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Tax Clearance Now Required for Louisiana State Sales Tax Resale Certificates and Approval of Certain State Procurement Contracts

The Louisiana Department of Revenue has now issued formal guidance regarding the new requirement that taxpayers receive a Louisiana state tax clearance in order to obtain: (i) a new or renew an existing Louisiana state sales tax resale certificates; and (ii) approval of certain Louisiana state procurement contracts.

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Specifically, the Department has issued the following new Revenue Information Bulletins (RIBs):

Tax Clearance Required for State Sales Tax Resale Certificates  –  RIB 17-020:

Effective June 14, 2017, Act 211 (HB 307) of the 2017 Regular Session of the Louisiana Legislature enacted La. R.S. 47:1678 to require an applicant applying for issuance or renewal of a Louisiana state sales tax resale certificate to be current in filing all tax returns and reports and in payment of all taxes, interest, penalties, and fees owed to the state and collected by the Department.

As of October 1, 2017, the Department will not issue or renew a state resale certificate for any taxpayer unless the taxpayer has obtained a tax clearance, which is achieved when the taxpayer has:

  •  filed all tax returns and reports due, and

  • paid all taxes, interest, penalties, and fees owed to the state.

Excluded are items under formal appeal pursuant to applicable statutes or being paid in compliance with the terms of an installment agreement with the Department.

This tax clearance requirement applies to all state taxes, including sales, income, withholding, excise, severance, tobacco, and automobile rental tax.

Tax Clearance Required for State Procurement Contracts  –  RIB 17-021:

Effective June 14, 2017, Act 211 (HB 307) of the 2017 Regular Session of the Louisiana Legislature enacted R.S. 39:1624(A)(10) and 47:1678 to require a tax clearance for approval of certain state contracts.

As of October 1, 2017, all state contracts that require the review and approval of the central purchasing agency of the Louisiana Office of State Procurement (the “Procurement Office”) for the procurement of personal, professional, consulting, or social services will be approved only after the Procurement Office has obtained a tax clearance from the Department on behalf of the contracting taxpayer.

A tax clearance will only be granted by the Department if the proposed contractor is current in filing all tax returns and reports and payment of all taxes, interest, penalties, and fees owed to the state and collected by the Department.

Excluded are items under formal appeal pursuant to applicable statutes or being paid in compliance with the terms of an installment agreement with the Department.

A tax clearance is not required in order to bid on or solicit a procurement contract.

If a proposed contractor is subject to a final assessment that is collectible by distraint and sale, the proposed contractor cannot be approved for a procurement contract until the contractor has filed all returns and reports due, paid, or made arrangements with the Department to pay the delinquent tax liability, and the Department has notified the Procurement Office of the payment or arrangement to pay.

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About this Author

Associate

Rav Khinda is an associate in the firm's Tax & Estates Practice group and practices in the firm's New Orleans office.

Mr. Khinda is a 2014 graduate of Tulane University Law School where he received his Juris Doctor degree and served as a managing editor of the Tulane Maritime Law Journal. Mr. Khinda holds a Master of Laws in taxation from the New York University School of Law and also received his Bachelor of Arts in Political Science and History from the University of Houston. Prior to joining Jones Walker LLP, Mr. Khinda served...

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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.

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