La. Admin. Code tit. 61 § III-2301

Current through Register Vol. 50, No. 9, September 20, 2024

Section III-2301 - Fresh Start Program

A. Definitions. For purposes of this Section and the administration of the Fresh Start Proper Worker Classification Initiative ("Fresh Start Program") set forth in R.S. 47:1576.3, the following terms have the meanings ascribed to them.

IRS Form 1099-MISC-an information return required to be filed with the Internal Revenue Service, in accordance with Section 6041(a) of the Internal Revenue Code of 1986, as amended, and the regulations adopted thereunder, to report nonemployee compensation paid to a service provider prior to January 1, 2020.

IRS Form 1099-NEC-an information return required to be filed with the Internal Revenue Service, in accordance with Section 6041A(a) of the Internal Revenue Code of 1986, as amended, and the regulations adopted thereunder, to report nonemployee compensation paid to a service provider on or after January 1, 2020 or any equivalent form required to be filed by the Internal Revenue Service.

Reclassified Employees-a worker, or a class or classes of workers who were consistently treated as independent contractors or other non-employees by the taxpayer for the previous three years and for which the Taxpayer filed all required Forms 1099-NEC, or Forms 1099-MISC, with the Internal Revenue Service, consistent with the nonemployee treatment, who will be treated as employees for future periods.

Taxpayer-the person seeking to voluntarily reclassify a worker, or a class or classes of workers through the Fresh Start Program.

B. Application Requirements. Taxpayers applying for relief under the Fresh Start Program shall comply with the following procedures.

1. Applications shall be submitted electronically on forms provided by the secretary between January 1, 2023 and December 31, 2023.

2. An application shall include:

a. a list of each worker that the applicant seeks to voluntarily reclassify as an employee for future tax periods under the Fresh Start Program, including the worker's name, social security number, date of hire and class;

b. copies of the IRS Forms 1099-NEC, or IRS Forms 1099-MISC, that were filed with the IRS for the previous three years for each of the workers for which reclassification is sought under the Fresh Start Program;

c. proof of workers' compensation coverage for the reclassified employees. Coverage shall have an effective date for the reclassified employees of no earlier than 60 days prior to and no later than the date the application is submitted;

d. any other information requested by the Department of Revenue. Additional information shall be submitted within 45 calendar days of the date of written request. Failure to provide the additional information within 45 days may result in denial of the application; however, reasonable extensions may be granted.

3. If a taxpayer does not complete the application in its entirety, the Department of Revenue shall notify the applicant of the deficiencies by mail. The taxpayer shall have 45 calendar days from the date of the notification to correct the deficiencies. If the taxpayer fails to respond during the 45 day period, the application shall be denied.

C. Eligibility

1. A taxpayer is not required to reclassify all of its workers who are currently treated as nonemployees, but shall reclassify all workers within the same class.

2.R.S. 47:1576.3(F) provides that a taxpayer is not eligible for relief if the taxpayer or a member of its affiliated group within the meaning of Section 1504(a) of the Internal Revenue Code is currently under an employment, withholding, or unemployment tax audit by the Internal Revenue Service, United States Department of Labor, or a state government entity. For purposes of this exclusion, a taxpayer that has been contacted by the auditing agency to initiate an audit concerning the classification of workers is considered to be currently under audit.

D. Determination of Ineligibility

1. If the Department of Revenue determines that a taxpayer is ineligible to participate in the Fresh Start Program, the department shall send written notice to the taxpayer within 30 days of such determination.

2. Ineligible taxpayers are not entitled to any relief under the Fresh Start Program.

E. Closing Agreement

1.R.S. 47:1576.3(E)(2) states that acceptance of a taxpayer's application constitutes a joint closing agreement between the taxpayer and the Department of Revenue.

2. Upon acceptance of an application for participation in the Fresh Start Program, the taxpayer agrees to the following conditions which shall be deemed part of the joint closing agreement.

a. Taxpayer shall timely report and remit all withholding taxes for the reclassified employees, or class or classes of workers for all tax periods beginning with and subsequent to the date on which the taxpayer is accepted for participation in the Fresh Start Program and for a period of three years thereafter.

b. Taxpayer shall timely remit all unemployment insurance contributions for the reclassified employees, or class or classes of workers for all tax periods beginning with and subsequent to the date on which the taxpayer is accepted for participation in the Fresh Start Program and for a period of three years thereafter.

c. Taxpayer shall maintain workers compensation coverage for the reclassified workers, or class or classes of workers for all tax periods beginning with and subsequent to the date on which the taxpayer is accepted for participation in the Fresh Start Program and for a period of three years thereafter.

3. The terms of the closing agreement shall be valid, binding, and enforceable by and against all parties, including their transferees, successors, and assignees.

4. The secretary reserves the right to void the closing agreement if the applicant taxpayer fails to comply with any of the conditions outlined in the agreement.

La. Admin. Code tit. 61, § III-2301

Promulgate by the Department of Revenue, Policy Services Division, LR 4974 (1/1/2023).

AUTHORITY NOTE: Promulgated in accordance with R.S. R.S. 47:1511 and 47:1576.3.