Monday, May 20, 2024

Study group members: Complex Louisiana sales tax system creates challenges for improving collection

by BIZ Magazine

By David Jacobs | The Center Square

The Louisiana Legislature has created a study group to look at centralizing the state’s sales tax collection system. The current decentralized system is difficult to navigate, business owners and advocates say.

But as study group members and speakers noted Thursday, there’s only so much good that can be done by tweaking its administration when the underlying sales tax system is so complex.

“Clearly the complexity of the sales and use tax system is the big [problem],” said Karen White, executive counsel for the Louisiana Municipal Association. “We’re all sort of saddled with that.”

However, after listening to testimony from two witnesses who handle sales tax compliance for Stine Home + Yard, White suggested the current parish-level electronic filing system could be changed so that businesses could make a single payment rather than separate payments for every parish in which they owe taxes.

White also suggested the study group might be able to come up with a proposal to limit the number of audits businesses face. Businesses can face audits from any jurisdiction, and potentially pay high penalties for unintentional mistakes, witnesses said.

“It sounds like you’re guilty until proven guilty,” said state Sen. Stewart Cathey Jr., a Monroe Republican.

Each parish in Louisiana oversees its own sales tax collection, audits, rates and interpretations of what is taxed. Louisiana has an unusually large number of exemptions and exclusions, and some items are taxable at the state level but not the local level or vice versa.

Local government officials traditionally have opposed setting up a single collector like most other states have done. They fear they won’t get the money they need to provide services on a timely basis and say collecting their own taxes is the best way to ensure the money is spent the way local taxpayers and voters want it spent.

House Resolution 31 by House Speaker Clay Schexnayder, approved during this year’s special session, created the study group to “make recommendations to the legislature related to the creation of a centralized sales and use tax collection system.”

The study group met for the second time Thursday. The resolution calls for them to create a report to submit to the legislature in time for next year’s regular session.

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