More Hidden Taxes for Louisiana

Taxes, taxes, and more taxes.  When will it all end?  Tax increases have been a hot topic around the state of Louisiana in recent days after a barrage of tax increases are subject to bombard Louisianans in the coming days.  In the recent Special Legislative Session ending on March 9, Louisiana lawmakers wheeled and dealed until the final minutes as they fought amongst themselves trying to balance the bloated budget that has expanded exponentially in recent years.  As it turned out, there were very few, if any, arguments to cut wasteful spending and take a more conservative approach at balancing the budget.  Apparently, their definition of a balanced budget is to increase taxes.  Taxes on cigarettes, alcohol, hotels, are just some to name a few.  The most controversial tax increase is the increase of the state sales tax by one percent.  In fact, the one percent sales tax increase makes Louisiana have the highest sales tax in the country.  But, according to lawmakers, this still is not enough to fund our $25 billion budget, and has been expressed by Governor John Bel Edwards.

After a hail storm of tax increases, it was reported that our current fiscal budget, with the added tax increases, will still have a $30 million shortfall.  A few days later that number had more than doubled to more than $70 million.  2017’s budget was first reported to have an $800 million shortfall, which is now increased somewhere around $950 million, as for now.  Well, if you are not angry yet you should be.  You can clearly see the writings on the wall.  The inevitability of further tax increases and more government spending are in plain sight.  In fact, Governor Edwards has repeatedly stated that we need to raise more taxes.  It’s no big secret, however, there is a secret.

Taxes will continue to rise in Louisiana one way are another.  In fact, they have been, even before the Special Session.  That’s right, secret taxes have already been implemented, secretly of course, and you have already been paying for it whether you are aware of it or not, and that is the sole purpose of this report.

ACT No. 125

At last year’s Regular Session, 2015, our lawmakers were busy fiddling with ways to produce more revenue for the state.  New taxes are more difficult to pass, but making a few changes, here and there, to your tax write offs; what is and isn’t deductible, how much is deductible, and so on, are apparently easier to squeeze in.  That’s right, now that tax season is underway many Louisianans are shocked to the fact that they are paying more taxes this year than the previous, and here is why.

ACT No. 125, signed into law at last year’s 2015, Regular Session, takes House Bill (HB) 629 TAX CREDITS, and attempts to squeeze every penny it can out of what you can and cannot write off.  There are lines drawn through the old amount, and lines under the new amount indicating the change.  There are a multitude of tax changes in ACT 125 and you can see for yourself at: https://www.legis.la.gov/legis/ViewDocument.aspx?d=959818   But for the sake of this discussion, and for the courtesy of your time, I’ll pick one in particular to talk about, and you’ll see why.

 

When parents filed their taxes in 2015, for 2014’s returns, they were able to claim a $25 child tax credit for each child attending school.  In addition to that, the tuition and other expenses could be written off as well.  Now here’s where it gets tricky.  As we speak, parents that filed early this year are receiving letters from the LDR stating that they owe more money to the State, or receiving less tax refund depending on the circumstance.  There are a couple of reasons for this;

(1)  ACT No. 125 <> HB 629 <> Section 297 <> Paragraph D (2) <> Lines 5-6   states as                    follows:

5.     Any taxpayer who so qualifies shall be entitled to a maximum tax credit
6.     of twenty-five eighteen dollars per child for educational expenses.

(the twenty-five has a line through it and can be view at the link above)

So, ACT No.125 clearly states that the $25 child tax credit has been reduced to $18.  It’s only 7 dollars but again, 1% sales tax, etc., when will it end?  What about families with multiple children?  It all adds up.  However, that isn’t the only increase.  There is another dirty little secret, perhaps even dirtier than ACT No. 125.  This brings us to the second reason.

(2)   Not only was the child tax credit for children attending school reduced from $25 to $18, but the ability to use that tax credit along with the tuition write off is eliminated.  That’s right, now you can choose either the child tax credit, or the tuition write off.  But here is where it gets even dirtier.

According to multiple CPA’s whom I’ve spoken to, this little goody was just recently enacted this year.  So a law enacted this year should be effective for this year when I claim my taxes next year, right?  Well that isn’t the case.  According to several CPA’s I’ve personally spoken to they have received late notifications from the LDR stating that the law which was enacted this year, has been made retroactive for last year!  What? This wasn’t the doing of ACT No. 125.  It was only responsible for reducing the amount of the child tax credit.  Where did this change come from, and how can you retroact a tax?  Well, apparently they can do whatever they choose.

I contacted the Louisiana Department of Revenue (LDR) to ask them just that.  The agent whom I spoke to confirmed the changes, but failed to tell me where I could visibly read the change.  She said it wasn’t a retroactive change and it was in last year’s Regular Session.  Again, she could not give me a specific bill, or web address which I could read it.  She truly sounded clueless and her answer, I believe, was based on assumptions.  I spent much time searching the web for a form indicating such but came up short.  I did find a form on their site indicating the change but there is no date on it anywhere indicating when it was produced.  It only says, ‘WHAT’S NEW FOR LOUISIANA 2015 INDIVIDUAL INCOME TAX.’  I have that link listed below.  However, there are a few things you should know.

Not every CPA’s office I contacted was aware of this particular change.  In fact at the beginning of the year no one was.  Most were aware of only the $18 change, but most new nothing about the inability to deduct both the tuition and child tax credit.  In fact, the forms which they had, lacked the information about this change.  Our government’s own documents were produced wrong, evidently, leaving that option available.  Most were aware of the child tax credit reduction, but no one had the correct forms indicating the other.  Some of their early filling clients filled without these changes and have since received letters from the LDR indicating adjustments to their returns have been made accordingly.  Now, it would seem to me that if the change would have been made earlier last year that everyone would have had the correct information for their clients, and all of the forms would have been produced correctly.  Don’t you think?  How is it that they were notified, at least some of them based on my research, this year and told that the old forms were outdated and that there were tax changes?

The evidence to me indicates that this was another dirty little trick to milk us tax payers out of every cent they can.  It seems as though they have enacted a retroactive tax and pulled another one over on the people.  The form indicting the change is clearly stated on their website at:    http://revenue.louisiana.gov/TaxForms/IT540i(2015).pdf, but does not have a date of it’s enactment.  It reads:

<Education Credit – Line 13 – Resident taxpayers are allowed a credit of $18 for each child attending a kindergarten, elementary, or secondary school (kindergarten through twelfth grade) located in Louisiana, if the child qualifies as a dependency exemption on the taxpayer’s Louisiana income tax return. This credit is not allowed if the Deduction for Elementary and Secondary school tuition is claimed on Schedule E.>

Regardless of when this new change was written, the ramifications stay the same.  We are being squeezed dry out of every penny they can.  Our state has a $25 billion budget with a population of only 4.5 million.  When will we as citizens demand a balanced budget via spending reductions and not tax hikes?  It seems as though the more taxes they acquire the more they need.  Louisiana now has the highest sales tax in the nation with a slew of taxes hitting us as soon as April 1 and we are still in a shortfall.  It is time we hold the responsible accountable and get Louisiana back on the right path.  And that is called elections, which we miserably failed.  I truly believe that an informed populous can rid the perpetrators and restore freedom and prosperity.  It’s time we as citizen’s wake up and stop the cancer from growing, which is the political corruption.  It is time we take a stand.  It is time we see the truth.  We the people of Louisiana, deserve better and it should be demanded!

Please post your questions or comments below.  Thanks for taking the time to get informed.