Requires deduction and withholding of oil and gas proceeds of out-of-state entities. (gov sig) (OR SEE FISC NOTE GF RV)
Impact
The introduction of this bill signifies a notable shift in Louisiana's approach to revenue generation from oil and gas activities. By establishing a specific withholding tax applicable to out-of-state recipients, the state aims to capture income that would otherwise escape taxation. This could potentially bolster state revenues amid changing economic landscapes and fluctuating oil prices. However, the bill restricts this withholding requirement for in-state corporations and resident individuals, thereby isolating the tax's impact on external entities.
Summary
Senate Bill 106, introduced by Senator Peacock, seeks to implement a withholding tax framework specifically targeting proceeds from oil and gas transactions involving out-of-state entities. This measure mandates that all remitters who process payments for oil and gas proceeds must deduct a four percent tax beginning January 1, 2014. The bill expands the definitions surrounding oil and gas proceeds, and delineates the responsibilities of both remitters and pass-through entities, which are often involved in these financial transactions.
Sentiment
The sentiment surrounding SB 106 appears to be mixed. Supporters advocate for it as a means to ensure that all parties profiting from Louisiana’s natural resources contribute to state coffers, especially during times of economic strain. Conversely, critics may question the potential burden this places on businesses operating across state lines, raising concerns about fairness and the unintended consequences of driving away necessary investments in Louisiana's oil and gas sectors.
Contention
A significant point of contention lies in the delineation of 'remitters' and 'pass-through entities', as well as how the state's ability to tax proceeds from out-of-state operations affects cross-border transactions. Additionally, there are concerns surrounding the administrative burden imposed on entities that must comply with the new withholding requirements, including penalties for late payments and the complexity of filing quarterly returns.
Changes the definition of alternative fuel for purposes of the tax credit for conversion of a vehicle to alternative fuel usage (EN INCREASE GF RV See Note)
Requires the withholding of individual income taxes from income earned by certain individuals for purposes of the motion picture investor tax credit (EN SEE FISC NOTE GF RV See Note)
Changes the deadline for the submission of annual reports to the Department of Revenue regarding deductions and withholdings of employee wages (EN NO IMPACT SG RV See Note)
Changes the definition of alternative fuel for purposes of the tax credit for conversion of a vehicle to alternative fuel usage (EN INCREASE GF RV See Note)
Provides for penalties for employers who fail to withhold due to misclassification of employees. (2/3 - CA7s2.1(A)) (1/1/21) (Item #24) (OR INCREASE GF RV See Note)
Provides for uniform definitions of independent contractor and employee, and for penalties for the misclassification of employees. (2/3 - CA7s2.1(A)) (1/1/22) (OR INCREASE SG RV See Note)