CALCASIEU  TAX  REVIEW

Vol. 16 Issue 1  August 2004

Reporting period necessary on Return

The Calcasieu Parish Tax Office uses a third party vendor to print returns for dealers registered through our office.  Although multiple returns are sent to our dealers, it should be noted that a particular reporting period is not printed on them.  This has caused numerous difficulties for our data entry personnel.  Dealers are reminded to ensure that they provide the pertinent “Return Period” on their returns to assure that proper credit is given to the specific period intended.  This will help a great deal in accurate processing of your return.

“Dyed” Diesel not taxable

The LA Supreme Court issued a ruling this past July that “off-road” diesel was included in the technical definition of motor fuel and is therefore subject to the prohibition found in Louisiana Constitution Article VII 4(C) against political subdivisions levying a tax on motor fuel.  For more on this decision see Ocean Energy, Inc. vs. Plaquemines Parish DOR, 04-C-0066 Supreme Court of Louisiana.  Calcasieu Parish has never sought to tax diesel fuel and is not affected by the decision.

Dealers required to keep records

More and more often we find that businesses are not keeping adequate records in accord with applicable tax laws.  For local sales and use tax purposes, R.S. 47:337.29 states that every dealer required to make a report and pay any tax shall keep and preserve suitable records of the sales, purchases, or leases taxable under various local tax ordinances. Dealers may obtain a fairly detailed listing of records customarily maintained by entrepreneurs from your local tax office (soon to be on our website www.calcasieusalestax.org).

These records are open to inspection by the tax office at all reasonable hours.  Dealers that fail to maintain and retain suitable records for accurately determining compliance with these laws are subject to fines and/or imprisonment.

Fall Seminar for October                                         

State and local tax officials have scheduled a tax seminar for October 15^th at 1732 Kirkman Street in Lake Charles, LA.  Presentations will be made on various topics of interest such as legislation, use tax, business records and other timely topics.  The seminar will be held in the Calcasieu Parish School Board Conference Room from 9:00am until 12:00 noon.  There is no charge for attendance but pre-registration would assist us in having sufficient materials available for attendees.  Pre-registration can be accomplished by simply calling 337-437-1280 and providing your name, telephone number and the number of persons that are planning to attend.

Buying a Business?

Purchasing an on-going business can result in some costly consequences if the previous owner was not current with their sales/use tax obligations.  For this reason, an interested party should request from the owner a statement from both the state and local tax offices indicating that there are no taxes due from periods up through the date of change in ownership.  Failure to take such precautions can be quite costly in some cases.  Section 47:337.21 addresses these issues involving transfer of ownership and personal liability of the successor(s) if certain action is not taken to ensure that all pre-existing tax obligations have been or will be satisfied prior to the transfer.

A Look at Software Maintenance

When purchasing software, purchasers receive the normal license that permits the use of the software version that is current at the time of the purchase.  For an added fee, a software maintenance agreement may be secured to cover a combination of services.

Those services shall include maintenance releases sometimes referred to as bug fixes.  The purpose of bug fixes is to enable a purchaser to correct problems with the software detected after the release.  Maintenance releases provide no added capabilities to the software beyond those of the original version.

Maintenance releases, software upgrades and consultation support are the services or combination of services offered under maintenance agreements.  Maintenance releases, also known as bug fixes, enable buyers to tweak software problems detected after the version purchased is released.  Software upgrades are usually offered based on a price for each release.  The upgrades enhance the version purchased beyond its original capabilities.  Finally, through consultation support, software licenses can address the developers with user-specific problems.

Maintenance releases furnished without charge will not be taxable.  Likewise, charges that only allow the software licensee the right to personal consultation with the developing company will not be taxable.  Service packages will need scrutinizing to determine whether all or part of the service package is taxable.  Key factors will be whether the software is “canned or customized” and whether any updating, enhancing or reformatting of software is involved.

Where to Find Returns

Once upon a time, we mailed returns randomly to occasional filers, annual and others as requested.  Today, occasional filers are not mailed returns and are directed to our department website or the LATA website in the case of internet preparedness.   However, any dealer can for an unusual reason need access to a tax return.  If so, the websites available for downloading a copy of our local Sales and Use Tax Return are www.LAOTA.com through the Louisiana Association of Tax Administrators and our own departmental website www.calcasieusalestax.org.  When using the LATA website, simply click on item #6 Parish Tax Agencies, and then choose Calcasieu.  Go to Forms and you will find the Sales Tax Return form for printing in PDF format.  If you are not internet prepared we do have returns available through the office.  Feel welcome to call or drop by.  Don’t Forget!  When using a blank return, always provide the name of your business, account number and the period(s) for which the return is due.

Failure to Account for Monies

Handling and accounting for sales tax is a serious matter and because of possible consequences the collection effort should not be taken lightly.  If not, any person, as defined by the ordinance, that is required to collect and pay over any tax (including penalty and interest) imposed by the regulations who intentionally fail to collect or honestly account for or pay over such tax (penalty and interest) as an agent shall in addition to other penalties provided by law, be fined not more than ten thousand dollars ($10,000.00) or imprisoned with or without hard labor for not more than five (5) years or both.

Legislative Highlights 2004

The following Acts affecting Sales/Use tax issues were passed by the Louisiana Legislature during 2004.

Act 49:  Change the sources of price data used to determine the sales price of refinery gas.

Act 418: Exempts new properly licensed motor vehicle dealers from the requirement to notify the Department of Public Safety of vehicle transfers.

Act 724:  Applicants who register with the Board of Contractors as a home improvement contractor provide proof of registration with the Department of Revenue by submitting a certificate of resident/non-resident status.

Act 1 of Special Session:  Enacts phase out of STATE sales/use taxes on certain machinery and equipment used in manufacturing, agriculture or forestry over a seven year period.  Locals have option to adopt similar provisions applicable to local levies.

Act 691:  Prohibits local taxation on diesel fuel.