In the wake of the legislative session, the state’s CPAs and tax attorneys are breathing a sigh of relief that some of the language in bills affecting corporate taxes was amended in the final days of the session before the bills passed. Still, the final version of the measures only partially addresses problems that had them concerned, and they say corporate taxpayers are in for a headache.
“It’s better, but it’s still a mess,” says Ronald Gitz, II, executive director of the Society of Louisiana CPAs.
At issue are the dozens of bills that roll back business tax credits, exemptions, deductions and rebates. Originally, those bills were to become effective July 1, regardless of the tax year to which a tax return relates. As a practical matter, that would have meant taxpayers who filed for an extension on their 2014 state tax return would have faced a higher tax liability if they filed their return after July 1 than if they did so before then.
The Senate, however, amended the bills to say those taxpayers who would be negatively impacted by the changes will get their money back—just not until 2017, when the state will return one-third of it. An additional one-third will be returned in 2018 and the rest will be returned in 2019.
“Essentially, the state is borrowing money from taxpayers and promising to pay it back in three, four and five years—interest free,” Gitz says. “It’s staggering.”
The legislation originally was written to make all tax changes effective July 1, regardless of the year for which the tax return was filed, because of the need to balance the budget during the 2016 fiscal year. Had the changes only been effective for future tax years, the state would have only generated half the $600 million or so it was counting on from the changes.
Under the amended version of the bills, the money will be returned to taxpayers who paid the higher tax rate—but not until after the end of the 2016 fiscal year.
“The (thing) that got us the language to begin with was that these changes had to make the fiscal note work for 2016,” Gitz says. “Well the same logic is that you have to get past 2016 before you return the money. This has got to be unprecedented.”
Local CPAs say they’ll be burning the midnight oil over the next two weeks to file as many 2014 tax returns as possible before the July 1 changes go into effect.
“It’s going to be busy,” says Bill Potter of Postlethwaite & Netterville. “It’s not as bad as it could have been, but it’s going to be a hassle to do it right.”
—Stephanie Riegel
