Louisiana has imposed various sales taxes dating back to the 1930s. The current sales tax law originates from Act 9 of the 1948 Regular Legislative Session. Known as the Louisiana General Sales Tax Act, it is often referenced by the acronym “LGST.” The Louisiana General Sales Tax Act was incorporated into Chapter 2 of Title 47 of the Louisiana Revised Statutes of 1950. Chapters 2-A, 2-B, and 2-C were added later as part of the sales tax law.
Chapter 2 contains most of the sections applicable to the general sales tax law. Section 301 comprises the “Definitions” and is in many ways the crux of the sales tax law. It contains the controlling meaning and interpretation of words and phrases used throughout the ensuing sections of the law. Over the years, Section 301 has grown from a few basic terms to multiple, complex enactments by a succession of legislative measures. The greatest complexity arose from a detailed listing of transactions that are excluded from the main definitions. “Exclusions” identified in section 301 are distinguished from “exemptions” found mostly in sections 305 through 305.72. The differences between exclusion and an exemption are mostly legal in nature. But exclusions are specifically intended to fall outside the meaning of a definition. Exemptions, although falling within the meaning of a definition, are specifically relieved from tax by virtue of the legislature.
Sections 303 (Collection) and 303.1 (Direct Payment Numbers) define the requirements for the collection of state sales tax by persons defined as “dealers” and give instructions for dealers regarding state and local sales taxes on motor vehicles, motorboats, off-road vehicles, health and fitness clubs, auctioneers and taxpayers which have received direct pay authorization. Section 304 (Treatment of tax by dealer) imposes fiduciary requirements, responsibilities, and prohibitions in accounting for the collection of state and local sales tax. And as stated previously, Sections 305 through 305.72 is where most of the exemptions from state and local sales tax are housed. Sections 306 (Returns and payment of tax; penalty for absorption) through 318 (Disposition of collections) relate to the enforcement and administration of the tax.
Prior to 1978, exemptions passed by the legislature for state sales tax applied equally to local sales and use tax. Act 205 of the 1978 Regular Session stipulated that future exemptions granted by the legislature would apply to local taxing authorities only if the act specifically stated such. Phrases like, “solely for the purpose of state sales and use tax,” “sales and use tax levied by any local governmental subdivision or school board” and “for purposes of the sales and use tax of all taxing authorities” were inserted into many exclusions and exemptions to clearly earmark which provisions applied only to state sales tax, which applied only to local sales tax and which applied to both. In subsequent years, local taxing authorities were often granted a “local option” for newly proposed exemptions.
Due to numerous amendments over the decades, Louisiana’s sales tax law has become increasingly complex. The legislature established the Louisiana Sales Tax Streamlining and Modernization Commission in 2015 to study Louisiana’s state and local sales tax structure and make recommendations to simplify existing law. The Commission’s chairman, Rep. Julie Stokes, introduced HB 673 of the 2017 Regular Session to implement these changes. After being heavily amended, the bill failed final passage on the last day of the session.
LOCAL SALES TAX
In some form, local sales tax has existed at least as long as state sales tax. Originally, some parishes were granted authority in their home rule charters to collect local sales tax. Act 285 of 1950 extended this revenue source to all municipalities allowing them to levy a sales tax of one percent upon approval by voters. Louisiana’s constitution, adopted in 1974, defines the current authority for local collection and administration of sales and use tax. Today, many political subdivisions impose sales tax to procure funding for local programs like schools, law enforcement, emergency services, and special districts. In 1966, local tax collectors organized themselves into the Louisiana Association of Tax Administrators (LATA) in response to the increasing number of local sales tax laws. The organization’s stated purposes are to assist tax administrators, disseminate information, encourage cooperation and increase efficiency in local sales tax administration. It has become the driving force for many changes in local sales tax administration. LATA spearheaded efforts to require a single sales tax collector for each parish, established procedures allowing taxpayers to file protests at the Louisiana Board of Tax Appeals for local sales tax assessments and supported efforts to create the Louisiana Uniform Local Sales Tax Board.
Perhaps LATA’s premier achievement is an enactment of the Uniform Local Sales Tax Code (commonly referenced as the “UTC”) found in Chapter 2-D of Title 47. It includes Revised Statutes 47:337.1 through 337.102. The UTC has its origins in the mid-1990s when a working group of experienced local sales tax collectors, sanctioned by LATA, began monthly meetings to draft a unique set of statutes designed to promote uniformity and efficiency in local sales tax collection and administration. Drafting was complete by the late 1990s but local governments had difficulty finding legislative sponsorship. Finally, Senator Bill Jones of Ruston, LA agreed to author the bill. The original concept of the UTC was that of a “stand-alone” document dissociated from the Louisiana General Sales Tax law (LGST) in Chapter 2. After a failure to pass in the 1999 Regular Session, LATA worked on a compromise that tied the UTC to certain provisions of the LGST in order to accommodate consistency when laws were amended by legislative action or attributed to judicial rulings. Act 73 of 2003 was enacted with an effective date of July 1, 2003. While the Louisiana Constitution grants local governments the authority to levy and collect local sales and use tax, it reserves the power to the Legislature to determine under what laws that authority may be executed.
Parts A. and B. of Chapter 2-D provide for the establishment of the UTC and the transition and preservation of local taxing ordinances prior to its enactment. Part C. is comprised of definitions, exclusions, exemptions, and certain prohibitions. Section 337.9 in Part C. establishes a linkage of enumerated state sales and use tax exemptions applicable at the local level. Section 337.10 identifies those State-level exclusions or exemptions which have been adopted or may be adopted voluntarily at the local level. It also restates the prohibition resulting from Act 205 of 1978. Part D. captures several provisions of local sales tax collection and administration procedures that existed previously under Title 33 – most notably section 337.12, which contains prohibitions concerning inter-parish transactions. Part E. mirrors similar provisions of LGST law regarding the filing and remittance of taxes collected but is distinguished by the creation of a uniform local electronic filing system in Section 337.23.
The most widely cited usage of the UTC lies in Part F., General Administrative Enforcement authority. Drafters sought to promote consistency between local taxing authorities and the Department of Revenue by adopting virtually identical enforcement powers granted to the Secretary of Revenue in R.S. 47:1561 et seq. In the UTC, sections 337.24 through 337.86 mirror those provisions reserved to the Department. The UTC’s Administrative Procedure Act, Part H. of the Code, emulates powers granted to the Department of Revenue with respect to rule-making authority, but only for provisions of sales tax law not considered “common law” which is a law applicable to both state and local sales tax provisions.
RULES AND REGULATIONS
The Secretary of Revenue has authority to promulgate rules (aka regulations) in accordance with the Administrative Procedures Act (R.S. 49:950, et seq.) for sales and use tax statutes considered “common law” as defined in R.S. 47:337.2. These procedures include the publication of a notice of intent, announcing the purpose and content of the proposed rule, holding a public hearing for those parties interested in the outcome and review by legislative oversight committees. Regulations are generally for the purpose of clarifying the intent of the legislature when the law was passed, providing guidance to taxpayers on how to comply with the law and advising taxpayers how the Department of Revenue will administer the law. Rules and regulations are considered to have the force of law and are binding upon the collector and the taxpayer until the law is otherwise changed by the legislature or a ruling of the courts. However, courts may also determine that a rule or regulation exceeds the intent of the legislature and can invalidate its effect.
Rules issued by the Louisiana Department of Revenue can be found in Title 61 of the Louisiana Administrative Code (LAC). Chapter 43 Sales and Use Tax, Sections 61:I.4301 – 4372 apply to sales tax in general. Chapter 44, Sales and Use Tax Exemptions, Sections 61:I.4401 – 4423 apply specifically to exemptions. “Local only” rules and regulations are found in Chapter 72 of the LAC. The LATA promulgated two rules in March 2007. See Chapter 3, Local Sales Tax Reporting Date and Chapter 5, Tax on the Storage of Property. Act 274 of the 2017 Regular Session transferred local rulemaking authority to the Louisiana Uniform Local Sales Tax Board “LULSTB.”