Monday, July 15, 2024

Louisiana Senate votes for easier refunds of unconstitutional taxes

by BIZ Magazine

By David Jacobs | The Center Square

The state Senate gave final approval to a bill that would make it easier for taxpayers to get refunds of taxes collected based on an unconstitutional or misapplied law.

The bill now goes to Gov. John Bel Edwards, whose administration has raised concerns about the unpredictable new costs the measure will create for state government.

Under current law, taxpayers can pay a disputed tax under protest and sue the state for a refund. They can also file a claim with the state Board of Tax Appeals, though if successful the legislature still has to choose to appropriate the money to repay.

Rep. Phillip DeVillier, R-Eunice, brought House Bill 265 this session to require tax collectors to pay refunds when taxes are overpaid as a result of an unconstitutional law, invalid or unenforceable rule or regulation, or because of a misinterpretation of a law or rule. The requirement to pay under protest would be eliminated.

The powerful Louisiana Association of Business and Industry supports the change. As HB 265 languished in committee, the House tacked its goals onto Senate Bill 198 by Sen. Barrow Peacock, R-Bossier City.

On Wednesday, Peacock urged his colleagues to concur with the House amendments. He said the change would help small businesses that can’t afford to hire lobbyists or teams of lawyers.

Sen. J.P. Morrell, D-New Orleans, said he supported refunding taxpayers who unwittingly paid unconstitutional taxes but feared the bill would lead to unforeseen consequences and cause a “giant hole in the budget.”

He said the proposed law deletes a provision that allows the state to structure how it pays out such claims, including a backlog of judgments dating back to the Gov. Bobby Jindal administration. While the proposed law is not retroactive, it would affect claims against the state already approved by a court, Morrell said.

The expedited process, and the promise that claims would be paid with interest, would encourage businesses to challenge every tax the legislature passes and make crafting a budget nearly impossible, Morrell argued.

“When we pass any taxes, we’re incentivizing the large businesses to challenge them,” he said.

Morrell urged senators to send the bill to a conference between House and Senate members.

Peacock disputed Morrell’s argument about structuring payments. He said his bill preserves the state’s ability to issue incremental refunds as long as the number of incremental payments doesn’t exceed the total number of years the tax was overpaid.

The Senate voted 24-11 to concur with the House amendments and send the bill to the governor.

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