Current through Register Vol. 50, No. 3, March 20, 2024
A. For
purposes of this Section, nonresident means any individual not domiciled,
residing in, or having a permanent place of abode in Louisiana.
B. Nonresidents are taxed on all income from
sources within Louisiana. Income from sources within Louisiana includes
compensation for personal services rendered within Louisiana.
C. The purpose of this rule is to apportion
to Louisiana, in a fair and equitable manner, a nonresident's total
compensation for personal services performed in the state. It is presumed that
application of the provisions of this rule will result in a fair and equitable
apportionment of that compensation.
1. When
the department demonstrates that the method provided under this rule does not
fairly and equitably apportion that compensation, the department may require
the nonresident service provider to apportion that compensation under an
alternative method the department prescribes, as long as the prescribed method
results in a fair and equitable apportionment.
2. If a nonresident service provider
demonstrates that the method provided under this rule does not fairly and
equitably apportion compensation, the nonresident may submit a proposal for an
alternative method to apportion compensation. If approved, the proposed method
must be fully documented and explained in the nonresident service provider's
nonresident personal income tax return for the state.
3. Nonresident service providers shall keep
adequate records to substantiate their determination or to permit a
determination by the department of the part of their adjusted gross income that
was derived from or connected with sources in this state.
D. Compensation of Salaried Employees with a
Constant Rate of Pay. The Louisiana income from personal services is the
proportion of total compensation from services rendered, which the total number
of working days in the state bears to the total number of working days both
within and without the state.
1. The total
number of working days is determined by subtracting all nonworking days from
the total number of days in the year or contract period, if the contract period
is less than a year.
2. Nonworking
days include, but are not limited to, Saturdays and Sundays not worked,
holidays, days off for religious observance, days of absence due to illness or
personal injury, vacation days, days of leave without pay, days off for any
personal reason, and sabbatical days.
3. Days spent in travel, if the travel is at
the direction of the employer, are considered working days even if the travel
is on a day that would usually be considered a nonworking day.
E. Compensation Based on Volume of
Business. The Louisiana income from commissions earned by a nonresident
traveling salesman, agent or other employee for services performed or sales
made, whose compensation depends directly on the volume of business transacted
by him, includes that proportion of the compensation received which the volume
of business transacted by such employee within Louisiana bears to the total
volume of business transacted by him within and without the state.
F. Compensation from Continuous Employment in
Louisiana for Part of the Year. If a nonresident employee (including officers
of corporations, but excluding employees, mentioned in Subsection D above) is
employed continuously in this state for a definite portion of any taxable year,
that employee's Louisiana income includes the total compensation for the period
employed in this state.
G.
Compensation from Transportation Services. If a nonresident employee is
employed in this state at intervals throughout the year, as would be the case
if employed in operating trains, boats, planes, motor buses, trucks, etc.,
between this state and other states and foreign countries, and is paid on an
hourly, daily, weekly or monthly basis, that employee's Louisiana income
includes that portion of the total compensation for personal services which the
total number of working days, as defined in Subsection C above, employed within
the state bears to the total number of working days both within and without the
state. If the employee is paid on a mileage basis, that employee's Louisiana
income includes that portion of the total compensation for personal services
which the number of miles traversed in Louisiana bears to the total number of
miles traversed within and without the state. If the employee is paid on some
other basis, the total compensation for personal services must be apportioned
between this state and other states and foreign countries in such a manner as
to allocate to Louisiana that portion of the total compensation which is
reasonably attributable to personal services performed in this state. This
Subsection is not intended to attribute to Louisiana any income that is
exempted from state taxation by federal law.
H. Compensation of Nonresident Entertainers
and Athletes Who Are Not Members of a Professional Athletic Team. Compensation
earned by a nonresident entertainer is considered earned where the services are
performed, regardless of where the nonresident entertainer lives, enters into
the contract, or receives payment. Entertainers include, but are not limited
to, actors, singers, musicians, performers, and professional athletes who are
not members of a professional athletic team.
1. Entertainers must include the gross amount
received for performances in this state in their Louisiana income.
2. Ordinary and necessary business expenses
directly attributable to the income earned in Louisiana and a pro-rata share of
indirect business expenses not directly attributable to income from any
particular source are "adjustments to income." These "adjustments to income"
are subtracted from Louisiana income to arrive at "total Louisiana
income."
I. Nonresident
Athletes Who Are M embers of a Professional Athletic Team
1. The Louisiana income of a nonresident
individual who is a member of a professional athletic team includes that
portion of the individual's total compensation for services rendered as a
member of a professional athletic team during the taxable year which, the
number of duty days spent within the state rendering services for the team in
any manner during the taxable year, bears to the total number of duty days
spent both within and without the state during the taxable year.
2. Definitions. These terms are defined as
follows. Unless otherwise indicated, these definitions apply only to this
Subsection.
Duty Days-all days during the taxable year
from the beginning of the professional athletic team's official preseason
training period through the last game in which the team competes or is
scheduled to compete.
i. Duty days
shall also include days on which a member of a professional athletic team
renders a service for a team on a date that does not fall within the period
described in the general definition of duty days above, for
example, participation in instructional leagues, the Pro Bowl, or other
promotional caravans. Rendering a service includes conducting training and
rehabilitation activities, but only if conducted at the facilities of the
team.
ii. Included within duty days
shall be game days, practice days, days spent at team meetings, promotional
caravans, and preseason training camps, and days served with the team through
all postseason games in which the team competes or is scheduled to
compete.
iii. Duty days for any
person who joins a team during the season shall begin on the day that person
joins the team, and for a person who leaves a team shall end on the day that
person leaves the team. If a person switches teams during a taxable year, a
separate duty day calculation shall be made for the period that person was with
each team.
iv. Days for which a
member of a professional athletic team is not compensated and is not rendering
services for the team in any manner, including days when the member of a
professional athletic team has been suspended without pay and prohibited from
performing any services for the team, shall not be treated as duty
days.
v. Days for which a member of
a professional athletic team is on the disabled list shall be presumed not to
be duty days spent in the state. They shall, however, be included in total duty
days spent within and without the state.
vi. Travel days that do not involve either a
game, practice, team meeting, promotional caravan or other similar team event
are not considered duty days spent in the state, but shall be considered duty
days spent within and without the state.
Member of a Professional Athletic Team-shall
include those employees who are active players, players on the disabled list,
and any other persons required to travel and who do travel with and perform
services on behalf of a professional athletic team on a regular basis. This
includes, but is not limited to, coaches, managers, and trainers.
Professional Athletic Team-includes, but is
not limited to, any professional baseball, basketball, football, soccer, or
hockey team.
Total Compensation-includes salaries, wages,
bonuses, and any other type of compensation paid during the taxable year to a
member of a professional athletic team for services performed in that
year.
i.
Total
compensation shall not include strike benefits, severance pay,
termination pay, contract or option-year buyout payments, expansion or
relocation payments, or any other payments not related to services rendered to
the team.
ii. For purposes of this
rule, "bonuses" subject to the allocation procedures described in this
Subsection, are:
(a). bonuses earned as a
result of play during the season, including performance bonuses, bonuses paid
for championship, playoff or bowl games played by a team, or for selection to
all-star league or other honorary positions; and
(b). bonuses paid for signing a contract,
unless all of the following conditions are met:
(i). the payment of the signing bonus is not
conditional upon the signee playing any games for the team, or performing any
subsequent services for the team, or even making the team;
(ii). the signing bonus is payable separately
from the salary and any other compensation; and
(iii). the signing bonus is nonrefundable.
Total Compensation for Services Rendered as a Member
of a Professional Athletic Team-the total compensation received during
the taxable year for services rendered:
i. from the beginning of the official
preseason training period through the last game in which the team competes or
is scheduled to compete during that taxable year; and
ii. during the taxable year on a date that
does not fall within the period in Clause i. above, for example, participation
in instructional leagues, the Pro Bowl, or promotional caravans.
J. Nothing in this regulation shall restrict
the secretary's authority to otherwise provide for efficient administration of
the individual income tax.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.
47:111(A)(12),
R.S. 47:290,
R.S.
47:293,
R.S.
47:295, and
R.S.
47:1511.
