SLS 202ES-256 ORIGINAL
2020 Second Extraordinary Session
SENATE BILL NO. 76
BY SENATOR LUNEAU
REVENUE DEPARTMENT. Provides for penalties for employers who fail to withhold due
to misclassification of employees. (2/3 - CA7s2.1(A)) (1/1/21) (Item #24)
1 AN ACT
2 To amend and reenact R.S. 47:111(A)(10) and (E), 113, and 114(F)(2) and (3) and to enact
3 R.S. 47:111(F), 113.1, and 114(F)(4), relative to misclassification of employees;
4 liability imposed on employers who fail to withhold amounts as required by R.S.
5 47:111 due to misclassification of employees; to increase the penalties for failing to
6 file required reports; to provide penalties for the misclassification of employees; to
7 provide for definitions; to provide for effectiveness; and to provide for related
8 matters.
9 Be it enacted by the Legislature of Louisiana:
10 Section 1. R.S. 47:111(A)(10) and (E), 113, and 114(F)(2) and (3) are hereby
11 amended and reenacted and R.S. 47:111(F), 113.1, and 114(F)(4) are hereby enacted to read
12 as follows:
13 §111. Definitions
14 A. Wages. For purposes of this Subpart the term "wages" means all
15 remuneration (other than fees paid to a public official) for services performed by an
16 employee for his employer, including the cash value of all remuneration paid in any
17 medium other than cash; except that such term shall not include remuneration paid:
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1 * * *
2 (10) which is not considered taxable by the Internal Revenue Code of 1954
3 1986 as amended.
4 * * *
5 E. Misclassified employee. For purposes of this Subpart the term
6 "misclassified employee" means an individual who is an employee as defined
7 herein receiving wages from an employer, but from whom no tax was deducted
8 or withheld as required by R.S. 47:112 due to the employer's failure to properly
9 classify the individual as an employee.
10 F. Number of withholding exemptions and withholding credits for
11 dependents claimed. For purposes of this Subpart, the term "number of withholding
12 exemptions and withholding credits for dependents claimed" means the number of
13 withholding exemptions and withholding credits for dependents claimed in a
14 withholding exemption certificate in effect under R.S. 47:112(F), except that if no
15 such certificate is in effect, the number of withholding exemptions and withholding
16 credits for dependents claimed shall be considered to be zero.
17 * * *
18 §113. Liability of employer
19 A. An employer shall be liable for the payment to the collector secretary of
20 the amounts required to be withheld under R.S. 47:112, and an employer who has
21 withheld and paid such amounts to the collector secretary shall not otherwise be
22 liable to any person for the amounts of any such payments. Any sums withheld in
23 accordance with the provisions of this Sub-part shall be deemed to be held in trust
24 for the collector secretary.
25 B. Upon failure of an employer to pay as provided in R.S. 47:114 any
26 amounts withheld or required to be withheld under this Chapter, he shall become
27 personally liable for any such tax. The tax, interest, penalties, and attorney fees shall
28 be payable as provided generally in the Subtitle, and the amount thereof may be
29 determined, computed and collected by any method generally provided for in this
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1 Subtitle.
2 C. Notwithstanding any provision in this Subtitle to the contrary the
3 liability due by an employer under Subsections A or B of this Section who fails
4 to withhold the amounts required to be withheld pursuant to R.S. 47:112 from
5 a misclassified employee, shall be calculated by applying the highest Louisiana
6 individual income tax rate to the total wages paid to the misclassified employee
7 during the period. The total wage component of this calculation may be
8 reduced by any portion of the wages that have been reported by the
9 misclassified employee on a properly filed Louisiana individual income tax
10 return and the resulting tax liability paid as of the date of assessment against
11 the employer.
12 §113.1. Liability of contractor
13 A. Beginning January 1, 2021, a contractor who knew or had reason to
14 know that amounts paid to its subcontractor included labor costs of
15 misclassified employees shall be subject to a penalty equal to twenty-five
16 percent of the amounts due by the subcontractor under R.S. 47:113(C). This
17 penalty may be enforced in the same manner provided by law for the collection
18 of a tax.
19 B. In addition to the secretary's authority to impose a penalty pursuant
20 to this Section, in the event of subsequent offenses by a contractor under this
21 Section, the secretary may order the State Licensing Board for Contractors to
22 immediately suspend the contractor's license.
23 §114. Returns and payment of tax
24 * * *
25 F. Penalty provision.* * *
26 (2) The penalty described in this Subsection shall be twenty-five dollars for
27 each quarterly return, annual return, or receipt required to be furnished under R.S.
28 47:112(L). The total penalty imposed pursuant to this Subsection shall not exceed
29 thirty-seven thousand five hundred dollars for each annual period. This penalty shall
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1 be an obligation to be collected and accounted for in the same manner as if it were
2 part of the tax due and can be enforced either in a separate action or in the same
3 action for the collection of the tax.
4 (3) Beginning January 1, 2021, if the failure to submit quarterly returns,
5 annual returns, and receipts required to be furnished under 47:112(L) or the
6 failure to remit the amount required to be withheld is due to the
7 misclassification of an employee, a specific penalty equal to twenty-five percent
8 of the amount due under R.S. 47:113(C) shall be imposed. This penalty shall be
9 an obligation to be collected and accounted for in the same manner as if it were
10 part of the tax due, and can be enforced either in a separate action or in the
11 same action for the collection of the tax.
12 (4) If the failure to timely submit the annual return is attributable, not to the
13 negligence of the taxpayer, but to other causes set forth in written form and
14 considered reasonable by the secretary, the secretary may remit or waive payments
15 of the whole or any part of the specific penalty provided for such failure. Until
16 December 31, 2015, in any case where the penalty exceeds twenty-five thousand
17 dollars, it can be waived by the secretary only after approval by the Board of Tax
18 Appeals. Notwithstanding the provisions of R.S. 47:1508, beginning January 1,
19 2016, waivers of all penalties exceeding twenty-five thousand dollars shall be subject
20 to oversight by the House Committee on Ways and Means and the Senate Committee
21 on Revenue and Fiscal Affairs. This provision shall not apply to any penalty the
22 secretary remits or waives in accordance with rules and regulations promulgated
23 pursuant to the Administrative Procedure Act regarding the remittance or waiver of
24 penalties under the department's voluntary disclosure program.
25 * * *
26 Section 2. This Act shall become effective on January 1, 2021.
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Leonore Heavey.
DIGEST
SB 76 Original 2020 Second Extraordinary Session Luneau
Present law provides for withholding of taxes on wages paid for services performed by an
employee for his employer.
Proposed law defines "misclassified employee" an employee from whom no tax was
deducted or withheld as required by present law due to the employer's failure to properly
classify the individual as an employee.
Proposed law provides for a penalty for employers who fail to withhold the amounts required
to be withheld due to the misclassification of an employee. The penalty is determined by
multiplying the highest Louisiana individual income tax rate (currently 6%) by the total
wages paid to the misclassified employee during the period. However, the penalty may be
reduced if the misclassified employee paid Louisiana income tax on these wages.
Proposed law provides for a penalty for contractors who knew or had reason to know that
amounts paid to its subcontractor included labor costs of misclassified employees equal to
25% of the penalty for employers who fail to withhold the amounts required to be withheld
due to the misclassification of an employee.
Present law requires every employer who withholds taxes to file a quarterly withholding
return and an annual reconciliation report for all employees for whom taxes are withheld and
provides for a five dollar per return penalty for late returns or reports with an overall annual
maximum penalty of $7,500.
Proposed law retains present law reporting requirements and increases the late filing penalty
from $5 to $25 for each late return, report, or receipt and increases the annual maximum
penalty from $7,500 to $37,500.
Proposed law provides a specific penalty for nonfiling of withholding returns, reports, and
receipts or failure to remit withholding where the failure to file or remit is due to the
misclassification of an employee. The penalty is equal to 25% of the amount of withholding
tax that should have been remitted.
Effective January 1, 2021.
(Amends R.S. 47:111(A)(10) and (E), 113, and 114(F)(2) and (3); adds R.S. 47:111(F),
113.1, and 114(F)(4))
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