Louisiana Department of Revenue gets more power to provide tax relief

Lawmakers in Louisiana have made it easier for the Louisiana Department of Revenue to provide tax relief in the wake of a gubernatorial or presidential declaration of disaster or emergency. They’ve also amended the relief that’s available upon request.

Prior to the enactment of Senate Bill 498 on June 4, 2020, the Department of Revenue could grant a “reasonable” filing and payment extension “upon written request of the taxpayer and for good cause shown.” Relief was limited to 60 days for income tax, 30 days for sales tax, and 60 days for any other tax due (including franchise tax). Interest continued to accrue during the extension period.

Effective June 4, 2020, the department is authorized to provide the following filing and payment extensions upon receipt of a written request for relief from a taxpayer with good cause:

• Not to exceed six months for income and franchise taxes
• Not to exceed 30 calendar days for sales tax
• Not to exceed two months for any other tax due

Interest will start accruing from the date the tax would have become delinquent in the absence of an extension (i.e., the original due date).

In the event of a gubernatorially declared disaster or emergency, the department is authorized to “grant reasonable extensions of time for the filing of returns and reports and payment of taxes, fees, or service charges” as follows:

• Up to six months for income and franchise taxes
• Up to three calendar months for sales tax and any other tax, fee, or service charge handled by the department

As above, interest will start accruing from the date the tax fee or service charge was originally due, although the tax won’t be considered delinquent until the expiration of the extension period.

The department may provide similar relief in the event of a presidentially declared disaster or emergency, with one significant exception: Interest may be suspended.

Thus, the department may authorize a filing and payment extension not to exceed six months for franchise and income taxes, and not to exceed three calendar months for any other tax, fee, or service charge. The return won’t be considered delinquent until the expiration of the extension period, “and the collector may suspend the accrual of interest for all or part of the extension period.”

In the fiscal note of the bill, the department explains that while expanding its authority to grant extensions may result in more extensions, “the granting of extensions, for any circumstances, does not change ultimate tax liabilities, only the timing of tax receipts.” In other words, taxpayers must eventually pay the tax due.

However, extensions could impact fiscal year budgets by moving revenue from one fiscal year to the next. Cash flow could also be affected.

It’s not uncommon for a disaster declaration to apply to specific parishes only, not all taxpayers in a state. The relief offered in response to the coronavirus (COVID-19) is an exception to that rule. Learn more about COVID-19 tax relief.