Louisiana House Bill HB751

Louisiana 2015 Regular Session

• Introduced: 4/3/15
• Refer: 4/3/15
• Refer: 4/13/15

Caption

Reduces the amount of dealer's compensation for collection and remittance of state sales and use taxes (OR +$2,500,000 GF RV See Note)

Impact

The reforms introduced by HB 751 are expected to have a significant impact on state laws governing tax collection. By capping the compensation for dealers, the bill could lead to a decreased financial burden on the state and increase its taxable revenue due to diminished deductions. Municipalities are still authorized to pay compensation to their local dealers, allowing some flexibility; however, the new state-imposed limitations could lead to disparities in dealer compensation across different municipalities. This could disproportionately affect smaller businesses that rely heavily on dealer compensation when calculating profitability.

Summary

House Bill 751 proposes amendments to the regulations surrounding the compensation of dealers responsible for the collection and remittance of state sales and use taxes in Louisiana. Specifically, the bill reduces the rate of dealer compensation from 0.935% to a capped total of $100,000 per year for those operating multiple business locations. The bill is set to take effect on July 1, 2015, applying to all taxable transactions from that date onward. This alteration aims to simplify the taxation process and potentially increase state revenues by limiting the deduction allowed to dealers, who facilitate the tax collection process.

Sentiment

The sentiment surrounding HB 751 appears to be mixed, with support primarily from fiscal conservative legislators who argue that the changes will lead to better financial management of state resources. Conversely, critics express concerns that such reductions in dealer compensation might discourage timely reporting and remittance of taxes by dealers, leading to a potential decline in overall tax compliance among businesses. The debate highlights underlying tensions between fiscal responsibility and the operational viability of local businesses who rely on the allowances previously given to them for performing tax collection duties.

Contention

Notable points of contention surrounding HB 751 include concerns about how the reduced compensation for dealers may affect tax compliance and local businesses' financial health. Opponents of the bill argue that reducing dealer compensation could lead to a decrease in the motivation for dealers to ensure accuracy in tax reporting and remittance. Furthermore, there are apprehensions regarding the broader implications of state control over local compensation decisions, where municipalities may prefer to set their compensation structures based on unique local needs.