Could the Louisiana Tax Amnesty Program Affect You?

The Louisiana Department of Revenue has established a tax amnesty program which began on September 23, 2013 and will run through November 22, 2013. The goal of the program is to collect outstanding state tax liabilities from Louisiana residents who have fallen behind on their state taxes and want a fresh start. Eligible taxpayers who apply during the stated tax amnesty period may be eligible to have half of the interest and all penalties waived for the tax periods for which the amnesty is applied. According to state officials, some 450,000 taxpayers and businesses currently owe the state of Louisiana an estimated $2.5 billion dollars although at least half of that amount is currently in dispute.

Louisiana taxpayers who are behind on their tax payments—for any reason at all—will still be required to pay 100% of the their taxes, however 50% of the accrued interest and 100% of the penalties will be waived, creating significant benefits for many Louisiana taxpayers to return to compliance. Delinquent taxpayers and non-filers will also be exempt from all tax penalties. The anticipated revenues from the tax amnesty program are expected to plug a nearly $200 million dollar hole in the state’s health and hospital budget. Using the tax amnesty money to make up the shortfall in the health and hospital budget was determined to be an alternative to raising taxes.

Robert Billiot, Louisiana State Representative, believes the amnesty program can help many taxpayers who were hurt by the BP oil spill or storm Isaac. The amnesty tax program is not new to Louisiana—the state implemented similar programs in 2001 and 2009, collecting $193 million and $483 million respectively. Still, some Louisiana lawmakers oppose the tax amnesty program, claiming it makes it too easy for taxpayers to take advantage of the reduction in penalties and interest. The theory is that taxpayers will simply wait until an amnesty program is implemented rather than being responsible and paying their taxes in a timely manner.

Quite often, states which implement a tax amnesty program will follow the program with increased penalties and stricter enforcement against taxpayers who were eligible but declined to participate in the program. Late penalty fees could increase from 10-25% for those taxpayers who were eligible but did not choose to participate in the program. It is important for Louisiana taxpayers who are considering taking part in the current tax amnesty program to understand that the amnesty program applies to specified taxes and tax periods open under the statute of limitations. Taxpayers who have not filed their taxes are under a statute which has not run which means a potentially unlimited “lookback” period.

The Louisiana tax amnesty program comes with potential problems for the state and local government. Aside from the cost associated with administering the tax amnesty program, should a significant number of delinquent taxpayers fail to come forward or be identified, the program could cost the state rather than providing much-needed revenue. Further, regular use of tax amnesty programs tends to encourage a failure to pay taxes and a “wait-and-see” attitude on the part of taxpayers. The Louisiana tax amnesty program will be repeated in 2014 and 2015, although these programs will last only one month instead of two and may be less generous in terms of penalties and interest.

If you are a Louisiana resident who is unsure whether you should take advantage of the current tax amnesty program, the Law Office of Paul A. Grego can help. For tax amnesty questions as well as any other issues related to federal or state taxes, audits or challenging an IRS decision, Louisiana tax attorney Paul A. Grego will help you determine the best solution. With a free initial consultation and assessment of your particular situation you are well on your way to resolving your tax problems. Call 504-302-4949 today or visit our website for additional information.