Tuesday, April 23, 2024

Louisiana Senate approves centralizing sales tax oversight

by BIZ Magazine

By David Jacobs | The Center Square

The Louisiana Senate voted unanimously Wednesday for a House-passed proposal to centralize oversight of sales tax collection.

“Doing business like we’ve always done isn’t working for us,” said Sen. Barry Milligan, R-Shreveport, who presented House Bill 199 in his chamber. “We’re being left behind.”

Under Louisiana’s unusual system, 53 different entities collect sales taxes. Local leaders historically have liked it that way, arguing that having local officials collect local taxes is the best way to ensure the money is spent the way local voters and taxpayers want it spent.

Business advocates, however, long have argued the current system is too difficult to navigate for companies that sell in multiple jurisdictions, especially for small businesses. The decentralized system also contributes to Louisiana’s poor showing on various think tanks’ rankings of state tax systems.

Some lawmakers also fear the current system could be found unconstitutional in light of the U.S. Supreme Court’s Wayfair decision, which cleared the way for states to collect sales taxes on internet sales but said states placing an “undue burden” on interstate commerce could be violating the U.S. Constitution.

The bill calls for an eight-person commission, with four representing state interests and four representing local officials. At least two-thirds of them would have to agree to change commission policy.

Under amendments adopted Wednesday, the Senate would have to confirm the commission’s members. The House and Senate will have to work out the differences in their versions of HB 199.

Local officials want to retain their ability to audit businesses in their areas that they suspect are withholding taxes, but businesses don’t want to be subjected to multiple audits by different jurisdictions. The commission is directed to streamline the audit process, but what that will mean is not clear. The commission will serve as the central auditor for all out-of-state taxpayers.

The change will require a constitutional amendment, which means voters must approve. The bill calls for an election next fall.

The enabling legislation that pairs with the proposed amendment is not available in the current session. Lawmakers will have to hammer out the details in a future session.

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