2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:1576.3. Fresh Start Proper Worker Classification Initiative

RS 47:1576.3 - 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 the Louisiana Workforce Commission.
(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 the commission 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 the commission in order to coordinate the review and consideration of the application. Any information furnished shall be considered confidential and privileged and held by the commission 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 the commission.
(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.
Acts 2022, No. 406, §2.