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Regular Session, 2011
HOUSE BILL NO. 597
BY REPRESENTATIVES MICHAEL JACKSON, BALDONE, BARRAS, BURRELL,
CARTER, GREENE, HENRY, GIROD JACKSON, RICHARD, RITCHIE,
ROBIDEAUX, AND JANE SMITH
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 HLS 11RS-1007 ENGROSSED
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(1) To create the Angel Investor Tax Credit Program to encourage third1
parties to invest in early stage wealth-creating businesses in the state.2
(2) To expand the economy of the state by enlarging its base of wealth3
creating wealth-creating businesses.4
(3) To enlarge the number of quality jobs available to retain the presence of5
young people educated in Louisiana.6
§6020.1. Angel Investor Tax Credit Program; establishment; qualifications;7
administration8
A. Qualifying B. Administration. (1) Program. Investments made on or9
after January 1, 2011, by qualifying individuals or entities that invest in a Louisiana10
Entrepreneurial Business as defined by R.S. 51:2303(5) may earn, apply for, and if11
qualified, be granted a rebate. Such credits shall be earned and granted for a period12
of five tax years as provided in this Part. The administration of rebate applications13
for these credits, certification of eligibility and qualification of applicants for14
rebates, and the provision payment of these credits rebates shall be called known15
as the Angel Investor Tax Credit Rebate Program, hereinafter referred to as16
"program". 17
B.(1) (2) Rules. The Angel Investor Tax Credit Program program shall be18
implemented and administered by the Department of Economic Development,19
hereinafter referred to as "department". In compliance with the Administrative20
Procedure Act and this Part, the department shall adopt and promulgate such rules21
as are necessary for the efficient and effective administration of this program in22
keeping with the purposes for which it is enacted.23
(2) In providing for the implementation and administration of the program,24
the The department shall work closely with the secretary of the Department of25
Revenue in order to promulgate in the development and promulgation of rules. Such26
The rules shall include provisions for:27
(a) The Department of Economic Development to An application process28
through which the department may certify the eligibility of any taxpayer an investor29 HLS 11RS-1007 ENGROSSED
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applicant for receipt of the tax credit provided for in this Part a rebate and the1
qualification of any taxpayer claimant an investor to claim the credit against state tax2
liability a rebate.3
(b) The presentation of a taxpayer's an investor's eligibility certification and4
any other documentation required in order to be applied for to earn or claim a credit5
rebate.6
(c) Provide for an annual report of The submission of annual reports by the7
Louisiana Entrepreneurial Business regarding the use of proceeds, number of8
employees, amount of payroll, annual revenue, and any other information requested9
by the Department of Economic Development department.10
C. Qualifications. (1) To qualify for an angel investor tax credit for five tax11
years a rebate, the investor and the investment shall meet all of the following12
qualifications shall be required by each applicant requirements:13
(a) The investment in the Louisiana Entrepreneurial Business must be an14
investment that is at risk and not secured or guaranteed. "At risk" means that the15
repayment of the investment is entirely dependent on the success of the Louisiana16
Entrepreneurial Business.17
(b) The funds invested by the applicant cannot have been raised as a result18
of other Louisiana tax incentive programs, funds pooled or organized through capital19
placement agreements for the purpose of equity and venture capital investing unless20
approved by the Department of Economic Development, or as the result of illegal21
activity.22
(c) For the purposes of this Angel Investor Tax Credit Program the program,23
an angel investor or investors cannot be the principal owner or owners of the24
business who are involved in the operation of the business as a full-time professional25
activity, nor can their spouses and relatives within the third degree of consanguinity26
or affinity. A principal owner means one or more persons who own an aggregate of27
fifty percent or more of the Louisiana Entrepreneurial Business.28 HLS 11RS-1007 ENGROSSED
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(d) (c) The use of proceeds from the investment must be used for capital1
improvements, plant equipment, research and development, working capital for the2
business, or other business activity as may be approved by the Department of3
Economic Development department. The proceeds cannot be used to pay dividends,4
repay shareholder's loans, redeem shares, or repay debt unless approved by the5
Department of Economic Development department.6
(e) (d) The investor applicant shall meet the definition of accredited investor7
established by the Department of Economic Development Rule 501 in Regulation8
D of the General Rules and Regulations promulgated under the Securities Act of9
1933.10
(f) (e) The investment in the Louisiana Entrepreneurial Business by the11
applicant must be maintained for three years unless otherwise approved by the12
Department of Economic Development.13
(2) To qualify for an angel investor tax credit a rebate, the Louisiana14
Entrepreneurial Business in which the investment is made shall meet all the15
following requirements:16
(a) The principal business operations of the business are located in17
Louisiana.18
(b) Prior to the investment by the taxpayer, the business has received19
approval as qualified to receive angel investor tax credits by the Department of20
Economic Development, the department has approved the business as one which21
may receive investments which may qualify for a rebate under the program.22
(c) The Louisiana Entrepreneurial Business business must demonstrate that23
it will be a wealth-creating business for Louisiana by demonstrating in its business24
plan that it will have more than fifty percent of its sales from outside Louisiana.25
(d) The business is not a business engaged primarily in retail sales, real26
estate, professional services, gaming or gambling, natural resource extraction or27
exploration, or financial services including venture capital funds.28 HLS 11RS-1007 ENGROSSED
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§6020.2. Angel Investor Tax Credit; amount; duration; forfeit1
A.(1) Except as provided in Subsection B of this Section, the taxpayer2
D. Rebates. (1) The total amount of rebates granted by the department in3
any calendar year shall not exceed five million dollars. The department shall by rule4
establish the method of allocating available rebates to investors including but not5
limited to a first-come, first-served system, reservation of rebates for a specific time6
period, or other method which the department, in its discretion, may find beneficial7
to the program. If the department does not grant the entire five million dollars in8
rebates in any calendar year, the amount of residual unused rebates shall carry9
forward to subsequent calendar years and may be granted in any year without regard10
to the five million dollar per year limitation. After the approval of an investor pool,11
the department shall issue a letter identifying the amount of rebates that are available12
to that pool; however, no rebate shall be granted to an investor until the investment13
has been made in the Louisiana Entrepreneurial Business.14
(2)(a) An investor may earn and apply for and, if qualified, be granted a15
refundable credit on any income or corporation franchise tax liability owed to the16
state by the taxpayer seeking to claim the credit rebate in the amount approved by17
the secretary of the Department of Economic Development department. for The18
amount of the rebate shall be based upon the amount of money invested by the19
taxpayer investor in the Louisiana Entrepreneurial Business, which investment shall20
not exceed one million dollars per year per business and two million dollars total per21
business. Except as otherwise provided in this Paragraph, the refundable credit shall22
be allowed against the income tax for the taxable period in which the credit is earned23
and the franchise tax for the taxable period following the period in which the credit24
is earned. However, credits earned on or before December 31, 2005, shall not be25
allowed until the income tax period beginning January 1, 2006, and the franchise tax26
due January 1, 2007.27
(2)(a) The credits Rebates approved by the Department of Economic28
Development department shall be granted at the rate of fifty thirty-five percent of the29 HLS 11RS-1007 ENGROSSED
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amount of money invested by the taxpayer in the Louisiana Entrepreneurial1
Business, with the credit amount of the investment. The total rebate amount shall2
be divided in equal portions for and shall be payable over five years , subject to the3
limitations provided for in Paragraph (1) of this Subsection.4
(b) The total angel investor tax credits amount of rebates granted by the5
Department of Economic Development department in any calendar year shall not6
exceed five million dollars.7
(c) After certifying the eligibility of the Louisiana Entrepreneurial Business8
and the amount of the investment, the secretary of the Department of Economic9
Development department shall issue a tax credit rebate certificate, a copy of which10
is to be attached to the tax return of the angel investor to the investor, and shall11
provide a copy of the certificate to the secretary of the Department of Revenue. The12
rebate shall be payable over five years, divided into equal amounts. The amount13
available in the first year shall become payable twenty-four months from the date the14
department certifies the amount of the investment.15
(c) For rebates certified after July 1, 2011, beginning with the date the first16
angel investor rebate becomes payable, the department shall transmit monthly an17
angel investor rebate report to the Department of Revenue. The report shall contain18
the following information for each investor whose rebate is payable within that19
month: the The tax credit certificate shall contain the taxpayer's investor's name,20
address, tax identification number, the amount of credit the rebate, the name of the21
qualifying business Louisiana Entrepreneurial Business, a statement certifying that22
the Louisiana Entrepreneurial Business was domiciled in Louisiana at the close of23
the previous calendar year, and other information which may be required by the24
Department of Revenue. Upon receipt of the report, the secretary of the Department25
of Revenue shall make payment to each investor listed in the report in the amount26
to which he is entitled from the current collections of the taxes collected pursuant to27
Chapter 1 of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950, as28
amended. The tax credit rebate certificate, unless rescinded by the Department of29 HLS 11RS-1007 ENGROSSED
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Economic Development department, shall be accepted by the Department of1
Revenue as proof of the credit rebate. A rebate certificate shall expire and have no2
value or effect after the last day of the sixth year after it was granted.3
(d) The Department of Economic Development department shall maintain4
a list of the tax credit rebate certificates issued.5
(3)(a) All entities taxed as corporations for Louisiana income or corporation6
franchise tax purposes shall claim any credit allowed under this Section on their7
corporation income and corporation franchise tax return.8
(b) Individuals shall claim any credit allowed under this Section on their9
individual income tax return.10
(c) Estates or trusts shall claim any credit allowed under this Section on their11
fiduciary income tax returns.12
(d) Entities not taxed as corporations shall claim any credit allowed under13
this Section on the returns of the partners or members as follows:14
(i) Corporate partners or members shall claim their share of the credit on15
their corporation income or corporation franchise tax returns.16
(ii) Individual partners or members shall claim their share of the credit on17
their individual income tax returns.18
(iii) Partners or members that are estates or trusts shall claim their share of19
the credit on their fiduciary income tax returns.20
B. A tax credit rebate granted pursuant to the Angel Investor Rebate21
Program shall expire and have no value or effect on tax liability beginning with the22
eleventh tax year after the tax year in which it last day of the sixth year after the23
year it was originally granted.24
If at the close of any calendar year in the five-year period beginning with the25
first year in which a rebate certificate was issued to an investor, the Louisiana26
Entrepreneurial Business is no longer domiciled in Louisiana, the rebate shall be27
recaptured from the investor unless change of domicile is the result of a merger,28 HLS 11RS-1007 ENGROSSED
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consolidation, or other acquisition of such business with or by a party not affiliated1
with the business.2
(b) If at the close of any calendar year in the three-year period beginning3
with the first year a rebate certificate was issued to an investor, the investor transfers4
the equity received in connection with the qualified investment, the rebate shall be5
recaptured from the investor unless the transfer results from any of the following6
circumstances:7
(i) The liquidation of the business issuing the equity;8
(ii) The merger, consolidation, or other acquisition of such business with or9
by a party not affiliated with the business; or10
(iii) The death of the investor.11
§6020.3. False or fraudulent information in making application, claim for credit12
rebate, or other instrument; penalties13
A. E.(1) Any person making an application, claim for an angel investor tax14
credit a rebate, or any report, return, statement, or other instrument or providing any15
other information pursuant to the provisions of the Angel Investor Tax Credit Rebate16
Program who willfully makes a false or fraudulent application, claim, report, return,17
statement, invoice, or other instrument or who willfully provides any false or18
fraudulent information, any person who willfully aids or abets another in making19
such a false or fraudulent application, claim, report, return, statement, invoice, or20
other instrument, or any person who willfully aids or abets another in providing any21
false or fraudulent information, shall be guilty, upon conviction, of a felony and shall22
be punished by the imposition of a fine of not less than one thousand dollars and not23
more than fifty thousand dollars or imprisoned for not less than two years and not24
more than five years, or both.25
B.(2) Any person convicted of a violation of this Section shall be liable for26
the repayment of all rebate amounts which were granted to that person. Interest shall27
be due on such repayments at the rate of fifteen percent per annum. 28 HLS 11RS-1007 ENGROSSED
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Section 2. This Act shall become effective upon signature by the governor or, if not1
signed by the governor, upon expiration of the time for bills to become law without signature2
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If3
vetoed by the governor and subsequently approved by the legislature, this Act shall become4
effective on the day following such approval.5
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 authorized 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 rebates to applicants, which may include a first-come, first-served system,
reservation of tax rebates 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 of 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 of up to 35% of the amount of the investment for investments of up to
$1 million per year, per business.
Present law requires the department to issue a tax credit certificate to qualifying investors
and requires the certificate to contain certain specific background information for the rebate
regarding the investor, investment, and Louisiana Entrepreneurial Business. Further, a copy
of the tax credit certificate is provided to the secretary of the Dept. of Revenue.
Proposed law changes present law by renaming the document from tax credit certificate to
rebate certificate, and changes the form of transmittal of the specific background
information for each rebate from the tax credit certificate to the angel investor rebate report. HLS 11RS-1007 ENGROSSED
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Further, requires monthly transmittal by the department of an angel investor rebate report
to the Dept. of Revenue.
Proposed law authorizes the secretary of the Dept. of Revenue to pay rebates from income
tax collections.
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)
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Added requirement that the Dept. of Economic Development transmit monthly
an angel investor rebate report to the Dept. of Revenue.
2. Changed the document which contains the background information relating to
each rebate from the tax rebate certificate to the monthly angel investor rebate
report.
3. Deleted corporation franchise tax collections as a source from which rebates
shall be paid.