Two Louisiana Tax Laws Tilt the Audit and Penalty Rules Toward the Taxpayer

What happens when the tax collector sends a bill based on a guess?

For a Louisiana business facing a local sales tax audit, HB1039 now requires the collector to ask properly first.

Before a local collector makes an estimated assessment, the collector must send the dealer a written request that identifies the books, records, and documents it wants. If the collector skips that step, the estimated assessment is treated as "arbitrary" under Louisiana law.

The audit notice, which already goes out by certified mail, must now tell the taxpayer that signing a waiver of the prescriptive period is voluntary. The prescriptive period is the deadline for the collector to assess tax, so a waiver gives the government more time.

When the taxpayer and the collector do agree in writing to suspend that deadline, they can also agree to stop additional interest and delinquency penalties from building during the suspension. Both sides have to agree. The law gives the taxpayer no automatic freeze.

The late-return penalty also does not apply when the taxpayer paid under protest, signed a compliant suspension agreement, or entered a compliant installment agreement.

Taxpayers who owe estimated income tax must prepay enough during the year to avoid an underpayment penalty. HB633 lowers the current-year measure of that amount from 90 percent of the tax shown on the return to 70 percent, with a separate figure of 66 2/3 percent for farming and fishing income. It also moves the end of the underpayment period from the fifteenth day of the fourth month after the tax year closes to the fifteenth day of the fifth month, for individuals and corporations.

The changes apply to tax periods beginning on or after January 1, 2026. The bill carries a fiscal designation as a decrease in state general fund revenue.

IPS supports both laws. HB1039 makes a local collector show its work before estimating what a business owes. HB633 lowers a penalty threshold that caught taxpayers who had already paid most of their tax during the year.

Rep. Daryl Deshotel (R) sponsored HB1039. It passed the House 98-0 and the Senate 36-0. Governor Jeff Landry signed it June 2, 2026, as Act 691, and it took effect August 1, 2026.

Rep. Tony Bacala (R) sponsored HB633. It passed the House 100-0 and the Senate 31-0, and the House agreed to the Senate amendments 99-0. Governor Landry signed it May 22, 2026, as Act 307, and it took effect on signature.

Neither law cuts a tax rate. Both make the audit and penalty rules fairer to the people paying.

This is our read of the law. We encourage you to read it yourself and reach your own conclusions.