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New requirements have been added regarding contracts entered into with private agencies or auditing firms for the auditing of sales and use tax in Louisiana. Among the new requirements are the following: Upon the completion of an examination or audit for a taxpayer, providing audit leads by the private agency or auditing firm to other local collectors is prohibited by taxpayer confidentiality requirements. All taxpayer information obtained by the private agency or auditing firm for the audit or examination must be returned to the taxpayer, and the agency or firm shall not retain any copies of the information. All taxpayer related information generated by the agency or firm shall be delivered to the tax collector. The private agency or auditing firm must limit its functions. It is only allowed to audit the taxpayer’s books and records. It is not allowed to perform any assessment or collection of tax, as these are required to be performed by the local collector. Any individual performing an examination or audit for the private agency or auditing firm must have a lead auditor who has one of the following: an active CPA license, a Bachelor of Science degree with a minimum of 18 hours in accounting, or a certified tax examiner’s certificate issued by the Louisiana Association of Tax Administrators. If a private auditing firm conducts an audit, the taxpayer shall be given notice by the local tax authority advising them that the audit will be conducted by a third party agency and whether payment to the auditing firm is contingent on the collection of tax or is in any other way dependent on the audit outcome. (LA RS 47:337.26; Act 1029 (H.B. 845), Laws 2010, effective July 8, 2010).


A department store operator with stores in Louisiana and other states is not liable for use tax on the printing costs of catalogs and other printed materials that are sent to its stores and customers located in Louisiana. Since the catalogs were sent directly to customers and Louisiana stores and not sent to the taxpayer for its use, the printing and shipping costs were deemed to be exempt from sales or use tax as an advertising service. In order for the advertising costs to be taxable, the catalogs would need to be transferred to the client for use by the client. Even though some of the catalogs were sent to stores owned by the taxpayer, it was determined that these were not deemed transferred to the purchaser for their own use. Actual transfer of the items by the advertising firm to the client for use by the client is a pre-requisite for a taxable basis. The decision in this case was also based on the decision in Louisiana Health Services, 746 So. 2d 285. (Bridges v. The Higbee Co. T/A Dillard’s, Louisiana Appellate Court, First Circuit, No. 2009 CA 1634, June 28, 2010))


In a recent revenue ruling, Louisiana stated that all products delivered electronically to equipment located within the State, including computer software and applications, stored media, and entertainment media and products are considered tangible personal property, and are therefore subject to sales, use, or lease tax. Similarly, remotely accessed software, information materials, and entertainment products or media are taxable transactions when the access requires payment or consideration in any form. This applies whether accessed one-time or as part of a subscription, and regardless of if the item can be only be viewed or if it is downloaded. Further, any consideration paid for electronic receipt or access to data, materials, media, information, or other form of communication that is converted to readable, usable, or viewable form by software or browsers installed on hardware located in Louisiana is also subject to sales, use or lease tax. (Revenue Ruling No. 10-001, Louisiana Department of Revenue, March 23, 2010)


The Louisiana Department of Revenue reminded taxpayers that the Contractor Registration Program will no longer issue new certifications beginning January 1, 2010. The Department will no longer certify the residency of contractors performing jobs in Louisiana or issue certificates for jobs performed by nonresident contractors. In addition, nonresident contractors will no longer be required to pay the ten-dollar application fee per contract or post a bond. Also beginning January 1, 2010, resident contractors are not required to renew their certifications. Jobs performed by nonresident contractors certified prior to January 1, 2010 should continue to Louisiana law as it relates to nonresident contractors. Furthermore, every resident or nonresident contractor performing jobs in Louisiana must register for Louisiana general sales tax as well as any other applicable taxes like income or withholding. (Revenue Information Bulletin No. 09-057, Louisiana Department of Revenue, December 29, 2009)


In an informational bulletin, the Louisiana Department of Revenue explains how Act 442 of the Regular Session of the Louisiana Legislature changes the definition of “tangible personal property” to exclude certain property. The Act provides that the term “tangible personal property” shall not include any property that would have been considered immovable property prior to the enactment of Act 632 on July 1, 2008 by the 2008 Louisiana Legislature. Act 632 defines component parts of immovable property as things attached to a building, such as doors, shutters, gutters, cabinetry, plumbing, heating, cooling, electrical and similar systems, or things that are attached to a construction other than a building and attached to such a degree that they cannot be removed without substantial damage to themselves or to the building or other construction. As a result, the purchase, lease, and repair of immovable property shall be excluded from sales tax. In addition, the exclusion shall be applied retroactively and is applicable to all transactions occurring on or after July 1, 2008. (Revenue Information Bulletin No. 09-036, Louisiana Department of Revenue, October 15, 2009)



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