HLS 11RS-1007 ORIGINAL
Page 1 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2011
HOUSE BILL NO. 597
BY REPRESENTATIVE MICHAEL JACKSON
TAX CREDITS: Converts the Angel Investor Tax Credit Program to the Angel Investor
Rebate Program and provides for the rebate program
AN ACT1
To amend and reenact R.S. 47:6020, 6020.1, 6020.2, and 6020.3, relative to tax credits; to2
convert the Angel Investor Tax Credit Program to the Angel Investor Rebate3
Program; to provide for the amount of the rebate; to provide for the maximum4
amount of rebates which may be granted in a year; to authorize the Department of5
Economic Development to administer the program; to provide relative to the6
repayment, recapture, or recovery of rebates under certain circumstances; to7
authorize the collection of interest under certain circumstances; to provide for an8
effective date; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 47:6020, 6020.1, 6020.2, and 6020.3 are hereby amended and11
reenacted to read as follows: 12
§6020. Legislative findings and purposes Angel Investor Rebate Program13
A. Purpose. The legislature finds that the welfare of the state is enhanced14
by a healthy entrepreneurial business environment and that ready sources of capital15
necessary to support this environment are not currently available.16
B. This Act* The Angel Investor Rebate Program is intended to achieve the17
following purposes:18
(1) To create the Angel Investor Tax Credit Program to encourage third19
parties to invest in early stage wealth-creating businesses in the state.20 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 2 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(2) To expand the economy of the state by enlarging its base of wealth1
creating wealth-creating businesses.2
(3) To enlarge the number of quality jobs available to retain the presence of3
young people educated in Louisiana.4
§6020.1. Angel Investor Tax Credit Program; establishment; qualifications;5
administration6
A. Qualifying B. Administration. (1) Program. Investments made on or7
after January 1, 2011, by qualifying individuals or entities that invest in a Louisiana8
Entrepreneurial Business as defined by R.S. 51:2303(5) may earn, apply for, and if9
qualified, be granted a rebate. Such credits shall be earned and granted for a period10
of five tax years as provided in this Part. The administration of rebate applications11
for these credits, certification of eligibility and qualification of applicants for12
rebates, and the provision payment of these credits rebates shall be called known13
as the Angel Investor Tax Credit Rebate Program, hereinafter referred to as14
"program". 15
B.(1) (2) Rules. The Angel Investor Tax Credit Program program shall be16
implemented and administered by the Department of Economic Development,17
hereinafter referred to as "department". In compliance with the Administrative18
Procedure Act and this Part, the department shall adopt and promulgate such rules19
as are necessary for the efficient and effective administration of this program in20
keeping with the purposes for which it is enacted.21
(2) In providing for the implementation and administration of the program,22
the The department shall work closely with the secretary of the Department of23
Revenue in order to promulgate in the development and promulgation of rules. Such24
The rules shall include provisions for:25
(a) The Department of Economic Development to An application process26
through which the department may certify the eligibility of any taxpayer an investor27
applicant for receipt of the tax credit provided for in this Part a rebate and the28 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 3 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
qualification of any taxpayer claimant an investor to claim the credit against state tax1
liability a rebate.2
(b) The presentation of a taxpayer's an investor's eligibility certification and3
any other documentation required in order to be applied for to earn or claim a credit4
rebate.5
(c) Provide for an annual report of The submission of annual reports by the6
Louisiana Entrepreneurial Business regarding the use of proceeds, number of7
employees, amount of payroll, annual revenue, and any other information requested8
by the Department of Economic Development department.9
C. Qualifications. (1) To qualify for an angel investor tax credit for five tax10
years a rebate, the investor and the investment shall meet all of the following11
qualifications shall be required by each applicant requirements:12
(a) The investment in the Louisiana Entrepreneurial Business must be an13
investment that is at risk and not secured or guaranteed. "At risk" means that the14
repayment of the investment is entirely dependent on the success of the Louisiana15
Entrepreneurial Business.16
(b) The funds invested by the applicant cannot have been raised as a result17
of other Louisiana tax incentive programs, funds pooled or organized through capital18
placement agreements for the purpose of equity and venture capital investing unless19
approved by the Department of Economic Development, or as the result of illegal20
activity.21
(c) For the purposes of this Angel Investor Tax Credit Program the program,22
an angel investor or investors cannot be the principal owner or owners of the23
business who are involved in the operation of the business as a full-time professional24
activity, nor can their spouses and relatives within the third degree of consanguinity25
or affinity. A principal owner means one or more persons who own an aggregate of26
fifty percent or more of the Louisiana Entrepreneurial Business.27
(d) (c) The use of proceeds from the investment must be used for capital28
improvements, plant equipment, research and development, working capital for the29 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 4 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
business, or other business activity as may be approved by the Department of1
Economic Development department. The proceeds cannot be used to pay dividends,2
repay shareholder's loans, redeem shares, or repay debt unless approved by the3
Department of Economic Development department.4
(e) (d) The investor applicant shall meet the definition of accredited investor5
established by the Department of Economic Development Rule 501 in Regulation6
D of the General Rules and Regulations promulgated under the Securities Act of7
1933.8
(f) (e) The investment in the Louisiana Entrepreneurial Business by the9
applicant must be maintained for three years unless otherwise approved by the10
Department of Economic Development.11
(2) To qualify for an angel investor tax credit a rebate, the Louisiana12
Entrepreneurial Business in which the investment is made shall meet all the13
following requirements:14
(a) The principal business operations of the business are located in15
Louisiana.16
(b) Prior to the investment by the taxpayer, the business has received17
approval as qualified to receive angel investor tax credits by the Department of18
Economic Development, the department has approved the business as one which19
may receive investments which may qualify for a rebate under the program.20
(c) The Louisiana Entrepreneurial Business business must demonstrate that21
it will be a wealth-creating business for Louisiana by demonstrating in its business22
plan that it will have more than fifty percent of its sales from outside Louisiana.23
(d) The business is not a business engaged primarily in retail sales, real24
estate, professional services, gaming or gambling, natural resource extraction or25
exploration, or financial services including venture capital funds.26
§6020.2. Angel Investor Tax Credit; amount; duration; forfeit27
A.(1) Except as provided in Subsection B of this Section, the taxpayer28 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 5 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
D. Rebates. (1) The total amount of rebates granted by the department in1
any calendar year shall not exceed five million dollars. The department shall by rule2
establish the method of allocating available rebates to investors including but not3
limited to a first-come, first-served system, reservation of rebates for a specific time4
period, or other method which the department, in its discretion, may find beneficial5
to the program. If the department does not grant the entire five million dollars in6
rebates in any calendar year, the amount of residual unused rebates shall carry7
forward to subsequent calendar years and may be granted in any year without regard8
to the five million dollar per year limitation. After the approval of an investor pool,9
the department shall issue a letter identifying the amount of rebates that are available10
to that pool; however, no rebate shall be granted to an investor until the investment11
has been made in the Louisiana Entrepreneurial Business.12
(2)(a) An investor may earn and apply for and, if qualified, be granted a13
refundable credit on any income or corporation franchise tax liability owed to the14
state by the taxpayer seeking to claim the credit rebate in the amount approved by15
the secretary of the Department of Economic Development department. for The16
amount of the rebate shall be based upon the amount of money invested by the17
taxpayer investor in the Louisiana Entrepreneurial Business, which investment shall18
not exceed one million dollars per year per business and two million dollars total per19
business. Except as otherwise provided in this Paragraph, the refundable credit shall20
be allowed against the income tax for the taxable period in which the credit is earned21
and the franchise tax for the taxable period following the period in which the credit22
is earned. However, credits earned on or before December 31, 2005, shall not be23
allowed until the income tax period beginning January 1, 2006, and the franchise tax24
due January 1, 2007.25
(2)(a) The credits Rebates approved by the Department of Economic26
Development department shall be granted at the rate of fifty thirty-five percent of the27
amount of money invested by the taxpayer in the Louisiana Entrepreneurial28
Business, with the credit amount of the investment. The total rebate amount shall29 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 6 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
be divided in equal portions for and shall be payable over five years, subject to the1
limitations provided for in Paragraph (1) of this Subsection.2
(b) The total angel investor tax credits amount of rebates granted by the3
Department of Economic Development department in any calendar year shall not4
exceed five million dollars.5
(c) After certifying the eligibility of the Louisiana Entrepreneurial Business6
and the amount of the investment, the secretary of the Department of Economic7
Development department shall issue a tax credit rebate certificate, a copy of which8
is to be attached to the tax return of the angel investor to the investor, and shall9
provide a copy of the certificate to the secretary of the Department of Revenue. The10
rebate shall be payable over five years, divided into equal amounts. The amount11
available in the first year shall become payable twenty-four months from the date the12
department certifies the amount of the investment. Thereafter, the rebate for each13
subsequent year shall be payable twelve months after the date on which the prior14
year's rebate was claimed. The tax credit rebate certificate shall contain the15
taxpayer's investor's name, address, tax identification number, the amount of credit16
the rebate, the name of the qualifying business Louisiana Entrepreneurial Business,17
and other information which may be required by the Department of Revenue. The18
tax credit rebate certificate, unless rescinded by the Department of Economic19
Development department, shall be accepted by the Department of Revenue as proof20
of the credit rebate. A rebate certificate shall expire and have no value or effect after21
the last day of the sixth year after it was granted.22
(d) (c) The Department of Economic Development department shall23
maintain a list of the tax credit rebate certificates issued.24
(d) Notwithstanding any other provision of law to the contrary in Title 47 of25
the Louisiana Revised Statutes of 1950, as amended, the secretary of the Department26
of Revenue shall pay the rebate authorized in this Section from the current27
collections of the taxes imposed by Chapter 1 or Chapter 5 of Subtitle II of Title 4728
of the Louisiana Revised Statutes of 1950, as amended.29 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 7 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(3)(a) All entities taxed as corporations for Louisiana income or corporation1
franchise tax purposes shall claim any credit allowed under this Section on their2
corporation income and corporation franchise tax return.3
(b) Individuals shall claim any credit allowed under this Section on their4
individual income tax return.5
(c) Estates or trusts shall claim any credit allowed under this Section on their6
fiduciary income tax returns.7
(d) Entities not taxed as corporations shall claim any credit allowed under8
this Section on the returns of the partners or members as follows:9
(i) Corporate partners or members shall claim their share of the credit on10
their corporation income or corporation franchise tax returns.11
(ii) Individual partners or members shall claim their share of the credit on12
their individual income tax returns.13
(iii) Partners or members that are estates or trusts shall claim their share of14
the credit on their fiduciary income tax returns.15
B. A tax credit rebate granted pursuant to the Angel Investor Rebate16
Program shall expire and have no value or effect on tax liability beginning with the17
eleventh tax year after the tax year in which it last day of the sixth year after the18
year it was originally granted.19
If at the close of any calendar year in the five-year period beginning with the20
first year in which a rebate certificate was issued to an investor, the Louisiana21
Entrepreneurial Business is no longer domiciled in Louisiana, the rebate shall be22
recaptured from the investor unless change of domicile is the result of a merger,23
consolidation, or other acquisition of such business with or by a party not affiliated24
with the business.25
(b) If at the close of any calendar year in the three-year period beginning26
with the first year a rebate certificate was issued to an investor, the investor transfers27
the equity received in connection with the qualified investment, the rebate shall be28 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 8 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
recaptured from the investor unless the transfer results from any of the following1
circumstances:2
(i) The liquidation of the business issuing the equity;3
(ii) The merger, consolidation, or other acquisition of such business with or4
by a party not affiliated with the business; or5
(iii) The death of the investor.6
§6020.3. False or fraudulent information in making application, claim for credit7
rebate, or other instrument; penalties8
A. E.(1) Any person making an application, claim for an angel investor tax9
credit a rebate, or any report, return, statement, or other instrument or providing any10
other information pursuant to the provisions of the Angel Investor Tax Credit Rebate11
Program who willfully makes a false or fraudulent application, claim, report, return,12
statement, invoice, or other instrument or who willfully provides any false or13
fraudulent information, any person who willfully aids or abets another in making14
such a false or fraudulent application, claim, report, return, statement, invoice, or15
other instrument, or any person who willfully aids or abets another in providing any16
false or fraudulent information, shall be guilty, upon conviction, of a felony and shall17
be punished by the imposition of a fine of not less than one thousand dollars and not18
more than fifty thousand dollars or imprisoned for not less than two years and not19
more than five years, or both.20
B.(2) Any person convicted of a violation of this Section shall be liable for21
the repayment of all rebate amounts which were granted to that person. Interest shall22
be due on such repayments at the rate of fifteen percent per annum. 23
Section 2. This Act shall become effective upon signature by the governor or, if not24
signed by the governor, upon expiration of the time for bills to become law without signature25
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If26
vetoed by the governor and subsequently approved by the legislature, this Act shall become27
effective on the day following such approval.28 HLS 11RS-1007 ORIGINAL
HB NO. 597
Page 9 of 9
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
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)]
Michael Jackson HB No. 597
Abstract: Converts the Angel Investor Tax Credit Program to the Angel Investor Rebate
Program and provides for the administration of the rebate program for eligible
investments made on or after Jan. 1, 2011.
Present law became null and void on Dec. 31, 2009. It authorizes a credit against La.
income and corporation franchise tax liability for qualifying individuals which invested in
"La. Entrepreneurial Businesses", as approved by the Dept. of Economic Development
(hereinafter department).
Present law authorized credits equal to 50% of the amount of the investment, for investments
of up to $1 million per year, per business.
Proposed law converts the tax credit program to a rebate program to be administered by the
department in generally the same manner as the former tax credit program.
Proposed law provides for the eligibility requirements for investments and the businesses
in which they are made.
Proposed law authorizes the department to establish by rule the method of allocating
available tax credits to applicants, which may include a first-come first-served system,
reservation of tax credits for a specified time period, or other method which the department
deems appropriate.
Proposed law limits the total amount of rebates which the department may grant each
calendar year to $5 million. Any residual amount which remains at year's end may be used
to provide rebates in subsequent years, notwithstanding the $5 million annual cap.
Proposed law authorizes the secretary of the department to issue rebate certificates to
investors in amounts equal to up to 35% of the amount of the investment made by a
qualifying investor, for investments of up to $1 million per year, per business.
Proposed law authorizes the secretary of the Dept. of Revenue to pay rebates from the
collections of corporation income and franchise taxes.
Proposed law provides the conditions under which rebates must be repaid or recaptured,
including the change of domicile of a La. Entrepreneurial Business or the use of investment
monies in a manner deemed inappropriate by the department.
Proposed law provides that rebates granted but later disallowed in whole, or in part, or
subject to recapture or repayment, may be recovered by the Dept. of Revenue. Interest may
be assessed and collected on recovered rebate monies, at a rate of 15% per annum.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:6020, 6020.1, 6020.2, and 6020.3)