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Louisiana Commercial Activity Tax Cannot Claw Its Way Out of Committee: Bill Voluntarily Deferred by Sponsor

The hotly contested new Commercial Activity Tax (“CAT”) proposal in Louisiana – H.B. 628 – may now have officially run out of lives.

After hours of debate over two days of hearings in the Louisiana House Ways & Means Committee, Governor Edwards’ (D) proposed CAT was voluntarily deferred by the bill’s sponsor, Rep. Sam Jones.  The bill’s deferral came following a barrage of testimony against the bill from tax researchers, business and industry groups, and individual taxpayers, as well as a clear distaste for the bill by a majority of the Way & Means Committee members.

Despite efforts by the Governor’s administration to soften the effect of the CAT by eliminating its applicability to S Corporations and LLCs, there still remained a vocal concern from those testifying, and many Committee members, over the tax pyramiding effects of the CAT and the effect of the proposed tax on low-margin businesses in the State.  Thus, according to comments made during the hearings, the CAT became a KITTEN, but it still had claws that could adversely affect taxpayers in this current economic environment.

While this does not mean the CAT has necessarily given up all of its lives, the general consensus around the Capitol is that the votes on the House Ways and Means Committee are not lining up in favor of the CAT.

A full copy of the now-deferred CAT bill can be found here.

© 2020 Jones Walker LLPNational Law Review, Volume VII, Number 115

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About this Author

Bill Backstrom, Tax, estates Attorney, Louisiana, Jones Walker Law FIrm
Partner

Bill Backstrom leads the firm's Tax & Estates Practice Group. His practice, for more than 30 years, has focused primarily on state and local tax matters in Louisiana and on a multistate basis. These matters include tax and business planning, utilization of tax and business incentives, audits, government relations, administrative appeals, judicial appeals, and legislative matters.

Mr. Backstrom is a Board Certified Tax Specialist as certified by the Louisiana Board of Legal Specialization. He is a frequent lecturer and author on a variety of tax topics, including all...

504.582.8228
Matthew Mantle, State, Local Tax, Louisiana, Jones Walker Law FIrm
Partner

Matthew Mantle is a partner in the firm’s Tax & Estates Practice Group and practices with the State & Local Tax Team out of the firm's New Orleans office.

Matt concentrates primarily on state and local tax matters in Louisiana, Alabama, and on a multistate basis, representing firm clients throughout the Gulf South in all areas of state and local tax. His practice includes tax and business planning, audits, administrative appeals, judicial appeals, identification and utilization of tax incentives, governmental relations, and tax legislation. He has also represented firm clients on various unclaimed property matters. Matt was recently recognized in "Chambers USA–America's Leading Lawyers for Business" in the area of Corporate/M&A: Tax.

504.582.8418