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Regular Session, 2011
HOUSE BILL NO. 248
BY REPRESENTATIVE HENRY
TAX CREDITS: Changes the Digital Interactive Media Producer Tax Credit to a refundable
tax credit and provides other modifications to the program
AN ACT1
To amend and reenact R.S. 47:6022(A), (C)(4)(c)(i), (5), (10)(b), and (14), (D)(2), and (E)2
through (J), to enact R.S. 47:6038 and 6039 and R.S. 51:2306, and to repeal R.S.3
47:6022(K), relative to tax credits; to provide for the name and applicability of the4
digital interactive media producer tax credit; to provide for a refundable tax credit;5
to provide for rebates of tax credits under certain circumstances; to provide a tax6
credit for small business workforce expansion; to require reports by the secretary of7
the Department of Economic Development; to provide for definitions, limitations,8
and program administration; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 47:6022(A), (C)(4)(c)(i), (5), (10)(b), and (14), (D)(2), and (E)11
through (J) are hereby amended and reenacted and R.S. 47:6038 and 6039 are hereby12
enacted to read as follows: 13
§6022. Digital interactive media producer and software tax credit14
A. Short title. This Section shall be known and may be referred to as the15
"Louisiana Digital Media and Software Act".16
* * *17
C.18
* * *19
(4)20
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(c)1
(i) Software development primarily designed and developed for institutional,2
private, or internal purposes primarily for internal or operational purposes of the3
company.4
* * *5
(5) "Digital interactive media company Company" means an entity organized6
under the laws of the state of Louisiana authorized to do business in the state of7
Louisiana and engaged in the business of producing digital interactive media as8
defined in this Section. Digital interactive media company "Company" shall not9
mean or include any company owned, affiliated, or controlled, in whole or in part,10
by any company or person which:11
(a) Which has a contract or application with the Department of Economic12
Development that is in default or noncompliance.13
(b) Which is in default on a loan made by the state or a loan guaranteed by14
the state ,nor with any company or person who. 15
(c) Who has ever declared bankruptcy under which an obligation of the16
company or person to pay or repay public funds or monies was discharged as a part17
of such bankruptcy.18
* * *19
(10)20
* * *21
(b) "Production expenses" shall not include postproduction expenditures for22
any of the following:23
(i) Expenditures for or related to marketing, promotion, and distribution,24
non-production related overhead, amounts,.25
(ii) Administrative, payroll, and management services which are not directly26
related to management of the project.27
(iii) Food, entertainment, and lodging expenses.28 HLS 11RS-401 REENGROSSED
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(iv) Amounts that are later reimbursed by the state or any other1
governmental entity, costs.2
(v) Costs related to the transfer of tax credits, amounts.3
(vi) Amounts that are paid to persons or entities as a result of their4
participation in profits from the exploitation of the production,the.5
(vii) Any application fee, or state or local taxes.6
* * *7
(14) "Tax credit" means the digital interactive media producer and software8
development tax credit authorized by this Section.9
D.10
* * *11
(2) For applications for state-certified productions submitted to the office on12
or after July 1, 2009, and subsequently approved by the office and secretary, there13
are hereby authorized tax credits which shall be earned by a digital interactive media14
company at the time funds are expended in Louisiana on a state-certified production15
as follows:16
(a) A digital interactive media company shall earn tax credits Credits shall17
be earned at the rate of twenty-five percent of the base investment.18
(b) To the extent that base investment is expended on payroll for Louisiana19
residents employed in connection with a state-certified production, a digital20
interactive media company shall earn additional tax credits shall be earned at the rate21
of ten percent of the payroll.22
(c) The initial certification shall be effective for expenditures made prior to23
the date of initial certification and shall be valid until the production is completed.24
E. Application of the credit Use of tax credits.25
(1) The credit For tax credits earned for expenditures made on or before26
December 31, 2011:27
(a) The credit shall be allowed against the income or franchise tax due from28
a taxpayer for the taxable period in which the credit is earned as well as the29 HLS 11RS-401 REENGROSSED
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immediately preceding period. If the tax credit allowed pursuant to this Section1
exceeds the amount of such taxes due from a taxpayer, then any unused credit may2
be carried forward by the taxpayer as a credit against subsequent tax liability for a3
period not to exceed ten years. However, in no event shall the amount of the tax4
credit applied by a taxpayer in a taxable period exceed the amount of such taxes due5
from the taxpayer for that taxable period.6
(2) (b) All entities taxed as corporations for Louisiana income tax purposes7
shall claim their share of any credit allowed under this Section on their corporation8
income and franchise tax return. 9
(3) (c) Individuals, estates, and trusts shall claim their share of any credit10
allowed under this Section on their individual income tax return.11
(4) (d) Entities not taxed as corporations shall claim their share of any credit12
allowed under this Section on the returns of the partners or members as follows: 13
(a) (i) Corporate partners or members shall claim their share of the any credit14
on their corporation income tax returns.15
(b) (ii) Individual partners or members shall claim their share of the any16
credit on their individual income tax returns.17
(c) (iii) Partners or members that are estates or trusts shall claim their share18
of the any credit on their fiduciary income tax returns.19
F. Transferability of the credit.20
(1) (e) Any tax credits allocated to a person and not previously claimed by21
any taxpayer against his Louisiana state income or franchise tax may be transferred22
or sold by such person to another person, subject to the following conditions:23
(a) (i) A single transfer or sale may involve one or more transferees. The24
transferee of the tax credits may transfer or sell such tax credits subject to the25
conditions of this Section.26
(b) (ii) Transferors and transferees shall submit to the office and Department27
of Revenue in writing, a notification of any transfer or sale of tax credits within28
thirty days after the transfer or sale of such tax credits. The notification shall include29 HLS 11RS-401 REENGROSSED
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the transferor's tax credit balance prior to transfer, the state-certified production1
number, the name of the state-certified production, the transferor's remaining tax2
credit balance after transfer, all tax identification numbers for both transferor and3
transferee, the date of transfer, the amount transferred, a copy of the tax credit4
certificate, and any other information required by the office or the Department of5
Revenue.6
(c) (iii) Failure to comply with this Subparagraph will result in the7
disallowance of the tax credit until the taxpayers are in full compliance.8
(d) (iv) The transfer or sale of this credit does not extend the time in which9
the credit can be used. The carry forward carryforward period for credit that is10
transferred or sold begins on the date on which the credit was originally earned.11
(e) (v) The transferee shall apply such credits in the same manner and against12
the same taxes as the taxpayer originally awarded the credit.13
(2) For tax credits earned for expenditures made on or after January 1, 2012:14
(a) The tax credits shall be refundable and allowed against the individual or15
corporate income tax liability of the companies or financiers of the project in16
accordance with their share of the credit as provided for in the application for17
certification for the project. The credit shall be allowed for the taxable period in18
which expenditures eligible for a credit are expended as set forth in the final tax19
credit certification letter. Any excess of the credit over the income tax liability20
against which the credit may be applied shall constitute an overpayment, as defined21
in R.S. 47:1621(A), and the secretary of the Department of Revenue shall make a22
refund of such overpayment from the current collections of the taxes imposed by23
Chapter 1 of Subtitle II of this Title, as amended. The right to a refund of any such24
overpayment shall not be subject to the requirements of R.S. 47:1621(B).25
(b) At the time of final certification of tax credits, a company may elect, on26
a one-time basis, to receive a rebate of the credits. The amount of the rebate shall27
be eighty-five percent of the face value of the credits. Upon receipt of the final tax28
credit certification letter and any necessary additional information, the secretary of29 HLS 11RS-401 REENGROSSED
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the Department of Revenue shall make payment to the company, or its irrevocable1
designee, which may include but not be limited to a bank or other lender, in the2
amount to which he is entitled from the current collections of the taxes collected3
pursuant to Chapter 1 of Subtitle II of this Title, as amended.4
G. Certification and administration. (1) The office shall determine through5
the promulgation of F. Administration. (1) The office may promulgate rules in6
accordance with the Administrative Procedure Act to establish the policies and7
program elements regarding project qualifications for state-certified productions and8
any other matter necessary to carry out the intent and purposes of this Section. Such9
rules shall be subject to oversight by the House Committee on Ways and Means and10
the Senate Committee on Revenue and Fiscal Affairs.11
(a) what projects qualify as state-certified productions , and12
(b) any Any other matter necessary to carry out the intent and purposes of this13
Section. These rules shall not be effective until they are approved by the House14
Committee on Ways and Means and the Senate Committee on Revenue and Fiscal15
Affairs.16
(2) Application. A company seeking to participate in the tax credit program17
shall apply to the department through an application process established by the18
department.19
(2)(a) The (3) Certification. (a) The office shall review the company's20
application and any other information which it deems appropriate for determination21
of the project's eligibility for initial certification. For a project deemed eligible, the22
office shall submit provide an initial certification of a the project as a state-certified23
production to each digital interactive media the company and to the secretary of the24
Department of Revenue. The initial certification shall be effective for expenditures25
made no more than six months prior to the date of initial certification and shall be26
valid until the project is completed. The initial certification shall include a unique27
identifying number for each state-certified production.28 HLS 11RS-401 REENGROSSED
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(b) Prior to final certification of tax credits of a state-certified production or1
any portion thereof, the digital interactive media company shall submit to the office2
a cost report of production expenditures. The cost report of expenditures shall be3
subject to an agreed-upon procedures engagement conducted by a certified public4
accountant in accordance with statements on standards for attestation engagements5
established by the American Institute of Certified Public Accountants. The6
accountant shall issue a the cost report in the form of procedures and findings. The7
accountant shall be a certified public accountant licensed in the state of Louisiana8
and shall be an independent third party unrelated to the digital interactive media9
company. The agreed-upon procedures shall be established by the office and10
secretary, with assistance from the Society of Louisiana Certified Public11
Accountants, and shall be placed in rules promulgated in accordance with the12
Administrative Procedure Act. The department may request additional audits of the13
project expenditures, the cost of which shall be borne by the company.14
(c) Upon completion of all or a portion of a state-certified production, the15
office shall review the production expenses and, if approved by the office and16
secretary, issue a final tax credit certification letter to the digital interactive media17
company. The certification letter shall include the identifying number assigned to18
that state-certified production in the initial certification.19
(d) As a condition for receiving certification of tax credits under this Section,20
state-certified productions may be required to display the state brand or logo, or both,21
as prescribed by the secretary of the Department of Economic Development.22
(3) Any taxpayer applying for the credit shall be required to reimburse the23
department for any audits required in relation to granting the credit.24
H. G. Recapture of credits. If the office finds that funds for which a digital25
interactive media company received credits according to this Section are not actually26
expended in Louisiana as a production-related cost of a state-certified production,27
then the digital interactive media company's state income tax for such taxable period28 HLS 11RS-401 REENGROSSED
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shall be increased by such amount necessary for the recapture of credit provided by1
this Section.2
I. H. Recovery of credits by Department of Revenue. (1) Credits previously3
granted to a taxpayer, but later disallowed, may be recovered by the secretary of the4
Department of Revenue through any collection remedy authorized by R.S. 47:15615
and initiated within three years from December thirty-first of the year in which the6
credits were earned.7
(2) The only interest that may be assessed and collected on recovered credits8
is interest at a rate of three percentage points above the rate provided in R.S.9
9:3500(B)(1), which shall be computed from the original due date of the return on10
which the credit was taken.11
(3) The provisions of this Subsection are in addition to and shall not limit the12
authority of the secretary of the Department of Revenue to assess or to collect under13
any other provision of law.14
J. I. The provisions of this Section shall not apply to any investments or15
expenditures that qualify for tax credits under R.S. 47:6007.16
J. A taxpayer shall not receive any other incentive administered by the17
Department of Economic Development for any expenditures for which the taxpayer18
has received a tax credit or rebate under this Section.19
* * *20
§6038. Reports; tax incentives administered by the Department of Economic21
Development22
Notwithstanding any provision of law to the contrary, the secretary of the23
Department of Economic Development shall report to the Joint Legislative24
Committee on the Budget information concerning the granting and denial of tax25
credits and rebates, hereinafter referred to as "tax incentives", administered by the26
department authorized under this Chapter. On January thirtieth of each year, the27
secretary shall transmit to the members of the committee a list of the recipients of28
each tax incentive, as well as a list of applicants denied tax incentives, over the most29 HLS 11RS-401 REENGROSSED
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recently concluded calendar year. The report shall contain the name and primary1
place of business of each applicant.2
§6039. Tax credit for small business workforce expansion3
A. There shall be a credit against Louisiana income tax for small businesses4
which create new jobs for Louisiana residents.5
B. For purposes of this Section, the following terms and phrases shall have6
the following meanings:7
(1) "Small business" means a business which employees fifty or less persons8
for the duration of the fiscal year in which the job was created and for which the tax9
credit is claimed.10
(2) "Job" means employment in this state of an employee working at least11
an average of forty hours per week, who was not previously employed on an12
employer's payroll in Louisiana, and who is domiciled in Louisiana.13
C. The amount of the credit shall be equal to ten percent of the annual wage14
or salary paid to the employee in a new job which is eligible for the tax credit. The15
total amount of tax credit claimed pursuant to this Section in any one taxable year16
shall not exceed two hundred fifty thousand dollars per small business.17
D. The provisions of this Section shall be applicable for all taxable periods18
beginning on and after January 1, 2012.19
Section 2. R.S. 51:2306 is hereby enacted to read as follows:20
§2306. Reports; tax incentives administered by the Department of Economic21
Development22
Notwithstanding any provision of law to the contrary, the secretary of the23
Department of Economic Development shall report to the Joint Legislative24
Committee on the Budget information concerning the granting and denial of tax25
credits and rebates, hereinafter referred to as "tax incentives", administered by the26
department authorized under this Title. On January thirtieth of each year, the27
secretary shall transmit to the members of the committee a list of the recipients of28
each tax incentive, as well as a list of applicants denied tax incentives, over the most29 HLS 11RS-401 REENGROSSED
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recently concluded calendar year. The report shall contain the name and primary1
place of business of each applicant.2
Section 3. R.S. 47:6022(K) is hereby repealed in its entirety.3
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Henry HB No. 248
Abstract: Changes the Digital Interactive Media Producer Tax Credit from a transferrable
tax credit to a refundable credit which may be converted to a rebate and provides for
other program modifications, establishes an income tax credit for small business
workforce expansion and requires certain reporting by the Dept. of Economic
Development.
Present law provides for the Digital Interactive Media Producer Tax Credit which is
applicable to income and corporation franchise taxes. The tax credit is transferrable.
Proposed law retains present law for credits earned for expenditures made on or before Dec.
31, 2011. Proposed law changes the name of the tax credit from digital interactive media
and producer tax credit to digital interactive media and software development tax credit.
Proposed law changes present law for tax credits earned for expenditures made on or after
Jan. 1, 2012. The applicability of the tax credit is changed from a transferable tax credit to
a refundable tax credit which may be converted to a rebate equal to 85% of the face value
of the tax credit.
Proposed law authorizes a company to elect on a one-time basis, at the time of final
certification of the tax credit, to receive a rebate in lieu of a tax credit. The amount of the
rebate is 85% of the face value of the credit. Rebates are payable by the secretary of the
Dept. of Revenue from current collections.
Present law provides for definitions, including "production expenses".
Proposed law retains present law and specifies that "production expenses" shall not include
food, entertainment and lodging expenses, and administrative, payroll, and management
services which are not directly related to management of the project.
Present law requires administrative rules promulgated by the Dept. of Economic
Development to be approved by the House Committee on Ways and Means and the Senate
Committee on Revenue and Fiscal Affairs before taking effect.
Proposed law retains present law and requires that oversight by those committees be
conducted in accordance with the Administrative Procedure Act.
Proposed law specifies that a company seeking to participate in the tax credit program must
apply to the department through an application process established by the department.
Present law provides for "initial certification" for a company seeking to participate in the tax
credit program. HLS 11RS-401 REENGROSSED
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Proposed law retains present law and specifies that an initial certification shall be limited to
expenses incurred no more than six months prior to the date of initial certification.
Present law restricts a project which earns a tax credit authorized under present law from
eligibility for tax credits or rebates provided under the La. Quality Jobs Program Act.
Proposed law repeals present law but adds a restriction prohibiting a project which receives
a digital interactive media producer tax credit from receiving any other tax incentive
administered by the Dept. of Economic Development.
Proposed law requires the secretary of the Dept. of Economic Development to report on Jan.
30 of each year to the Joint Legislative Committee on the Budget concerning the granting
and denial of tax credits and rebates (hereinafter tax incentives) administered by the
department. The report shall provide the name and primary place of business of recipients
of tax incentives, as well as that of applicants denied tax incentives during the most recently
concluded calendar year.
Proposed law establishes an income tax credit for small businesses which create new jobs
for La. residents for tax years beginning on and after Jan. 1, 2012. The amount of the credit
shall be equal to 10% of the annual wage or salary paid to the employee in a new job which
is eligible for the tax credit. The total amount of tax credit claimed pursuant to proposed law
in any one taxable year shall not exceed $250,000 per small business. For purposes of
proposed law, the following terms and phrases shall have the following meanings:
(1)"Small business" means a business which employees 50 or fewer persons for the
duration of the fiscal year in which the job was created and for which the tax credit
is claimed.
(2)"Job" means employment in this state of an employee working at least an average of
40 hours per week, who was not previously employed on an employer's payroll in
La., and who is domiciled in La.
(Amends R.S. 47:6022(A), (C)(4)(c)(i), (5), (10)(b), and (14), (D)(2), and (E)-(J); Adds R.S.
47:6038 and 6039 and R.S. 51:2306; Repeals R.S. 47:6022(K))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Changed the restriction on projects receiving a digital interactive media tax credit
from receiving other tax incentives from a prohibition of receiving any other
state tax incentive to a prohibition of receiving any other tax incentive
administered by the Dept. of Economic Development.
House Floor Amendments to the engrossed bill.
1. Added requirement that the secretary of the Dept. of Economic Development
report on Jan. 30 of each year to the Joint Legislative Committee on the Budget
concerning the granting and denial of applications for tax incentives
administered by the department in the most recently concluded calendar year.
2. Added an income tax credit for small businesses which create new jobs for La.
residents. The credit is equal to 10% of the wages of the new employee, with an
annual maximum per business of $250,000.