Tax Services • Published 6/28/2017 2017 Louisiana Regular Legislative Session Summary

The Louisiana regular legislative session concluded on June 8. Below is a summary of the tax legislation changes that came out of the 2017 regular session of the Louisiana legislature. If you have any questions or want to learn more about how these changes affect you or your business, please contact us.

Income Tax

Educational Expense Credit (S.B. 25, ACT 375)

Effects:

• Sunsets the educational expense credit contained in La. Rev. Stat. Ann. § 47:297(D)(1).
• Confirms that changes made to the credit under Act No. 125 of the 2015 Regular Session are repealed.

Effective Date: June 23, 2017

Permanent Reduction of Credits (S.B. 79, ACT 400)

Effects:

• Repeals the credit reduction sunset contained in Act 125 of the 2015 Regular Session.
• Further reduction for certain tax credits.
• Explains the interaction of S.B. 79 with other legislation affecting certain tax credits, such as H.B. 454 and S.B. 25 of the 2017 Regular Session.

Effective Date: June 27, 2017, but generally applicable to tax periods beginning on or after January 1, 2017.

Credit for Donations to School Tuition Organization (S.B. 95, ACT 377)

Effects:

• Modifies the tax rebate for donations to school tuition organizations into a nonrefundable tax credit for donations made on or after January 1, 2018.
• Creates a three-year carryforward period for any excess credit.
• Adds additional requirements that school tuition organizations must meet in order to qualify for the credit program.
• Adds additional verification requirements for the Department of Education with respect to students receiving scholarships from a school tuition organization.

Effective Date: June 23, 2017 for donations made on or after January 1, 2018.

Termination of Credits (S.B. 172, ACT 403)

Effects:

• Terminates the following credits as of January 1, 2020
  1. Atchafalaya Trace Heritage Area Development Zone tax credit; Y
  2. Corporation tax credit for establishing or expanding a business in Louisiana;
  3. Tax credits for contributions to educational institutions;
  4. Jobs credit;
  5. Credit for employment of nonviolent offenders;
  6. Reduction to tax for mental/physical incapacity;
  7. Credits for military service members/dependents for hunting and fishing licenses;
  8. Credit for Louisiana Citizens Property Insurance Corporation assessment.
• Terminates the following credits January 1, 2022:
  1. Historic rehabilitation tax credit;
  2. Credit for conversion of vehicles to alternative fuel.
• Reinstate full amount of insurance tax premium offset credit.

Effective Date: June 28, 2017

Alternative Fuel Tax Credit (S.B. 243, ACT 325)

Effects:

• Converts the credit to a nonrefundable credit for purchases of qualifying property on or after January 1, 2018.
• Creates an additional requirement for commercial vehicles such that they must be registered in Louisiana and used primarily in Louisiana for 4 years after the conversion.
• Clarifies that costs associated with fueling station infrastructure that is not directly related to the delivery of an alternative fuel into the fuel tank of motor are not included in the cost of qualified clean-burning motor vehicle fuel property.
• Limits the credit to 30% of qualifying costs.
• Repeals the sunset provision of the 2015 tax credit reductions as it relates to this credit.

Effective Date: June 22, 2017.

Research and Development Tax Credit (H.B. 300, ACT 336)

Effects:

• Decreases the amount of research and development credit to 5% of qualified expenditures less the base amount for any entity that employs one hundred or more persons; 10% of qualified expenditures less the base amount if the entity employs fifty to ninety-nine persons; 30% of the qualified expenses less the base amount, if the taxpayer employs less than 50 persons.
• Modifies the definition of base amount for an entity that employs 50 or more persons, such the base amount is 80% of the average annual qualified research expenses within Louisiana during the three prior taxable years, while, for those entities that employ less than 50 persons, the base amount will be 50% of qualified research expenses within Louisiana during the three prior years.
• Allows a research and development tax credit for those taxpayers who receive certain grants from the federal Small Business Technology Transfer Program in addition to those who receive a federal small Business Innovation Research Grant and limits the amount of such credit to 30% of such aware.
• Creates new law such that research and development tax credits for tax years 2018 and later that are based on participation in the Small Business Technology Transfer Program or the Small Business Innovation Research Grant program not previously claimed by any taxpayer may be transferred or sold to another Louisiana taxpayer, subject to certain conditions.
• Finally, modifies the sunset of the research and development credit such that the credit will not apply to expenditures incurred or grants received after December 31, 2021.

Effective Date: June 22, 2017 and applicable to tax years beginning or after January 1, 2017.

Credit for Residential Improvements made by Disabled Persons (H.B. 337, ACT 270)

Effects:

• Expands the credit to include renovation of an existing dwelling if the taxpayer, the taxpayer’s spouse, or other dependent has a physical disability that requires, or will require, modifications for accessibility.
• Explains the allocation of the credit if the qualifying dwelling is owned by two or more taxpayers who qualify for and claim a homestead exemption on the dwelling, such that the credit will be limited to the pro-rate ownership interest of each taxpayer.
• Sets the amount of the credit at $5,000 or the cost of the renovation or whichever is less and sets a carryforward for five years.
• Addresses applicability of credit to certain leased property.
• Limits the total amount of credits per year to $500,000.
• Addresses applicability of changes made to the credit during the 2015 regular session.

Effective Date: January 1, 2018.

Rural Health Care Professional Tax Credit (H.B. 427, ACT 342)

Effects:

• Modifies the existing tax credit such that is available to  physicians, dentist, or primary care nurse whose primary office  is located in an area that is both a primary care high needs geographic health professional shortage area as designed by the general government and a rural area as defined the Louisiana Department of Health.
• Tasks the Louisiana Department of Health with certifying practitioners for the credit.
• Provides that the credit will be subject to recapture or disallowance of the taxpayer does not maintain compliance with the credit requirements.
• Limits the availability of the credit per taxpayer to five years.
• Provides that the annual credit limit is $1.5 million.
• Sunsets the credit such that no credit will be certified for applications for the credit received on or after January 1, 2021.

Effective Date: January 1, 2018.

Dividend Exclusion (H.B. 555, ACT 352)

Effects:

• Provides for deduction from gross income for amounts received as dividend income by any member of regulated group of entities.
• This generally applies to groups of entities regulated by the Louisiana Public Service Commission as a telecommunications provider or an electric utility.

Effective Date: January 1, 2018.

Tax Consequences for Disaster/Emergency-Related Work (H.B. 639, ACT 358)

Effects:

• Provides for an exclusion from the gross income for nonresident businesses engaged in disaster or emergency-related work in Louisiana during a declared disaster for all income received for disaster or emergency-related work conducted during the disaster period. Furthermore, such businesses will not be considered to have the requisite contact that would require registration, filing, or remitting income taxes in Louisiana. Any nonresident business that remains in the state after the disaster period shall be subject to the state’s normal nexus standards. Modifies the definition of “allocable income” for nonresident corporations to exclude income from emergency-related work rendered during a declared disaster and makes clear that such income is also excluded from apportionable income.
• Provides for an exclusion from income of out-of-state employees any compensation for personal services rendered by a nonresident individual who is an out-of-state employee during a declared disaster. In addition, such employees will not be considered to have established residency or presence in Louisiana that would require income tax filing or withholding. Any out-of-state employee that remains in the state after the disaster period shall be subject to the state’s normal nexus standards. Modifies the definition of “allocable income” for nonresident individuals to exclude salaries, wages, or other compensation received by a nonresident individual for personal services rendered during a declared disaster and makes clear that such income is also excluded from apportionable income.
• Clarifies that both nonresident business and out-of-state employees will be required to pay transaction taxes and fees (such as motor fuel taxes, hotel occupancy taxes, sales/use taxes) as required unless those taxes are exempted during the disaster period.
• Allows the Department of Revenue, by request, to require registered businesses to provide written notice of any requests for nonresident businesses to perform disaster or emergency-related work in the state.
• Modifies the definition of wages for withholding purposes to exclude remuneration paid for services performed by a nonresident individual during a declared disaster.

Effective date: This law shall become effective on July 1, 2017 but shall apply to all tax years beginning on or after January 1, 2018.

Sales Tax

Louisiana Tax Free Shopping Program (S.B. 30, ACT 318)

Effects:

• Extends the termination of the Louisiana Tax Free Shopping Program to July 1, 2023.  Prior to this extension the program would have terminated on July 1, 2017.

Effective date: Upon signature of the governor

 

Sunset date: July 1, 2023

Painting of Transport Category Aircraft (S.B. 93, ACT 279)

Effects:

• Provides that surface preparation, coating and painting of certain aircraft are exempt from state sales and use tax.
• Such services are not considered repairs of tangible personal property nor fabrication for state sales tax purposes.
• Qualifying aircraft are: 1) fixed or rotary wing military aircraft; or 2) certified transport category aircraft so long as the FAA registration address of the aircraft is not in Louisiana.

Effective date: July 1, 2017.

Agricultural Sales and Use Tax Exemptions (S.B. 97, ACT 378)

Effects:

• Makes five existing agricultural exemptions applicable to “commercial farmers” and defines commercial farmer for purposes of sales and use tax.
• “Commercial Farmer” means only those persons occupationally engaged in producing food or agricultural commodities for sale. The term is limited to those persons’ partnerships, or corporations regularly engaged in the commercial production for sale of vegetables, fruits, crops, livestock, poultry, or other food or agricultural products that report farm income and expenses on a federal Schedule F filed by a person assigned a NAICS code beginning with 11.
• The applicable exemptions are:
  • R.S. §47:301(10)(e) – The sale of raw agricultural commodities, including, but not limited to feed, seed, and fertilizer, to be used in preparing, finishing, manufacturing, or producing crops or animals for market.
  • R.S. §47:305.3 – The sale of seeds for use in planting of any kind of crops.
  • R.S. §47:305.8 – The sale of pesticides used for agricultural purposes.
  • R.S. §47:305.37 – Diesel fuel, butane, propane or other liquefied petroleum gases used or consumed for farm purposes. (currently subject to 1% state sales tax)
  • R.S. §47:305.63 – Polyroll tubing sold or used for commercial farm irrigation. (currently subject to 3% state sales tax through June 30, 2018)

Effective date: January 1, 2018

Medical Devices (S.B. 180, ACT 416)

Effects:

• Reinstates the full state sales tax exemption for medical devices under LA. R.S. §47:305(D)(1)(s) effective July 1, 2017.
• These items are currently subject to 3% state sales tax based on the suspension of exemptions by Acts 25 and 26 of the 2016 First Extraordinary Legislative Session.
• Covers “medical devices” used by a patient in the treatment of disease under the supervision of a physician or administered by a physician, nurse or other healthcare professional.

Effective date: July 1, 2017 

Dental Devices (S.B. 241, ACT 395)

Effects:

• Reinstates the full state sales tax exemption for orthotic devices, prosthetic devise, prostheses, restorative materials, and other dental devices under LA. R.S. §47:305(D)(1)(t) effective October 1, 2017.
• These items are currently subject to 3% state sales tax based on the suspension of exemptions by Acts 25 and 26 of the 2016 First Extraordinary Legislative Session.

Effective date: July 1, 2018

Construction Contracts when Tax Rate Increases (H.B. 264, ACT 209)

Effects:

• Adds fixed fee and guaranteed maximum contract types to LA. R.S. §47:305.11(A), which formerly applied only to lump sum and unit price contracts.
• This exemption protects contractors with such contracts in force when a sales tax increase occurs by exempting the purchases for the qualifying contract from the increased tax rate.

Effective date: June 14, 2017.

Precious Metals and Coins (H.B. 396, ACT 340)

Effects:

• Reinstates the full state sales tax exclusion for sales of platinum, gold and silver bullion effective October 1, 2017.
• Reinstates the full state sales tax exclusion for numismatic coins that have a sales price of no more than one thousand dollars effective October 1, 2017.
• Adds an exclusion for numismatic coins sold at a national, statewide, or multi-parish numismatic trade show and makes it fully effective as of October 1, 2017.
• The above exclusions are subject to 3% state sales tax based on the suspension of exemptions by Acts 25 and 26 of the 2016 First Extraordinary Legislative Session.
• Eliminates the existing exclusion for numismatic coins sold for a price in excess of one thousand dollars unless sold at trade show as described above, effective upon the signature of the governor. Such coins will then be subject to the full state and local sales tax.

Effective date: June 22, 2017, with additional effectiveness as of October 1, 2017.

Establishment of Louisiana Local Sales Tax Board and the Louisiana Sales and Use Tax Commission for Remote Sellers (H.B. 601, ACT 274)

Effects:

• Establishes the La. Uniform Local Sales Tax Board as a political subdivision of the state for the purpose of promoting certain uniform procedures and policies concerning the collection and administration of local sales and use taxes, and to provide policy advice and support to local sales and use tax collections.
  • Provides that the board be composed of the following eight members:
  • The executive director of the La. Municipal Association.
  • The executive director of the School Boards Association.
  • The executive director of the Police Jury Association.
  • The executive director of the La. Sheriffs Association.
  • The head of a single parish collector's office appointed by the executive board of the La. Municipal Association.
  • The head of a single parish collector's office appointed by the board of directors of the La. School Boards Association.
  • The head of a single parish collector's office appointed by the executive board of the Police Jury Association of La.
  • The head of a single parish collector's office appointed by the executive committee of the La. Sheriffs Association.
• Authorizes the board to do the following:
  • Support and advise local tax collectors concerning collection and administration of local taxes.
  • Promulgate rules and regulations pursuant to the Administrative Procedure Act relating to local sales and use tax, specifically including rules for a voluntary disclosure program and a uniform refund request and approval process.
  • Enter into agreements and contracts with local government entities and tax collectors, the state, and various service providers such as legal counsel, auditors, and other activities.
  • Prescribe uniform forms and model procedures to be used by local sales and use tax collectors, which shall include a coordinated multi-parish audit process.
  • Procure the development of computer software and equipment for the collection and administration of local sales and use taxes.
• Establishes the La. Sales and Use Tax Commission for Remote Sellers as an independent agency within the Dept. of Revenue for the administration and collection of state and local sales and use taxes related to remote sales, and to provide for policy uniformity and simplicity in sales and use tax compliance for remote sellers.
  • Provides that the commission shall be composed of eight members as follows:
    • The secretary of the Dept. of Revenue.
    • Three employees of the Dept. of Revenue appointed by the secretary.
    • Four appointed members appointed to serve from the La. Uniform Local Sales Tax Board.
  • Provides that the commission serve as the single entity in required under any federal law that may require remote sellers to collect and remit sales and use tax on La. sales. To accomplish this, activities of the commission shall include:
    • Establish the minimum tax administration, collection, and payment requirements required by federal law with respect to the collection and remittance of sales and use tax imposed on remote sales.
    • Establish a fiscal agent solely for the purpose of remote seller remittances.
    • Serve as the single entity in La. to require remote sellers to collect and remit to the commission sales and use taxes on remote sales sourced to La.

Effective date: June 16, 2017.

Polyroll Tubing, Residential Fuel or Gas, and Radiation Therapy Treatment Centers (H.B. 629, ACT 424)

Effects:

• Adds polyroll tubing for commercial farm irrigation to the exemption under LA. R.S. §47:305.25(A) for the first $50,000 on the purchase of certain farm equipment. This is effective as of October 1, 2017 and will exempt such tubing from 4% of the current 5% state sales tax on the first $50,000 of the purchase price.
  • Under LA. R.S. §47:305.63, polyroll tubing sold or used for commercial farm irrigation is currently subject to 3% state sales tax.
• Clarifies that the exclusion for the sale of any fuel or gas, including butane and propane under LA. R.S. §47:301(10)(x)(i) applies only sales for residential use.
  • Such sales are currently subject to 3% state sales tax based on the suspension of exemptions by Acts 25 and 26 of the 2016 First Extraordinary Legislative Session.
• Reinstates the full exemption from state sales tax on purchases, leases and repairs of capital equipment by qualifying radiation therapy treatment centers under LA. R.S. §47:305.64 effective July 1, 2017.
• Also adds The Willis-Knighton Health Systems in Shreveport, Louisiana to the list of qualifying radiation therapy treatment centers.
  • Such sales are currently subject to 3% state sales tax based on the suspension of exemptions by Acts 25 and 26 of the 2016 First Extraordinary Legislative Session.

Effective date: June 26, 2017

Property Tax

Construction Work in Process (S.B. 140, Constitutional Amendment)

Effects:

• Provides for exemption from Ad Valorem tax all property that is delivered to a construction project site for the purpose of incorporating the property into any tract of land, building, or other construction as a component part, including the type of property that may be deemed to be a component part once placed on an immovable for its service and improvement.
• The exemption applies until the construction project is complete. The project shall be deemed complete when construction is finished to the extent that the project can be used or occupied for its intended purpose.
• For projects completed in phases, any phase of the project that is complete, available for its intended use, or operational will cease to be exempt.
• Such property has customarily been exempt from assessment in Louisiana, however, this will put the exemption in the constitution to protect it going forward.

Effective date: Effective if approved by the electors during the statewide election on October 14, 2017

Exemption for Surviving Spouses of First Responders Who Died in the Line of Duty (H.B. 145, Constitutional Amendment)

Effects:

• Provides for exemption from Ad Valorem tax for the total assessed value of the homestead of the unmarried surviving spouse of a person who died while on active duty serving one of the following roles beginning with the tax year 2018 and thereafter:
  • An emergency medical responder, technician, or paramedic;
  • A volunteer firefighter;
  • A law enforcement or fire protection officer who would have qualified for the salary supplement authorized in Section 10(D)(3) of this article if he had comp0leted the first year of his employment before death;
• There is currently an exemption for surviving spouses of the following persons who died in the line of duty:
  • A member of the armed forces of the Unite States or the Louisiana National Guard;
  • A State police officer;
  • A law enforcement or fire protection officer who qualified for the salary supplement authorized in Section 10(D)(3) of this article;
• The qualifying property is a property that qualified for the homestead exemption and was the place of residence of the first responder at the time of death; and
• The surviving spouse has not remarried; and
• The surviving spouse annually provides evidence of their eligibility for the exemption.

Effective date: Effective January 1, 2018 if approved by the electors during the statewide election on October 14, 2017

Inventory Tax Credit (S.B. 182, ACT 385)

Effects:

• Modifies the limit on refundability of ad valorem taxes for related taxpayers to those taxpayers that are included in one consolidated federal income tax return.

Effective Date: June 23, 2017, applicable to all claims for credits on any return filed on or after July 1, 2017, regardless of the taxable year to it relates, except that this change shall not apply to any credits properly claimed on an original return filed prior to July 1, 2017.

Inventory Tax Credit (H.B. 313, ACT 338)

Effects:

• Modifies the definition of “inventory” to include any items of tangible personal property owned by a retailer that is available for or subject to a short-term rental and that will subsequently or ultimately sold. Further states that any items meeting this definition will not otherwise be exclude from inventory.
• Updates the definition of “retailer” to include a person engaged in the short-term rental of tangible personal property under NAICS codes 532412 and 532310.

Effective Date: June 22, 2017, but retroactive to tax periods beginning on or after July 1, 2016.

Ad Valorem Tax Credits for Vessels in Outer Continental Shelf (H.B. 425, ACT 418)

Effects:

• Modifies current law by allowing a credit to be taken for ad valorem taxes paid under protest.
• Current law is expanded to allow disclosure of this information to courts, arbitrators, and administrators of the Master Settlement Agreement and the NPM Adjustment Settlement Agreement.

Effective date: July 1, 2017.

Incentive Programs & Credits

Ports of Louisiana Tax Credits (S.B 150, ACT 245)

Effects:

• Provides for termination of the investor and import-export cargo tax credits under LA. R.S. §47:6036 as of July 1, 2021.
• This program was scheduled to terminate on July 1, 2020 before this extension.

Effective date: June 14, 2017.

Termination Dates for Various Programs and Credits (S.B. 178, ACT 178)

Effects:

• Provides that no contracts for the Corporate Tax Apportionment Program under LA. R.S. §47:3331 shall be entered into on or after July 1, 2017.
• Provides that no Angel Investor Tax Credits shall be reserved on or after July 1, 2021 for this program under LA. R.S. §47:6020.
• Provides that no credit will be allowed for the Sound Recording Investor Tax Credit under LA. R.S. §47:6023 on or after July 1, 2021.
• Provides that no credit will be allowed for the Green Jobs Industries credit under LA. R.S. §47:6037 on or after July 1, 2017.
• Provides that no contracts shall be entered into for the Industrial Exemption program under LA. R.S. §51:1807 on or after July 1, 2017.
• Provides that no contracts shall be entered into for the Technology Commercialization Credit under LA. R.S. §51:2354 through 2356 on or after July 1, 2017.

Effective date: June 22, 2017 and on the dates specified above.

Quality Jobs Program Changes and Termination Dates for Various Programs Administered by LED (S.B 183, ACT 386)

Effects:

• Provides that no contracts for the University Research and Development Park under LA. R.S. §17:3389(G) shall be entered into on or after July 1, 2017.
• Provides that no advance notifications will be accepted on or after July 1, 2021 for the Enterprise Zone program under LA. R.S. §51:1787.
  • This program was scheduled to sunset on July 1, 2017 before this extension.
• Provides that no cooperative endeavor agreements for the Louisiana Mega-Project Energy Assistance Rebate under LA. R.S. §51:2367 shall be entered into on or after July 1, 2017.
• Provides that no new contracts shall be approved for the Competitive Projects Payroll Incentive Program under LA. R.S. §51:3121 shall be approved on or after July 1, 2022.
  • This program was scheduled to sunset on July 1, 2018 before this extension.
• The Quality Jobs Program under LA. R.S. §51:2452 through 2458 has been amended as follows:
  • Headquarters has been added as a qualifier for the program;
  • The hourly pay for the qualifying benefit rates of 4% (reduced from 5%) and 6% has been increased to $18 and $21.66 per hour respectively.
  • The healthcare requirement has changed to “be in compliance with federally mandated healthcare requirements or, if no federally mandated healthcare requirements exist, shall be determined to have a value of at least $1.25 per hour.
  • For businesses with more than more than fifty employees, there must be 15 (up from 5) net new jobs created and gross payroll of $675,000 (up from $500,000) when the employer is applying for his third annual rebate.
  • For businesses with NO more than more than fifty employees, there must be 5 net new jobs created and gross payroll of $225,000 (down from $250,000) when the employer is applying for his third annual rebate.
  • Provides that an employer utilizing Quality Jobs shall not receive any other nondiscretionary statutory incentive for payroll expenditures for which this program has paid benefits.
  • These changes apply only to QJ Advance Notifications filed on or after July 1, 2017.

Effective date: June 23, 2017, however see the dates specified above for specific programs.

Film Tax Credits (S.B. 254, ACT 309)

Effects:

• Modifies various definitions for film tax credit purposes.
  • Includes marketing and promotion expenses in the definition of “production expenditures” for productions certified on or after July 1, 2015. Further provides that “production expenditure” does not include certain other expenses, such as expenditures for related party transaction that have been limited, the production expenditure verification report fee.  Limits expenditures for Above the Line salaries for the production to 40% of such amounts.  “Production expenditure” also does not include most bond fees, insurance premiums, and similar amounts unless the expenditures are made to a Louisiana resident, Louisiana financial institution, or other entity with a principal place of business in Louisiana.  In addition, catering and craft services expenditures are excluded for all applications received on or after July 1, 2017, unless the expenditures are made to a source within Louisiana.
  • Modifies definition of resident to mean a natural person required to file a Louisiana tax return.
  • Amends the definition of “source within the state” to describe procurement companies that qualify as a source within the state, generally requiring Louisiana contact such as physical presence and employees within the state.
  • Adds multiple new definitions, including the definition of “legacy credit” is credit whose final certification was issued before July 1, 2017 and that has not yet expired, that hasn’t been claimed as a credit or transferred to the Department of Revenue before July 1, 2017.
• Expands credit to certain expenditures related to qualified entertainment companies.
• Makes changes to credit for state-certified productions after July 1, 2017
  • Allows a credit of 25% of the base investment, if the base investment is greater than $300,000 or the production qualifies as a Louisiana screenplay production. Provides for an increase in the base investment credit rate in certain situations.
  • Adds additional credit if the base investment is spent on expanding Louisiana payroll or on certain visual effects expenditures.
  • The maximum base investment credit is 40%.
  • Provides that the initial certification shall be good for expenditures made 12 months prior to and 24 months after the initial certification, with special rules for state-certified productions for scripted episodic content.
  • Adds a provision that productions receiving credits have to acknowledge the financial benefit in promotional materials and participate in career-based learning and training programs.
• Adds a company-based payroll tax credit for qualified entertainment companies and provides certain certification requirements for participation. Further provides for the application procedure and actual granting of the credit.
• Enacts a provision to prevent disguised sales of credit through partnerships such that allocation of credits will not be respected unless they have “substantial economic effect” as that term is used for federal partnership tax purposes.
• Sets the amount at which credits can be transferred back to the department of revenue by the motion picture company:
  • For projects that apply on or after July 1, 2009 and before July 1, 2017: 85% of the face value.
  • For projects that apply on or after July 1, 2017: 90% of the face value.
  • Beginning July 1, 2017, legacy credits that are recorded in the credit registry by January 1, 2018 may be transferred for 85% of face value.
• Prohibits transfers of credits to other taxpayers for projects that apply on or after July 1, 2017.
• Provides rules regarding final certification.
• Prohibits award of credits for applications received on or after July 1, 2025.
• Provides rules related to the credit cap and allocation of the credit cap. For applications submitted on or after July 1, 2017, the cap is $150 million per fiscal year.
• Provides rules for the taxpayer credit cap such that only $180 million of credits can be used against income tax or transferred to the Department of Revenue each fiscal year beginning July 1, 2017.

Effective Date: June 15, 2017.

Musical and Theatrical Production Credit (S.B. 248, ACT 396)

Effects:

• Provides that no credits for applications received on or after July 1, 2025.
• Eliminates current credit caps contained in the statute.
• Creates new cap, effective July 1, 2017, limiting the amount of credits issued to $10 million.
• Reserves 50% of the credits for nonprofit productions.
• Repeals the sunset provision of the 2015 tax credit reductions as it relates to this credit.

Effective Date: July 1, 2017.

Solar Tax Credits (H.B. 187, ACT 413)

Effects:

• Limits the availability of the solar tax credit to systems purchased and installed before January 1, 2016.
• Adds a provision such that, even if the fiscal cap is reached, a taxpayer will still receive the full amount of the credit as long as its system qualifies for the credit and provided that any amended returns claiming a credit that would have been otherwise denied due to the cap are filed by September 1, 2017. All supporting documentation required for a complete claim must be filed with the Department of Revenue by November 1, 2017.
• Provides that interest on the credit will begin to accrue 90 days from October 1, of the year which relates to the fiscal year credit cap from which the credit or installment of credit is paid.
• Provides that the credit will be payable to taxpayers in 3 equal installments from fiscal years 2017-2018 to fiscal years 2019-2010, with the maximum amount of credits allowed in any year of $5 million. Any remaining balance will be paid in fiscal year 2020-2021. No credits will be paid after fiscal year 2020-2021.
• Modifies the amount of credit for leased systems installed on or after January 1, 2014 and before July 1, 2015.

Effective Date: June 26, 2017

Enterprise Zone Program (H.B. 237, ACT 206)

Effects:

• Provides that no advance notifications will be accepted on or after July 1, 2021 for the Enterprise Zone program under LA. R.S. §51:1787.
• This program was scheduled to sunset on July 1, 2017 before this extension.

Effective date: June 14, 2017

Angel Investor Tax Credit (H.B. 454, ACT 345)

Effects:

• Provides for termination of the Angel Investor Tax Credit program such that no credits will be granted or reserved for applications received on or after July 1, 2021. This provision is effective July 1, 2017.
• Creates a cap for the credit program such that total credits granted in a calendar year shall not exceed $3.6 million. This provision is effective July 21, 2018.
• Creates an additional circumstance requiring recapture of the credit if, in the three-year period after the tax credit certificate was issued to the investor, the investor transfers the equity to an entity, trust, or other organization under the control of the investor. This provision is effective July 21, 2018.
• Repeals the sunset provision of the 2015 tax credit reductions as it relates to this credit. This provision is effective July 21, 2018.

Effective date: Effectives date vary; see description in Effects, above.

Film Tax Credits (H.B. 508, ACT 223)

Effects:

• Modifies the transfer fee for film tax credits; the fee will be $200 per transferee for projects that apply to the office prior to July 1, 2017 and 2% of the tax credit transfer value for projects that apply to the office on or after July 1, 2017.
• Creates a special fund in the state treasury for the fees and provides for allocation/use of funds.

Effective Date: Effective June 15, 2017 with the enactment of SB 254 (ACT309).

Miscellaneous Tax

Aviation Gasoline (H.B. 230, ACT 145)

Effects:

• Redefines aviation gasoline for purposes of the exemption from gasoline tax as follows: “Aviation gasoline” is any gasoline which is intended for or primarily used for propelling aircraft, which is invoiced as aviation gasoline or is received, sold, stored, or withdrawn from storage by any person for the purpose of propelling aircraft. (LA. R.S. §47:716.1)
• Redefines aviation gasoline for purposes of the exemption from special fuels tax as follows: “Aviation gasoline” is any gasoline which is intended for or primarily used for propelling aircraft, which is invoiced as aviation gasoline or is received, sold, stored, or withdrawn from storage by any person for the purpose of propelling aircraft. (LA. R.S. §47:818.2)

Effective date: July 1, 2017

Severance Tax Exemptions for Inactive and Orphan Wells (H.B. 461, ACT 421)

Effects:

• Current law authorized a five year exemption from severance tax for production from oil and gas wells that are returned to service after being inactive for two or more years or having thirty days or less of production during the past two years (inactive well), effective July 1, 2006 through June 30, 2010.
• New law provides for an incentive for production from an inactive well from a five year exemption to a 50% rate reduction for 10 years, and by establishing a new effective period beginning July 1, 2018 through June 30, 2023.
• New law establishes an incentive for production from a well with orphan well designation for more than 60 months. Production would be taxed at 75% of the normal rate for 10 years, effective for the period from July 1, 2018 through June 30, 2023.
• New law provides that to qualify for the reduced orphan and inactive well tax rate that the oil and gas production be produced within the same producing interval or within 100 feet above or below the producing interval that the well-produced from before being inactive or designated as an orphan well.
• New law requires the Dept. of Revenue to notify the commissioner of conservation to cease certification of new inactive and orphan wells for the remainder of the fiscal year if the severance tax paid at the reduced orphan and inactive rate rises above $15 million in any fiscal year.

Effective date: See description for effective dates 

Telecommunications Tax for the Deaf (H.B. 582, ACT 273)

Effects:

• Current tax is five cents per month on each residence and business customer telephone access line of the local exchange companies. This tax is eliminated.
• New tax is four and one-half cents per month to be assessed per line for each wireline access line and per telephone number for each wireless handset device for each residential and business customer of a local or wireless telecommunication service company operating in Louisiana.
• The tax does not apply to wireless devices used only for data purposes or to prepaid wireless devices.

Effective date: October 1, 2017.

 
Premium Tax Credit (H.B. 664, ACT 313)

Effects:

• Modifies the definition of “qualifying Louisiana investment” for purposes of the insurance premium tax credit for health maintenance organizations by noting that otherwise qualifying investments will only be considered “qualifying Louisiana investments” if the health maintenance organization offers fully insured commercial or Medicare Advantage products; is domiciled, licensed, and operating in Louisiana; maintains its primary corporate office and at least 70% of its employees in Louisiana; and, maintains its core business functions in Louisiana.
• This also modifies current law such that this is definition of “qualifying Louisiana investment” is effective for all tax years beginning on or after January 1, 2017.

Effective date: Effective January 1, 2018.

 

Administrative Provisions

Income Tax Withholding (S.B. 177, ACT 384)

Effects:

• Modifies withholding requirements for payments that are production expenditures to require withholding at the rate on the employee’s withholding allowance certificate rate and if there is no certificate, at the highest individual rate.

Effective Date: July 1, 2017.

Procurement Law Changes/Tax Clearance Certificates (H.B. 307, ACT 211)

Effects:

• Adds an additional requirement such that, before approving a proposed contract, the state procurement officer ensures that the prospective contractor is current in filing and paying all required taxes and fees as required by the Department of Revenue. Provides further that Secretary of the Department of Revenue is authorized to disclose tax information upon request of the state procurement officer in order to aid his determination of tax compliance.
• Enacts a new law such that no sales tax resale certificates shall be issued or renewed unless the applicant is current in all tax obligations.
• Enacts a new law such that no contract that requires the review and approval of the central purchasing agency shall be approved unless the chief procurement officer has received a tax clearance certificate for the contractor, absent an exception (generally due to type of contract, source of funding, or limited source of procurement)

Effective date: June 14, 2017; applicable to any request for insurance/renewal of a resale certificate or to any approval/request for approval of a contract submitted on or after October 1, 2017.

Contributions to Louisiana Horse Rescue Association (H.B. 566, ACT 67)

Effects:

• Allows taxpayer to designate a portion of their tax refund to the Louisiana Horse Rescue Association.

Effective Date: January 1, 2018.

Payment of Tax by Electronic Funds Transfer (H.B. 333, ACT 150)

Effects:

• Gives the Secretary of the Department of Revenue discretion to require electronic payments without limitation.
• Provides that in cases where the taxpayer can provide it would cause undue hardship to the taxpayer, the Secretary of the Department of Revenue shall exempt the taxpayer from electronic payment.
• Requires electronic filing of individual income tax returns filed by a tax preparer that prepares and files more than 100 individual income tax returns per year and allows the Secretary to require electronic filing of any other type of tax return or report.
• Provides procedures for request of waiver of certain penalties related to failure to comply with electronic filing requirements.

Effective Date: June 12, 2017.

Questions & Contact

If you have any questions related to these developments, please contact us today! 

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