Louisiana’s tax amnesty program has brought in $142 million for the sagging state budget this year — several million more than expected.
The state budget relied on at least $100 million coming in through the monthlong effort, which gave thousands of tax scofflaws a chance to pay the taxes they owed with discounted interest and without penalties.
After the Department of Revenue’s share was removed from the entire $169 million collected, about $40 million remains that hasn’t yet been spent.
The money comes just as Gov. Bobby Jindal’s administration is expected to announce Friday budget cuts to address an estimated $171 million shortfall.
“The increase in amnesty funds is welcome news for the state budget as we work to create a plan to eliminate the shortfall created by declining oil prices,” Commissioner of Administration Kristy Nichols said in a prepared statement. “Some of these payments may be used to reduce the impact of expenditure cuts on state agencies and taxpayers.”
She would not say how much of the $40 million or so would be used to fill the $171 million gap in this year’s state budget.
A similar program recouped an estimated $452 million last year, but leaders expected the amount would drop significantly this year and estimated accordingly.
“When you have it year-over-year it’s hard to get the numbers,” Revenue Secretary Tim Barfield said. This year’s program was particularly successful because of a new payment program that allows people and businesses to pay off their owed taxes month by month — rather than paying 100 percent at once.
“We got basically $25 million to $30 million of payments we wouldn’t have gotten,” Barfield said.
Unlike last year, the state didn’t accept tax credits as payment. About $70 million of last year’s tax amnesty collections were paid in tax credits, but there was a backlash because the state typically hands out credits to spur economic development and industry growth.
Barfield said the people who participated in this year’s amnesty — some 41,000 applications were received — were more likely to owe less than those who participated last year, because the Department of Revenue had settled debts with several major offenders during the previous program.
About $112 million of the $169 million total collections came through resolving audits and lawsuits, which generally involve businesses. About $57 million came through collecting delinquent tax, which tend to involved individuals and small businesses.
“This year, I think if you look at the average settlement amount it will be significantly less,” Barfield said.
Barfield has cautioned that next year’s scheduled amnesty program likely will pull in even less for the state. “This department will continue to work hard and do all we can, but this is the law of diminishing returns,” he said.
After 2015, the state won’t have another amnesty until 2025, under current state law, though Barfield noted lawmakers could vote to change that.