Legislature Expands the Jurisdiction of the Board of Tax AppealsThis article appears in, and is reproduced with the permission of, the Journal of Multistate Taxation and Incentives, Vol. 24, No. 10, February 2015. Published by Thomson Reuters / Tax & Accounting. Copyright (c) 2015, Thomson Reuters/ Tax & Accounting. All rights reserved.
Traditionally, Louisiana's Board of Tax Appeals has been an administrative board of limited jurisdiction. The Board had the power to review refund claims that had been denied by the Louisiana Department of Revenue, assessments for taxes that were appealed without payment under protest, and claims for money that had been wrongfully paid to the state.
For some time now, the role of the Board in the collection of taxes has been under scrutiny. Suggestions have ranged from eliminating the Board and transferring its duty to administrative law judges to establishing a tax court within the judicial system. None of these suggestions, however, came to fruition. Act 198 of the 2014 Legislative Session successfully amended the role of the Board but charted a different course than those previously proposed.
Act 198 expands the jurisdiction of the Board. In addition to its former powers, the Board now has the authority to hear appeals from assessments that were paid under protest. Further, under Act 198 and Act 640 of the same legislative session, the Board can now hear appeals relative to local tax matters.
This article will cover the changes made to the collection of state taxes by Act 198. The changes made by the Legislature relative to the collection of local taxes will be covered in a subsequent article.
Changes under Act 198Waiver of penalty: The Department of Revenue may waive the penalty for failure to file a return. R.S. 47:114. Previously, the Board had to approve any waiver that exceeded $5,000. Act 198 raised that threshold to $25,000.
Expansion of the Board's jurisdiction: Previously, amounts paid under protest could only be recovered by filing suit in a district court. Act 198 provides that the Board may now hear payment under protest petitions. R.S. 47:1407(1). Conjointly R.S. 47:1476 was amended to allow a taxpayer to pay under protest and file suit in either the district court or at the Board.
Expansion of a party's right to discovery: Under Act 198, a party may issue a request for admissions and interrogatories directly to the other party. R.S. 47:1408. Before the Act, all discovery had to be conducted through the Board and was limited to depositions and the production of documents.
Persons authorized to appear before the Board: Prior to Act 198, both certified public accountants and "public accountants" were entitled to represent taxpayers with the Board's approval. R.S. 47:1414. Act 198 eliminated the term "public accountant" so, apparently, only certified public accountants can represent their clients before the Board. The Board's approval is still required for representation by a certified public accountant.
Review of adverse decisions: Prior to Act 198, adverse decisions of the Board were appealed to a district court. Now, the appeal will be lodged with an appellate court. The Act also codifies the appellate courts' standard of review which is to determine whether the Board's decision was in accordance with the law and whether the decision was manifestly erroneous based on the record. R.S. 47:1435(C). Appellate courts were also granted supervisory jurisdiction over the Board, which means that the appellate court has the right, in its discretion, to review any order or action of the Board. R.S. 47:1435(B).
Appeal of acclaim against the State: A claim against the State is used by a taxpayer who, for whatever reason, is procedurally barred from making a refund claim but "principles of justice and equity" require that a refund be granted. Sperry Rand Corp. v. Collector of Revenue, 376 So 2d 505 (La. 1 Cir. 1979). It is the legal equivalent of a "Hail Mary" pass in football. See, e.g., Louisiana Health Services and Indem. Co. v. Secretary, Dept. of Revenue, State of La., 746 So 2d 285 (La. 1 Cir. 1999). Prior to Act 198, if the claim was denied by the Board, the claimant could petition the Legislature for the right to appeal the adverse decision. After Act 198, the appeal is lodged with a court "when such cause of action is otherwise allowed by law." R.S. 47:1486. Since, almost by definition, a claim is filed when the claimant has no cause of action, it is difficult to see how a claimant will be able to appeal an adverse decision.
Cancellation of liens, privileges, mortgages and approval of compromises: Act 198 eliminated the need for the Board's approval for the cancellation of any security interest filed by the Department against a taxpayer. Further, the Board no longer has to approve the compromise of a judgment which is for $500,000 or less. R.S. 47:1578.
Waiver of penalties: The Department is given the authority to waive any penalties of less than $25,000. Previously, the Board had to approve any waiver exceeding $5,000. R.S. 47:1603.
Other changes: Act 198 amended R.S. 47:287.614 to provide that a corporation whose federal income tax return is adjusted by the Internal Revenue Service must file an amended return within 60 days of the final determination of such adjustments by the Internal Revenue Service.
ConclusionPayments under protest no longer have to be litigated in a district court. Now, the taxpayers can choose a tribunal familiar with the intricacies of tax law. The right to discovery has been expanded.
Whereas before, matters moved rather quickly at the Board, at least by the law's standards, the docket is now likely to be clogged, especially since the Board will now hear local tax cases. Whereas before, cases could be tried fairly cheaply, the expansion of discovery rights will surely result in additional attorney fees costs.
Overall, however, Act 198 is favorable to taxpayers.