SALT Issues that Impact Louisiana Taxpayers

SALT Issues that Impact Louisiana Taxpayers

[00:00:00] Introduction: Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in SALT, where we talk about the issues and strategies to help you make sense of state and local tax.

Today in our conversation with Jaye Calhoun, a Louisiana based attorney with Kean Miller, we commiserate with taxpayers on some of the challenges businesses face when dealing with home rule jurisdictions.

We also discuss how Jaye's broad exposure to many organizations has influenced the issues she chooses as an attorney to dig into. Welcome to the SALTovation podcast.

[00:00:39] Meredith Smith: Well, Jaye, thank you so much for being here today and doing this with us. We really appreciate your time. And it's so nice to see you.

[00:00:47] Jaye Calhoun: Yeah. It's nice to see you guys virtually. Judy and I, uh, hang out periodically around the country at different conferences and event. She's a, she's always the, uh, life of the party type a character. I was the king. If you recall, I did. You were what? I was the king. I got the king in the cake. Remember that we had a, we had a Mar grab party in new world. Yes.

[00:01:11] Judy Vorndran: king of, I got to wear a robe and I carried a CEP and there was gender appropriate. I was the king and some dude was a queen. Perfect. , we're very, uh, progressive for tax people.

[00:01:25] Jaye Calhoun: well, you know, we do have fun in the state and local tax world. And yesterday actually I went up to DC and, uh, something for American bar association tax section.

Which we're both involved in. Uh, we were talking to young people about getting involved in tax and there were people talking about international tax and people talking about tax controversy, you know, and all kinds of different kind of cool things. And then we got up there and started telling 'em why state and local has all of that and more.

Uh, huh.

[00:01:54] Judy Vorndran: And it's in English. You can read the language. That's the difference. Right? You can read all the languages. You don't have to worry about translating it from like Chinese or Spanish or French, German Swiss. I mean, think of the language you can't do. International tax. Can't read the language. Can't read the law.

[00:02:11] Jaye Calhoun: Right? They can read the law. Right. But we get to figure out the, especially those states that piggyback off of federal tax, we have, you know, we have figure about the implications, not just in one jurisdiction, but in jurisdictions around the country. So anyway, hopefully, and it makes your

[00:02:27] Judy Vorndran: home state and everything so much more transparent to you.

Like I go to Steamboat, I have a condo up there and I. What are the taxes? What are they doing? What's the development. How are they supporting this? They're taxing us somehow

[00:02:38] Jaye Calhoun: some way. Hello? Yeah, learn something. I have a friend with a condo in steam. This is cool. . And

[00:02:45] Judy Vorndran: so do you know that Montana? I went to big sky Montana for, uh, like skiing through the icon pass a couple years ago.

And they don't not have taxes in Montana, by the way, they have tourist taxes that are probably imposed right then and there I'm like, I thought Montana didn't have sales tax. No, they do. It's just local taxes, which I haven't even thought about. Cuz we've got some local taxes that think about Jay, cuz you got it.

Your backyard. And I have. So anyway, there you go. We're, we're starting wanted

[00:03:12] Jaye Calhoun: to ask question. We need to let our MC interrupt by asking why this isn't. This is indicative of who we are, what we are

[00:03:21] Meredith Smith: recruiting for the profession, the next generation. It's so true that we're not so boring, right? We're not just green advisors that, you know, our audits,

[00:03:31] Jaye Calhoun: ugly stuff.

That's not us. We can have fun. Yes. So then,

[00:03:37] Meredith Smith: all right, well then I guess I will kind of bring back

[00:03:40] Jaye Calhoun: your job. Young ladies.

[00:03:43] Meredith Smith: I mean, my boss is here. I need to do my job.

[00:03:46] Jaye Calhoun: Good job.

[00:03:47] Judy Vorndran: Thank God she does it. I, I couldn't do it. I can't hold it together. I we're supposed to, I need her

[00:03:52] Jaye Calhoun: that tax though. Yeah, that's fine.

Go for it. Not always. Well, Jay, so.

[00:03:58] Meredith Smith: Keen Miller is based in new Orleans, Louisiana, which has some unusual tax policy positions that make it difficult to think clearly about state and local tax. So two of those issues are kind of the home rules that we in Colorado, you know, can struggle with and the influence of case law.

We'd like to get your insights on how these issues impacts taxpayers doing business in your home state of

[00:04:21] Jaye Calhoun: Louisiana. Sure. Okay. So actually keen Miller is a regional firm, so it started in Baton Rouge. Um, we have a, we have a nice new Orleans office, which is where I am at the moment. But, um, so, uh, yeah, so Louisiana is a really, uh, great place to practice state local because it is confusing.

You know, we have, so I guess in Colorado, y'all call 'em home, home, rural county, right. We have parish. Yes. Um, our parishes, uh, are not a few of them have charters. Um, so I guess that's an equivalent of a home rule.

[00:04:53] Judy Vorndran: They, they ordinance or municipal code. Yeah. So you know how

[00:04:56] Jaye Calhoun: like local taxes are essentially derivative of state tax typically.

And if your constitution, as our state constitution does, you know, allows certain parishes to have their own, uh, somewhat independent, uh, jurisdiction, uh, we call, you know, we call them charters like, uh, okay. Criminal charters, maybe. Um, but anyway, our problem isn't really so much those charts, that's a separate problem.

What that means is we will have parishes that, you know, we have state rules and they, some of them are intended to create some degree of uniformity. I mean, our version of uniformity is really different from a lot of other states, uh, version of uniformity. But you know, what that means is a parish will say, we don't have to follow this state rule, which creates uniformity.

We have our charter. And so that, that is a separate issue. The real issue that you face when you deal with Louisiana and the sales and use tax area, is that the parishes each get to independently administer and collect their own taxes. So. You don't, you don't really have one centralized collector with remote sellers.

Now we have sort of a version of that, but, um, but even so the parishes can still audit. They can still independently audit taxpayers. They can still independently, uh, engage in collection activity. One sort of weird trend that we've had. I've watched grow in my practices that parishes will, uh, hire contract auditing firms out of other states that will come in and audit for like 24 parishes at once mm-hmm , but it's not really as one centralized audit.

Um, the problem is each parish is really doing its own audit. But through the contract auditor. So that means like your clients will get a different letter in the mail each day from a different parish saying you've been selected for audit and it will look a lot like the other letters because it's one contract auditing firm sending 'em out.

When the contract auditor is done, they will then, you know, uh, create their work papers for each independent parish. So they go to the parish to parish and issues, an assessment. And then you have 24 fights on your hand as opposed to like, right. so that, that has been sort of problematic. Um, one of the, one of the things that we found and, and, you know, this is just always just bothered the heck at me, but you have, we had one client that was audited by contract auditor and they were doing everything right.

They were getting, you know, they were, they were collecting and remitting everywhere. They were supposed to collect and remit. And I guess this individual, this contract auditor didn't wanna leave the job without having found some liability. So they basically decided they'd remitted to all the wrong parishes and they accept everything.

And so then they got hundreds of thousand dollars of disparate assessments in the mail from different parishes. Um, and we have a cross crediting statute, which is supposed to allow the taxpayer to put the parishes on notice cuz they, they did the right thing they collected and they remitted that two parishes are disagreeing about who is entitled to the.

But there's no like way to enforce that. So, you know, you can, you can, you can trigger the cross crediting statute, but there's no like one centralized place to get it all sorted out. Anyway. So let's talk about Louisiana version of uniformity as all the other states did after Wayfair, you know, Louisiana's pretty excited, you know, they're raking in the money now with all these remote sellers, uh, collecting and remitting and they are, we understand that there's a problem.

You know, uh, in the, in the Wayfair decision, the Supreme court talked about undue burden. And if perhaps there are states that are poster children for undue burden, Colorado is probably one of them. Louisiana is probably, we F ask a

[00:08:31] Judy Vorndran: coordinated cost F

[00:08:35] Jaye Calhoun: and we talk about, I get invited because of local taxes and problem states and stuff.

And Louisiana was always the. Colorado now everybody's like, Colorado's worse. I'm like, wait, what? yeah, I know.

[00:08:47] Judy Vorndran: Funny. Right? We're struggling to stay at the bottom.

[00:08:51] Jaye Calhoun: Well, you're getting, I'm proud of you. So, but anyway, but we, we're still kind of, not like that. So trying to come up with some, you know, uniformity to not create an undue burden bar nine interstate commerce, we have a remote sellers commission.

The remote sellers commission is set up strictly to take collections from vendors with no physical presence. And they're collecting state and local. Now what's interesting is for a while, I think it was until July 1st, 2020, you could pay one. , that's not the situation anymore. After July 1st, 2020 individuals are supposed to, I mean, businesses are supposed to collect based on the accurate parish rate and the accurate parish tax base.

So there's still that aspect of, we also have a separate commission set up for vendors with nexus. Called the uniform local sales tax board. So we have two independent bodies that are gonna be issuing policy decisions and collecting and, and well uniform local sales tax board is not so much a collector because in a situation where the vendors actually have physical presence, they can go through.

Parish sheet file. And, but it's still, you know, separate with each parish and it's still, you know, separate for the state and you still have all the issues, but you have a separate body now to make decisions for policy reasons. And so, anyway, so we've got these two separate things going on, and then we have the parishes who get to decide, you know, uh, well, they, this is how they think, how are they dealing with it?

Well, they're definitely making more money. But they don't like having to give a little bit of what they would otherwise get to the state or to the remote sellers commission as a result of having, um, you know, so, so they don't want that haircut. The other thing they don't like quite as much is that they've been warned.

If you go back rich or actively there, there might be a problem. And so if they can find nexus, they're still looking for nexus. If they can find NEX. Then they can go back retroactively. So you have some parishes that are more active than others in pursuing roommate sellers. In these situations. So uniformity last session, last legislative session, um, you know, there's still this concern about the fact that Louisiana's, you know, voted bad for business rated bad for business, and they, they understand some of the, legislature's starting to understand that the reason part of the reason is the fact that you have independent local administration.

You. We have centralized collection. So the problem is the parishes ability to collect their own taxes is enshrined in our state constitution. So in order to centralize collection more, you have to have a constitutional amendment. Last session, we had a constitutional amendment, went to the voters voters, basically.

I remember that like about 48% voted for 52% voted against kind of close. It was really kinda an interesting constitutional amendment though, because it was super complicated. Like it had all of the details, like who was gonna sit on commissions and, and all kinds of it was really long. And so, um, anyway, I don't think that's what the problem was.

The problem was. I didn't hear a lot about it. I heard something about it. You. The promoters were out there, kind of advertising do this, do this, vote for this. Um, but right before the election, I started getting all this junk mail from local collectors saying they're trying to take our authority away, and this is a, a power grab by the state.

So just, but there was a lot of it and it, it was defeated. It was also, um, a low, I guess, a low turnout election and they haven't quit. So our legislature is now back in session. They've put another little bit simpler, uh, potential, uh, constitutional amendment to be put on a ballot in November. Trying it again.

So I don't know if, I mean that has not become a law yet. They're still just kind of keeping right after that amendment was defeated, but the, uh, Halstead bead case, basically, I think it was an Arizona retailer filed a lawsuit and, and federal district court here saying it was really interesting. And I guess, I think we're doing this to get around the tax injunction act, but what they said was, um, you.

Sell in Louisiana above a certain threshold because your system's too complicated. Mm-hmm , what's interesting is they sued the state and they sued maybe four parishes. Um, you know why those four parishes? I think I asked the guy and I don't really remember what his respond. I didn't, I didn't really completely understand why those four parishes, but that's what they did.

Um, you know, again, it, it's kind of your system being state and locals really sort of as independent, uh, participants gets too complicated. So the federal judge that's hearing it, uh, ly, um, basically. Um, or judge, yeah. Had come out with some questions, basically issued a, um, they hasn't killed it yet, so it's still there.

It's still proceeding and they're trying to, but the judge wanted access to the remote seller's website. He says, you guys are saying. Hope I get the judge's name, right. I might might not actually ever write, but, um, he said, you guys are saying, this is too complicated for out-of-state vendors to use. I wanna see it myself.

So, um, so anyway, so I guess at this point, the judge is trying to get into the remote sellers commission website and, and figure out how complicated it is. And again, that's for remove vendors only. And what's interesting is I think even if you could, you know, you can get on and file. The problem is they can still audit.

You can, they can still have as to what's tax phone, what isn't right. So they don't

[00:14:33] Judy Vorndran: even agree on what, like that's our problem with Colorado, like software isn't taxable, if it's E delivered in Colorado, but it is at the home rules. Who cares about the home rules? Nobody one even knows what the home rules it's on the east coast.

They don't, they know what Denver is. They know what Aspen is, but they don't know it's a home rule. Yeah. It's we have so many companies that just supply the state law locally as well onto their sales. And they don't bother with all these. Crazy. We have seven

[00:14:59] Jaye Calhoun: cities and the problem is if you get audited, it could be an expensive mistake, you know?

Yes. Um, you can rock along for a little while thinking you're doing fine years past. And if you're, if you're filing, at least you're gonna have documentation. So what is the

[00:15:14] Judy Vorndran: right differential though? Is it like, I can't, I can't think of all the different city rates. I mean, for our city rates, you could be as high as 4% tax rate.

So, I mean, it's almost double the state. So,

[00:15:25] Jaye Calhoun: well, Denver's like 4.83,

[00:15:28] Meredith Smith: some like.dot do you know? Do

[00:15:33] Jaye Calhoun: we, we have up to 5%. We did. Yeah.

[00:15:36] Judy Vorndran: So, I mean, I mean, you're seeing rates pushing 10, 11% in some of our home cities, all in, in Colorado.

[00:15:43] Jaye Calhoun: It's a lot. So then, so

[00:15:44] Meredith Smith: then Jay, right now, what are remote sellers supposed to

[00:15:48] Jaye Calhoun: do?

Like, what,

[00:15:49] Meredith Smith: what, cause I feel like, you know, this state, when you get a registration kind of kicks you into this like remote seller bucket, but then what does that mean? Like it's no longer, you're saying there's no longer that group 9% rate anymore. Right? Like what Alabama and Texas can do.

[00:16:07] Jaye Calhoun: Right. I have. So, you know, I, I don't, um, I'm not.

Accountant, I'm an attorney. So, but I, so don't we put di we

[00:16:16] Meredith Smith: put, disclaimer on this, don't worry

[00:16:19] Jaye Calhoun: this is not legal advice, an account. Cause I was gonna see how far I could get into the system to, we did the same questions about that. And I, I really didn't get very far because I don't have a return to file.

Yeah. That, um, so, uh, I need to ask my accountant friends, like how, how complicated it is to, to really figure it out. Anecdotally, I have heard, you know, it's still, you know, varying degrees of complication. The, the parishes, I believe, are supposed to be providing the information on the well seller's site so that people can get the rates.

Right. Uh, huh. Um, you know, whether or not they're doing tax based, right. Or, or allowing exemptions appropriately, completely different issue. But the rate information, I understood the parishes themselves to be providing, and you can have different rates within a, within a parish. Right. You know, so hopefully,

[00:17:13] Judy Vorndran: hopefully it's going, but you know, the tax base could be different.

The rates are obviously different. Now. Some of that can be managed with software, but then the compliance, like our subsystem. This is what's so crazy. Cuz we have statutory and home rule in Colorado. So the statutory there's still cities and counties are just state collected. So all that money goes in anyway and that change in Wayfair.

It used to be what we call location in common. If you were in Denver, you collected just the state in Colorado, whatever jurisdiction in Denver was in. You didn't collect anything else? No other counties, no other cities. Now I have to collect all that rate, basically front door rate, right? And then you have to put it on the reform.

Well, you have to actually check a box in the Colorado revenue online and open up the jurisdictions, cuz it isn't naturally set up that way. Right. And so you have to piecemeal it. If you don't wanna do all. How you still that, right? Oh, I'm only gonna do these seven and only not the two, like you were saying they're two, four.

Yeah. Paris is just 64.

[00:18:08] Jaye Calhoun: Remember that decision we have definitely had, you know, clients issues like, you know, the software just got it wrong, the software. Oh yeah. The software has to keep up with, you know, what's going on. Right. And then recently, and I can't remember exactly what the issue was, but somebody called me and they were like, We have this question, we can't answer.

And they said, big name, software company. Won't touch it. They said, we're just not touching this. So can, you know, like what? So anyway, they, they needed to kind of get an answer to their question. So it it's a little strange. It is a little disturbing that, you know, we know from practice cuz what we see the problems it is, it is really not possible to be completely.

[00:18:46] Judy Vorndran: And it's correct. Well, Amazon in Colorado. Fus last I heard to actually collect the home rural city taxes. Really? They have refused to collect it. Now they have warehouses InTown I think Denver Thornton, Aurora. I think they have warehouse facilities. So they'll collect in there cuz there's site there, but they refuse to collect in every city.

Cuz they're trying to use that ammunition to get conformity at the, we have this thing called the Colorado municipal league. That sort of is the legal arm of the cities if they so choose it and they'll help advocate. All that good stuff. So they kind of sit there and provide advice and counsel and help kind of create uniformity, which there isn't always cuz they get to choose what they want.

But you know, we just have, it's just really not right. In my opinion. And I think a lot of legislators don't understand what it really takes to do the compliance. Like they're not doing it. You know, so they don't know

[00:19:35] Jaye Calhoun: what about like marketplace providers now. So you do have this overlay of, you know, potentially somebody else is gonna be collecting and yep.

You know, and, and who, who amongst the possible, you know, parties that they can audit are gonna get audited. And what I mean? So the, I think the marketplace provider legislation, which came so closely on the heel. Of ways. I thought that was so strange. That's exponentially complicated. Well, it's understandable because if you think about it, like every state, every locality now has nationwide and even international jurisdiction, but you know, when you buy like stuff on, for example, Amazon, like I, I bought two alarm clocks.

They looked identical on two different days for my kids. One of them came and it was, you know, it was fine. It worked fine. The other one came in this box and the instruc, and it looked on the outside, like the first one I bought, but the instructions were in broken English and it didn't work. And it was, I was like, this is a knockoff made in another country.

So the problem is, you know, your locality or state, you have, you have international jurisdiction. You're never gonna get those folks in the foreign countries that have the issues. So I think the marketplace provider legislation was essentially a way to kind of, uh, You know, make sure they've got some deep pocket close by.

They can go after if they're well,

[00:20:52] Judy Vorndran: I'm sure it was to punish Amazon. I mean, come on but

[00:20:55] Jaye Calhoun: there's everybody hate Amazon, like made your life easier. I hate

[00:20:59] Judy Vorndran: to say that, but I know. Well, well, I think about, they were, one of my partners actually went to work for them years ago. So when it was all bricks and clicks and they kept, they didn't have nexus for like 13 years, intentionally, you know?

So they didn't collect sales tax. So I think a lot of people are like, wait a minute, change the economy and you haven't paid your due. Well, they're not paying check

[00:21:18] Jaye Calhoun: different tax. That's what drives me crazy. It's not their tax, right. It's hard tax. Yep. They weren't collecting from us and we weren't paying.

No, we weren't. So how come Amazon hasn't paid its tax. Amazon hasn't collected. Our tax

[00:21:32] Judy Vorndran: from us made. Yes, really? Yeah. It's kind of unfair to them. Isn't it? I mean that the people put the illness on vendors, right? No, nobody, but at least, I mean, Amazon is using a little, there might to create some parody in Colorado, which I hope that political influence will be helpful.

And we have had this. That system. And it's not a hundred percent used yet. Where's 61 cities, I think of the seventies. So where everyone's in, they just, you know, technologically had he feet, the back end, the front end. And then we just passed bill, which I believe our governor should be signing any minute that basically took away the licenses.

So there was a license requirement. 10 20. I mean, you can pay as much $175 for some of our city licenses per year, just for the privilege of collecting their tax. Do you guys have that something similar at the Paris

[00:22:18] Jaye Calhoun: level? Yeah, so we don't necessarily charge people to collect the tax, but we check in for lots of other

[00:22:24] Judy Vorndran: stuff.

Well, for the license though. Okay. Yeah, no, we have occupational licenses,

[00:22:28] Jaye Calhoun: so, okay. Occupational license and occupational license tax. Yep. Um, you know, we collect that, so is that. Well, but that's a little different though. I don't see. A charge collecting the tax. It's a charge for existing. Yeah. Cause we charge business privilege of, you know, selling of folks in the state.

[00:22:46] Judy Vorndran: Right. Right. So, I mean, they've did a study and I think the tax was, I mean, it could be anywhere from 1500 a year up to like maybe even 20,000. If you took 175. For a license to collect city sales tax per year. Multiply that by 70, I mean you're 20,000 bucks. I mean, so it's like real money every year to remit $5 to a city.

I mean, that's how little some of the stacks can be. Cuz I mean, we have a city called Deno. I think it has 10,000 people in it. It's tiny. I don't even know how they, or why they're a home rule. I don't know enough about them, but right. To know that. Cause I don't have a lot of clients in that space, but it's like, why does the, Kono a home rule?

I'm almost Googling population. Like how big is this city? Why are they?

[00:23:28] Jaye Calhoun: So I think Meredith has a question. Well, Jay,

[00:23:30] Meredith Smith: I, I wanted to circle back to something. So the kind of constitutional amendment is going back on the ballot this year. Cause it didn't pass last year is the kind of. Professional community, the practitioner community on board for this.

[00:23:46] Jaye Calhoun: And

[00:23:47] Meredith Smith: then would you say, but then I also wanna know like, if they are, and like, this is something that like, Hey, from a tax perspective, this is really good for the state. Do they need to get better marketing for like, you know, the general voter to understand what any of that stuff means? Cuz the general person doesn't understand.

What any of this means, right? Like I was trying to tell my husband yesterday, my husband's an educator, very smart man. Trying to tell him what I did yesterday. He's like, I know what those words mean. but like,

[00:24:20] Jaye Calhoun: I. You

[00:24:21] Meredith Smith: had a great day. You did a lot of things. like, I dunno what

[00:24:25] Jaye Calhoun: any of that means. Yeah. Like, right, right.

Yeah. So, um, so I, so there are certain folks, there are certain, uh, I guess maybe even a trade association or two that, that did kind of go to bat for centralized centralized collection is a good idea. I think it was, uh, you know, I can't say that the whole like tax community got behind it. And I think part of the problem is.

Reading the, uh, the amendment, it is very, very specific and it creates, it seems to almost create some new entrenched interest. And it's kind of a weird thing, but, um, I think the concern was if they didn't get it all in the constitution, then folks are gonna mess with it in the, the legislature. Future legislators were gonna mess with it.

So in any event, I haven't really seen a lot of passion about that. This is what I hope people do get passionate about. We have a bill now advancing through our state legisla. Dealing with how about this payment of interest on payments you made under protest if you lose. So in other words, you pay under protest cuz you don't want interest to continue to accrue.

What if you had to pay interest on those payments? Anyway, if you lose, how crazy is that they got your money, they're making interest on it. And if you lose your case, you still have to kick an interest. Why would you pay under protest? Is that anyway. So that sort of thing right now is, is being pushed by the locals.

And is it advancing through our state legislature? That kind of thing. I hope people kind of get up in armpit because again, it's gonna kill the payment under protest procedure. It makes no sense when I'm saying, well, why are they doing this other than like a money grab? Because this is so we can only, the legislature can only raise taxes every other year.

This is not a money raising session. And maybe they consider this procedural to raise money for the locals. But so , so anyway, I'm hoping, you know, that gets doesn't get anywhere because that just makes no sense to me. Wow.

[00:26:25] Judy Vorndran: Yeah. Yeah. Well, we have that where we aren't paying interest on refunds. I mean, they were trying to do the same thing in Colorado, right?

Not, they don't wanna

[00:26:31] Jaye Calhoun: pay don't wanna make sense. I mean, that, that make sense, but I mean, it is something you can understand, but at least you're not paying twice, which is kind of what be doing, I guess, if you, if. Maybe you're not paying twice, but what happens is you're not gonna be able to pay under protest or it's not gonna make any difference if you do, or if you don't, it's not gonna give you any advantage.

Right. And they are getting paid twice. Cuz you know, if you pay a protest, they got your money. There are an interest on it. Yeah. Plus you then have to pay interest on, I mean, what kind of interest rate at the end of the day is gonna be received by the parish on your money? Right?

[00:27:06] Judy Vorndran: Ours is 10, 12%. I mean it's crazy.

Our, our home's

[00:27:09] Meredith Smith: high. Their, the typical interest rate on monthly interest is 1%. One of 'em is even 1.5%.

[00:27:16] Jaye Calhoun: Yeah. And it's higher for, for, uh, under payments and lower for overpay.

[00:27:21] Judy Vorndran: Yep. Yep. Yeah. So like where gonna earn 12% interest? Yeah. I think we have clients like owe money and we'll do a VDA and they've got a cough up the cash.

Right. And they're like, could we get a payment plan? I'm like, go get a bank loan. It's a better deal. Like you could borrow money from a bank a lot cheaper than borrowing it from our city.

[00:27:39] Jaye Calhoun: Oh, I've definitely heard parishes. Say, um, we don't want people gaming the system, essentially, you know, paying and then we have to pay him back with interest later, but you're not investing with the tax collector.

I mean, I, I dunno, maybe there was like one situation, one time where that happened, but I can't even imagine a client coming to me saying, you know, I looked at, you know, options in the market and I think I'm gonna go invest with the tax

[00:28:03] Judy Vorndran: collector. Right? Right. No, we had issues with that in Colorado where they thought people were overpaying their estimated payment.

Didn't owe it and getting interest back there was, was that really happening? It was a legislative belief. So

[00:28:14] Jaye Calhoun: there was naive a policy. Oh, a legislative belief as belief, as opposed to, and people

[00:28:18] Judy Vorndran: are like, what? Yeah. Well

[00:28:21] Jaye Calhoun: even like, so the,

[00:28:23] Meredith Smith: for example, like the Denver volunteer disclosure program for sales tax, it's.

Three like 36 months for use tax on your purchases. It's seven years. And so I don't know offhand what seven times 12 is, but if you're doing a use tax VDA, you're paying like 98% interest on your first initial period. Is that literally

[00:28:46] Jaye Calhoun: 1% constitutional if you're collecting?

[00:28:49] Judy Vorndran: I mean, I don't know is that use Tori, but I don't know

[00:28:51] Jaye Calhoun: if it's not.

No, no, no. I'm talking about discrimination. I mean like the associated, no, because the, the periods are different. No, because if use tax, you end up paying more. Uh,

[00:29:02] Judy Vorndran: no, it's just a longer look back. The interest is the

[00:29:05] Jaye Calhoun: interest, right? I wonder you couldn't make a constitutional argument though. I dunno. Not like the sales

[00:29:09] Meredith Smith: use tax look pack needs to

[00:29:11] Jaye Calhoun: be the same.

Yeah. Well, it needs to be short, like, like, uh, sales tax. Well,

[00:29:18] Judy Vorndran: over the years, seven years

[00:29:20] Jaye Calhoun: to do business and interstate commerce use tax primarily falls on interstate commerce.

[00:29:27] Judy Vorndran: You think? Huh? I don't know. I don't make any constitutional arguments,

[00:29:31] Jaye Calhoun: so, oh, they're

[00:29:33] Meredith Smith: cool though. They're fine. Well, no. What Denver would do though, is they would then make the sales tax look back seven years.

Yeah. In not 36 years, they would, they pull like

[00:29:41] Jaye Calhoun: a Hawaii and go, they would win the battle and lose the war. I'm just saying, so. Still a, I mean

[00:29:47] Judy Vorndran: over the years, maybe. Yeah. Yeah. Well, Denver has changed their periods over the years. I mean, it's never been consistent cuz you know, BDAs are administrative, they're not re they're not legislative, so you, they don't, they do what they want.

So they just they've changed the policy here and there and everywhere. It's been very interesting.

[00:30:04] Jaye Calhoun: It's good to be

[00:30:05] Judy Vorndran: king. Yeah. They're king. Yes. Denver especially is king. I mean, we have some pretty big cities and they have a lot of might and they're. Yeah. And we've had a lot of change in, uh, leadership too, which has been hard cuz you have a lot of legacy people that work there like 30 years and they just knew things like the back of their hand.

And then we have the newer groups that are still not don't have that institutional knowledge. And we've had a lot of change in our city too, over the years. So yeah.

[00:30:30] Jaye Calhoun: Well, just

[00:30:31] Meredith Smith: like the, our home, you know, our home rules have a hard time just keeping up with kind of like urban sprawl and, you know, our, our further out kind of suburbs, if I, I grew up around Chicago.

So like, everything is a suburb, I don't know, like Colorado cause some suburbs, but anyway, you know, that are more accessible, you know, like Loveland has grown and like Louisville, you know, That their staff of one can't keep up. And so they're like trying to hire, but even the staff of one has only been there three years and they're their most senior person and knows the most.

So it's just,

[00:31:09] Judy Vorndran: and then they filter from each other too. So there's really good talent. The city's just juggling around. So then you're still down a resource everywhere. It's really, this

[00:31:17] Jaye Calhoun: is kind of what I look about tax practice is you mainly, always working collaboratively. Yeah. So especially if you've got somebody who's relatively new and they're just kind of learning the ropes, you know, you're, you're going in there.

And, you know, you're talk, you're discussing the fact that, you know, they don't wanna collect tax that isn't owed in their hard parts. They don't and, uh, you know, and basically discussing a lot and, you know, trying to help, uh, educate really, even sometimes when you are working with a collector, you're trying to educate, um, they're trying to educate you.

You're trying to educate them, but, you know, but I like the collaborative aspect of tax practice. Well, and I think

[00:31:54] Meredith Smith: that's also something like, kind of an environment that is shifting, you know, Colorado has like a coalition of state tax auditors that is open. So every quarter they get together, they do continuous education and they open it up to practitioners.

So we as tax ops are actively engaged in this Colorado tax auditor coalition. Mm-hmm, you know, Judy and I are gonna be presenting at the next one of like, Hey comment, taxpayer hurdles, because really like. They don't wanna be the bad guy. They want people to teach big, you know, teach people to do the right thing.

But at the same time, they're there to. Connect collect money for their cities, but it is a lot of like open sharing information resources, like, Hey, how best you handle this? Have you seen this? So there is, you know, a lot of collaboration and, you know, kind of inviting in. Practitioners, which is really nice to see.

[00:32:48] Judy Vorndran: Yeah, there are relationships we've built over the years, but you know, one thing we've asked for many times is we just have a list of what you do and don't tax. We don't have to look at every single ordinance. You know, how do you apply this? Cuz that's the hardest thing is. Taxpayers, you know, your clients don't wanna pay you to look at 70 laws.

Do they have a manual $5? No, they ordinances.

[00:33:10] Jaye Calhoun: I know, but is there a manual though? Because, um, sometimes, and they're not always really comfortable sharing, but sometimes the manuals they use. Um,

[00:33:21] Judy Vorndran: some of the cities do some do, but they don't have like a list of, like, I remember we did an audit in the city of Louisville and she, one of thes was showing us how she had this chart of how they handled the construction use tax audit.

Right. So mobile equipment, all the items going into the building and what was brought in, what was brought out, all that good stuff. And then what was paid under permit? Cause they pre, they take tax on the materials upfront on the permitting process. That is not the same across our cities, but they were referencing a chart from a survey that they did internally with other cities.

Well, Brookville does this and so on. And I'm like, okay, but what does your law say? Right? And then if you have this survey, share it with the public so we know what to expect. That's the thing I find the most difficult. I mean, we, years ago I remember RO saying we don't really publish a lot of guidance cause we don't wanna be beholden to it.

We don't wanna be trapped by it because, you know, we don't know it's gonna depend on the facts. Right. But. And so it's like, but that helps taxpayers. If you can't figure out what to do, how do you

[00:34:21] Jaye Calhoun: apply? And they're better selves, they're better tax collect ourselves. They do, they should want to educate the public.

Right. And, you know, I guess the theory is the more people know, the more they, you know, they don't want expense. Right. Even crazy about paying taxes, but you don't wanna expensive problems later. And especially like on a, a sales or use tax situation where. It can be become your expensive problem. Mm-hmm if you don't collect it up front, I mean, a lot of like my clients, they just, they just wanna know what the right answer is.

They just they'll do it. And so, right. So I think the federal government does a really good job of sort of educating the public as to what the rules are. I mean, they do the enforcement, they do the collection, but they understand their mission to educate as well in the front right now, as Meredith was saying, as you were saying, you know, a lot of.

Departments don't have a lot of money. They don't have a lot of people. They don't have pick up one person, you know, how they're supposed to do everything and that's kind of hard, but maybe that is where your tax bar or your, um, professional organizations can, can help as well. I know like ABA, I P T um, I hope we did it this year, but for the past couple of years, we, you know, certainly invited the, the local tax department to come give 'em scholarships and that kind of thing, you know, They can sit, they can contribute.

They can listen. You know, we can have that sort of collaborative process of figuring out,

[00:35:39] Judy Vorndran: but they were kind of the one advocating, like I've sat on this governor's task force for many years. I dedicated a lot of time energy for no money, honestly, just cuz I thought it was the right thing to do for the community.

Nice. And we would try to get community joiners, right? People moan and grow, but then they don't step up. They don't put many towards it and they don't cuz some of it is lobbying cuz that's how it gets done and they don't get the time or effort and the testimony that's what really needs the testimony.

Everybody complains to us, but they don't take complain to these legislators that are trying to problem solve. So it's, it's just fascinating to me. Like you could play, but you don't take initiative cuz you can only do so much. You know, and so people just adjust to it, but it does, it just feels like the momentum has happened finally, but it's taken that effort, that grassroots effort to show like this has gotta get better.

And so do you think that's partly why you guys have been working towards that constitutional amendment? Like there's more money there's we need more transparency. There's more people registering. Why will we go for this now? Well,

[00:36:41] Jaye Calhoun: I, I think there is a sense of the impact on the state business wise, you know, our reputation for having a complicated tax system.

Plus the other thing is also a sense that, you know, maybe not all the locals are on board about it, but what our. These, all these new collections be jeopardized. If in fact Louisiana's system somehow was determined to be ally creating an UND burden, interstate commerce. Like I dunno what the case would look like.

Maybe it's Halstead B that establishes that. But, um, you know, they understand there's a little bit of vulnerability there. Um, you know, maybe there's a sense of if we make it better and more uniform collect more money. I right. I would

[00:37:23] Judy Vorndran: think you would. I mean, I think Arizona's been proof of that. I've heard that they're just raking in millions now that they went central.

So I can't imagine we wouldn't have learned from that. And then if you have money, then you can do some studies and some information and grab different bits of, I don't know. I mean, you gotta have the resources, other problems

[00:37:40] Jaye Calhoun: with the tracking business besides our tax system as well. although we have great food and we have lots of fun but you know, we got other stuff we gotta.

Figured out as well. and so kind

[00:37:55] Meredith Smith: of, as we, as we near the end, kind of wanna plug your kind of leadership positions that you've held in various organizations, you know, What the Louisiana tax Institute, American college of tax council, ABA, I P T,

[00:38:09] Jaye Calhoun: which has come up. I just, the girl who you can't say, I know that song from Oklahoma actually, you know, what's funny is, um, so yes, I did tell you just told you this.

Yeah. So I was up and talking to young people about. That. And we were giving 'em life and career advice. You get old enough and you get really excited cuz people say, you know, what do, what do you do to, you know, how'd you get where you are, whatever. Um, but the thing is, um, at the beginning, especially when I was young, um, and I, and I didn't know, you know, a whole bunch, but I wanted to learn, you know, I would volunteer to do stuff like create materials or even speak or whatever in state and local.

It's really important. I think, to be involved in these organizations that have members from around the country, because. We got, we have, you know, it's not like the, the beautiful federal tax code, which applies everywhere in the us. Yeah. You know, we have clients that, you know, whose operations across state borders.

You know, if I have a Colorado question, I need to call Judy if, uh, Judy has a, a. A client with a need in Louisiana, hopefully she's gonna call me. Yep. And so it's, it's good for, you know, developing business. It's good for making sure you're, you're serving your client's needs. And also it's kind of good to watch, you know, just to know what's going around on around the country.

Mm-hmm because, um, you know, that if, if it works in a particular state, all the states are gonna jump on board. You know, mm-hmm , especially if it's sort of groundbreaking or, you know, like Wayfair, as soon as Wayfair came out, that was a sense, right?

[00:39:37] Judy Vorndran: I mean, South

[00:39:38] Jaye Calhoun: Dakota. Yeah. Hey, we can do this now, too. And so they had to pass legislation what we're watching right now, which is kind of interesting it's happening up in the east coast mainly, and, and also in Utah, some of these other states up there, but basically there's a sort of a.

A movement to get rid of the unitary business principle when it comes to, uh, taxation of gain on the sale of a, of an interest in a, in a business Uhhuh. And so that, um, you know, we've had the unary business principle for a while. You've been pretty safe selling your, you can set Louisiana, you can sit in Colorado and sell your interest in a, in a, an entity that may have operations in other states, but your tax, your capital gain is getting taxed by the state where you sit.

That is actually, uh, something right now. States are trying to work around. Um, there, there, these theories of investee apportion until they call it, even though short, say the other day, it's not really AOR. It's like allocation, you know, we're allocating all the capital gain of the state, where the business really had the most of its operations.

You know, what is that? Right. So that's kind. A thing to watch. And if it works on the east coast, like it had like Utah got some great decisions where the judge said, no, this is unconstitutional. It's progressing through the Massachusetts courts. There's another case in New York. If it works that that's coming to a.

Come into a place near you. So there's like, uh, there's a really, there's a really, um, there's a lot of really good reasons to be involved in these organizations. Right. You know, not the least of which you make friends from around the country who have condos and Steamboat or, you know, friends that'll take you around from Mardi GRA, um, sending king cakes that

Yeah, so, so good business and professional reasons to, to, well, I

[00:41:22] Judy Vorndran: think about, so were you at the luncheon at the, a, B I P T in new Orleans? That was about pre way there. I mean, it was both sides. I think it was Alabama. He was, um, representing. South Dakota is a, a me too, right. He spoke. And then the lawyer who represented, I think it was new egg, cuz it was new egg, overstock and Wayfair that all took that case report independently.

And that lawyer would talked about stare decisis, like let things say as they were, we don't need to upset the apple cart and I'm sitting in that meeting and then the Alabama's like, yeah, da, da, da. And of course he went to work for Deloitte. I think he was like the executive director of Alabama. Now he works for, you're

[00:42:00] Jaye Calhoun: thinking of, oh my goodness.

Ah,

[00:42:02] Judy Vorndran: right. We know him. Yes. I know. I'm like, I could see his face, it'll come to us.

[00:42:08] Jaye Calhoun: But I remember I'm

[00:42:09] Judy Vorndran: in my contacts to all their arguments about the pros and the cons and Joe I, Joe. Yeah, they would, um, that, that it wouldn't get decided. To change the world. Right. And it did. And I listened to the, our lawyer who was talking about stare decisis or stare decisis, or however you say it, let things leave as they are.

I'm like, there's no way the economy has changed too much. There's too much money leaving the doors of the states. You've gotta have go Garrett. And, you know, he had a very good argument for Alabama and the reason that Wayfair should get enacted. And then he talked about how Alabama did their flat rate and all that good stuff to make it easier for compliance and giving the money back to the taxpayers for collecting the money.

And, but I just thought that's no way. And then here it came through and it happened. I mean, I was in, I was in Ireland on vacation when that case got decided. And one of my clients wished me like Merry Christmas, happy new year. Right? Like you just blew up because this case got decided, but who would've thought within a year, every state would have a law.

Every state that has a sales tax. You don't see that kind of movement legislatively in this nation, that much uniformity I know kinda, I mean, crazy. Even Florida,

[00:43:20] Jaye Calhoun: not uniformity though. It's not that much. No, I know. I know all the laws are there.

[00:43:25] Judy Vorndran: No, it's not even close to uniform. Of course. Now what I get with clients is like, I've exceeded economic threshold.

I'm like, so what do you do? I go, I do this insulation thing. I go, you already had physical process nexus. You already had a duty to collect the tax before Wafa no, that's a no.

[00:43:40] Meredith Smith: That's something that we see a lot and it's like, well, I'm not, I haven't sold this much. And I was like, okay, but, but how do you, but physical presence still exists.

[00:43:49] Judy Vorndran: Yeah. As, I mean, I'm glad people know when they didn't used to know, but I was already feeling pretty Wayfair. Like physical presence was eroded so much even before we've had like wholesale remote workers. Right. Everybody's agnostic about hiring now. Like I wanna person I'm gonna hire 'em wherever. Like you don't realize you just created all kinds of duties in those.

Because you were agnostic about hiring. Yeah. No, it's crazy. It's sort of surreal

[00:44:13] Jaye Calhoun: to think about brave new world. Yeah. Almost

[00:44:16] Meredith Smith: four years

[00:44:17] Judy Vorndran: too. Yeah.

[00:44:19] Jaye Calhoun: And so

[00:44:19] Meredith Smith: Jay, you had mentioned kind of as a final thought, you know, kind of this, the unitary kind of concept on the sales partnership interest, maybe kind of being the next big thing kind of thing to watch out for.

Is there any other thing that you think is going to be kind of something that's either gonna be heavily litigated or that's gonna kind of be next on the kind of chopping block? Take down,

[00:44:45] Jaye Calhoun: not take. Yeah.

[00:44:46] Judy Vorndran: So, um, take up, take up. Well,

[00:44:49] Jaye Calhoun: it would be good for folks increase our fees for

in New Jersey. So it would be good to watch what the MTC is doing. They have a number OFS going on. They're considering partnership issues. They're considering, um, Uh, public I 6, 2 72, um, and limitate, they, they feel like Wayfair kind of changed, sort of got rid of public I 6, 2 70. Yes,

[00:45:13] Judy Vorndran: I think. Yeah. Well, California just adopted.

So California's already globbed on, they've adopted some of the MTC rules, so

[00:45:20] Meredith Smith: modernizations

[00:45:22] Jaye Calhoun: quote. Yeah. Yeah. So, um, I don't know, I guess, and I justice Ginsbergs of this. Who said this? I don't remember, but basic. So everybody has said this things are cyclical. So right now we're in this kind of expansion of state, text jurisdiction.

It would seem there has to be some limitations. There has to be protection for business visit. It's just, it's almost like, and, and this is how I gauge it. So I also teach a couple law school class. I teach a joint class for the two law schools here. and my students, you know, where are they? I take their temperature with how comfortable they are with different things.

And, you know, over time, they very much, um, like, you know, we've been talking about like remote worker issues and you know, whether, because people used to work in a jurisdiction, we're paying taxes, but now they're not even coming back, but the jurisdiction still needs the money. So they should still be able to tax them they don't have as much an issue with that, which surprises me.

They're also okay. With virtual presence, which I think is such an odd thing because in theory, your government, you know, the reason you pay taxes, collect taxes for government is they're doing. Something for you. Yeah. Um, but economic nexus is all about, you know, simply providing a marketplace being enough.

Yeah. To, you know, have these foreign governments make demands on you. Uh, right now the temperature is, you know, to sort of floating tax liability is okay. Somebody has to tax it, right? Yeah. Not okay. right. Right. So I'm hoping. The pendulum swings back, uh, not just in, you know, my students being, taking their temperature, but, but basically in legislatures, perhaps in Congress to right.

Engage in some effort towards uniformity, uh, it, it does seem like almost an impossible uphill battle though, because obviously these. States, you know, they're, they become dependent on the revenues now that, you know, Wayfair, the physical presence requirement is gone. They're collecting all this money.

They're gonna fight to keep that right. Yeah. They were, they were interested in uniformity when they thought it was necessary to get Congress, to get rid of physical presence. Physical presence is gone. Where's the interest in uniformity. I'm not sure, you know, Louisiana may sort of be an outlier and, and thinking about it, you know, potentially other states may be thinking about it, but, but there's not a lot of.

I mean, you could never hurt all the cats. You could never get all the ducks in a row. Congress could do that. Congress,

[00:47:43] Judy Vorndran: the oversight, well like Wayfair, right? It took a Supreme court decision, but to get rolled out, you know, thresholds

[00:47:49] Jaye Calhoun: across the nation, but our constitution, our commerce clause, some extent, deep process, you know, but really the commerce clause, all of that was to protect a national marketplace and to prevent economicalization.

That was the term Supreme court. Forgot where I read that, but I love it. But the, but the problem is we are in an era of economic balkanization and we are moving deeper into it. And so, you know, will, will our leadership step in and, and provide some protection. Are we just gonna keep, you know, is, is it really gonna create, continue to create problems for businesses, expensive problems, extensive compliance issues and no real hope of being completely.

[00:48:28] Judy Vorndran: Right mean, we have clients sales tax, we

[00:48:31] Jaye Calhoun: retire rich. Right. But that's not really sort of, not really what we want. Well, I would like not, we wanna be what the rules are and help people. Yes.

[00:48:39] Judy Vorndran: I sometimes I feel like I can't apply the rules. Like I just can't it's cost ative. We have a client that has sales tax licenses everywhere.

Cuz they sell and they sell income tax returns for various reason. And they owe $5 or $65. It's expensive to file an income tax return and you already gave them your sales tax money, but now you gotta pay someone to create that return, split it across the nation, and to give a little bit of a tax. Like some of that doesn't entirely make sense.

Let's make it economically viable to

[00:49:07] Jaye Calhoun: I definitely full amount of money. My clients that they just do a cost benefit, risk analysis. They right how comfortable they are with risk. They figure out where. ER is, and then they try to get the big ones, you know? Right. And

[00:49:18] Judy Vorndran: Vermont wants to come after you for a thousand dollars.

Let 'em come. Right. I'll give a thousand

[00:49:23] Meredith Smith: to be fully compliant. You know, let's say the average prepare, you know, anywhere between $500 and $3,000, one of our clients charge them for a tax return for a single entity. You've got 46 sales tax licenses. You know, cut that down to maybe 43, that of those don't have an income corporate income tax call it like you're paying over a hundred thousand dollars, justify a return in all of those matching states.

Right.

[00:49:48] Jaye Calhoun: So right. And the, and the Amazons of the world don't care. They've got all the money, uh, but the small and medium sized businesses that are growing. We're

[00:49:58] Judy Vorndran: have, why have a huge issue with FBA, Amazon? Cause a lot of small sellers use them and they don't realize that having inventory estate is an income tax duty.

So like, oh, Amazon's a marketplace. They're collecting my sales tax. Yay. But you don't realize that inventory sitting in that warehouse is the next creating issue for your income tax purposes

[00:50:15] Meredith Smith: unless they put in, you know, cuz not, I, I still, you know what California. Sort ofish was, you know, one of the first, like the first big state to, I

[00:50:23] Jaye Calhoun: think

[00:50:23] Judy Vorndran: Tennessee had it

[00:50:24] Meredith Smith: too.

Well, the factor presence though, of, you know, your 50,000 property sales, but, you know, an FBA, if a, in theory, if a state had, you know, if a, a small seller had. $2,000 of inventory at an FBA warehouse, if that state had, you know, that factor presence, and that was it, and didn't exceed the upper threshold of the sales, you know, you could potentially avoid that filing,

[00:50:48] Judy Vorndran: right.

That's the part we deal with Jay. So we actually do the forms. And so we go, ah, you know, and it's expensive and doesn't make sense. Yeah. Which makes our us sad. Cuz we want to give value to our clients and we want them to, you know, we hope that in the end it all works out in the wash. There is just a lot of compliance from all

[00:51:06] Jaye Calhoun: this.

So, yeah. Well, Jay, thank you so much for

[00:51:10] Meredith Smith: spending your. It's you know, afternoon with us for you

[00:51:15] Jaye Calhoun: morning. Almost

[00:51:16] Judy Vorndran: lunch. Good

[00:51:16] Jaye Calhoun: afternoon, lunchtime. Now here. Yeah. so,

[00:51:19] Meredith Smith: you know, thank you again and sounds like you and Judy will be doing an I PT thing in June. So every

[00:51:27] Jaye Calhoun: all of our listeners make sure you join.

[00:51:29] Judy Vorndran: I'll be at the, I'll be at a, B a too in may.

So I did sign up to go that. Yeah. Are you going, I don't, are we, do

[00:51:37] Jaye Calhoun: we all need to now? . That's going. I

[00:51:41] Judy Vorndran: haven't paid my hotel reservation. I bought my flight. I paid for that. Yeah. To go.

[00:51:45] Jaye Calhoun: Okay. Well, make your hotel reservations stay there. All right. My friends. Thank you so much. Well, thank you so much. This was my first podcast ever.

So really well you killed it.

[00:51:57] Judy Vorndran: So , that was awesome. That was so interesting. Even some of the history of Jay that I wasn't aware of. So this will be, I'm excited to even co present with you, cuz I'm sure I'll learn a or two, so, oh, we'll have fun. We will have fun. And as always, this was another fun episode of SALTovation, till next time.

[00:52:10] Closing: This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax accounting or investment advice. Consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.