§ 47:1576.3 — Fresh Start Proper Worker Classification Initiative

Louisiana § 47:1576.3

• Jurisdiction: Louisiana
• Title 47: Revenue and Taxation

Text

§1576.3. Fresh Start Proper Worker Classification Initiative
A. For the purposes of this Section, the following terms have the meanings ascribed
to them:
(1) "Applicant" means any association, corporation, estate, firm, individual, joint
venture, limited liability company, partnership, receiver, syndicate, trust, or any other entity,
combination, or group that submits or arranges through a representative for the submission
of an application to request relief under the Fresh Start Proper Worker Classification
Initiative for a tax administered by the department.
(2) "Application" means a completed application to request relief under the Fresh
Start Proper Worker Classification Initiative and all supplemental information including but
not limited to cover letters, schedules, reports, and any other documents that provide
evidence of the applicant's qualification for the Fresh Start Proper Worker Classification
Initiative. Supplemental information requested by the department and timely provided by
the applicant shall be considered part of the application.
(3) "Application date" means the date a fully completed application requesting relief
under the Fresh Start Proper Worker Classification Initiative is received by the department.
Supplemental information requested by the department and timely provided by the applicant
shall not extend or delay the application date.
(4) "Class of workers" means a group of workers who perform the same or similar
services.
(5) "Commission" means Louisiana Works.
(6) "Department" means the Department of Revenue.
(7) "Secretary" means the secretary of the Department of Revenue.
B. The Fresh Start Proper Worker Classification Initiative is optional and provides
a taxpayer with an opportunity to voluntarily reclassify his worker as an employee for a
future tax period. To be eligible, a taxpayer shall meet all of the following requirements:
(1) Apply to the Fresh Start Proper Worker Classification Initiative between January
1, 2023, and December 31, 2023.
(2) Produce a certificate of proof of workers' compensation coverage for the
employee.
(3) Enter into a closing agreement with the department.
C. The Fresh Start Proper Worker Classification Initiative applies to taxpayers that
are currently treating their workers as independent contractors or other nonemployees and
want to prospectively treat the workers as employees. To be eligible, a taxpayer shall have
consistently treated the workers for the previous three years as nonemployees and shall have
filed any required Form 1099-MISC, Form 1099-NEC, or equivalent form with the Internal
Revenue Service with respect to those workers, consistent with the nonemployee treatment.
D.(1) An eligible taxpayer that participates in the Fresh Start Proper Worker
Classification Initiative agrees to prospectively treat the class or classes of workers identified
in the application as employees for future tax periods and is not liable for any withholding
tax or related interest and penalties with respect to any amounts paid to any workers before
the date on which the taxpayer is accepted for participation in the Fresh Start Proper Worker
Classification Initiative.
(2) An eligible taxpayer shall not be entitled to any relief from unemployment tax,
interest, or penalties pursuant to this Section but may seek relief in accordance with R.S.
23:1775.
(3) An eligible taxpayer may request that Louisiana Works develop with the taxpayer
a reasonable payment schedule for unemployment taxes owed for the look-back period as
defined in R.S. 23:1771. However, payment of all outstanding unemployment liabilities
shall not be required prior to acceptance of the taxpayer's application.
E.(1) An eligible taxpayer that wishes to participate in the Fresh Start Proper Worker
Classification Initiative shall submit an application for participation in the program to the
department on a form prescribed by the secretary. The department shall contact the taxpayer
or authorized representative to complete the application process once it has reviewed the
application and verified the taxpayer's eligibility.
(2) An accepted application constitutes a joint closing agreement between the
taxpayer and the department.
(3)(a) The closing agreement shall constitute confirmation by the taxpayer to treat
the class or classes of workers identified in the application as employees and to comply with
any and all reporting and payment obligations related to withholding tax, unemployment tax,
and workers' compensation coverage for the period subsequent to the effective date of the
agreement.
(b) Notwithstanding any provision of law to the contrary, any reclassification of a
class or classes of workers performing the following services shall be limited to withholding
tax and shall not be eligible for reclassification as an employee for purposes of
unemployment tax:
(i) Any services that are statutorily excluded from the definition of employment
provided for in R.S. 23:1472.
(ii) Any service performed in the employ of a state, and political subdivision of the
state, or of an Indian tribe, or any instrumentality of the state, any political subdivision of the
state, or any Indian tribe, which is wholly owned by one or more states, political
subdivisions, or Indian tribes, but only if the service is excluded from employment as defined
in the Federal Unemployment Tax Act.
(iii) Any service performed by an individual in the employ of a religious, charitable,
educational, or other organization, but only if the service is excluded from employment as
defined in the Federal Unemployment Tax Act.
(4) The closing agreement shall become effective on the date that the taxpayer
receives notice from the department that the taxpayer's application is accepted.
(5) Failure to comply with the terms of the closing agreement and this Section may
nullify the acceptance of the taxpayer's application. If an acceptance is nullified, the taxpayer
shall become liable for withholding tax, interest, and penalties determined to be due for prior
periods.
(6) The secretary may disclose any information provided in an application or in
support of an application to Louisiana Works in order to coordinate the review and
consideration of the application. Any information furnished shall be considered confidential
and privileged and held by Louisiana Works as provided for in R.S. 47:1508.
F. The following employers shall not be eligible to participate in the program:
(1)(a) Employers that are currently under audit concerning the classification of the
classes of workers by the Internal Revenue Service, the United States Department of Labor,
or by a state government entity.
(b) Employers who are contesting in court the classification of the class or classes
of workers from a previous audit by the Internal Revenue Service, the United States
Department of Labor, the department, or Louisiana Works.
(c) Employers who have withheld state income taxes from the amounts paid to any
worker and who have not remitted the tax to the department.
(2) For the purposes of Subparagraphs (1)(a) and (b) of this Subsection, a taxpayer
that is a member of an affiliated group within the meaning of Section 1504(a) of the Internal
Revenue Code shall be ineligible if any member of the affiliated group is under an
employment, withholding, or unemployment tax audit.
G. A finding that a taxpayer failed to provide information or documentation to reveal
a fact material to an eligibility determination or made a material misrepresentation as to any
eligibility requirement shall immediately nullify the acceptance of the taxpayer's application.
H. The department shall have the authority to promulgate rules and regulations for
the administration of the Fresh Start Proper Worker Classification Initiative. Additionally,
the department shall promulgate rules and regulations no later than July 1, 2023, establishing
a voluntary disclosure program for reporting undisclosed liabilities for withholding taxes that
would have been due for workers who were not classified as employees.

Legislative History

Acts 2022, No. 406, §2.