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Regular Session, 2010
HOUSE BILL NO. 845
BY REPRESENTATIVE NOWLIN
TAX/SALES-USE, LOCAL: Provides relative to requirements for private contracts with
agencies or firms for the collection of local sales and use tax
AN ACT1
To amend and reenact R.S. 47:337.26(C) and (D)(1)(introductory paragraph) and (c) and to2
enact R.S. 47:337.26(D)(3), (F), and (G), relative to collection of local sales and use3
tax; to provide for requirements governing certain activities of private contractors;4
to prohibit the sharing of certain taxpayer information; to provide with respect to5
contracts; to provide for oversight by the legislative auditor; and to provide for6
related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 47:337.26(C) and (D)(1)(introductory paragraph) and (c) are hereby9
amended and reenacted and R.S. 47:337.26(D)(3), (F), and (G) are hereby enacted to read10
as follows: 11
§337.26. Contracts for purposes purposes relating to collection of sales and use12
taxes13
* * *14
C.(1) Any private agency or auditing firm hired for the purposes of this15
Section and any employee , contractor, or other agent of such private agency or16
auditing firm shall be governed by the provisions of R.S. 47:1508 et seq.17
(2)(a) Audit leads provided by the private agency or auditing firm shall be18
subject to the taxpayer confidentiality requirements of R.S. 47:1508 et seq. Once19
confidential information has been disclosed by the taxpayer to the private agency or20 HLS 10RS-1211 REENGROSSED
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auditing firm, audit leads by such private agency or auditing firm to other local1
collectors are strictly prohibited under the taxpayer confidentiality requirements of2
R.S. 47:1508 et seq; however, the taxpayer may voluntarily waive confidentiality3
requirements in writing, authorizing the examination or audit to be expanded to4
include additional tax collectors.5
(b) The provisions of this Subsection shall be subject to the terms and6
conditions of any information sharing or other exchange agreement with another7
local collector or the Department of Revenue.8
(3) Notwithstanding any provision of this Section to the contrary, a private9
agency or auditing firm shall limit its activities to auditing the books and records of10
the taxpayer and shall not perform any assessment or collection functions, except as11
otherwise expressly permitted by law.12
(4) A lead auditor of a private agency or auditing firm performing an13
examination or audit function shall possess or have attained any of the following:14
(a) An active certified public accountant license.15
(b) A bachelor's degree with a minimum of eighteen hours of accounting.16
(c) An active certified tax examiner's certificate issued by the Louisiana17
Association of Tax Administrators.18
(d) A minimum of ten years' experience in the field of state or local sales and19
use tax.20
D.(1) Prior to initiating an examination or audit of a taxpayer, a taxing21
authority the local collector shall provide notice of the taxing authority's the intent22
to audit which shall be sent by certified mail to the taxpayer at the taxpayer's last23
known address. Such notice shall:24
* * *25
(c)(i) Advise the taxpayer of the right to review and copy the audit contract26
if the audit will be conducted by a private auditing firm.27
(ii) If the audit is conducted by a private auditing firm, the notice shall also28
advise the taxpayer whether the payment of compensation to the private auditing29 HLS 10RS-1211 REENGROSSED
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firm is contingent upon the actual collection of tax or in any other way dependent on1
the outcome of the audit.2
* * *3
(3)(a) Upon completion of the audit or examination, all original information4
obtained by the private agency or auditing firm from the taxpayer in connection with5
the audit or examination, whether written or in electronic form, shall be returned to6
the taxpayer, and the private agency or auditing firm shall not retain any copies of7
such information. All taxpayer related information derived, compiled, or generated8
by the private agency or auditing firm in any form whatsoever, including audit9
schedules,working papers, and copies of information received from the taxpayer,10
shall be delivered to the tax collector, except to the extent such information may be11
retained by certified public accountants in accordance with the Louisiana12
Accountancy Act.13
(b) No provision of this Section shall prohibit a private agency or auditing14
firm from retaining books and records of a taxpayer until the termination of any legal15
proceedings related to the audit or examination.16
(c) The tax collector and the private agency or auditing firm may enter into17
a written agreement in accordance with this Subparagraph, authorizing such private18
agency or auditing firm to act as agent for the storage and safekeeping of documents19
otherwise required to be maintained by the tax collector. Such documents shall be20
maintained in accordance with R.S. 47:1508 et. seq, and shall not be used by the21
private agency or auditing firm for the solicitation of additional audits nor for any22
other purpose for the personal benefit of such private agency or auditing firm.23
During the term of the agreement, such private agency or auditing firm shall obtain24
an independent auditor's report of its control objectives and activities in accordance25
with the Statement on Auditing Standards (SAS) No. 70.26
* * *27
F. Each contract entered into pursuant to this Section may be subject to28
review and oversight by the legislative auditor pursuant to R.S. 33:1427. Contracts29 HLS 10RS-1211 REENGROSSED
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entered into after July 1, 2010 shall contain a statement by the local collector and1
private agency or auditing firm certifying that the terms and conditions of the2
contract are in compliance with the requirements of the provisions of this Section.3
Any contract that does not satisfy the requirements of this Section may be declared4
null and void by a court of competent jurisdiction.5
G. The private agency or auditing firm hired for the purposes of this Section,6
including any employee, contractor, or other agent of such private agency or auditing7
firm conducting such examination or audit, shall be subject to the Code of8
Governmental Ethics as set forth in R.S. 42:1101 et seq.9
Section 2. The provisions of this Act shall apply to audits or examinations conducted10
after the effective date of this Act.11
Section 3. This Act shall become effective upon signature by the governor or, if not12
signed by the governor, upon expiration of the time for bills to become law without signature13
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If14
vetoed by the governor and subsequently approved by the legislature, this Act shall become15
effective on the day following such approval.16
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. 845
Abstract: Requirements for private contracts for audit activities related to the collection of
local sales and use tax, including taxpayer privacy protection, limitations on
contractor activities, and specific provisions for contracts.
Present law authorizes any taxing authority to contract for the examination or investigation
of businesses, tangible personal property, books, etc., of any taxpayer for purposes of
enforcement and collection of any tax imposed by the taxing authority.
Present law requires the taxing authority to notify a taxpayer of an impending audit and
provide information relating to the purpose of the audit, taxpayer rights, and identification
of the entity conducting the audit.
Proposed law retains present law and adds additional requirements for contracts with private
agencies or audit firms which include: limitations on the sharing of audit leads with other
tax collectors, limitations related to the confidentiality of taxpayer records, credentials
required for lead auditors, and disclosure of how the private agency or audit firm will be paid
for its services. HLS 10RS-1211 REENGROSSED
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Proposed law provides that contracts with private agencies or audit firms may be subject to
review and oversight by the legislative auditor. Further, requires contracts entered into after
July 1, 2010, to contain a certification by the local collector and contractor that the terms and
conditions of the contract are in compliance with the requirements of the provisions of
proposed law.
Proposed law provides for disposition of taxpayer records after the completion of the audit,
and specifies that a private agency or auditing firm may retain taxpayer books and records
until the termination of any legal proceedings related to an audit or examination.
Proposed law authorizes contracts between a tax collector and a private agency or auditing
firm for the storage of documents otherwise required to be retained by the tax collector.
Proposed law shall be applicable to audits commenced after the effective date of proposed
law.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:337.26(C) and (D)(1)(intro. para.) and (c); Adds R.S. 337.26(D)(3), (F),
and (G))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Added provision whereby a taxpayer may waive confidentiality requirements
related to his records.
2. Limited the specific educational requirements to lead auditors only.
3. Added provision authorizing a private agency or auditing firm to retain taxpayer
records until the termination of any legal proceedings related to an audit or
examination.
4. Regarding the requirement of proposed law whereby the contracts must be in
conformity with proposed law, added specification that such requirement applies
to contracts entered into after July 1, 2010.
House Floor Amendments to the engrossed bill.
1. Added provision authorizing the tax collector to contract with a private agency
or auditing firm for the storage of documents otherwise required to be retained
by the tax collector.