Gibson, George C.

Roland, Robert L.

English

Louisiana State University: DigitalCommons @ LSU Law Center

Louisiana Law ReviewVolume 17 | Number 1Survey of 1956 Louisiana LegislationDecember 1956Legislation Affecting Revenue and TaxationGeorge C. GibsonRobert L. RolandThis Article is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted forinclusion in Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact kreed25@lsu.edu.Repository CitationGeorge C. Gibson and Robert L. Roland, Legislation Affecting Revenue and Taxation, 17 La. L. Rev. (1956)Available at: https://digitalcommons.law.lsu.edu/lalrev/vol17/iss1/19Legislation Affecting Revenueand TaxationGeorge C. Gibson* and Robert L. Roland**The 1956 session of the Louisiana Legislature probably con-sidered more and passed fewer revenue and taxation measuresthan any previous Legislature. Of great significance was thehighly controversial and most unusual constitutional provisionrequiring a two-thirds vote to impose new or to raise existingtaxes.' The Legislature, at its regular session voted to submitthis limitation on its authority to the people again in the 1956general election, 2 but at the special session reversed itself andwithdrew the proposed constitutional amendment.8INCOME TAXSeveral changes, designed for the most part to make Louisi-ana law conform more closely to the federal law, were made inthe income tax provisions. Section 53.24 was added to Title 47to provide a specific exclusion from gross income of the amountof income which is attributable to certain discharges of indebted-ness, in whole or in part. To obtain the benefit of this optionalexclusion, the taxpayer must agree to the use of the applicableregulations relating to the adjustment of basis of property held.Section 156 was amended by adding subsection C, 5 relating tothe adjustment of basis for amounts excluded under section 53.2.The most far reaching change to the income tax law was theamendment to section 65 of Title 47 concerning depreciation andamortization.6 The new provision recognizes several methods ofdetermining depreciation available for federal purposes, includ-ing the declining balance and the sum of the years- digitsmethods. These new methods, although effective for taxableyears beginning after December 31, 1955, are applicable to prop-* Formerly attorney for the Collector of Revenue; presently member, NewOrleans Bar.** Member, Baton Rouge Bar; attorney for the Collector of Revenue.1. LA. CONST. art. X, § la, as added by La. Acts 1955, No. 140.2. La. Acts 1956, No. 623.3. House Concurrent Resolution No. 1 of Extraordinary Session of 1956.4. La. Acts 1956, No. 433, incorporated as LA. R.S. 47:53.2 (Supp. 1956).5. La. Acts 1956, No. 435, incorporated as LA. R.S. 47:156 (Supp. 1956).6. La. Acts 1956, No. 242, incorporated as LA. R.S. 47:65 (Supp. 1956).LOUISIANA LAW REVIEWerties completed after December 31, 1953. In order to bringLouisiana basis into agreement with federal basis, where theproperty is acquired after December 31, 1953, but before Janu-ary 1, 1956, the section contains a provision which permits a sup-plemental allowance to be claimed over a period of five years.Section 65 was also amended to provide an option with re-spect to certified defense facilities. 7 Where such facilities arecompleted in taxable years beginning after December 31, 1955,taxpayers may, at their option, amortize the facilities over aperiod of not less than sixty months, just as they may do underthe federal income tax laws. This will make the federal and stateallowances in future years the same for new facilitiesSection 79 of Title 47 concerning credits of individualsagainst net income was amended to eliminate the requirementthat those credits be apportioned where a change of status occursduring the taxable year.8 Under the amendment, the credits fordependents or dependent students are allowed in full so long asthe age limitations are not exceeded at the beginning of the tax-able year and the other conditions are met. The amendmentmakes it clear that a taxpayer may not claim a credit for a de-pendent and a credit for a dependent student if the dependentinvolved is the same one. The exemption for head of family isnot allowed unless that status exists during the entire taxableyear. The amendment also dropped from the law the obsoleteparagraph concerning the World War II readjustment exemp-tion.Section 133E of Title 47 was amended to make more liberalthe provisions governing the transfer of property to a controlledcorporation in return for stock or securities.9 Prior to thischange, gain or loss was recognized unless the amounts receivedby each of two or more transferors were substantially in pro-portion to the interest of each in the property prior to the ex-change. Under the change, no gain or loss is recognized if theperson or persons making the transfer have control after thetransfer regardless of proportionate interest. Furthermore, ifmoney or property is received in addition to stock or securities,gain, if any, is recognized, but only to the extent of the amount7. Ibid.8. La. Acts 1956, No. 473, incorporated as LA. R.S. 47:79 (Supp. 1956).9. La. Acts 1956, No. 434, incorporated as LA. R.S. 47:133 (Supp. 1956).[Vol. XVIIREVENUE AND TAXATIONof money received plus the fair market value of the other prop-erty.Notice was also taken of the rising costs of administrationincurred in an efficient administration of the income tax lawsby increasing the allowance of the Department of Revenue forcollection to five hundred thousand dollars per annum.10SALES TAXAlthough many proposals concerning the sales tax law wereconsidered, the only change made by the Legislature was theaddition of section 306.1 to Title 47.11 This section provides aformula for determining the sales tax liability of interstate andforeign carriers. Carriers may register as dealers and accrueand pay sales and use taxes directly to the Collector of Revenueafter applying to the total amount of the purchases and importa-tions the ratio of Louisiana miles operated to total mileage todetermine the amount of tax owed.Of more than passing interest was the continued policy onthe part of the Legislature to allow local governing authoritiesto levy sales taxes under certain conditions. Two such bills' 2were passed at the regular session and one18 at the special session.OCCUPATIONAL LICENSE TAXThe occupational license tax law was amended by adding anew section specifically taxing the business of operating a live-stock auction.14 The annual license is based on the amount of thegross annual commissions with the schedule being identical tothe schedule provided in the omnibus section. 15 Since this sched-ule is lower than that previously used by some political subdi-visions and since political subdivisions of the state are prohibitedfrom imposing any greater license tax than is imposed for statepurposes, 16 this legislation will be of interest to cities and par-ishes levying occupational license taxes.10. La. Acts 1956, No. 6 (formerly $300,000.00), incorporated as LA. R.S.47:284 (Supp. 1956).11. La. Acts 1956, No. 438.12. La. Acts 1956, No. 401 (East Baton Rouge Parish), incorporated as LA.R.S. 33:2741 (Supp. 1956); La. Acts 1956, No. 139 (West Feliciana Parish).13. La. Acts 1956 (E.S.), No. 27 (East Feliciana Parish, Iberville Parish).14. La. Acts 1956, No. 148, incorporated as LA. R.S. 47:385.1 (Supp. 1956).15. LA. R.S. 47:395 (1950).16. LA. CONST. art. X, § 8, as amended.1956]LOUISIANA LAW REVIEWVEHICLE REGISTRATION LICENSE TAXThe Legislature amended the exemption section of theVehicle Registration License Tax Law so as to provide a specificexemption for two and four wheel, rubber-tired, farm wagons ortrailers up to two ton capacity.17 Heretofore a license tax ofthree dollars per load carrying axle was imposed.' 8 Existingdefinitions limit the exemption to trailers owned by actual farm-ers and by them used exclusively in carrying farm produce raisedon their farms to market and returning to the farm.19CORPORATION FRANCHISE TAXThe changes concerning depreciation and amortization madein the income tax law were also made for corporation franchisetax purposes. 20 However, to be recognized for franchise tax pur-poses such allowances must be recorded on the books of the tax-payer.SEVERANCE TAXWith a view towards encouraging development of the severallow value deposits of lignite in Louisiana the 1956 Legislaturerepealed the severance tax of ten cents per ton of two thousandpounds.21 Since the severance tax on lignite produced no revenuefor the state,22 it cannot be said that this action of the Legisla-ture indicates a tax-repealing trend.MISCELLANEOUSOne administrative change was made in the gasoline tax lawrelative to reports by dealers and distribution of collections.2 3Dealers are required to report sales directly to parishes eachyear on or before February 20. The parishes in turn certifythese totals to the Collector of Revenue and the State Treasurerin order to receive credit in the Parish One Cent Gasoline Fund.Prior to the change, reports were made directly to the StateTreasurer.17. La. Acts 1956, No. 348, incorporated as LA. R.S. 47:479 (Supp. 1956).18. LA. R.S. 47:462B (1950).19. LA. 1.S. 47:451(12) (1950).20. La. Acts 1956, No. 328, incorporated as LA. R.S. 47:605 (Supp. 1956)See also page 75 supra for changes in the income tax law.21. La. Acts 1956, No. 102, incorporated as LA. R.S. 47:633 (Supp. 1956).22. ANNUAL REPORT OF THE COLLECTOR OF REVENUE FOR FISCAL YEAR 1954-1955, at 22-23.23. La. Acts 1956, No. 81, incorporated as LA. R.S. 47:722 (Supp. 1956).[Vol. XVIIREVENUE AND TAXATIONSections 821 through 827 of Title 47, regulating the handlingand selling of petroleum solvents, were repealed.2 4 These sectionsoriginated with the Legislature of 1938, when control of petro-leum solvents was deemed necessary to protect the public fromimproper dilution of gasoline with solvents. In repealing thesesections the Legislature simply disposed of an obsolete statutewith its useless burden on industry.Provision was made for newly incorporated towns to sharethe tobacco tax proceeds. This act also made some adjustmentin the distribution schedule.2 5Three changes were made in the laws affecting alcoholicbeverages. The administration of the laws concerning permitsfor beverages of high alcoholic content was transferred from theDepartment of Revenue to the recreated ABC Board. 26 An addi-tional tax of ten cents per gallon on such beverages was imposedin order to defray the costs of the ABC Board.27 Several changeswere made concerning qualifications of applicants for permitsfor beverages of low alcoholic content.28 This same act also de-fined malt beverages as not being "liquors" - thus avoiding thestate statute forbidding the sale of liquor on Sunday - andchanged the designation of "saloon" to "beer outlet."The special session saw the passage of an act2 9 increasingthe license tax for conducting race meetings after attempts to doso during the regular session failed to get the necessary two-thirds vote. In place of the graduated scale previously provided,the new act substitutes a flat seven percent tax on all moneyhandled, with the minimum fee to be $1,000.00 per day, just asbefore. The moneys received from the tax, after expenses arededicated in prescribed amounts to the Legislative Council, themunicipality in which the track is located, Isaac Delgado TradeSchool, Louisiana State University, for enumerated purposes,and the balance, if any, to the general fund of the state. Thegraduated commissions which were allowed the operators under24. La. Acts 1956, No. 342.25. La. Acts 1956, No. 171, incorporated as LA. R.S. 47:869 (Supp. 1956).26. La. Acts 1956, No. 36, incorporated as LA. R.S. 26:1 et seq. (Supp. 1956).27. La. Acts 1956, No. 152, incorporated as LA. R.S. 26:341 (Supp. 1956).28. La. Acts 1956, No. 123, incorporated as LA. R.S. 26:241, 26:272, 26:279,26:286, 26:286.1, 26:459 (Supp. 1956).29. La. Acts 1956(E.S.), No. 40, incorporated as LA. R.S. 4:153 (Supp.1956).1956]LOUISIANA LAW REVIEWthe old law were discarded in favor of a flat eight per cent al-lowance.An act of the special session 30 settles the apparent conflict oftwo acts3' of -the regular session concerning fees of attorneysfor the inheritance tax collectors of the state. It increases thefees allowed the attorney in Orleans Parish, but requires him toemploy an appraiser and pay for his services out of the fees pro-vided by the act. It also provides a graduated fee schedule forall attorneys appointed to assist the inheritance tax collectors incases where there is no inheritance tax due - the fees in suchcases ranging from one dollar to twenty dollars.The due date of inheritance taxes for purposes of prescrip-tion was clarified. 32 If no administration has been applied for,inheritance taxes are declared to be due six months after death.AD VALOREM TAXESSeveral amendments to the laws governing ad valorem taxeswere passed by the Legislature. One change increased the sal-aries of the members of the Tax Commission.33 Another increasedthe allowance of assessors for clerical and other expenses.34 Sev-eral acts made changes in the Assessors' Retirement Fund.3 5 Thestatute controlling the salary and expense fund of Orleans Parishassessors was also amended. 36 Tax collectors may now use thenew certified mail as well as registered -mail for tax notices.87Another act" establishes a separate class of property for the pur-pose of assessing and taxing lands, trees, improvements, plants,and inventories used primarily in the production and processingof tung nuts. The act provides that such property shall be listedat ten percent of assessed valuation of cultivated agriculturallands in one case, and of actual value in the other. This listingis also binding for local assessment purposes.30. La. Acts 1956(E.S.), No. 8, incorporated as LA. R.S. 47:2417, 47:2419(Supp. 1956).31. La. Acts 1956, No. 129, incorporated as LA. R.S. 47:2417, 47:2419 (Supp.1956) ; La. Acts 1956, No. 423, incorporated as LA. R.S. 47:2419 (Supp. 1956).32. La. Acts 1956, No. 542, incorporated as LA. R.S. 47:2422 (Supp. 1956).33. La. Acts 1956, No. 125, incorporated as LA. R.S. 47:1832 (Supp. 1956).34. La. Acts 1956, No. 20, incorporated as LA. R.S. 47:1908 (Supp. 1956).35. La. Acts 1956, Nos. 4, 19, incorporated as LA. R.S. 47:1918 (Supp. 1956).36. La. Acts 1956, No. 363, incorporated as LA. R.S. 47:1910 (Supp. 1956).37. La. Acts 1956, No. 344, incorporated as LA. R.S. 47:2180 (Supp. 1956).38. La. Acts 1956, No. 115.[Vol. XVII

Legislation Affecting Revenue and Taxation

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Legislation Affecting Revenue and Taxation

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