Louisiana House Bill HB632

Louisiana 2020 Regular Session

• Introduced: 2/28/20
• Refer: 2/28/20
• Refer: 3/9/20

Caption

Provides for certain penalties imposed by the Department of Revenue and provides for the disposition of the monies collected from penalties and the self-generated revenue of the department

Impact

The bill is set to create a more manageable framework for tax penalties, potentially benefitting taxpayers who may previously have faced high penalties for minor infractions. For instance, the adjustment in the failure-to-pay penalty could alleviate financial burdens on individuals who may struggle to meet tax obligations, thereby encouraging compliance. Furthermore, by designating 1% of taxes and interest collected to self-generate revenue for the DOR, the bill ensures that funds are available for the administration and maintenance of tax collection processes, possibly improving efficiency within the department.

Summary

House Bill 632 amends existing Louisiana tax law by altering the penalties imposed by the Department of Revenue (DOR) for various infractions related to tax filings and payments. While the current law maintains separate penalties for failure to file and failure to pay taxes, HB632 proposes to reduce the penalty for the failure to pay the full amount from 5% to 0.5% per month, retaining a maximum penalty of 25% for combined failures. It also introduces new definitions for negligent failure, establishing a presumption for a 10% understatement of tax liability. The amendments aim to clarify and streamline the process by which taxpayers can be penalized, potentially leading to a simpler regulatory environment for taxpayers.

Sentiment

The sentiment around HB632 appears to vary among lawmakers and stakeholders. Supporters argue that the modifications to the penalties are humane and sensible, catering to taxpayers who are making a genuine effort to comply with their tax obligations. Conversely, critics may view the changes as insufficient, arguing that they do not substantially deter tax evasion or fraud. Overall, discussions reflect a balance between reducing the punitive aspects of tax compliance and ensuring that measures are in place to prevent deliberate malpractice.

Contention

A notable point of contention surrounding HB632 includes its provisions for negligence and fraud. The revised definitions and penalty rates could lead to debates on what constitutes a 'reasonable attempt' to comply with tax laws. While supporters believe the changes clarify the laws, opponents argue that the bill's language may enable some taxpayers to exploit these definitions, thereby undermining overall tax integrity. Additionally, the prohibition against refunding penalties paid prior to the bill's enactment could be seen as unfair to those who complied under previous regulations without the knowledge of future adjustments.