HLS 11RS-656 ORIGINAL
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Regular Session, 2011
HOUSE BILL NO. 209
BY REPRESENTATIVE ROBIDEAUX
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
REVENUE DEPARTMENT: Provides with respect to the use of managed and sampling
audits of tax returns
AN ACT1
To amend and reenact R.S. 47:1541(B) and to enact R.S. 47:1541(D) and 1601(A)(2)(e),2
relative to the Department of Revenue; to provide relative to the audit of taxpayer3
records by the department; to provide the purposes for which sampling audits may4
be utilized; to authorize the use of management audits at the secretary' s discretion5
under certain circumstances; to authorize agreements regarding managed audits; to6
provide for definitions; to provide for limitations; to authorize the discretionary7
waiver of interest; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 47:1541(B) is hereby amended and reenacted and R.S. 47:1541(D)10
and 1601(A)(2)(e) are hereby enacted to read as follows: 11
§1541. Secretary's duty to determine correct tax12
* * *13
B. The taxpayer and the secretary or his designee may enter into a binding14
agreement to use a sampling procedure as a basis for projecting audit findings, which15
may result in either an underpayment or overpayment of tax. Sampling audit16
methods are appropriate if:17
(1) The taxpayer's records are so detailed, complex, or voluminous that an18
audit of all detailed records would be unreasonable or impractical; or19 HLS 11RS-656 ORIGINAL
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(2) The taxpayer's records are inadequate or insufficient to the extent that 1
a competent audit of the period in question is not otherwise possible; or2
(3) The cost to the taxpayer or the state for an audit of all detailed records3
will be unreasonable in relation to the benefits derived and sampling procedures are4
expected to produce a reasonable result.5
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D. (1) The secretary may, in a written agreement, authorize a taxpayer to7
conduct a managed audit pursuant to this Subsection. The agreement shall specify8
the period to be audited and the procedure to be followed, and shall be signed by an9
authorized representative of the secretary and the taxpayer.10
(2) For purposes of this Subsection, the term "managed audit" shall mean a11
review and analysis of invoices, checks, accounting records, or other documents or12
information to determine the correct amount of tax. A managed audit may be limited13
to certain categories of liability under this Chapter, including tax on:14
(a) Sales of one or more types of taxable items;15
(b) Purchases of assets;16
(c) Purchases of expense items;17
(d) Purchases under a direct payment permit; or18
(e) Any other category specified in an agreement authorized by this19
Subsection.20
(3) The decision to authorize a managed audit rests solely with the secretary.21
In determining whether to authorize a managed audit, the secretary may consider, in22
addition to other facts the secretary may consider relevant, any of the following:23
(a) The taxpayer's history of tax compliance;24
(b) The amount of time and resources the taxpayer has available to dedicate25
to the audit;26
(c) The extent and availability of the taxpayer's records; and27
(d) The taxpayer's ability to pay any expected liability.28 HLS 11RS-656 ORIGINAL
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(4) The secretary may examine records and perform reviews that he1
determines are necessary before the audit is finalized to verify the results of the2
audit. Unless the audit or information reviewed by the secretary discloses fraud or3
willful evasion of the tax, the secretary may not assess a penalty and may waive all4
or a part of the interest that would otherwise accrue on any amount identified to be5
due in a managed audit. This Paragraph does not apply to any amount collected by6
the taxpayer that was a tax or represented to be a tax, but that was not remitted to the7
state.8
(5) The taxpayer is entitled to a refund of any tax overpayment disclosed by9
a managed audit under this Subsection and in accordance with R.S. 47:1621.10
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§1601. Interest on unpaid taxes12
A.13
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(2)15
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(e) Waiver of interest when a management audit is performed as agreed to17
by the secretary and the taxpayer. The secretary may waive all or a part of the18
interest that would otherwise accrue on any amount identified to be due in a managed19
audit performed under the provisions of R.S. 47:1541(D).20
* * *21
Section 2. This Act shall become effective upon signature by the governor or, if not22
signed by the governor, upon expiration of the time for bills to become law without signature23
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If24
vetoed by the governor and subsequently approved by the legislature, this Act shall become25
effective on the day following such approval.26 HLS 11RS-656 ORIGINAL
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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)]
Robideaux HB No. 209
Abstract: Regarding the audit of tax returns by the secretary of the Dept. of Revenue,
provides for the conditions under which a sampling audit may be utilized, and
authorizes and establishes the procedure for the use of managed audits.
Present law provides for the duties of the secretary of the Dept. of Revenue, hereinafter
"secretary", to review tax returns and determine the correct amount of tax due. Present law
further authorizes the use of sampling audits pursuant to binding agreements between the
secretary and the taxpayer.
Proposed law retains present law and adds the conditions under which the use of sampling
audits is appropriate. These include taxpayer records which are complex, voluminous,
insufficient, or potentially more costly to audit than any benefit that might be derived from
an audit.
Proposed law provides for the procedure for and use of managed audits of tax returns. The
secretary is authorized to enter into a written agreement with a taxpayer relative to the use
of a managed audit of his tax return. The agreement shall specify the period to be audited
and the procedure to be followed, and shall be signed by an authorized representative of the
secretary and the taxpayer.
Proposed law specifies factors to be considered by the secretary regarding the decision to
authorize a management audit, including: the taxpayer's history of tax compliance, the
amount of time and resources the taxpayer has available to dedicate to the audit, the extent
and availability of the taxpayer's records, and the taxpayer's ability to pay any expected
liability.
Proposed law authorizes the waiver of interest on any amounts found to be due through a
managed audit. The secretary is prohibited from assessing a penalty unless the audit or other
information reviewed discloses fraud or willful tax evasion. A taxpayer is entitled to a
refund of any tax overpayment disclosed by a managed audit.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:1541(B); Adds R.S. 47:1541(D) and 1601(A)(2)(e))