available tax preparation
software.
- File an extension request with Louisiana File Online at revenue.louisiana.gov/fileonline.
- Request an extension through the Bulk Extension Filing application.
- Submit a paper copy of Louisiana Form
R-2868. This fillable form is available at revenue.louisiana.gov/taxforms.
- Submit a paper copy of IRS
Form 4868.
To make a payment with an individual income tax extension request,
you must do so through Louisiana File Online, the commercial software
electronic option, or with paper copies of Form R-2868 or IRS Form
4868. The online Bulk Filing Extension application does not accommodate
electronic payments.
Individual income extension requests for 2010 tax-year returns are
due no later than May 16, 2011.
For more information, contact:
Carl Reilly
Director, Tax Administration Division
Louisiana Department of Revenue
(225) 219-2690
Carl.reilly@la.gov
The Louisiana Department of Revenue (LDR) announced Thursday that
it will not require the electronic filing of corporate and individual
income tax extensions and payments for 2010 tax returns due in 2011.
On November 20, 2010 notices of intent for the following were published
in the Louisiana Register: Corporate Income and Franchise Tax Filing
Extensions (LAC 61:III.1503), Corporate Income and Franchise Tax
Filing Extension Payments (LAC 61:III.1505), Individual Income Tax
Filing Extensions (LAC 61:III.2501), and Individual Income Tax Filing
Extension Payments (LAC 61.III.2503). The proposed rules would have
required electronic filing of corporate and individual income tax
extensions and extension payments beginning with returns due on or
after January 1, 2011. LDR will not proceed with rulemaking for these
four notices of intent.
LDR does intend to mandate electronic corporate and individual
income tax extensions and extension payments beginning with the 2012
filing season/2011 tax year. The department will publish an advance
notice of proposed rulemaking in the Potpourri section of the March
or April 2011 issue of the Louisiana Register to allow stakeholders
to participate in the rulemaking process well before the implementation
date.
LDR encourages all taxpayers and tax professionals to take
advantage of the benefits of electronic filing of extensions and
extension payments. For more information about electronic filing
and payment options, including extensions and bulk filing, visit
the LDR E-services page at: http://www.revenue.louisiana.gov/sections/eservices.
Our tax alert of December 2, 2010 focused on four Notices of Intent
issued by the Louisiana Department of Revenue (LDR) to mandate electronic
filing of Louisiana tax filing extensions and extension payments
for both individuals and corporations. The Notices of Intent for
all four proposed rules were published in the November 2010 issue
of the Louisiana Register and are also available at the following
links.
Notice
of Intent – Individual Income Tax Filing Extensions (PDF)
Notice
of Intent – Individual Income Tax Extension Payments (PDF)
Notice
of Intent – Corporation Income and Franchise Tax Filing Extensions (PDF)
Notice
of Intent – Corporation Income and Franchise Tax Extension
Payments (PDF)
Until Tuesday, December 28, at 4:30 p.m., the LDR is accepting written
public comment regarding these proposed rules. A public hearing is
scheduled Wednesday, December 29, beginning at 9:00 a.m.
The LCPA strongly urges members to submit comments by the December
28th deadline. To assist members in responding, we have prepared
the following talking points:
1. The IRS still allows federal individual extensions to be filed
in paper form accompanied by paper checks (i.e., non-electronic payments).
Even if a federal individual extension is voluntarily filed electronically,
the taxpayer is allowed to submit a paper check in payment of the
estimated balance due. LCPA suggests that different federal and state
extension and payment requirements will create unnecessary confusion
for taxpayers and taxpayer representatives. In addition, many taxpayers
may be wholly unable to comply with LDR’s proposed rules because
they self-prepare paper returns, have done so for many years, and
do not have ready access to a computer.
2. LDR’s Notices of Intent require immediate implementation
of electronic extension filing and payment. LCPA believes there
should be a delayed phase-in period to allow Louisiana practitioners
and taxpayers to become familiar with the system and how it works.
In addition, LDR should consider hardship exceptions to the otherwise
harsh requirements.
3. Many corporations subject to Louisiana income and franchise tax
are very small and are also unsophisticated with respect to computer
technology. Some of these businesses are unable to electronically
submit tax payments because of lack of staff or the inability
of the owners to handle the intricacies of electronic payment of
tax in addition to running their businesses.
4. The timing of these Notices of Intent does not allow any phase-in
period for taxpayers to learn the system for electronic filing and
payment of tax. While a taxpayer may be able to electronically file
an extension, LCPA believes the learning curve associated with electronic
payments could be burdensome.
5. Some taxpayers are opposed to electronic payments in any form
for security reasons.
6. The Notices of Intent include fiscal year taxpayers. Currently,
LDR electronic extensions are available only from January 1st to
May 15th.
Comment letters should be sent to Shone Pierre, Assistant Secretary,
Office of Legal Affairs, Louisiana Department of Revenue, P.O. Box
44098, Baton Rouge, LA 70804-4098 or by fax to (225) 219-2759.
The
Louisiana Department of Revenue has issued four notices of intent
to mandate electronic filing of Louisiana tax filing extensions
and extension payments for both individuals and corporations.
The four notices of intent are:
Notice
of Intent – Individual Income Tax Filing Extensions – mandates
the electronic filing of a request for an extension to file an individual
income tax return beginning with returns due on or after January
1, 2011.
Notice
of Intent – Individual Income Tax Extension Payments – mandates
the electronic filing of the payment of taxes due with a request
for an extension of time to file beginning with the filing of the
2010 individual income tax returns.
Notice
of Intent – Corporation Income and Franchise Tax Filing
Extensions – mandates
the electronic filing of a request for an extension to file a
corporation income and franchise tax return beginning with returns
due on or after January 1, 2011.
Notice
of Intent – Corporation Income and Franchise Tax Extension
Payments – mandates
that the payment of taxes due with a request for an extension
of time to file a return be submitted electronically beginning
with the filing of 2010 corporation returns and 2011 franchise
tax returns.
Please click on the above links to review the notices of
intent. Interested parties may submit data, views, or arguments,
in writing to the LDR. The LCPA strongly urges members to
submit comments by the December 28, 2010 deadline to Shone
Pierre, Assistant Secretary, Office of Legal Affairs, Louisiana
Department of Revenue, P.O. Box 44098, Baton Rouge, LA 70804-4098
or by fax to (225) 219-2759. A public hearing will
be held on all four proposals on December 29, 2010 in Baton
Rouge. The LCPA leadership and management will be drafting
a comment letter on the proposals.
Effective
at the close of business on December 31, 2010, the Louisiana Department
of Revenue will temporarily suspend its Private Letter Rulings
(PLR) service. The temporary suspension of this service is so
the Department can re-dedicate resources to more efficiently provide
other needed taxpayer programs.
This temporary suspension of the PLR service will not affect any
PLR requests received before December 31, 2010, as those requests
will be handled to completion. However, the Department will temporarily
be unable to handle any PLR requests that are received after that
date. Taxpayers who wish to obtain a PLR response but have not yet
submitted a PLR request are encouraged to do so by December 31, 2010.
Louisiana
Revised Statute 47:293 allows individuals to claim a deduction
for excess federal itemized deductions on their individual income
tax return. In addition, La. R.S. 47:293 defines the term “excess
federal itemized personal deductions” as the amount by which
the federal itemized deductions exceed the amount of the taxpayer’s
federal standard deduction. The question has arisen between the
Department of Revenue and taxpayers over what is meant by the
term “federal itemized deductions.”
In some cases, a taxpayer will have more federal itemized deductions
than they have federal adjusted gross income. In this case, the taxpayer
is allowed to offset their federal adjusted gross income by the federal
itemized deductions until their federal taxable income is zero. Taxpayers
have questioned whether Louisiana’s statutory use of the term
federal itemized deductions means the total amount claimed on the
taxpayer’s federal income tax return or the amount allowed
by the IRS to offset the taxpayer’s federal adjusted gross
income and federal taxable income to zero.
The term “excess federal itemized personal deductions” is
defined as the amount by which the federal itemized personal deductions
exceed the amount of federal standard deduction for the taxpayer’s
filing status. La. R.S. 47:239(3) does not limit taxpayers to the
amount of itemized deductions actually claimed on their federal return.
Therefore, taxpayers may claim the total amount of their itemized
deductions on line 8A of the IT-540 even if they were not able to
claim the entire amount on their federal return.
Thousands
of small Louisiana nonprofit organizations could lose their tax-exempt
status if they fail to file overdue federal income tax returns
before October 15, 2010.
The Internal Revenue Service (IRS) has initiated a one-time relief
program under which more than 5,000 Louisiana nonprofits can preserve
their tax-exempt status by filing late federal returns that were
due in 2007, 2008, and 2009.
Louisiana-based nonprofits that lose their federal tax-exempt status
will also lose their tax-exempt status under Louisiana’s tax
code. They will have to reapply with the IRS to regain their tax-exempt
status, and any income received between the revocation date and the
renewed exemption may be taxable.
The IRS has established a special webpage (http://www.irs.gov/charities/article/0,,id=225705,00.html)
to guide organizations through the process of preserving their status
as tax-exempt nonprofits. The full IRS list of Louisiana organizations
at risk of losing their tax-exempt status is available at the webpage.
The
Louisiana Department of Revenue will allow Louisiana residents
to claim the Texas Margin Tax as a credit for taxes paid to other
states on the Louisiana individual income tax return. LDR Secretary
Cynthia Bridges announced the LDR’s position on the Texas
Margin Tax recently.
A
new forum for audit dispute resolution is now available to Louisiana
taxpayers, the Louisiana Department of Revenue has announced.
The Audit Protest Bureau (APB) is an independent unit of the Department
of Revenue staffed and managed by legal and tax administration
experts who are trained in dispute resolution. APB staff will
work with the parties to resolve audit protests in a timely manner.
The audit-protest process works in three steps:
1. When a proposed tax assessment is issued but before
formal assessments, APB will have control of the audit-protest process;
2. Taxpayers wishing to dispute an assessment must file
a protest with APB;
3. APB determines the facts, identifies unresolved issues
and renders a written determination.
APB recently began hearing sales tax audit assessment protests.
The bureau will begin hearing income tax audit protests on January
5, 2011. Until then, income protests will continue to go before the
LDR Field Audit Services Division.
Any taxpayer who wishes to dispute a tax assessment issued because
of an audit must file a written protest with APB within 30 days of
the date of assessment. The protest petition form is available on
the Tax Forms page at the LDR website (www.revenue.louisiana.gov)
The
Louisiana Department of Revenue provides on-site problem resolution
through its Mobile Tax Service (MTS). LDR field officers, equipped
with wireless, tablet PCs, provide real-time access to account
information, enabling them to resolve most tax billing issues
instantly. To schedule an on-site Mobile Tax Service visit, contact
your local LDR regional director.
With the wireless network, MTS agents are able to gain secure access
to information that was previously available only in an office setting.
The agents can now remain in the field for longer periods of time,
therefore making more field contacts in less time. Wireless functionality
enables MTS agents to perform the following operational tasks in
real time:
•Access taxpayer information;
•Make changes to accounts;
•Identify and register previously unregistered businesses;
•Eliminate the need for updating accounts when returning to
the office.
We
have received inquiries from members concerning the Form 1099-G's
issued by LDR. Certain taxpayers are now receiving corrected Form
1099-G's from LDR. Below is an explanation from LDR on the calculation
and criteria for issuing of this form.
The
Department issued 1099s for the 2008 tax year in December 2009.
It was later determined that the method utilized to issue the
1099s was incorrect. The recalculation was performed only on accounts
where the reduction to the Louisiana income tax amount that should
have been taken on the 2008 Schedule A of the federal return was
not refunded. Attached is the formula that was utilized to issue
the corrected 1099s.
Calculation
of 1099
The calculation example uses the 2008 Tax Return
lines below:
Determine Tax Liability
Ln18 (Total Income Tax and Consumer Use Tax) |
|
XXXX.XX |
| Less: Refundable Credits: |
|
|
| Ln 19 (2008 Refundable Child Credit) |
XXX.XX |
|
| Ln 20 (2008 Refundable School Readiness Credit) |
XXX.XX |
|
| Ln21 (Earned Income Credit |
XXX.XX |
|
| Ln22 (La. Citizen's Insurance Credit) |
XXX.XX |
|
| Ln23 (La. Property Insurance Credit) |
XXX.XX |
|
| Ln24 (Other Refundable
Tax Credits) |
XXX.XX |
|
| |
|
|
| Adjusted
Louisiana Income Tax & Consumer Use Tax after |
|
XXXX.XX |
| If calculated amount
is less than zero equal zero |
|
XXXX.XX |
| |
|
|
| Calculate Tax Payments: |
|
|
| Ln 25 (Amt of La. Tax Withheld) |
XXXX.XX |
|
| Ln 26 (Amt of Credit Carried Forward From 2007 |
XXX.XX |
|
| Ln 27 (Amt Paid by a Composite Partnership Filing) |
XXX.XX |
|
| Ln 28 (Amt of Estimated Payments Made in 2008) |
XXX.XX |
|
| Ln 29 (Amt Paid with Extension Request) |
XXX,XX |
|
| Total Payments (Not a line item on return) |
|
XXXX.XX |
| |
|
|
| Calculate the difference of tax due on payments |
|
|
| Adjusted Louisiana Income Tax & Consumer Use Tax after |
|
|
| Refundable credits minus total payments. |
|
|
| Amount of Overpayment place on the 1099 |
|
XXXX.XX |
| |
|
|
The
Calculation for 2008 is:
Ln 18 minus (Ln 19 thru Ln24) = xxxxxx. (If xxxxxxx < 0,
use 0.)
(Ln 25 thru Ln 29) minus xxxxxx = 1099 amt. (1099 amt must be > 0.)
The calculation for 2009 and future years will not include
a reduction for consumer tax paid by individual income tax over payment.
The calculation should start with the adjusted income tax on line
16 of the 2008 return.
LA Acts 457 Reminder
As you engage in year-end tax planning, particular attention should
be paid to the January 1, 2010 effective date of newly enacted LA.
Acts 457. The legislation excludes from an individual's Louisiana
tax table income any "[i]ncome from net capital gains, which
shall be limited to gains recognized and treated for federal income
tax purposes as arising from the sale or exchange of an equity interest
in or substantially all the assets of a non-publicly traded corporation,
partnership, limited liability company, or other business organization
commercially domiciled in this state." With the top Louisiana
individual income tax rate at 6%, being able to maneuver a qualifying
transaction into tax years beginning on or after January 1, 2010
can generate significant state income tax savings for your individual
clients.
By way of example, if on November 30, 2009 a Louisiana resident
owning 100% of the outstanding stock of a corporation commercially
domiciled in Louisiana receives a cash offer to sell the stock for
$1 million, generating a $900,000 net capital gain recognition for
federal tax purposes, the transaction will escape the 6% Louisiana
income tax if the transaction closes after December 31, 2009. If
the same transaction closes on December 31, 2009, the Louisiana resident
must include the $900,000 net capital gain from the sale of the stock
in his Louisiana tax table income on his 2009 Louisiana individual
income tax return and remit the taxes.
We acknowledge and thank Bob Angelico and Jim Exnicios of Liskow & Lewis
for providing this information.
The Louisiana Tax Amnesty Program has reached the midway point,
with only one more month to run. It ends on October 31, 2009. The
following is a list of more frequently asked questions on the Amnesty
program to supplement the list of FAQs that was provided in our alert
of September 1, 2009.
1. What is statute of limitations for collection on returns
filed?
Returns not filed but assessment made? We have heard 10 years and
there is no statute for amounts owed the State of Louisiana. It appears
that there are instances where information is still in LDR system
where amounts have prescribed. Does the taxpayer need to allege prescription,
take court action, or some other action to have amounts removed?
2. Are there different statute of limitations for returns
filed and collection?
A. LDR's position is that the tax liability does not prescribe
if a formal assessment was issued before the period prescribed. For
unfiled returns beginning with 1998, the period remains open until
a return is filed as failure to file interrupts prescription. Recorded
tax liens are limited in life to 10 years unless reinscribed.
B. To summarize:
a. If a return has been filed, LDR has 3 years from the 31st day
of December of the year in which the tax was due to issue a formal
assessment unless the return filed was determined to be false or
fraudulent, in which case prescription is suspended. For example,
a 2005 calendar year individual income tax return becomes due 1/01/2006
and prescribes 12/31/2009, absent any other action to the contrary.
b. If a return was not filed, prescription is interrupted.
C. See http://www.legis.state.la.us/lss/lss.asp?doc=206543 Article
7, Section 16 of the La. Constitution and http://www.legis.state.la.us/lss/lss.asp?doc=101284 La.
Rev. Stat. 47:1580 for specific information.
3. What is policy of LDR concerning suspension of driver's
license? Is there a time period for taxes owed when license suspension
takes place? Example would be if taxes owed for ??? months? A threshold
amount? More than one tax year?
A. The suspension of driver's license for failure to pay a collectible
debt applies only to individual income tax.
B. The tax debt was be equal to or greater than $1000 for a single
tax period and must be in a collectible status, often called a seizable
or warrant for distraint status.
C. See http://revenue.louisiana.gov/forms/lawspolicies/LAC61_I_1355.pdf LAC
61:I.1355 for specific information on LDR's authority for this action.
4. We have heard of multiple problems with processing returns
where the taxpayer has various credits? In each instance, there
is missing information which delays the processing even though it
was submitted with the original return. It is necessary for our
members to resubmit information which was submitted with the original
return for clients to receive their refunds.
A. LDR continues to hear that even though our procedures have changed.
For those preparers who file paper returns, the Revenue Processing
Center no longer pulls the attachments as a general rule. For those
preparers who file electronically, we have provided an option for
sending in the attachments. I think the issue is more that when a
return has a number of credits or a particularly high credit, it
simply takes a while before the return is posted.
B. The preparer can use the
http://www.revenue.louisiana.gov/forms/misc/TaxPractitionersMailboxes(3_08)
.pdf Tax Preparer Mailboxes to follow up on those accounts
and to send documentation. The documentation can be sent securely
through the LCPA website and LDR now has a method of sending attachments
securely as well.
5. Would a taxpayer who was audited for a year (for example
Yr. 1994) prior to July 2001 and has not paid its outstanding tax
liability with interest and penalty to date be eligible for tax
amnesty? The taxpayer closed its business in Yr. 2003 and would
like to settle this tax matter and file for dissolution asap.
Yes
6. What is the correct procedure for submitting amended
returns in the Amnesty program? Should these be submitted to the
collection agency or directly to LDR?
A. If an amended return needs to be filed, it is best to take it
to a regional office or fax it to a specific person. The amnesty
application along with the calculated tax plus interest can be included
with the amended return. Alternatively, the taxpayer/preparer can
wait until the amended return is posted and if any amount remains
due make the application and payment through the amnesty website
at www.LDRAmnesty.com
B. The http://www.revenue.louisiana.gov/forms/misc/TaxPractitionersMailboxes(3_08)
.pdf Tax Preparer Mailboxes can be used for this purpose.
C. Also, the information can be faxed or mailed to me. upon request
I will provide that information to specific tax preparers.
7. What is the criteria for Amnesty cases being processed
by LDR v. those that are processed by collection agency? Is there
something called "Level 2"?
A. If the amount shown due has to be adjusted, it requires a review
by LDR. We have internally referred to those cases as Level 2.
B. Also, if a return needs to be filed to establish the liability
or an amended return needs to be filed to correct the liability,
the return establishing the liability has to be processed by LDR.
Those can be mailed to DCS but will be forwarded to LDR for processing.
C. Please see the answer to Question 6 for additional information
on mailing the returns.
8. We have instances where is has been necessary to file
amended 2005 returns due to various reasons. An example would be
an amended 2005 return where there is an incorrect carry forward
of a net operating loss. The 2005 return is amended along with the
carry forward returns (2006 and 2007) because an affirmative carry
forward statement was not filed with the original 2005 return. The
correct procedure is the carry back and 2002, 2003, and 2004 returns
are amended. Taxpayer owes additional tax for 2006 and 2007 and
would be due refunds for 2002, 2003, and 2004. What are the effects
of this, taking into consideration the statute dates on these multiple
years? What are the statute dates for each year?
A. For individual income tax, http://www.legis.state.la.us/lss/lss.asp?doc=101303 La.
Rev. Stat. 47:1623 addresses the general prescriptive period for
NOLS. The general rule is:
a. The loss can be carried back if the loss period is still open
and
b. The federal adjusted gross income was amended for the IRS. The
latter qualification is necessary as our taxable income begins with
the federal adjusted gross income.
B. For corporate income tax, please see http://www.legis.state.la.us/lss/lss.asp?doc=101303 La.
Rev. Stat. 47:1623 and La http://www.legis.state.la.us/lss/lss.asp?doc=101642 .
Rev. Stat. 47:246, et al
C. If more specific information is needed, we recommend that the
information concerning the specific account be included in a letter
or email to LDR for review and comment. Unless the request is submitted
in the form of a private letter ruling, we can only issue informal
advice, but we will be willing to do that upon review of the account
and the information provided. For this specific question that would
be the recommended process as there can be any number of exceptions
to the general rule.
D. Act 519, the Louisiana Tax Delinquency Amnesty Act, provides
that no refunds may be issued except those that are attributable
to net operating losses (NOLs) or to an adjustment made by the IRS
to the taxpayers federal income tax (RARs) and notice is provided
to LDR within 60 days of receipt of judgment from the IRS.
9. What will happen to overpaid amnesty amounts? Will be
they be refunded? Example-taxpayer submits $300 with application
and amended return. The correct amount is $275. What happens with
the $25? Will it be refunded?
Refunds of voluntary payments will not be issued. If an involuntary
payment created an overpayment subsequent to receipt of the amnesty
application and payment, LDR will consider a request for refund on
a case by case basis.
10. Same as No. 9 except the amount submitted is $25 short.
Will they be allowed to make up the difference even if the correspondence
from LDR is after 10/31?
No. All amounts due must be paid by the close of the amnesty period.
11. Are we correct in assuming that amended returns cannot
be submitted electronically thru Amnesty website?
That is correct. An amended return can be submitted electronically
through LATAP or via ELF. However, you will want to make sure that
it has posted and the amount due identified and paid. Please review
the full answer to Question 6.
12. There are instances of corporations where the charter
has been revoked by the Secretary of State. It is our understanding
the franchise tax continues to accrue until dissolution. Is there
a way to stop the assessment notices from LDR?
Yes, by dissolving the corporation. A revoked charter simply means
that the corporation failed to comply with Secretary of State requirements.
It does not relieve the entity of any obligation to file with LDR.
The Louisiana Tax Amnesty Program starts on September 1st and the
web site www.LDRAmnesty.com will
go live and interactive on that day. Below is a summary from a conference
call the NO Roundtable Group had with LDR on August 20, 2009 which
includes information that may be of benefit to you in processing
your client's amnesty applications. We will keep you informed of
additional developments as the Amnesty program becomes operational.
Please note the Amnesty period is from September 1, 2009 to October
31, 2009. Returns with applications for amnesty should be submitted
as soon as possible to ensure proper processing.
.
FAQ's from www.LDRAmnesty.com.
.
What is the 2009 Louisiana Tax Amnesty Program?
• A two-month window of opportunity for resident and non-resident
individuals, and in-state and multi-state businesses, to pay their
Louisiana state tax debts in return for the state's forgiveness of
penalties and a portion of the interest;
• A voluntary program; each eligible taxpayer must determine
if participation is in their best interest;
• Tax amnesty is not an "issue resolution program "so
it may not always be the best option for taxpayers in litigation.
If not, alternative dispute resolution programs such as mediation,
arbitration and settlement may be utilized to resolve the tax dispute.
What taxes and tax periods are included?
• All taxes administered and collected by the Louisiana Department
of Revenue (LDR), except for motor fuel taxes and withholding reconciliation
Form L-3;
• Taxes that became due on or after July 1, 2001, and before
January 1, 2009 (Since the last amnesty program). This excludes all
2008 returns due on or after January 1, 2009;
• Taxes due prior to January 1, 2009 for which LDR has
issued an individual or a business a billing notice or a demand for
payment on or after July 1, 2001, and before May 31, 2009;
• Taxes for which the taxpayer and LDR entered into an
agreement to suspend the running of prescription until December 31,
2009;
• Taxes due on or before July 1, 2009, but were ineligible
for an earlier amnesty program due to having a matter in civil litigation.
What are the benefits of participating in the tax amnesty
program?
• LDR will forgive civil penalties and 50 percent of the balance
of the accrued interest charges for all participants granted tax
amnesty. In addition, participants will not incur administrative
or civil actions for the issues and periods included in the amnesty.
Who qualifies for tax amnesty?
• Those who failed to file a tax return or report;
• Taxpayers who failed to report all income or all tax.
interest and penalties that were due;
• Taxpayers who claimed incorrect credits or deductions;
• Taxpayers who misrepresented or omitted any tax due;
or
• Certain taxpayers under audit or in administrative or judicial
litigation.
Who does not qualify for tax amnesty?
• Taxpayers under criminal investigation by the Department
of Revenue;
• Taxable periods for which a civil fraud penalty has been
issued.
• Penalties associated with the withholding reconciliation
Form L-3
What is required to obtain tax amnesty?
• File an amnesty application and applicable returns or reports;
• Payment during the two-month tax amnesty period of the tax
and any collection fees assessed, billed, noticed, or demanded by
LDR;
• Payment during the two-month tax amnesty period of 50 percent
of accrued interest charges;
• By accepting amnesty, the participant agrees to waive appeal
rights for the specific tax and periods upon which amnesty is granted;
• For eligible audits and litigation, participants agree to
abide by LDR's interpretation of the law at the time returns are
filed in 2010, 2011 and 2012 with respect to issues resolved through
amnesty;
• For cases in litigation, participant agrees to pay attorney
fees if outside counsel represents LDR.
.
Questions Submitted by the New Orleans Roundtable Group
of the LCPA
1. Will there be any acknowledgement?
Yes, once a taxpayer has been granted amnesty for a certain period(s)
an acknowledgement will be sent. Denials will not be sent until after
the amnesty period is over. Updates on a taxpayer's account can be
found at www.LDRAmnesty.com.
Each person attempting to access a taxpayer's account must certify
that he is an authorized representative of the taxpayer or the taxpayer
by answering a series of questions before the information can be
accessed. Please note that an attempt will be made to contact taxpayers
who have applied for amnesty but have not met the conditions for
amnesty where possible.
.
2. How to figure interest? The rate has changed for the
tax years included in the plan. How does LDR charge interest? A
full month at a time, daily, etc.?
Interest on unpaid tax is normally charged daily. For amnesty,
interest will be calculated to September 15th and October 15th. Those
who pay in September will pay based on the September 15th calculation.
After September 30, they will pay based on the October 15th calculated
amount. Interest can be calculated on an annual, monthly or daily
basis. As a practical manner, LDR generally calculates interest on
a daily basis.
.
3. What about those who have received notices now? If they
do not pay by September 1st, can they file application?
For eligible amnesty periods, the starting point for amnesty will
be the tax balances at that time. If a taxpayer satisfies the entire
tax obligation prior to the beginning of the amnesty period, no refunds
will be issued and no amnesty application will be considered if there
is no outstanding balance as of September 1, 2009.
.
4. If you use a vendor, will the work be done in Louisiana
or the state where the vendor is located?
There will be a coordination of efforts between the contractor
and LDR.
.
5. What to do with current notices for returns that could
qualify for amnesty?
Once September comes, we will halt a majority of our collection
actions including billing. If you are working with a tax officer
or someone else in LDR, those efforts should continue.
.
6. Should we advise clients to wait until 9/1/09 & apply
for amnesty? Hopefully a levy is not issued in the meantime.
If a levy were issued, the issuing agent would probably work with
the taxpayer to get them in a better position to take advantage of
amnesty. As you are aware, many taxpayers will chose not to participate
in amnesty and some collection actions will have to continue.
.
7. If possible, should we request a hold on the account?
That should not be necessary.
.
8. How do we keep a levy from happening? Make a partial
payment?
If your clients are actively working with a tax officer to resolve
their debt it is unlikely a levy would be issued.
.
9. Does amnesty apply to just unpaid penalty & interest?
Taxpayer paid tax only and not any penalties and interest on a return
that has been filed.
Yes, the amnesty starting point is the balance reflected on the
account. All tax must be paid in addition to half of remaining interest
and certain fees such as lien fees and certain collection fees. The
unpaid penalties on the period will be subject to forgiveness under
amnesty.
.
10. Do you think LDR is suspending collection activity
until 9/1/09?
No
.
11. The main issue I have been dealing with is amended
returns.
a. Does the client file the return now and just pay the
tax?
If this option is chosen, the client remains eligible for the amnesty
program provided that interest and penalties remain due as of September
1, 2009. Please remember that if multiple returns are filed at the
same time, any payment sent with the multiple returns will be used
to satisfy the total amount due including penalty and interest for
the oldest period first. It is recommended that separate payments
be made with each return if you choose to pay only the tax.
b. Does the client file the return now and pay nothing?
If this option is chosen, the client remains eligible for the amnesty
program. However, LDR's collection efforts continue.
c. Does the client wait until September 1 to file the return?
If this option is chosen, the client remains eligible for the amnesty
program. However, LDR's collection efforts continue. LDR always recommends
the filing of a return even when the payment cannot be made.
.
12. What about taxpayers who previously filed a return,
paid the full interest but are fighting the penalty?
Under the emergency rule for amnesty, payments are applied to tax,
penalty and then interest. If the taxpayer wishes to avail himself
of the amnesty provisions, he would be eligible only for forgiveness
of 50% of the interest and full forgiveness of any remaining penalty
that might be due after the original payment was applied. Please
remember that there is no forgiveness of penalty paid before September
1, 2009. Alternatively, in this instance, the taxpayer may request
a waiver of the delinquent penalty.
.
13. Please explain the procedure where a return is filed
within the 60-day amnesty window. Does LDR calculate the 50% interest
due and send an assessment to the taxpayer? Please assume that all
amounts due are paid by the close of the amnesty period and the
filing period is eligible for amnesty.
In order to be considered for amnesty, the return must be filed
with an amnesty application and the payment of tax due plus 50% of
the accrued interest charges. If the taxpayer does not request amnesty
or the full payment is not made as noted, no relief is provided to
the taxpayer. Interest is calculated at various rates for the different
years. See http://www.revenue.louisiana.gov/forms/taxforms/1111(1_09)W.pdf R-1111
for monthly interest rates under "Tax Forms" on http://www.revenue.louisiana.gov LDR's
website. Also see http://www.revenue.louisiana.gov/forms/lawspolicies/RIB09001.pdf RIB
09-001 for multiple years of annual delinquent interest rates.
.
14. Would a taxpayer who was audited for a year (for example
Yr. 1994) prior to July 2001 and has not paid its outstanding tax
liability with interest and penalty to date be eligible for tax
amnesty? The taxpayer closed its business in Yr. 2003 and would
like to settle this tax matter and file for dissolution ASAP.
If the years audited are currently open under waiver the answer
would be yes. Also, they must have received a bill or notice since
7/1/2001.
The Louisiana Department of Revenue (LDR) is reminding taxpayers
who are unable to file their state tax returns by the May 15,
2009, deadline to file for an extension with the state, and to pay
any estimated taxes that are due by the filing deadline.
Filing extensions are available under state law (La. Revised Statute
47:103(D)), which authorizes the Secretary of Revenue to grant a
six-month extension of time to file an individual income tax return
upon the request of the taxpayer.
In the past, taxpayers who were granted automatic federal extensions
were granted a state income tax filing extension if a copy of the
federal Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return, Federal Form 4868, was attached to
the front of the state income tax return when it was filed.
This is no longer the case.
Beginning with the 2008 Louisiana Individual Income Tax Return,
due no later than May 15, 2009, Louisiana taxpayers are required
to request a specific state individual income tax filing extension,
or to submit a copy of their Federal Application for Automatic Extension
of Time To File U.S. Individual Income Tax Return on or before the
May 15 due date. Copies of federal extension requests that are simply
attached to state tax returns will not be accepted.
Taxpayers have four options for requesting a state income tax filing
extension (see Revenue Information Bulletin No. 09-005):
1. File a paper state extension (Form R-2868) 2.
File an extension request electronically via Louisiana File Online
(fileonline.revenue.louisiana.gov), the Department of Revenue’s
free online tax filing application. 3. File a paper copy of the
IRS extension (Federal Form 4868) with LDR on or before the due
date of the Louisiana individual income tax return (generally May
15th).
Federal and state extensions may be faxed to the Department of
Revenue at 225-231-6211 or mailed to:
Return Extensions Louisiana Department of Revenue P.O. Box 751
Baton Rouge, LA 70821-0751
If an estimated payment is being made with the extension, the extension
and payment should be mailed to the above address.
Filing an extension does not grant a taxpayer extra time to pay
the tax due. Payments received after the due date will be charged
applicable penalties and interest. Estimated payments can be made
electronically via Louisiana File Online.
For more information, call the Louisiana Department of Revenue
Customer Service Center at 225-219-0102.
For tax practitioners who wish to request state extensions for
multiple clients at once, the LDR Individual Income Bulk Extension
filing application is the best option. However, first-time Louisiana
filers are not eligible to use the bulk filing application or Louisiana
File Online and must request extensions by fax or mail.
To use the bulk extension application, a tax practitioner must
have a Department of Revenue Electronic Filing Identification Number
(EFIN) or a current LDR account number.
Practitioners who have the required EFIN or LDR account numbers
must register and create an LDR user account, which will allow access
to all LDR electronic filing and payment applications.
Once you are logged in, the system will prompt you to upload a
text file with a list of your clients’ Social Security numbers.
After the upload is complete, you will receive a confirmation list
with the SSNs sorted into four possible categories:
• Extensions Granted – SSNs that were processed successfully.
The extension information can be viewed by logging in to the individual
accounts via Louisiana File Online.
• First-Time Filers – SSNs that were rejected because
the client is a first-time Louisiana filer and is not eligible for
the online extension application. Please fax or mail the extension
request for these taxpayers.
• Duplicate Extension Requests – SSNs that already have
an extension for the same tax period through either the bulk-extension
application or Louisiana File Online. Duplicates that are the result
of faxed or mailed extension requests will not reject and the extension
will be granted.
• Invalid Extension Requests – SSNs that are invalid
and not able to be processed for any other reason.
We have received
inquiries concerning Louisiana Department of Revenue (LDR) policies
on individual and corporate extensions of time to file, the “proof
of payment” requirement for Citizens Insurance credits, and
the Retrofit deduction.
LDR will accept the federal extension Form 7004 for Louisiana corporate
income and franchise tax returns in the same manner as in previous
years. The federal extension for the corporate return may be submitted
at the time the return is filed. Members are reminded franchise tax
payments for calendar year corporations are due on April 15, 2009.
The only change in procedures is for Louisiana individual income
tax returns. Please refer to Revenue Information Bulletin No. 09-005
(http://www.rev.state.la.us/forms/lawspolicies/RIB09005.pdf).
Louisiana Citizens Insurance Credit and Louisiana Citizens Property
Insurance Assessment – Proof of payment is still required for
corporate returns but not for individual income tax returns.
Louisiana Property Insurance Credit for the taxpayer’s primary
residence – Proof of payment is not required, although it must
be provided upon request. RIB 09-008 (http://www.rev.state.la.us/forms/lawspolicies/RIB09008.pdf)
which addresses the “proof of payment” issue for the
Louisiana citizens residential property insurance credit has not
yet been updated.
Information on the Construction Code Voluntary Retrofitting Deduction
is available at RIB 09-007 (http://www.rev.state.la.us/forms/lawspolicies/RIB09007.pdf).
We have received inquiries concerning the “proof of payment” mentioned
in RIB 09-008 issued on February 13, 2009 entitled “2009 Louisiana
Property Insurance Tax Credit.”
LDR has indicated that there will be clarification on this subject
in the near future.
The LCPA New Orleans Chapter Roundtable Group held a conference
call with
the Louisiana Department of Revenue (LDR) on Thursday, February 19,
2009,
and the following issues were discussed. This information may be
of
assistance to you in the preparation and filing of Louisiana returns
this
filing season.
1. LCPA SecureSend
a. LDR has established a mailbox (tax.preparers@la.gov) to send
attachments to the LDR when using SecureSend, the LCPA’s new
member benefit
program, for secure file delivery (www.lcpasend.com) .
b. When sending attachments requested by the LDR using SecureSend,
you
must identify the person (or office) who has requested the documentation
attached to the e-mail.
c. If the intended recipient of the attachments is not identified,
then the attachments will be uploaded directly to the taxpayer’s
account
without review.
d. For attachments not requiring review, but needing to be placed
in
the taxpayer’s file, simply send the attachment through SecureSend.
There
must be sufficient information on the attachment to identify the
taxpayer
name, account number and filing period.
e. This mailbox may be used for all state taxes, not just individual
income tax.
2. Using mailboxes
a. How to access the mailboxes from the LDR website
1) Select Tax Professionals icon
2) Select Tax Preparer and Refund Inquiry Mailbox
3) Select appropriate mailbox
b. Mailbox names
1) CPABilling.Inquiry-Ind@la.gov (individual)
2) CPABilling.Inquiry-Bus@la.gov (business)
3) CPARefund.Inquiry@la.gov (refund)
4) CPAGeneral.Questions@la.gov (general
questions)
The LDR tries to respond to email inquiries within three days.
Currently,
the LDR is behind the normal three-day turnaround time for replying
to
emails. You may try sending an email request a second time if no
response is
received after a few days.
The new General Questions mailbox link will be set up on the LDR
website
within a week or so.
Form 1099-Gs sent out by LDR: The LDR has received inquiries regarding
the
calculations on the 1099-Gs that have been sent out to taxpayers.
The LDR
made these calculations and will not be issuing any corrected 1099s.
Practitioners are advised to make whatever adjustments are necessary
in
filing correct tax returns.
3. E-filing multi state returns
a. Either retain the returns until requested by LDR or e-fax to
LDR.
b. It is recommended to e-fax to LDR at 225-231-6221 or send through
SecureSend when the return is filed.
4. E filed returns with insurance and citizens’ credit.
a. Most refunds will be processed with review occurring at a later
date. Regardless of when the review occurs, the declaration page
will be
needed.
b. Tax professionals may either keep the documentation on file and
provide it upon request or send it as a return attachment as explained
under
3b.
c. 7% credit of homeowner’s insurance policy
1) See RIB
09-008
2) Includes premiums for separate wind and hail policies
3) Excludes:
i. Flood insurance
ii. Riders for jewelry, furs, etc.
iii. Citizens’ Insurance Assessments associated with the qualified
policy
4) Documentation requirement includes a copy of the declaration page
of
the insurance policy.
It is recommended (but not required) to attach the insurance declaration
page for the insurance credit. The larger or more material the amount
is,
the more important it is to attach the declaration page. The “key
item” on
the declaration page is the due date of the policy during 2008.
Proof of premium payments (cancelled checks, escrow statements
etc.) should
be retained by the taxpayer. LDR can ask for proof of payment after
the
return is processed. LDR will issue an additional link on the FAQ
page of
website concerning the “proof of payment” mentioned in
the RIB.
Note that renters’ (tenants’) insurance policies on
contents also apply
towards this 7% credit.
The insurance credit is only good for premiums paid in 2008. There
will not
be a separate non-filers’ form as there is for the Citizens
Credit. If a
Louisiana tax return is not filed, you cannot get the credit.
5. Retrofit credit
a. A statement of the work completed and copies of invoices are
required. Includes only projects completed in 2008 with invoices
beginning
on January 1, 2007.
b. The documentation can be e-faxed to LDR at 225-231-6221 or sent
through SecureSend when the return is filed.
c. Qualifying items
1) Roof deck attachment.
2) Secondary water barrier.
3) Roof covering.
4) Gable ends bracing.
5) Roof-to-wall connections.
6) Opening protection.
7) Exterior doors, including garage door
d. RIB
09-007 is currently available with more detailed information.
6. E filed returns and attachments
a. Generally speaking, tax professionals may choose to maintain
the
documentation obtained from their clients on file and provide upon
request
or may send to the agency at the time the return is filed.
b. In considering whether to provide the documentation upon request
or
send at the time of filing, at least one factor should be considered
- the
amount of a requested deduction or credit or the amount of a requested
refund. If any of those areas are fairly sizeable, particularly for
refunds, the documentation will generally be requested prior to processing
the refund.
c. LDR is receiving about 1600 e-faxes per week for return
attachments and expects that to increase.
The documentation for these returns should be kept for the three-year
assessment period (statute of limitations).
7. Road Home and line 21 from Federal returns. Some refunds
were held
up last year for this:
a. LDR must have documentation from line 21 of the federal return.
The biggest problems LDR had last year were from paper returns where
copies
of the federal forms were requested or where the amount on line 21
had no
obvious relevance to the income adjustment. This year, LDR anticipates
fewer issues with this deduction.
b. LDR is currently developing a program for after-the-fact review
of
certain returns and credits. This will most likely be reviewed at
that time
unless a rather significant refund is requested.
Verification of Line 21 of Form 1040 has been the biggest processing
issue,
so it is important to send LDR a copy of the federal return when
taking the
Road Home adjustment on Schedule E.
8. Extensions. See RIB
09-005.
a. A fax number has been set up to receive faxed copies of state
or
federal extensions. It is 225-231-6211.
b. A special mailbox has been set up to receive state or copies of
federal extension requests when accompanied by a payment. The mailing
address is:
Louisiana Department of Revenue
ATTN: Return Extensions
P O BOX 751
Baton Rouge, LA 70821-0751
c. The bulk filing of state extensions by tax professionals is
not yet
available on the LDR website. It should be available the first week
of
March. The LDR will send a notification with an explanation of how
to submit
the extensions to various tax professional groups when it is available.
It is the LDR’s understanding that once bulk extensions are
filed over the
website, the practitioner will receive a transmittal receipt showing
that
the extensions were sent. LDR is not clear as to whether the transmittal
receipt will show the number of extensions that were processed. There
is
currently no plan for the names and SSNs of the extended clients
to be shown
on this receipt.
Income tax payments on extension will still be sent by mail (certified
mail
is preferred).
Louisiana and Federal extensions may still be sent by (certified)
mail to
the LDR.
9. Information for the wind and solar energy credit can
be found on the
Department’s website under Laws and Policies. The rule cite
is LAC
61:I.1907.
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If you need additional information or have any questions, please
feel free to contact me. Thanks.
Al Suffrin, CPA, CAE
Society of Louisiana CPAs
asuffrin@lcpa.org
1-800-288-5272, ext. 126 or (504) 904-1126
Legislation & Advocacy – Just one of your many LCPA Member Benefits
. . . We’re Here for You!
.
|
The Society of Louisiana Certified Public
Accountant's efforts and continuing involvement in discussion
with the Internal Revenue Service and the Louisiana Department of Revenue
has helped deliver much-needed additional tax relief for hurricane victims.
If you need additional information or have any questions
regarding the information below, please contact:
Al Suffrin
CPA, CAE
Society of Louisiana CPAs
asuffrin@lcpa.org
1-800-288-5272, ext. 126
or (504) 904-1126
Legislation & Advocacy
- Just one of your
many LCPA
Member Benefits. . .
We're Here for You! |
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