Taxpayers may need to be proactive between now and the end of the year if they intend to deduct their 2016 property taxes on their 2016 federal income tax returns. Taxpayers that own real property in a flood-impacted parish and deduct property taxes paid for federal income tax purposes should be aware that the timing of 2016 property tax payments, and the ability to deduct 2016 property taxes paid on their 2016 federal income tax returns, may be affected.

Normally, a parish mails its property tax bills in December and the taxpayer (or the taxpayer’s mortgage company) pays the property tax in the year the bill is mailed. Due to the flood, at least two parishes, East Baton Rouge and Livingston, are not mailing property tax bills until 2017. A cash-basis taxpayer, i.e., individuals and many businesses, may only deduct state and local taxes in the year the taxpayer pays the tax. A summary of the status of 2016 property tax bills in East Baton Rouge and Livingston Parish 2016 follows.

East Baton Rouge Parish

The East Baton Rouge Sheriff’s Office is not mailing property tax bills until January 2016. A representative of McGlinchey Stafford spoke with a representative of the East Baton Rouge Sheriff’s Tax Office who confirmed that East Baton Rouge Parish is currently accepting payment of 2016 property tax. Taxpayers whose taxes are not held in escrow by their mortgage companies may pay their property taxes online, by mail, or in person. The East Baton Rouge Sheriff’s Office website contains information about how to pay 2016 property taxes.

It appears that some mortgage companies are aware of the delay in East Baton Rouge property tax bills and they are planning to remit the 2016 property tax payments in December 2016. Taxpayers whose taxes are held in escrow by their mortgage companies should check their escrow statements online and confirm whether their mortgage company remitted their 2016 property taxes. If a taxpayer’s mortgage company has not remitted 2016 property taxes, the taxpayer should contact his or her mortgage company and instruct the mortgage company to pay the 2016 East Baton Rouge Parish taxes before the end of the year.

Livingston Parish

The situation in Livingston Parish is more problematic than the situation in East Baton Rouge Parish. Livingston Parish has not completed its 2016 tax rolls. As a result, at this time, the Livingston Parish Sheriff’s Office is not accepting payment for 2016 property taxes. McGlinchey Stafford’s understanding is that the Livingston Parish Tax Assessor’s Office does not plan to send property tax notices the end of January 2017 — at the earliest. Nevertheless, an affected taxpayer should consider checking the Livingston Parish Sheriff’s Parish Office’s website towards the end of the year on the off chance the Sheriff’s Office begins accepting payments.

What happens if 2016 property taxes are paid in 2017?

Taxpayers who pay their 2016 property taxes in calendar year 2017 will be able to deduct both their 2016 and their 2017 property taxes (assuming the taxpayer pays 2017 property taxes in 2017) on their 2017 tax returns. The double property tax deduction in 2017, however, may trigger the alternative minimum tax. In addition, McGlinchey Stafford is closely following the potential for federal income tax reform in 2017. Certain federal income tax reform proposals, if enacted, may eliminate a taxpayer’s ability to deduct state taxes. Therefore, the potential exists that a taxpayer may not be able to deduct its 2016 property taxes paid in 2017 if federal income tax reform occurs and is effective for the 2017 tax year.

McGlinchey Stafford has not researched the property tax situation in other parishes impacted by the flood, but it is reasonable to assume that similar property tax issues may arise in those parishes. Therefore, if a taxpayer owns real property in a parish that was impacted by the flood, McGlinchey Stafford recommends that the taxpayer check the parish tax collector’s website or call the parish tax collector’s office to determine whether the tax collector issued property tax bills in a timely manner.

The Louisiana Homeland Security and Emergency Assistance and Disaster Act, codified at Louisiana Revised Statutes §§ 29:721-739, confers certain emergency powers upon the governor to ensure that the State will be able to deal adequately with emergencies and disasters. In particular, Section 29:724 (D)(1) permits the governor to “[s]uspend the provisions of any regulatory statute prescribing the procedures for conduct of state business . . . if strict compliance with the provisions of any statute, order, rule, or regulation would in any way prevent, hinder, or delay necessary action in coping with the emergency.” The Louisiana First Circuit Court of Appeal has discussed the limitations on Louisiana Revised Statute § 29:724, stating “[T]here is no provision in La. R.S. 29:724 that permits the governor to enact substantive law.” Louisiana Hosp. Ass’n v. State, 2013-0579, pp. 12-14 (La. App. 1 Cir. 12/30/14); 168 So. 3d 676, 686–87, writ denied, 2015-0215 (La. 5/1/15); 169 So. 3d 372. Thus, some of the Executive Orders recently issued by Governor Edwards may be susceptible to challenge as exceeding his authority under Louisiana Revised Statute § 29:724.

On August 15, 2016, Governor Edwards issued Executive Order JBE 2016-53 in response to the Great Flood of 2016. The Executive Order suspended “all deadlines applicable to legal proceedings, including prescription and preemption, in all Louisiana state courts, administrative agencies and boards . . . .” Governor Edwards amended Executive Order JBE 2016-53 by issuing Executive Order JBE 2016-57, which provides, in part:

Liberative prescription and preemptive periods continue to be suspended throughout the State until Friday, September 9, 2016. Deadlines in legal proceedings in courts, administrative agencies and boards affected by the flooding event, defined as the following parishes: Acadia, Ascension, Assumption, Avoyelles, Cameron, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Pointe Coupee, St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermilion, Washington, West Baton Rouge and West Feliciana, continue to be suspended until Friday, September 9, 2016…” JBE 2016-57 further provided that “all other deadlines in legal proceedings provided for in Executive Order Number JBE 2016-53 in all courts, administrative agencies, and boards shall end Friday August 19, 2016.

Governor Edwards’ Executive Orders JBE 2016-53 and JBE 2016-57 are comparable to Governor Blanco’s Executive Orders KBB 2005-32, KBB 2005-48, and KBB 2005-67. In response to Hurricane Katrina, Governor Blanco issued Executive Order KBB 2005-32 on September 6, 2005, suspending “all deadlines in legal proceedings, including liberative prescriptive and peremptive periods in all courts, administrative agencies, and boards, and applied retroactively from Monday, August 29, 2005 [the date Hurricane Katrina made landfall], through Sunday, September 25, 2005.” The September 25, 2005 date was extended for an additional 30 days pursuant to Executive Order KBB 2005-48, issued September 23, 2005. In October of 2005, Governor Blanco responded to Hurricane Rita by issuing Executive Order KBB 2005-67, signed on October 19, 2005, which suspended liberative prescription and peremptive periods until Friday, November 25, 2005.

Before Governor Blanco’s authority could be challenged, the legislature approved, ratified, and confirmed Executive Orders KBB 2005-32, 2005-48, and 2005-67 in Louisiana Revised Statute § 9:5821. The legislature further enacted a Louisiana law that expressly extended the time for filing an insurance claim to September 1, 2007, for Hurricane Katrina and to October 1, 2007, for Hurricane Rita. La. Rev. Stat. § 22:1894. The Louisiana Supreme Court upheld the constitutionality of the enactment of these laws, determining that the laws did not violate the state and federal contract clauses, the federal Supremacy Clause, or insurance companies’ procedural due process rights. State v. All Prop. & Cas. Ins. Carriers Authorized & Licensed To Do Bus. In State, 2006-2030, p. 3 (La. 8/25/06); 937 So. 2d 313, 317. The Court did not discuss the issue of whether Governor Blanco exceeded the authority given to the governor under the statute.

Although the extent of Governor Edwards’ authority pursuant to Louisiana Revised Statute §§ 29:721-739 has not yet been challenged, the legislature has not approved and ratified Executive Orders JBE 2016-53 and JBE 2016-57 as the legislature did for Governor Blanco’s Executive Orders. This means that Governor Edwards’ authority to issue Executive Orders JBE 2016-53 and JBE 2016-57 remains susceptible to challenge.

Under Louisiana Law, most insurance contracts cannot limit the time for the insurer to file a claim against the insurer to a period shorter than one year. La. Rev. Stat. § 22:868(B). Louisiana citizens impacted by Hurricane Katrina and Hurricane Rita had one year from the date of each storm to file insurance claims against their insurer, which would have expired on August 29, 2006, for Hurricane Katrina and September 25, 2006, for Hurricane Rita. However, under Governor Blanco’s Executive Orders, the deadline to file claims against insurance companies would have extended beyond the one-year statutory allowance, which may have exceeded Governor Blanco’s authority under Louisiana Revised Statutes §§ 29:721-739, if the legislature had not approved and ratified her executive orders.

Similarly, Louisiana citizens impacted by the Great Flood of 2016 would have had one year from the date of the flood to file insurance claims against their insurers, which would expire at various times between August 12, 2017, and August 15, 2017. Governor Edwards’ extension of these deadlines may be unauthorized under Louisiana Revised Statutes §§ 29:721-739, if a court finds this action to be an attempt to exercise legislative power.

Executive Orders JBE 2016-53 and JBE 2016-57 are distinguishable from Executive Order BJ 2012–16 issued by Governor Jindal on August 29, 2012, in response to Hurricane Isaac. An explanation of Executive Order BJ 2012-16 will prove useful in understanding the First Circuit Court of Appeal’s determination in Louisiana Hosp. Ass’n v. State that “there is no provision in La. R.S. 29:724 that permits the governor to enact substantive law.” Executive Order BJ 2012–16 was issued to provide for the “LIMITED TRANSFER OF AUTHORITY TO COMMISSIONER OF INSURANCE FOR EMERGENCY RULES FOR HURRICANE ISAAC.” The Order, issued in response to Hurricane Isaac, gave the Insurance Commissioner the Governor’s powers under Louisiana Revised Statute § 29:724. The Insurance Commissioner then implemented Emergency Rule 26, which prohibited out-of-network health care providers from sending written or electronic communication to insureds to attempt to collect any amount that was not fully paid by the insured or the health insurance issuer.

The First Circuit Court of Appeal held that Governor Jindal, and by extension the Insurance Commissioner, did not have authority to issue this emergency rule. Louisiana Hosp. Ass’n v. State, 2013-0579, pp. 13-14 (La. App. 1 Cir. 12/30/14); 168 So. 3d 676, 686–87, writ denied, 2015-0215 (La. 5/1/15); 169 So. 3d 372. The First Circuit explained that the statutory scheme in Louisiana Revised Statutes § 29:721 et seq. was enacted by the legislature “to enable the governor and parish presidents to declare a state of emergency for the stated purposes of, among other things, preserving the lives and property of the state . . . .” The legislature did not intend to convey legislative authority upon the governor during a state of emergency. Although Section 29:724 (D)(1) permits the governor to “[s]uspend the provisions of any regulatory statute prescribing the procedures for conduct of state business . . . if strict compliance with the provisions of any statute, order, rule, or regulation would in any way prevent, hinder, or delay necessary action in coping with the emergency,” there is no provision in Louisiana Revised Statute § 29:724 that permits the governor to enact substantive law. The court found that enacting Rule 26 was an exercise of legislative power, and was therefore inappropriate.

Governor Edwards’ Executive Orders JBE 2016-53 and JBE 2016-57 could be interpreted as an unauthorized exercise of legislative power because it appears to conflict with Louisiana law governing insurance contracts in Louisiana Revised Statute § 22:868(B) and has not been approved and ratified by the legislature. If the legislature intended give the governor the authority to extend legal deadlines, Louisiana Revised Statute § 22:1894 should not have been limited to insurance claims for Hurricane Katrina and Hurricane Rita. Instead, the legislature could enact a law that expressly allows the governor to extend the prescriptive and peremptive periods with ascertainable standards. For example, the legislature could require that the time period for the limitation be equivalent to the amount of time the courts were closed as a result of the emergency or disaster. This standard would give consistency to the executive orders issued by governors regarding legal deadlines in a time of emergency or disaster without leaving the extensions open to challenges as unauthorized exercises of legislative power.