Louisiana House Bill HB21

Louisiana 2016 1st Special Session

• Introduced: 2/14/16
• Refer: 2/14/16

Caption

Provides for the amount of vendors (dealers) compensation payable for the collection and remittance of state sales and use taxes (Item #21) (OR +$6,700,000 GF RV See Note)

Impact

The legislation is expected to streamline the processes associated with sales tax collection and vendor compensation, which could enhance compliance rates among businesses. By providing these clear financial limits and rates, the bill intends to simplify the compliance burden for vendors. It also aims to protect the state's fiscal interests by controlling vendor costs associated with state tax administration. If passed, these adjustments could result in substantial changes to how businesses within the state handle their sales tax obligations.

Summary

House Bill 21 aims to amend existing laws governing the compensation structure for vendors tasked with collecting and remitting state sales and use taxes in Louisiana. The bill establishes a tiered compensation rate for vendors, starting at 0.935% for the initial $10,000 of taxes collected within a calendar year, followed by a reduced rate of 0.50% for any additional compensation up to a total limit of $20,000 per year. This change is designed to incentivize timely submissions of sales tax while putting a cap on the overall amount of compensation that can be claimed by vendors, which ensures more predictable state revenue flows.

Sentiment

The overall sentiment surrounding HB21 appears to be pragmatic among legislators, focusing on the balance between fair compensation for vendors and the state's need to maintain effective revenue collection mechanisms. While proponents are generally aligned with the business community, who see a more structured and predictable tax environment as beneficial, there are concerns among some stakeholders about the adequacy of compensation at higher sales volumes and potential inequities that smaller vendors might experience under the new cap structures.

Contention

One notable point of contention is whether the changes in vendor compensation could disproportionately affect smaller retailers, who may struggle with the reduced rates as sales increase. Critics argue that capping compensation could undermine the incentive for accurate tax reporting and remittance for smaller operations. This debate reflects broader concerns about balancing the interests of state fiscal health with the operational realities faced by local businesses.