La. looks at how to collect sales tax
By Bob Anderson
Florida Parishes bureau
December 18, 2012
The creation of a statewide commission for collecting sales taxes would benefit businesses and help in the eventual collection of sales taxes from Internet sales, proponents of the idea say.
Several representatives of local governments question the idea, but say they are willing to discuss the matter as long as it doesn’t turn into a centralized state collection program, against which a couple of local governments have passed resolutions in recent weeks.
The Louisiana Department of Revenue is soliciting input on sales tax collection ideas and is having a “very healthy discussion” with the various sides, said Jason DeCuir, assistant secretary of the Louisiana Department of Revenue.
“What can we do to improve collections?” is the question the department is asking people who are involved with sales taxes, he said. “Let’s put our heads together.”
The complexity of the administration of sales tax collection is a burden on retailers under the current system, DeCuir said.
Proposals in Congress would provide for collection of sales taxes from online retailers, but those bills require “a central point of collections,” he said.
Some local officials say they “don’t want the state to be the central collection point, but that doesn’t say they oppose a board or some other single collection point,” DeCuir said.
“Local (sales tax) collectors are on the ground floor,” DeCuir said. “They know their areas best.”
The Department of Revenue is looking at a collaboration that involves the local tax collectors, he said.
Concerned about what they saw as a possible push to take sales tax collection away from parishes and put the process in the hands of the state, at least two parish governments took action against a proposal that hasn’t been made.
The Tangipahoa Parish Council and the St. Helena Parish Police Jury passed resolutions opposing any attempt by the state to take over the sales tax collection job.
Tom Ed McHugh, head of the Louisiana Municipal Association, said sales taxes are a vital matter to local government and one local governments have long guarded from state takeover.
“That’s our life’s blood,” he said of sales taxes.
“If we don’t do a good job (of collection) we suffer severely,” McHugh said. “If the state doesn’t do a good job, they don’t suffer, but we do.”
There has been no public discussion of the state taking over sales tax collection, said Doug Baker, communications director for the Department of Revenue.
Talking about such changes is premature, he said.
“As of yet there is no governor’s tax package,” Baker said.
“I’m not aware of any proposal on the table to have the state collect sales taxes,” said John LeBlanc, taxation and finance director for the Louisiana Association of Business and Industry.
There have been discussions of “some sort of program in which local jurisdictions would work together more cohesively,” LeBlanc said.
The tax code mandates uniformity among parishes, “but there is no mechanism to enforce that except the court system,” he said.
“In most states there is one collector of state and local taxes” so there are not laws that change, depending on jurisdictional boundaries, he said.
Businesses expect some differences in laws between states, but don’t expect laws to change over parish boundaries, LeBlanc said.
“If you are trying to attract a business from another state, these issues are foreign,” he said. “Out-of-state businesses are used to filing one return with one agency,” not multiple returns with multiple audits.
An idea that has been discussed is having a uniform sales tax commission to help when taxpayers have issues that cross parish lines, he said.
The next level would be to find some way for that body and the Revenue Department to work together, LeBlanc said. “There are all kinds of variations that are being discussed,” he added.
Collection of sales taxes from Internet sales will require a single collection point in a state, LeBlanc said.
“Irrespective of the federal legislation, Louisiana should be moving in this direction anyway,” he said.
The economy of scale could result in saving money in collections as well as simplifying tax payments by businesses and would prevent businesses from being subjected to the possibility of 65 audits in a year — one from each of the 64 parishes and one from the state, he said.
“There is a window of opportunity,” LeBlanc said. “It seems to be an issue that people are talking about.”
Mike Olivier, CEO of the Louisiana Committee of 100 for Economic Development, said the state suffers now from a tax system that businesses often view as so complicated that many companies don’t even consider locating in Louisiana.
A centralized sales tax collection system would simplify tax payments and make Louisiana more attractive, he said.
“The motor vehicle collection process is a great example” of how a collection program can work, he said.
Mike Curtis, who heads the sales tax collection program from Livingston Parish, said the high error rate in motor vehicle collections is evidence that such a centralized program doesn’t work well.
“We have a sneak peek into it now with motor vehicles, and it’s not a pretty picture,” Curtis said,
The positives of local collection far outweigh the negatives, he said.
Individual parishes have numerous taxing districts and different sales tax amounts in different parts of their parishes, Curtis said.
Parish tax collectors know where the boundaries are for the different taxing districts in their parishes and can quickly answer questions about those districts, he said.
They also keep local governments informed about what is happening with sales tax collections in their areas so governments know what to expect and plan accordingly, Curtis said.
He said he would oppose centralized tax collections by the state, but after talking with state officials, he is willing to continue the dialogue to explore other avenues of sales tax reform.
The state already has an electronic filing system that local governments and the business community worked closely to develop, said George Marretta, special projects director for the Louisiana Municipal Association.
There’s only one agency in each parish that collects sales taxes for all of the governmental bodies in a parish, he said.
Five parishes in the northeastern part of the state all look to Concordia Parish to collect their sales taxes and Cameron Parish has no sales tax, he said.
LMA’S 305 members don’t want any change that will slow down their receipt of sales tax money, which is the most important source of revenue for local governments, Marretta said.
Olivier said a centralized collection system would be more efficient. “I don’t know that there is a good argument against it other than the political control and the jobs as they exist today,” the former state secretary of Economic Development said.
“Anything we can do to improve the efficiency of our state and local government tax systems will have a positive effect on existing businesses and new business coming to Louisiana,” Olivier said.
“We have to come into the 21st Century and match the speed of commerce.”