SLS 20RS-583 ORIGINAL
2020 Regular Session
SENATE BILL NO. 334
BY SENATOR ALLAIN
REVENUE DEPARTMENT. Provides for the funding of the operations of the Department
of Revenue. (2/3 - CA7s2.1(A)) (7/1/20)
1 AN ACT
2 To amend and reenact R.S. 47:1602(A)(4), 1603(A)(1), 1604, 1604.1, and 1624(A)(1) and
3 to enact R.S. 47:1602(A)(5) and 1608, relative to the Department of Revenue and tax
4 administration; to provide for the funding of the Department of Revenue; to provide
5 for the disposition of certain taxes, penalties, and interest collected by the
6 department; to provide for certain requirements and limitations; to equalize the tax
7 deficiency and refund interest rates; to provide for penalties for failure to file a tax
8 return; to provide for penalties for fraud, negligence, substantial understatement of
9 tax, and willful disregard of tax laws; to provide for definitions; to provide for an
10 effective date; and to provide for related matters.
11 Be it enacted by the Legislature of Louisiana:
12 Section 1. R.S. 47:1602(A)(4), 1603(A)(1), 1604, 1604.1, and 1624(A)(1) are hereby
13 amended and reenacted and R.S. 47:1602(A)(5) and 1608 are hereby enacted to read as
14 follows:
15 §1602. Penalty for failure to make timely return
16 A. * * *
17 (4)(a) When any taxpayer files a return required to be made under the
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1 provisions of this Subtitle and pays the amount shown on the face of the return,
2 but fails to pay the full amount of tax actually required to be shown on the
3 return within thirty calendar days from the date of notice and demand therefor
4 pursuant to R.S. 47:1562(B), the specific penalty may be one-half of one percent
5 of the additional tax due. If the failure to pay the additional tax due continues
6 for more than thirty days, an additional one-half of one percent shall be
7 imposed for each additional thirty days or fraction during which the failure to
8 pay continues.
9 (b) The penalty imposed by this Paragraph for each thirty-day period
10 shall be calculated only on the additional amount due from the taxpayer, and
11 shall not be imposed for any thirty-day period for which the penalty provided
12 by Paragraphs (1), (2), or (3) of this Subsection is due.
13 (5) The penalties provided for by this Subsection shall not exceed twenty-five
14 percent of the tax in the aggregate.
15 * * *
16 §1603. Waiver of penalty for delinquent filing or delinquent payment
17 A.(1) If the failure to make any return at the time such return becomes due
18 or the filing of a return without remittance of the full amount due, action or failure
19 to act resulting in a penalty pursuant to R.S. 47:1602 or 1602.1 is attributable, not
20 to the negligence of the taxpayer, but to other cause set forth in written form and
21 considered reasonable by the secretary of the Department of Revenue, the secretary
22 may remit or waive payment of the whole or any part of the specific penalty
23 provided for such failure.
24 * * *
25 §1604. Penalty for false or fraudulent return
26 When the taxpayer files a return that is false or fraudulent or grossly incorrect
27 and the circumstances indicate that the taxpayer had intent to defraud the State of
28 Louisiana state of any tax due under this Sub-title Subtitle, there shall be imposed,
29 in addition to any other penalties provided, a specific penalty of fifty per centum
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1 (50%) seventy-five percent of the tax found to be due. This specific penalty shall
2 be an obligation to be collected and accounted for in the same manner as if it were
3 a part of the tax due, and can be enforced either in a separate action or in the same
4 action for the collection of the tax.
5 §1604.1. Negligence penalty
6 A. Finding of negligence. For negligent failure to comply with any provisions
7 of this Part Subtitle or any rules and regulations of the department, when the
8 secretary finds that a taxpayer did not have willful intent to defraud the state, the
9 provisions of R.S. 47:1604 and Subsection D of this Section do not apply the
10 secretary may assess a penalty equal to ten twenty percent of the tax deficiency
11 found to be due as a result of the taxpayer's negligence.
12 B. Large individual income tax deficiency. In the case of individual income
13 tax, if a taxpayer understates tax table income, by any means, by an amount equal to
14 twenty-five percent or more of adjusted gross income or has otherwise demonstrated
15 a willful intent to disregard the tax laws of this state, the secretary may assess a
16 penalty equal to twenty percent of the deficiency. However, in the case of individual
17 income tax, if a taxpayer understates tax table income by an amount equal to
18 twenty-five percent or more of adjusted gross income but the secretary finds that the
19 taxpayer did not have willful intent to disregard the tax laws of this state, the
20 secretary may assess a penalty of fifteen percent of the deficiency of ten percent of
21 the deficiency in addition to any penalty provided for in Subsection A of this
22 Section.
23 C. Other large tax deficiency. In the case of a tax other than individual
24 income tax, if a taxpayer understates tax liability by twenty-five percent or more, or
25 has otherwise demonstrated a willful intent to disregard the tax laws of this state, the
26 secretary may assess a penalty equal to twenty percent of the deficiency of ten
27 percent of the deficiency in addition to any penalty provided for in Subsection
28 A of this Section. However, in the case of a tax other than individual income tax, if
29 a taxpayer understates tax liability by twenty-five percent or more, but the secretary
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1 finds that the taxpayer did not have willful intent to disregard the tax laws of this
2 state, the secretary may assess a penalty of fifteen percent of the deficiency.
3 D.(1) Willful disregard for Louisiana tax laws. If a taxpayer has
4 demonstrated a willful disregard of the tax laws of this state, the secretary may
5 assess a penalty of forty percent of the tax deficiency found to be due.
6 (2) If the penalty under this Subsection applies, then the penalty due
7 pursuant to the provisions of Subsections A, B, or C of this Section shall not be
8 applicable.
9 E. For purposes of this Section, the following terms shall have the following
10 meanings unless the context clearly indicates otherwise:
11 (1) "Adjusted gross income" means gross income as defined in Section 62 of
12 the Internal Revenue Code.
13 (2) "Negligent failure" means any failure to make a reasonable attempt
14 to comply with the tax laws of this state, or a careless or reckless disregard for
15 the tax laws of this state. Negligent failure shall be presumed in any instance
16 where the taxpayer understates tax liability by ten percent or more but did not
17 demonstrate a willful disregard of the tax laws of this state.
18 (3) "Willful" means voluntarily and intentionally acting in violation of the tax
19 laws of this state. The secretary shall use this definition of "willful" when
20 determining whether a penalty shall be imposed for the willful intent to defraud this
21 state or willful intent to disregard the tax laws of this state.
22 * * *
23 §1608. Disposition of penalties and self-generated revenue
24 A. The disposition of all state taxes, interest, and penalties collected by
25 or on behalf of the Department of Revenue pursuant to the provisions of Title
26 47 of the Louisiana Revised Statutes of 1950, as amended, shall be governed by
27 the following:
28 (1) State taxes and interest. Beginning July 1, 2020, an amount equal to
29 one percent of all taxes and interest collected by or on behalf of the secretary of
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1 the Department of Revenue pursuant to the provisions of Chapters 1, 2, 2-A,
2 2-B, or 5 of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950, shall
3 be designated as self-generated revenue of the Department of Revenue.
4 (2) Penalties. Beginning July 1, 2020, the full amount of penalties
5 collected by the secretary of the Department of Revenue pursuant to Part IV of
6 Chapter 18 of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950,
7 shall be transferred to the state treasury for deposit into the state general fund,
8 provided that only the pass through expenses and fees collected pursuant to R.S.
9 47:1602.1, 1604.2, 1605, and 1606 shall be designated as self-generated revenue
10 of the Department of Revenue.
11 B. Subject to appropriation by the legislature, monies designated as
12 self-generated revenues pursuant to the provisions of this Section, together with
13 any other revenues otherwise self-generated by the secretary, shall be used by
14 the Department of Revenue for the administration and collection of taxes, the
15 operation of the department, and fulfilling of the department's obligations
16 related to the costs of tax adjudication, and may be retained by the secretary
17 and carried forward for such purposes.
18 * * *
19 §1624. Interest on refunds
20 A.(1) Notwithstanding (a) Except as otherwise provided in this Section
21 and notwithstanding any other provision of law to the contrary, on all refunds or
22 credits the secretary shall compute and allow as part of the refund or credit, interest
23 at the annual rate established in R.S. 13:4202 from ninety days after the later of the
24 due date of the return, the filing date of the return or claim for refund on which the
25 overpayment is claimed, or the date the tax was paid.
26 (b) Beginning January 1, 2021, on all refunds or credits, interest shall
27 accrue at three percentage points above the annual rate established in R.S.
28 13:4202 from ninety days after the later of the due date of the return, the filing
29 date of the return or claim for refund on which the overpayment is claimed, or
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1 the date the tax was paid.
2 (c) An overpayment shall bear no interest if it is credited to the taxpayer's
3 account. No interest on refunds or credits shall be allowed if the secretary proves by
4 clear and convincing evidence that a person has deliberately overpaid a tax in order
5 to derive the benefit of the interest allowed by this Section. Payments of interest
6 authorized by this Section shall be made from funds derived from current collections
7 of the tax to be refunded or credited.
8 * * *
9 Section 2. Beginning July 1, 2020, any collection action taken by the secretary shall
10 apply the penalties provided for in this Act for all tax periods, and no penalty shall be due
11 pursuant to the provisions of R.S. 47:1602(A) for actions subject to penalty pursuant to
12 Paragraph (4) of that Subsection except as provided for pursuant to that Paragraph.
13 Section 3. Notwithstanding any provision of law to the contrary, no refund shall be
14 due to any taxpayer for any penalty paid pursuant to the laws of the state existing prior to
15 the effective date of this Act if the refund is based on a claim that no penalty would be due
16 pursuant to the provisions of this Act, nor if based on the claim that penalties paid pursuant
17 to R.S. 47:1602(A) prior to the effective date of this Act should not have been paid on the
18 underpayment of tax actually due.
19 Section 4. This Act shall become effective July 1, 2020. If vetoed by the governor
20 and subsequently approved by the legislature, this Act shall become effective on
21 July 1, 2020, or the day following such approval, whichever is later.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Leonore Heavey.
DIGEST
SB 334 Original 2020 Regular Session Allain
Present law establishes separate penalties for the failure to make timely return and for the
failure to pay full amount of tax due shown on the return.
Proposed law retains present law failure to file and failure to pay penalties and provides for
a reduced penalty when the taxpayer fails to pay the full amount due that was required to be
shown on the return at the rate of ½ of 1% instead of 5% per month.
Proposed law retains present law maximum of 25% of the tax for the combined failure to file
and failure to pay penalties.
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Present law provides for penalties for fraud, negligence, and large tax deficiencies of 25%
or more.
Proposed law changes the penalty rates for fraud, negligence, and large tax deficiencies as
follows:
(1)Fraud (R.S. 47:1604), from 50% to 75% of deficiency.
(2)Negligence (R.S. 47:1604.1(A)), from 10% to 20% of deficiency.
(3)Large individual tax deficiency (R.S. 47:1601.1(B)), from a maximum of 20% to
10% of deficiency.
(4)Other large tax deficiency (R.S. 47:1601.1(C)), from a maximum of 20% to 10% of
deficiency.
Proposed law defines negligent failure as any failure to make a reasonable attempt to comply
with the tax laws of this state or a careless or reckless disregard for the tax laws of the state.
Proposed law creates a presumption of negligent failure where there is an understatement
of tax liability of 10% or more and there is no indication of willful disregard of the state's
tax laws.
Proposed law authorizes an additional penalty for willful disregard of the state's tax laws of
40% of the deficiency and retains present law definition of willful as "voluntarily and
intentionally acting in violation of the tax laws of this state."
Proposed law provides that beginning July 1, 2020, an amount equal to 1% of the state taxes
and interest collected by or on behalf of the Dept. of Revenue (DOR) shall be designated as
self-generated revenue of the department.
Proposed law requires, with respect to penalties collected by DOR, that from July 1, 2020,
and thereafter, 100% of penalties be deposited into the state general fund.
Proposed law requires the self-generated revenues to be used by DOR for the administration
and collection of taxes and for operation of the department, subject to appropriation by the
legislature.
Proposed law requires that beginning July 1, 2020, any collection action taken by the
secretary shall apply the penalties provided for in this Act for all tax periods.
Proposed law prohibits refunds of penalties paid before the effective date of this Act if the
claim for refund is that no penalties would be due under the provisions of this Act.
Present law provides for interest on unpaid taxes at three percentage points above the judicial
interest rate and interest on refunds of overpaid taxes at the judicial interest rate.
Proposed law equalizes the interest rates on refunds and unpaid taxes by increasing the
interest rate on refunds to three points above the judicial interest rate beginning Jan. 1, 2021.
Effective July 1, 2020.
(Amends R.S. 47:1602(A)(4), 1603(A)(1), 1604, 1604.1, and 1624(A)(1); adds R.S.
47:1602(A)(5) and 1608)
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