La. Revenue and Taxation § 47:118

Current with changes from the 2024 Legislative Session

Section 47:118 - Failure by individual to pay estimated income tax; penalty

A. Addition to the tax. In the case of any underpayment of estimated tax by an individual, except as provided in Subsection D, there shall be added to the tax due under this Chapter for the taxable year a penalty of twelve percent per annum upon the amount of the underpayment determined under Subsection B, for the period of the underpayment determined under Subsection C.

B. Amount of underpayment.

(1) For purposes of Subsection A, the amount of the underpayment shall be the excess of:

(a) The amount of the installment which would be required to be paid if the estimated tax were equal to ninety percent (sixty-six and two-thirds percent in the case of individuals referred to in R.S. 47:117(B), relating to income from farming) of the tax shown on the return for the taxable year or, if no return was filed, ninety percent (sixty-six and two-thirds percent in the case of individuals referred to in R.S. 47:117(B), relating to income from farming) of the tax for such year, over

(b) The amount, if any, of the installment paid on or before the last date prescribed for such payment.

(2) For the purposes of determining the amount of underpayment, the amount of the required installment shall be:

(a) Except as provided in Subparagraph (b), the amount of any required installment shall be twenty-five percent of the required annual payment.

(b) For purposes of Subparagraph (a), the term "required annual payment" means the lesser of:

(i) Ninety percent of the tax shown on the return for the taxable year (or, if no return is filed, ninety percent of the tax for such year), or

(ii) One hundred percent of the tax shown on the return of the individual for the preceding taxable year.

C. Period of underpayment. The period of the underpayment shall run from the date the installment was required to be paid to whichever of the following dates is earlier:

(1) The 15th day of the fourth month following the close of the taxable year;

(2) The date on which any portion of the underpayment is paid but limited to the amount of such payment. For purposes of this paragraph a payment of estimated tax on any installment date shall be considered a payment of any previous underpayment only to the extent such payment exceeds the amount of the installment determined under Subsection B(1) for such installment date.

D. Exception. Notwithstanding the provisions of the preceding Subsections, the penalty imposed with respect to any underpayment of any installment shall not be imposed if no declaration of estimated tax is required to be filed under the provisions of R.S. 47:116(A), or if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment of such installment equals or exceeds whichever of the following is the lesser:

(1) The amount which would have been required to be paid on or before such date if the estimated tax were whichever of the following is the least.

(a) The tax shown on the return of the individual for the preceding taxable year, if a return showing a liability for tax was filed by the individual for the preceding taxable year and such preceding year was a taxable year of twelve months, or

(b) An amount equal to the tax computed at the rates applicable to the taxable year on the basis of the taxpayer's status with respect to personal exemptions and credits for dependents under R.S. 47:79 for the taxable year, but otherwise on the basis of the facts shown on his return for, and the law applicable to, the preceding taxable year, or

(c) An amount equal to ninety percent (sixty-six and two- thirds percent in the case of individuals referred to in R.S. 47:117(B), relating to income from farming) of the tax for the taxable year computed by placing on an annualized basis the taxable income for the period from January first through the end of the first, second, or third quarter as the case may be. For purposes of this Subparagraph the taxable income for the period from January first through the end of the first, second, or third quarter as the case may be shall be placed on an annualized basis by:

(i) multiplying by twelve (or, in the case of a taxable year of less than twelve months, the number of months in the taxable year) the taxable income (computed without deduction of personal exemptions)

(ii) dividing the resulting amount by the number of months from January 1 to the end of the first, second, or third quarter as the case may be

(iii) deducting from such amount the deductions for personal exemptions allowable for the taxable year (such personal exemptions being determined as of the last date prescribed for payment of the installment); or

(2) An amount equal to ninety percent of the tax computed, at the rates applicable to the taxable year, on the basis of the actual taxable income for the months in the taxable year ending before the month in which the installment is required to be paid.

E. Application of Section in case of tax withheld on wages. For purposes of applying this Section

(1) The estimated tax shall be computed without any reduction for the amount which the individual estimates as his credit under R.S. 47:115(A) (relating to tax withheld at source on wages), and

(2) The amount of the credit allowed under R.S. 47:115(A) for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each installment date (determined under R.S. 47:117) for such taxable year, unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld.

F. Tax computed after application of credits against tax. For purposes of Subsections B and D, the term "tax" means the tax imposed by this Chapter reduced by the credit against tax allowed by R.S. 47:33.

G. Short taxable year. The application of this Section to taxable years of less than 12 months shall be in accordance with regulations prescribed by the collector.

H. Notice to taxpayer. At such time as the secretary receives an original individual income tax return with which payment is made in excess of one thousand dollars per individual, the secretary shall notify the taxpayer of the requirement for filing a declaration of estimated tax. The notification may be in the form of a mailing to the taxpayer of a declaration of estimated tax forms and instructions.

I. Penalty waiver. The secretary may waive, in whole or in part, payment of the penalty provided for in Subsection A of this Section if the individual submits an application for waiver of the penalty on or before one year from the statutory due date of the tax return associated with the underpayment not including any applicable extensions, showing the individual acted in good faith in failing to make the estimated payments. With the exception of those situations when, in the opinion of the secretary, the individual has acted with intentional disregard for the laws of the state, the secretary may presume the individual acted in good faith under the following circumstances:

(1) The failure to make the estimated payments was attributable to extraordinary circumstances beyond the individual's control.

(2) The individual made a declaration and paid estimated tax in accordance with R.S. 47:116, 117, and 117.1 before the due date of the return without regard to any extension of time.

La. Revenue and Taxation § 47:118

Added by Acts 1960, No. 342, §1. Amended by Acts 1971, No. 11, §1; Acts 1976, No. 95, §1, eff. Jan. 1, 1977; Acts 1995, No. 515, §1; Acts 2001, No. 203, §1, eff. May 31, 2001; Acts 2003, No. 1138, §1, eff. July 2, 2003; Acts 2004, No. 53, §1, eff. May 21, 2004; Acts 2006, No. 33, §1.

Added by Acts 1960, No. 342, §1. Amended by Acts 1971, No. 11, §1; Acts 1976, No. 95, §1, eff. 1/1/1977; Acts 1995, No. 515, §1; Acts 2001, No. 203, §1, eff. 5/31/2001; Acts 2003, No. 1138, §1, eff. 7/2/2003; Acts 2004, No. 53, §1, eff. 5/21/2004; Acts 2006, No. 33, §1.