ERSPAMER: Broken Louisiana System Making It More Difficult To Collect Tax Refunds

When the dreaded tax season comes to an end every year, few things are better than receiving a big refund check from the government. While overpaying everyone but the government is an especially bad idea, the government does have a legal obligation to refund those overpayments, which takes the form of a refund. This is true for governments everywhere, except for – you guessed it – the state of Louisiana.

In 2015, Louisiana passed a law that limited the deductions for taxpayers when they paid taxes in other states. Meaning that Louisiana residents who paid taxes in other states like Texas, were overpaying their taxes owed to Louisiana.

This law was ultimately deemed unconstitutional by the Supreme Court of Louisiana.

Rather than refunding the rightfully owed money to hard working Louisianans, the Secretary of Revenue said the state would not be issuing a refund to Louisianans. Rather, individuals could only recover their overpayments if they had filed their taxes under protest and then sued the state for recovery.

The First Circuit Court of Appeals agreed with the state that citizens did indeed have to file under protest in order be eligible for recovery.

Of course, there would be no reason for the people to file their taxes under protest, as the law had yet to be ruled unconstitutional! A catch 22 for taxpayers if there has ever been one.



This saga, unfortunately, perfectly encapsulates why Louisiana’s tax system is broken.

Our state’s current tax system is a maze of complexity and confusion for ordinary citizens. With a tax system like this, it’s no wonder that both businesses and citizens alike are fleeing the state.

But not everyone is willing to let the status quo hurt Louisiana citizens. Representative Phillip DeVillier (R-Eunice) and Senator Barrow Peacock (R- Bossier City) have introduced HB 265 and SB 198 respectively, which finally gives taxpayers the respect they deserve.

As we’ve seen before when solid, taxpayer fund-saving pieces of legislation are offered, the entrenched status quo fights tooth and nail to defeat them. Disappointingly yet unsurprisingly, HB 265 was referred to a committee that guarantees its death. However, SB 198 continues to move through the process as session winds down. The House voted to pass SB 198, but the bill still has a last stop on the Senate floor tomorrow.

This bill would mandate that tax collectors pay refunds to the people of Louisiana who were subject to an unconstitutional law, an unenforceable rule or other misinterpretation of tax law. If SB 198 passed, the people of Louisiana would finally receive their long overdue refund.

If the Legislature can’t reach an agreement, thousands of taxpayers will once again be getting the short end of the stick.

Daniel J. Erspamer is the CEO of the Pelican Institute for Public Policy. – New Orleans

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