The Louisiana Department of Revenue (the “Department”) released Revenue Information Bulletin No. 21-029 announcing the “Louisiana Transfer Pricing Managed Audit Program.” Beginning November 1, 2021, eligible corporations may request to participate in the program in order to resolve intercompany transfer pricing issues with the Department. Newly registered taxpayers, existing taxpayers, and taxpayers currently under audit by the Department may participate in the program. Taxpayers may request to participate in the program until April 30, 2022, and all managed audits must be closed by June 30, 2022.
A taxpayer must meet the following qualifications in order to participate in the program:
- Established history of voluntary tax compliance with the Department, if previously registered with the Department
- Certification that the taxpayer has available time and resources to dedicate as a participant in the program
- Available and suitable records concerning the intercompany transactions
- Reasonable expectation of ability to pay an expected liability
Periods available for resolution include all open periods that have not prescribed, including those held open by a prescription waiver, as well as the 2021 tax year for both calendar and fiscal year filers, and up to four future tax periods.
If a taxpayer is approved and participates in the program, the taxpayer will be authorized to conduct a managed audit with respect to intercompany transactions. The taxpayer will be expected to provide all requested documentation to the Department within thirty days of signing a Managed Audit Agreement. Once the Department reviews the taxpayer’s information, the Department will issue a written determination as to whether the Department agrees with the taxpayer’s position. The taxpayer will then have thirty days to accept the determination or offer modifications or adjustments.
If the Department ultimately disagrees with the taxpayer, the Department may proceed with assessment and collection procedures. However, no penalty will be assessed on any tax due relating to the managed audit findings. Any delinquency interest that accrued during the managed audit period will be abated, up to 180 days. The Department has defined the managed audit period from the date of the Department’s notice of acceptance into the program through the date of the Department’s notice of tax due.
Those taxpayers who already have transfer pricing matters under audit, or in the audit review, protest or litigation phase, are eligible to apply to participate in the program.
Please contact the Jones Walker SALT Team if you have questions about the potential benefits and consequences of participating in the new Louisiana Managed Audit Transfer Pricing Program.