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Regular Session, 2010
HOUSE BILL NO. 667
BY REPRESENTATIVE NOWLIN
TAX/SALES & USE: Authorizes a taxpayer to recover costs related to arbitrary tax
assessments
AN ACT1
To amend and reenact R.S. 47:337.28(A) and (C) and to enact R.S. 47:337.28.1 and2
337.51.1, relative to collection of local sales and use tax; to authorize the recovery3
of costs by a taxpayer in the case of an arbitrary or grossly incorrect tax assessment;4
to provide for the amount of the costs which may be recovered; to provide with5
respect to arbitrary and grossly incorrect assessments; to provide for definitions; and6
to provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 47:337.28(A) and (C) are hereby amended and reenacted and R.S.9
47:337.28.1 and 337.51.1 are hereby enacted to read as follows: 10
§337.28. Collector's authority to determine the tax in certain cases11
A. In the event any dealer fails to make a report and pay the tax as provided12
in this Chapter or in case the dealer makes a grossly incorrect report or a report that13
is false or fraudulent, the collector shall make an estimate of the retail sales of such14
dealer for the taxable period, of the gross proceeds from rentals or leases of tangible15
personal property by the dealer, or the cost price of all articles of tangible personal16
property imported by the dealer for use or consumption or distribution or storage to17
be used or consumed in the taxing jurisdiction, and of the gross amounts paid or18
charged for services taxable; and it shall be the duty of the collector to assess and19
collect the tax together with any interest and penalty that may have accrued thereon,20 HLS 10RS-1210 ORIGINAL
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which assessment shall be considered prima facie correct and the burden to show the1
contrary shall rest upon the dealer.2
* * *3
C. In the case of the lease or rental of tangible personal property, if the4
consideration given or reported by the dealer does not, in the reasonable judgment5
of the collector, represent the true or actual consideration, then the collector is6
authorized to ascertain in any manner feasible the true or actual consideration and7
assess and collect the tax thereon together with any interest and penalties that may8
have accrued. The assessment so made shall be considered prima facie correct and9
the burden shall be on the dealer to show the contrary.10
* * *11
§337.28.1 Arbitrary assessments prohibited12
A. Notwithstanding any provision of this Chapter to the contrary, the13
collector shall be prohibited from issuing an arbitrary assessment. For purposes of14
this Chapter, the term "arbitrary assessment" shall mean an assessment whereby the15
collector issued the notice of assessment either:16
(1) Prior to the completion of a detailed audit schedule resulting from an17
examination of the books and records of the taxpayer, when the failure of the18
collector to complete the audit was not due to the actions of the dealer; or19
(2) To suspend prescription in an effort to allow the collector additional time20
to investigate potential deficiencies; or21
(3) Subsequent to the dealer refusing to execute a prescription waiver for the22
prescribing tax year.23
B. If the assessment by the collector is determined to be an arbitrary24
assessment, the assessment shall neither interrupt nor suspend prescription, and the25
dealer shall be reimbursed by the collector for reasonable costs of litigation in the26
amount of ten percent of the taxes, interest, and penalty that were arbitrarily27
assessed.28 HLS 10RS-1210 ORIGINAL
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C. The provisions of this Section shall not apply if the dealer fails to make1
a report or makes a report that is false or fraudulent, or with respect to jeopardy2
assessments made pursuant to R.S. 47:337.53.3
D. No assessment shall be made under this Chapter for the purpose of4
depriving a taxpayer of his constitutional right to a three-year prescriptive period for5
the assessment of tax in accordance with Article VII, Section 16 of the constitution6
of Louisiana.7
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§337.51.1 Taxpayer recovery of costs9
A dealer shall recover reasonable costs from the collector if the collector10
issues a grossly incorrect assessment to the dealer. For purposes of this Section, the11
term "grossly incorrect assessment" shall mean an assessment issued by the collector12
in which there is a substantial overstatement of the tax alleged to be due. The13
overstatement is substantial if it exceeds amounts established with regard to grossly14
incorrect tax reports as provided in R.S. 47:337.75(B)(1). The reasonable costs to15
be recovered by the dealer under this Section shall be equal to ten percent of the16
overstatement of the tax alleged to be due.17
Section 2. This Act shall become effective upon signature by the governor or, if not18
signed by the governor, upon expiration of the time for bills to become law without signature19
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If20
vetoed by the governor and subsequently approved by the legislature, this Act shall become21
effective on the day following such approval.22
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Nowlin HB No. 667
Abstract: Authorizes the recovery of costs by a taxpayer in the case of an arbitrary or
grossly incorrect local sales and use tax assessment under certain circumstances.
Present law authorizes a local collector to estimate the retail sales of a dealer who fails to
report or pay taxes, or who files a fraudulent or false report. Further requires the collector HLS 10RS-1210 ORIGINAL
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to assess and collect the tax plus any interest and penalty that may have accrued thereon.
The assessment shall be considered prima facie correct and the burden to show the contrary
rests with the dealer.
Proposed law retains present law, except deletes the reference to a dealer report which is
"grossly incorrect".
Proposed law prohibits the issuance of arbitrary assessments by local collectors and defines
the conditions under which an assessment would be considered "arbitrary". Further, in the
event a taxpayer is issued an arbitrary assessment, provides that such assessment shall
neither interrupt nor suspend prescription, and requires the collector to reimburse the
taxpayer for reasonable costs of litigation equal to 10% of the taxes, interest, and penalties
arbitrarily assessed. Proposed law provides for exceptions.
Proposed law authorizes the recovery of reasonable costs in the event a local collector issues
an assessment which is grossly incorrect in that it is a substantial overstatement of the tax
alleged to be due. The amount of costs recoverable by a taxpayer are 10% of the amount of
tax due overstated in the assessment.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:337.28(A) and (C); Adds R.S. 47:337.28.1 and 337.51.1)