La. taxpayers face no major changes

There were no major changes to the Louisiana tax code in 2013, although it wasn’t for a lack of trying.

The Jindal administration pushed for a massive overhaul that included eliminating income taxes and many exemptions in exchange for a higher sales tax. But the effort failed, amid criticism of the proposal’s impact on businesses and the poor.

“That was their legislative package, so they didn’t really have much of a legislative package after that,” said Ralph Stevens, a director in Postlethwaite & Netterville’s tax services group in Baton Rouge.

Stevens said the big changes for Louisiana taxpayers will come on high earners’ federal returns, largely as a result of paying for the Affordable Care Act.

For example, high earners will pay tax rates of 39.6 percent instead of 35 percent, Stevens said. However, Louisiana taxpayers will be able to offset some of those federal taxes by deducting them on their Louisiana returns.

John Theriot, managing partner of Malcolm M. Dienes LLC, in New Orleans, said the lower state tax burden will help but probably won’t be enough to offset the higher federal taxes.

However, Louisiana taxpayers eligible for a refund can look forward to a change in how they receive that refund. Taxpayers can choose direct deposit, a check or a debit card.

The state Department of Revenue received considerable criticism when refund cards debuted. The card program was created to save the state the cost of printing and mailing refund checks.

Critics said the elderly had difficulty making the switch. Critics also questioned the fees taxpayers were charged for withdrawals that weren’t made on JP Morgan Chase ATMs.

“I had clients get these credit cards for $57,289, and we didn’t love that as you can imagine,” Theriot said. “It was kind of crazy.”

The Department of Revenue changed the policy in 2013.

Meanwhile, Theriot said the state is continuing its efforts to get taxpayers to file their returns electronically.

“The expected time for electronic filing is 21 days. If you file a paper return, it’s 12 to 16 weeks,” Theriot said.

Susan Tham, a tax partner with Champagne & Co. LLP, of Baton Rouge, said it may take a little longer for some Louisiana taxpayers to get their returns.

The state Department of Revenue, like the federal Internal Revenue Service, did not begin processing returns until Friday.

This year, like last year, taxpayers who request an extension to file their taxes must do so electronically, Tham said. That requirement surprised some taxpayers last year, but those who want an extension should be prepared.

The deadline to file an extension or state tax returns is May 15.

Stevens said the most complicated issue for Louisiana taxpayers is probably the filing requirements for married, same-sex couples.

The federal government allows these couples to file married joint or married separate tax returns, but Louisiana does not.

Theriot said that means those folks have to file two individual state returns no matter how they file federally.

And because the state returns usually involve the same information as the federal returns, married same-sex couples will be more complex, he added.

One tax change that will be simpler, although not more popular, involves the credit for flexible-fuel vehicles.

In 2013, Louisiana eliminated flex-fuel vehicles from the alternative fuel vehicle tax credit program. Flex-fuel vehicles can burn ethanol but also use gasoline. The state said allowing flex-fuel autos to qualify for the credit of up to $3,000 would have cost Louisiana $240 million per year.

The change came midyear, which upset a lot of taxpayers, tax preparers and their clients, Tham said. Many people felt that allowing only some of the flex-fuel vehicle owners to qualify for the tax credit was unfair, and a number of lawsuits have been filed to overturn that decision.