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The Louisiana Department of Revenue has amended the rule under which taxpayers are required to make payment by electronic funds transfer. This amendment extends the definition of Other Immediately Investible Funds to include credit and debit card payments and electronic checks. Under this amendment, taxpayers will also be responsible for payment of any fees associated with the use of Other Immediately Investible Funds. (Louisiana Department of Revenue, LAC 61:I.4910, effective February 20, 2005)


Counsel representing the State of Louisiana Department of Revenue attempted to prove that Dell Catalog Sales, a mail order computer company, had sufficient nexus through its optional service contracts to be subjected to Louisiana use tax. The judge, however, decided the case in Dell’s favor. The ruling found that Dell did not own the third party service contract provider and held no physical presence in the state of Louisiana; therefore, nexus did not exist. The state intends to appeal the decision. (State of Louisiana and Secretary of the Department of Revenue and Taxation v. Dell Catalog Sales, L.P., May 25th, 2004)


Effective July 1, 2004, a new form has been published for Louisiana’s new sales tax exclusion for manufacturing machinery and equipment. The form may be used by manufacturing and agricultural businesses to apply for the exclusion, effectively reducing the taxable sales price for purchase, imported or leased equipment by 5%. This reduction was enacted by Act 1 of the 2004 First Extra Session of the Legislature, and is scheduled to be phased in over a six-year period. For full details, see (Revenue Information Bulletin No. 04-012: Policy Documents, June 23, 2004.)


Effective July 1, 2004, Louisiana will exclude 5% of the price of machinery and equipment from state sales tax. This will be the first in the six-year, seven-step, phase-out of the sales and use tax currently levied on machinery and equipment used in manufacturing. Eligible machinery and equipment is defined in Act 1 (H.B. 2) as "tangible personal property or other property that is eligible for depreciation for federal income tax purposes and that is used as an integral part in the manufacturing of tangible personal property for sale." Machinery and equipment may be used to control pollution produced at the plant facility during the manufacturing process or to test or measure raw materials and product (finished or incomplete) being manufactured; computers and software integral to the machinery and equipment used in production also qualify. In addition, both the manufacturer and the plant must be principally engaged in manufacturing, as referred to in the North American Industry Classification System of 2002. The next six steps will be enacted over the course of the next six years to gradually increase the percentage of the price of manufacturing machinery and equipment exempt from the sales tax to 100%. The enactment of the Act was contingent upon the Revenue Estimating Conference forecasting additional revenue for 2004-5 of $235 million or more above the amount forecast in December 2003; the general revenues forecast for 2004-2005 were $268.8 million above that amount. (Revenue Information Bulletin No. 04-012-A, Louisiana Department of Revenue, May 18, 2004)


It has been found that no-show charges for guaranteed rooms are taxable. A cancellation fee on a room reservation is generally not taxable if the charge is less than what the rate would have been if the taxpayer would have kept their reservation. Early cancellation fees are exempt for taxpayers who cut their stay short. Group cancellation charges are exempt. (Revenue Ruling No. 04-004, April 23, 2004.)



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