Frequently Asked Questions
If a taxpayer is required to register and file a return with the State of Louisiana for purposes of collecting sales tax is the taxpayer also required to file for purposes of income/franchise tax?
Generally, a taxpayer taxed as an individual must file and pay tax on any Louisiana-sourced income. For taxpayers taxed as corporations, the requirement to file depends upon whether the corporation is a domestic or foreign corporation. If a corporation is a domestic corporation, meaning it is organized under the laws of Louisiana, it is required to file Form CIFT-620, Louisiana Corporation Income and Franchise Tax return, each year unless exempt from both taxes. Dormant Louisiana corporations must file CIFT-620, regardless of whether any assets are owned or any business operations are conducted, until a “Certificate of Dissolution” is issued by the Louisiana Secretary of State.
If a corporation is a foreign corporation, meaning it is organized under the laws of a state other than Louisiana, and derives income from Louisiana sources, it must file Form CIFT-620 regardless of whether or not there is any tax liability.
A foreign corporation is subject to the franchise tax if it meets any one of the criteria listed below:
- Qualifying to do business in Louisiana or actually doing business within this state; or,
- Exercising or continuing the corporate charter within this state; or,
- Owning or using any part or all of the corporate capital, plant, or other property in this state whether owned directly or indirectly by or through a partnership, joint venture, or any other business organization of which the foreign corporation or entity is a related party as defined in LA Revised Statute (R.S.) 47:605.1.
A corporation will be subject to the franchise tax if it meets the above criteria, even if it is not required to pay income tax under federal public law 86-272. Corporation franchise tax for foreign corporations, or other taxable foreign entities, continues to accrue as long as the corporation exercises its charter, does business, or owns or uses any part of its capital or plant in Louisiana, and in the case of a qualified corporation, until a “Certificate of Withdrawal” is issued by the Louisiana Secretary of State.