The Louisiana Legislature will have a busy 2005 “fiscal” session as it works its way through a number of tax proposals and, due to rule changes, will consider a number of non-fiscal bills. Property Law High on its agenda will be addressing the Louisiana Supreme Court’s decision in Willis-Knighton Medical Center v. Caddo Shreveport Sales and Use Tax Commission, 2004-0473 (La. 4/1/05), 2005 WL 737481, ___ So.2d ___. In the Willis-Knighton case, a majority of the Louisiana Supreme Court reinterpreted Louisiana’s property law and suggested that doors, toilets and similar fixtures in a building may not be component parts of the building. The decision could affect many legal issues, including the sales tax treatment of property used in building construction and taxes on repairs. The decision could also affect the extent and validity of mortgages, liens, insurance coverage and other important legal issues. The Louisiana Law Institute and the Legislature have begun to take steps to clarify the law if the Louisiana Supreme Court declines to reconsider the Willis-Knighton case. HB 348 (Rep. Greene), HB 510 (Rep. Labruzzo), HB 536 (Rep. Robideaux), and SB 196 (Sen. Barham) have been filed to amend the property law to deal with the impact of the Willis-Knighton decision. Additionally, HB 766 (Rep. Robideaux), SB 263 (Sen. Kostelka), and SB 299 (Sen. Barham) are bills to clarify the sales tax law if one of the property law rewrite bills is not enacted into law. Read these additional posts on the Willis-Knighton issue from June 1, May 19, and May 10. Headquarters Package Governor Blanco is promoting legislation to modify the Louisiana income and corporate franchise tax laws to be more favorable to the establishment of corporate headquarters in Louisiana. HB 679 (Rep. Hammett) would (i) exempt corporate interest and dividends from the corporation income tax, (ii) apportion capital gains from the sales of assets and the sales of intangible property, and (iii) use a sales only single factor formula for most manufacturing and merchandising businesses for purposes of computing the corporate income and franchise tax. Limitations on Sales Tax on Natural Gas Since 1986, the Louisiana Legislature has suspended a variety of sales tax exemptions to balance the state’s budget, including the exemptions for natural gas and electricity. While residential natural gas and electricity were constitutional exempted from the sales tax in 2002, commercial and industrial consumers continue to pay the 4% state sales/use tax on natural gas and electricity. During the 2005 regular session, the legislature will consider bills to cap the cost of natural gas that is subject to sales tax (HB 803, Rep. Morrish) and restoring the sales tax exemption for natural gas (HB 804, Rep. Morrish). For details on these and other bills that will be considered by the Legislature this session, go to www.legis.state.la.us
