Louisiana State Tax Audit Response, IDR Reply, and Position Statement

LOUISIANA STATE TAX AUDIT RESPONSE PACKAGE

TABLE OF CONTENTS

1. Initial Response to Audit Engagement Letter
2. Power of Attorney and Authorization
3. Response to Information Document Request (IDR)
4. Pre-Assessment Position Statement
5. Records Retention Certification
6. Taxpayer Bill of Rights Reservation
7. Louisiana Audit Practice Notes
8. Sources and References

1. INITIAL RESPONSE TO AUDIT ENGAGEMENT LETTER

[DATE]

Via Certified Mail, Return Receipt Requested, and Email

[AUDITOR NAME]
Audit Division — [Field Office]
Louisiana Department of Revenue
[ADDRESS]
[EMAIL]

Re: Audit Engagement
Taxpayer: [TAXPAYER FULL LEGAL NAME]
LDR Account Number: [________________________________]
FEIN/SSN (last 4): [____]
Tax Type(s): [Sales/Use ☐ Income ☐ Franchise ☐ Withholding ☐ Excise ☐ Other: __________]
Audit Periods: [BEGIN DATE] through [END DATE]
Engagement Letter dated: [DATE]

Dear [AUDITOR]:

This firm represents the above-named Taxpayer in connection with the captioned audit. Enclosed is a duly executed LDR Form R-7006 (Power of Attorney and Declaration of Representative).

Pursuant to La. R.S. § 47:15(A)(1), Taxpayer acknowledges receipt of the engagement letter and respectfully requests the following before the audit commences:

1. Written confirmation of the scope, periods, tax types, and estimated duration of the audit;
2. Identification of the lead auditor, supervisor, and any specialist auditors who will participate;
3. The name and contact information of the Department's appeals contact for any disputed adjustments;
4. A copy of any pre-audit risk-assessment or selection criteria the Department is willing to share;
5. A schedule of records to be examined, with adequate lead time for production (no fewer than thirty (30) days for the initial production).

Taxpayer further confirms its right under La. R.S. § 47:15(A)(2) to be free from harassment in the audit and collection process and its right under La. R.S. § 47:1508 to confidentiality of all records and communications produced in the audit.

All future communications regarding this audit should be directed to the undersigned. Please do not contact Taxpayer or any of its employees, officers, or directors directly.

We look forward to a cooperative and efficient audit.

Respectfully,

[________________________________]
[ATTORNEY OR CPA NAME]
Louisiana Bar Roll / CPA License No. [____]
[FIRM]
[ADDRESS]
Telephone: [PHONE]
Email: [EMAIL]

Enclosures:

• LDR Form R-7006 (Power of Attorney)
• Confidentiality acknowledgment

2. POWER OF ATTORNEY AND AUTHORIZATION

The Taxpayer hereby authorizes [REPRESENTATIVE NAME] to:

☐ Receive and inspect confidential tax information;
☐ Sign agreements, consents, or other documents related to the captioned audit;
☐ Represent Taxpayer at conferences and meetings with LDR personnel;
☐ Receive (but not endorse or cash) refund checks;
☐ Execute closing agreements pursuant to La. R.S. § 47:1578.

The authority to execute consents to extend prescription under La. R.S. § 47:1580 (Form R-2891) is [GRANTED ☐ / NOT GRANTED ☐].

This authorization remains in effect until revoked in writing.

3. RESPONSE TO INFORMATION DOCUMENT REQUEST (IDR)

[DATE]

[AUDITOR NAME]
Louisiana Department of Revenue
[ADDRESS]

Re: Response to IDR No. [____] dated [DATE]
Taxpayer: [TAXPAYER NAME]
LDR Account No.: [________________________________]

Dear [AUDITOR]:

Taxpayer responds to the above-referenced Information Document Request as follows:

General Objections and Reservations.

a. Taxpayer reserves the right to supplement, correct, or amend any production made in response to this IDR.

b. The production of any document is not, and shall not be construed as, a waiver of any privilege or protection that may apply to that document, to the subject matter of the document, or to any related document, whether produced or withheld.

c. Inadvertent production of any privileged document does not waive the privilege; pursuant to La. C.E. art. 502 and La. R.S. § 47:1508, Taxpayer requests immediate return or destruction of any inadvertently produced privileged material upon notice.

d. Taxpayer does not concede the materiality, relevance, or admissibility of any document produced.

e. Production of records relating to periods outside the three-year prescriptive period is made without prejudice to Taxpayer's right to assert prescription as a defense under La. R.S. § 47:1580.

If you have questions regarding this response, please contact the undersigned.

Respectfully,

[________________________________]
[REPRESENTATIVE NAME]
[FIRM]
[CONTACT]

Enclosures: Production index; documents Bates [____] to [____]

4. PRE-ASSESSMENT POSITION STATEMENT

[DATE]

Via Certified Mail and Email

Office of Legal Affairs / Audit Review
Louisiana Department of Revenue
617 North Third Street
Baton Rouge, Louisiana 70802

Re: Pre-Assessment Position Statement
Taxpayer: [TAXPAYER NAME]
LDR Account No.: [________________________________]
Tax Type: [SALES / INCOME / FRANCHISE / WITHHOLDING]
Audit Periods: [PERIODS]
Auditor's Proposed Adjustment: $[AMOUNT]

A. INTRODUCTION

This Position Statement is submitted on behalf of [TAXPAYER] ("Taxpayer") in response to the audit findings transmitted by [AUDITOR NAME] on [DATE]. For the reasons set forth below, Taxpayer respectfully requests that the Department withdraw the proposed adjustments in their entirety / reduce the proposed adjustment to $[AMOUNT].

B. SUMMARY OF FACTS

1. Taxpayer [is / is not] a Louisiana [domiciliary / dealer / franchise corporation].
2. The audit covers periods [BEGIN — END], of which [X] quarters/years are outside the three-year prescriptive period of La. R.S. § 47:1580.
3. The proposed adjustment arises from [describe transactions, accounts, or issues].
4. Taxpayer maintained complete books and records pursuant to La. R.S. § 47:1574 and produced same to the auditor on [DATE].

C. LEGAL ARGUMENT

1. Prescription bars assessment of [PERIODS].

La. R.S. § 47:1580 prescribes the assessment of all taxes three years from December 31 of the year in which the return was due or filed, whichever is later. The Department's proposed adjustments for [PERIODS] are accordingly time-barred. None of the statutory exceptions (fraud, omission of 25% or more of gross income, no return, or written consent) applies here because [REASONING].

2. The proposed adjustment misapplies La. R.S. § 47:[STATUTE].

[Detailed legal argument citing statute, regulation, jurisprudence, and Department's own guidance / Revenue Information Bulletins.]

3. Taxpayer is entitled to the [DEDUCTION/EXEMPTION/CREDIT] under La. R.S. § 47:[STATUTE].

[Argument with elements / proof.]

4. Penalties should be waived under La. R.S. § 47:1603.

Taxpayer acted in good faith and with reasonable cause. Specifically: [REASONING]. The Department's own Policy Services Division has applied reasonable-cause relief in materially similar circumstances. See PLR [NO.].

5. The proposed assessment violates the Louisiana Taxpayer Bill of Rights.

Pursuant to La. R.S. § 47:15, Taxpayer has the right to clear, correct, and timely written communications regarding any audit. The Department's [conduct/failure] to [provide clear written notice / convene an informal conference under La. R.S. § 47:1563] warrants withdrawal of the proposed adjustments.

D. CALCULATIONS

[Insert table or schedule showing Taxpayer's proposed calculation versus Department's calculation, with reconciliation.]

E. CONCLUSION AND REQUESTED RELIEF

For the foregoing reasons, Taxpayer respectfully requests that the Department:

a. Withdraw the proposed adjustments in their entirety; or alternatively
b. Reduce the proposed adjustments to $[AMOUNT] consistent with the calculations herein;
c. Waive all proposed penalties under La. R.S. § 47:1603;
d. Convene an informal conference under La. R.S. § 47:1563 prior to issuance of any Notice of Assessment;
e. Issue a closing agreement under La. R.S. § 47:1578 reflecting the agreed treatment.

Respectfully,

[________________________________]
[ATTORNEY NAME]
Louisiana Bar Roll No. [____]
Counsel for Taxpayer

Enclosures: Exhibits A–[__]; supporting authority

5. RECORDS RETENTION CERTIFICATION

STATE OF LOUISIANA

PARISH OF [PARISH]

I, [CUSTODIAN OF RECORDS NAME], being duly sworn, depose and state:

1. I am the [TITLE] of [TAXPAYER ENTITY] and am the custodian of the records produced herewith.

2. The records produced are kept in the ordinary course of Taxpayer's regularly conducted business activity; were made at or near the time of the events recorded by, or from information transmitted by, persons with knowledge; and are true, complete, and accurate to the best of my knowledge.

3. The records have been retained in compliance with La. R.S. § 47:1574 and Taxpayer's internal records-retention policy.

4. The production responsive to the captioned IDR has been made after diligent search, and Taxpayer represents that no responsive non-privileged documents have been knowingly withheld.

[________________________________]
[CUSTODIAN NAME AND TITLE]

Sworn and subscribed before me this [____] day of [_______________], 20[____].

[________________________________]
Notary Public

6. TAXPAYER BILL OF RIGHTS RESERVATION

The undersigned, on behalf of Taxpayer, expressly reserves and asserts each of the following rights under La. R.S. § 47:15:

☐ The right to be treated with courtesy, respect, and consideration by Department employees;
☐ The right to confidentiality of tax records under La. R.S. § 47:1508;
☐ The right to be free from harassment in audit and collection activities;
☐ The right to receive clear, correct, and timely written communications;
☐ The right to be notified before records are audited and to receive information about the estimated time, scope, and extent of the audit;
☐ The right to request a meeting with the auditor's supervisor pursuant to La. R.S. § 47:1563;
☐ The right to representation by an attorney, CPA, or enrolled agent;
☐ The right to appeal to the Louisiana Board of Tax Appeals under La. R.S. § 47:1431 et seq.;
☐ The right to pay under protest and seek refund pursuant to La. R.S. § 47:1576;
☐ The right to interest on overpayments pursuant to La. R.S. § 47:1624.

Nothing in any audit response or production shall be deemed a waiver of any of the foregoing rights.

7. LOUISIANA AUDIT PRACTICE NOTES

• Records retention — three-year baseline. La. R.S. § 47:1574 obligates dealers and taxpayers to maintain suitable records for at least three years. Where prescription is suspended (consent under § 1580, fraud, omission of 25%+) retain longer.
• Prescription consents. Form R-2891 (Consent to Suspension of Running of Prescription) extends the three-year prescriptive period. Counsel should weigh the strategic value (more time to develop facts and law) against the cost (foregoing a defense). Where consents are signed, limit them to specific issues and a short additional period — never blanket consents.
• Informal conference (§ 1563). Demand the informal conference in writing. The conference is an opportunity for the auditor's supervisor and, often, the Office of Legal Affairs to abandon weak adjustments before issuance of a formal Notice of Assessment.
• Confidentiality. La. R.S. § 47:1508 imposes criminal and civil penalties for unauthorized disclosure of taxpayer records. The Taxpayer may consent to disclosure (e.g., to bonding companies or lenders) by signing LDR Form R-7004.
• Privilege. Louisiana recognizes attorney-client privilege (La. C.E. art. 506) and a limited statutory accountant-client privilege (La. R.S. § 37:85.1). Federal Section 7525 privilege does NOT apply to state tax matters. Use Kovel arrangements (CPA engaged by counsel) to extend attorney-client privilege over CPA work product.
• Transition to assessment. If audit issues cannot be resolved at the field or supervisor level, the Department will issue a "Proposed Assessment" letter (informal-conference window, ~30 days) and then a formal Notice of Assessment under La. R.S. § 47:1565 (60-day Board appeal window). Calendar both deadlines.
• Voluntary disclosure. Louisiana operates a Voluntary Disclosure Agreement program limiting look-back to three years and waiving most penalties. Consider this as an alternative to audit defense for unfiled or under-reported periods.
• Sales-tax audits — local component. A state sales-tax audit by LDR does NOT cover local parish sales tax administered by parish sheriffs / school boards / consolidated collectors. Each parish conducts separate audits under La. R.S. § 47:337.1 et seq. Coordinate response across both.
• Penalty stacking. Louisiana imposes (i) failure-to-file, (ii) failure-to-pay, (iii) negligence, and (iv) 50% fraud penalties. La. R.S. § 47:1602–§ 47:1604.1. Reasonable-cause waivers under § 1603 are discretionary; document the cause contemporaneously.
• Civil-law terminology. Use "prescription," "petition," "judgment," and "Honorable Board" in formal filings.

8. SOURCES AND REFERENCES

• Louisiana Department of Revenue — Audit Resources: https://revenue.louisiana.gov/tax-professionals/general-resources/audit/
• La. R.S. § 47:15 (Taxpayer Bill of Rights): https://law.justia.com/codes/louisiana/revised-statutes/title-47/rs-47-15/
• La. R.S. § 47:1574 (Records Required): https://www.legis.la.gov/legis/Laws_Toc.aspx?folder=121&title=47
• La. R.S. § 47:1580 (Prescription)
• LDR Forms (R-7006 POA; R-2891 Consent): https://revenue.louisiana.gov/Forms/
• LDR Policy and Position Documents: https://revenue.louisiana.gov/Publications/
• Tin, Inc. v. Washington Parish Sheriff's Office, 2009-1455 (La. App. 1 Cir. 5/7/10) (audit assessment standards)
• St. Pierre's Fabrication & Welding, Inc. v. McNamara, 495 So. 2d 1295 (La. 1986) (burden of proof at audit)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. Every audit communication is potentially evidentiary; review with a Louisiana-licensed tax attorney before transmission. La. R.S. § 47:1574, § 47:1580, and the deadlines under § 47:1565 are jurisdictional — verify current statutory text before relying on these summaries.