How did Louisiana treat tax shelters that the IRS listed as abusive, and what penalties did the Department say it would impose?

Plain-English summary

Louisiana treated tax shelters listed as abusive by the IRS as abusive for Louisiana corporation and individual income-tax purposes.

The Department said a Louisiana taxpayer that used—or was later found to have used—one of those listed shelters would face the false-or-fraudulent-return penalty and the negligence penalty under La. R.S. 47:1604 and 47:1604.1, along with any other applicable penalties.

How the state rule worked

The ruling did not create a separate Louisiana list. It said Louisiana income-tax policy piggybacked the IRS treatment, so the federal abusive-shelter list supplied the state classification.

At issuance, the ruling directed readers to an IRS abusive-tax-shelter webpage or Internal Revenue Bulletin 2004-41. Those references are historical source pointers, not a current list on this page.

Common questions

Q: Did Louisiana maintain a different abusive-shelter standard in this ruling?

A: No. It followed the IRS list.

Q: Did the policy apply only to future use?

A: No. The ruling also addressed taxpayers determined to have used a listed shelter in the past.

Q: Which penalties did the Department specifically name?

A: The false-or-fraudulent-return penalty and negligence penalty, plus any other applicable penalties.

Q: Is the 2006 IRS list necessarily current?

A: No. The ruling's list references should be checked against current federal and state authority for the tax year involved.

Citations and references

• La. R.S. 47:1604 — false or fraudulent return penalty cited by the ruling
• La. R.S. 47:1604.1 — negligence penalty cited by the ruling
• Internal Revenue Bulletin 2004-41 — federal listed-shelter reference identified in the ruling
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 06-009

Original ruling text

Revenue Ruling
No. 06-009
June 29, 2006
Corporation and Individual Income Tax
Abusive Tax Shelters
The Internal Revenue Service (IRS) has taken several steps to combat Abusive Tax
Shelters. One of those steps includes maintaining a list that identifies certain listed tax
shelters that the IRS has determined are abusive.
Louisiana income tax policy piggybacks that of the IRS. Therefore, tax shelters that are
listed and considered abusive by the IRS will be considered abusive for Louisiana income
tax purposes.
If a Louisiana taxpayer employs any of the listed abusive tax shelters or is determined to
have employed any of the listed abusive tax shelters in the past, the department will
impose the penalty for a false and/or fraudulent return and the negligence penalty
pursuant to Louisiana Revised Statute 47:1604 and 1604.1 along with any other
applicable penalties.
The Abusive Tax Shelter list can be found at:
http://www.irs.gov/businesses/corporations/article/0,,id=120633,00.html
or Internal Revenue Bulletin: 2004-41.

Interested parties should contact Taxpayer Services at 225-219-7318.
Cynthia Bridges
Secretary
By:
Nina S. Hunter, Attorney
Policy Services Division
A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to
provide guidance to the public and to Department of Revenue employees. It is a written statement issued to
apply principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of
law and is not binding on the public. It is a statement of the department's position and is binding on the
department until superseded or modified by a subsequent change in statute, regulation, declaratory ruling,
or court decision.