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ACT No. 414
Regular Session, 2011
HOUSE BILL NO. 597
BY REPRESENTATIVES MICHAEL JACKSON, AUBERT, BOBBY BADON,
BALDONE, BARRAS, HENRY BURNS, BURRELL, CARMODY, CARTER,
CHANEY, CROMER, FOIL, GALLOT, GISCLAIR, GREENE, HARDY,
HARRISON, HAZEL, HENRY, HUTTER, GIROD JACKSON, JOHNSON,
ROSALIND JONES, SAM JONES, KATZ, LEGER, MONTOUCET, RICHARD,
RITCHIE, ROBIDEAUX, GARY SMITH, JANE SMITH, PATRICIA SMITH,
AND TEMPLET AND SENATORS APPEL, BROOME, CHEEK, CLAITOR,
DORSEY, KOSTELKA, LONG, MARTINY, MICHOT, MORRISH, MURRAY,
NEVERS, QUINN, WALSWORTH, AND WILLARD-LEWIS
AN ACT1
To amend and reenact R.S. 47:6020 and to repeal R.S. 47:6020.1, 6020.2, and 6020.3,2
relative to tax credits; to provide for the amount of the tax credit; to provide for the3
maximum amount of tax credits which may be granted in a year; to authorize the4
Department of Economic Development to administer the program; to provide relative5
to the repayment, recapture, or recovery of tax credits under certain circumstances;6
to authorize the collection of interest under certain circumstances; to provide for an7
effective date; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 47:6020 is hereby amended and reenacted to read as follows: 10
§6020. Legislative findings and purposes Angel Investor Tax Credit Program11
A. Purpose. The legislature finds that the welfare of the state is enhanced12
by a healthy entrepreneurial business environment and that ready sources of capital13
necessary to support this environment are not currently available.14
B. This Act* The Angel Investor Tax Credit Program is intended to achieve15
the following purposes:16
(1) To create the Angel Investor Tax Credit Program to encourage third17
parties to invest in early stage wealth-creating businesses in the state.18
(2) To expand the economy of the state by enlarging its base of wealth19
creating wealth-creating businesses.20 ENROLLEDHB NO. 597
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(3) To enlarge the number of quality jobs available to retain the presence of1
young people educated in Louisiana.2
§6020.1. Angel Investor Tax Credit Program; establishment; qualifications;3
administration4
A. Qualifying B. Administration. (1) Program. Investments made on or5
after January 1, 2011, by qualifying individuals or entities that invest in a Louisiana6
Entrepreneurial Business as defined by R.S. 51:2303(5) may earn, apply for, and if7
qualified, be granted a rebate tax credit. Such credits shall be earned and granted for8
a period of five tax years as provided in this Part. The administration of tax credit9
applications for these credits, certification of eligibility and qualification of10
applicants for tax credits, and the provision of for these credits shall be called known11
as the Angel Investor Tax Credit Program , hereinafter referred to as "program". 12
B.(1) (2) Rules. The Angel Investor Tax Credit Program program shall be13
implemented and administered by the Department of Economic Development,14
hereinafter referred to as "department". In compliance with the Administrative15
Procedure Act and this Part, the department shall adopt and promulgate such rules16
as are necessary for the efficient and effective administration of this program in17
keeping with the purposes for which it is enacted.18
(2) In providing for the implementation and administration of the program,19
the The department shall work closely with the secretary of the Department of20
Revenue in order to promulgate in the development and promulgation of rules. Such21
The rules shall include provisions for:22
(a) The Department of Economic Development to An application process23
through which the department may certify the eligibility of any taxpayer an investor24
applicant for receipt of the tax credit provided for in this Part and the qualification25
of any taxpayer claimant an investor to claim the credit against state tax liability.26
(b) The presentation of a taxpayer's an investor's eligibility certification and27
any other documentation required in order to be applied for to earn or claim a credit.28
(c) Provide for an annual report of The submission of annual reports by the29
Louisiana Entrepreneurial Business regarding the use of proceeds, number of30 ENROLLEDHB NO. 597
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employees, amount of payroll, annual revenue, and any other information requested1
by the Department of Economic Development department.2
C. Qualifications. (1) To qualify for an angel investor tax credit for five tax3
years a rebate tax credit, the investor and the investment shall meet all of the4
following qualifications shall be required by each applicant requirements:5
(a) The investment in the Louisiana Entrepreneurial Business must be an6
investment that is at risk and not secured or guaranteed. "At risk" means that the7
repayment of the investment is entirely dependent on the success of the Louisiana8
Entrepreneurial Business. 9
(b) The funds invested by the applicant cannot have been raised as a result10
of other Louisiana tax incentive programs, funds pooled or organized through capital11
placement agreements for the purpose of equity and venture capital investing unless12
approved by the Department of Economic Development, or as the result of illegal13
activity.14
(b)(c) For the purposes of this Angel Investor Tax Credit Program the15
program, an angel investor or investors cannot be the principal owner or owners of16
the business who are involved in the operation of the business as a full-time17
professional activity, nor can their spouses and relatives within the third degree of18
consanguinity or affinity. A principal owner means one or more persons who own19
an aggregate of fifty percent or more of the Louisiana Entrepreneurial Business.20
(d) (c) The use of proceeds from the investment must be used for capital21
improvements, plant equipment, research and development, working capital for the22
business, or other business activity as may be approved by the Department of23
Economic Development department. The proceeds cannot be used to pay dividends,24
repay shareholder's loans, redeem shares, or repay debt unless approved by the25
Department of Economic Development department.26
(e) (d) The investor applicant shall meet the definition of accredited investor27
established by the Department of Economic Development Rule 501 in Regulation28
D of the General Rules and Regulations promulgated under the Securities Act of29
1933.30 ENROLLEDHB NO. 597
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(f) (e) The investment in the Louisiana Entrepreneurial Business by the1
applicant must be maintained for three years unless otherwise approved by the2
Department of Economic Development.3
(2) To qualify for an angel investor tax credit, the Louisiana Entrepreneurial4
Business in which the investment is made shall meet all the following requirements:5
(a) The principal business operations of the business are located in6
Louisiana.7
(b) Prior to the investment by the taxpayer, the business has received8
approval as qualified to receive angel investor tax credits by the Department of9
Economic Development, the department has approved the business as one which10
may receive investments which may qualify for a tax credit under the program.11
(c) The Louisiana Entrepreneurial Business business must demonstrate that12
it will be a wealth-creating business for Louisiana by demonstrating in its business13
plan that it will have more than fifty percent of its sales from outside Louisiana.14
(d) The business is not a business engaged primarily in retail sales, real15
estate, professional services, gaming or gambling, natural resource extraction or16
exploration, or financial services including venture capital funds.17
§6020.2. Angel Investor Tax Credit; amount; duration; forfeit18
A.(1) Except as provided in Subsection B of this Section, the taxpayer19
D. Tax Credits (1) The total amount of tax credits granted by the20
department in any calendar year shall not exceed five million dollars. The21
department shall by rule establish the method of allocating available tax credits to22
investors including but not limited to a first-come, first-served system, reservation23
of tax credits for a specific time period, or other method which the department, in its24
discretion, may find beneficial to the program. If the department does not grant the25
entire five million dollars in tax credits in any calendar year, the amount of residual26
unused tax credits shall carry forward to subsequent calendar years and may be27
granted in any year without regard to the five million dollar per year limitation.28
After the approval of an investor pool, the department shall issue a letter identifying29
the amount of tax credits that are available to that pool; however, no tax credit shall30 ENROLLEDHB NO. 597
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be granted to an investor until the investment has been made in the Louisiana1
Entrepreneurial Business.2
(2)(a) An investor may earn and apply for and, if qualified, be granted a3
refundable credit on any income or corporation franchise tax liability owed to the4
state by the taxpayer seeking to claim the credit in the amount approved by the5
secretary of the Department of Economic Development department. for The amount6
of the tax credit shall be based upon the amount of money invested by the taxpayer7
investor in the Louisiana Entrepreneurial Business, which investment shall not8
exceed one million dollars per year per business and two million dollars total per9
business. Except as otherwise provided in Subparagraph (b) of this Paragraph, the10
refundable credit shall be allowed against the income tax for the taxable period in11
which the credit is earned and the franchise tax for the taxable period following the12
period in which the credit is earned. However, credits earned on or before December13
31, 2005, shall not be allowed until the income tax period beginning January 1, 2006,14
and the franchise tax due January 1, 2007.15
(2)(a) The credits approved by the Department of Economic Development16
department shall be granted at the rate of fifty thirty-five percent of the amount of17
money invested by the taxpayer in the Louisiana Entrepreneurial Business, with the18
credit amount of the investment with the credit divided in equal portions for five19
years, subject to the limitations provided for in Paragraph (1) of this Subsection.20
(b) The total angel investor tax credits granted by the Department of21
Economic Development in any calendar year shall not exceed five million dollars.22
(c) After certifying the eligibility of the Louisiana Entrepreneurial Business23
and the amount of the investment, the secretary of the Department of Economic24
Development department shall issue a tax credit certificate, a copy of which is to be25
attached to the tax return of the angel investor. The tax credit available in the first26
year shall become deductible from tax liability in the taxpayer's income tax year27
which occurs twenty-four months from the date the department certifies the amount28
of the investment.29 ENROLLEDHB NO. 597
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(c) The tax credit certificate shall contain the taxpayer's investor's name,1
address, tax identification number, the amount of credit, the name of the qualifying2
business Louisiana Entrepreneurial Business, a statement certifying that the3
Louisiana Entrepreneurial Business was domiciled in Louisiana at the close of the4
previous calendar year, and other information which may be required by the5
Department of Revenue. The tax credit certificate, unless rescinded by the6
Department of Economic Development department, shall be accepted by the7
Department of Revenue as proof of the credit. 8
(d) The Department of Economic Development department shall maintain9
a list of the tax credit certificates issued.10
(3)(a) All entities taxed as corporations for Louisiana income or corporation11
franchise tax purposes shall claim any credit allowed under this Section on their12
corporation income and corporation franchise tax return.13
(b) Individuals shall claim any credit allowed under this Section on their14
individual income tax return.15
(c) Estates or trusts shall claim any credit allowed under this Section on their16
fiduciary income tax returns.17
(d) Entities not taxed as corporations shall claim any credit allowed under18
this Section on the returns of the partners or members as follows:19
(i) Corporate partners or members shall claim their share of the credit on20
their corporation income or corporation franchise tax returns.21
(ii) Individual partners or members shall claim their share of the credit on22
their individual income tax returns.23
(iii) Partners or members that are estates or trusts shall claim their share of24
the credit on their fiduciary income tax returns.25
B.(4) A tax credit granted pursuant to the Angel Investor Program shall26
expire and have no value or effect on tax liability beginning with the eleventh tax27
year after the tax year in which it was originally granted.28
(5)(a) If at the close of any calendar year in the five-year period beginning29
with the first year in which a tax credit certificate was issued to an investor, the30 ENROLLEDHB NO. 597
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Louisiana Entrepreneurial Business is no longer domiciled in Louisiana, the tax1
credit shall be recaptured from the investor unless change of domicile is the result2
of a merger, consolidation, or other acquisition of such business with or by a party3
not affiliated with the business.4
(b) If at the close of any calendar year in the three-year period beginning5
with the first year a tax credit certificate was issued to an investor, the investor6
transfers the equity received in connection with the qualified investment, the tax7
credit shall be recaptured from the investor unless the transfer results from any of the8
following circumstances:9
(i) The liquidation of the business issuing the equity;10
(ii) The merger, consolidation, or other acquisition of such business with or11
by a party not affiliated with the business; or12
(iii) The death of the investor.13
§6020.3. False or fraudulent information in making application, claim for credit14
rebate, or other instrument; penalties15
A. E.(1) Any person making an application, claim for an angel investor tax16
credit, or any report, return, statement, or other instrument or providing any other17
information pursuant to the provisions of the Angel Investor Tax Credit Program18
who willfully makes a false or fraudulent application, claim, report, return,19
statement, invoice, or other instrument or who willfully provides any false or20
fraudulent information, any person who willfully aids or abets another in making21
such a false or fraudulent application, claim, report, return, statement, invoice, or22
other instrument, or any person who willfully aids or abets another in providing any23
false or fraudulent information, shall be guilty, upon conviction, of a felony and shall24
be punished by the imposition of a fine of not less than one thousand dollars and not25
more than fifty thousand dollars or imprisoned for not less than two years and not26
more than five years, or both.27
B.(2) Any person convicted of a violation of this Section shall be liable for28
the repayment of all rebate tax credits amounts which were granted to that person.29
Interest shall be due on such repayments at the rate of fifteen percent per annum.30 ENROLLEDHB NO. 597
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F. Transferability of the credit. Any Angel Investor Tax Credits not1
previously claimed by any taxpayer against its tax may be transferred or sold to2
another Louisiana taxpayer, subject to the following conditions:3
(1) A single transfer or sale may involve one or more transferees. The4
transferee of the tax credits may transfer or sell such tax credits subject to the5
conditions of this Subsection.6
(2) Transferors and transferees shall submit to the department and the7
Department of Revenue in writing, a notification of any transfer or sale of tax credits8
within thirty days after the transfer or sale of such tax credits. The notification shall9
include the transferor's tax credit balance prior to transfer, a copy of any tax credit10
certificate issued by the secretary of the Department of Economic Development and,11
the transferor's remaining tax credit balance after transfer, all tax identification12
numbers for both transferor and transferee, the date of transfer, the amount13
transferred, the price paid by the transferee to the transferor, and any other14
information required by the department or the Department of Revenue. Any pricing15
information submitted by a transferor or transferee shall be treated by the department16
and the Department of Revenue as proprietary to the entity reporting such17
information and therefore confidential. However, this shall not prevent the18
publication of summary data that includes no fewer than three transactions.19
(3) Failure to comply with this Subsection will result in the disallowance of20
the tax credit until the taxpayers are in full compliance.21
(4) The transfer or sale of this credit does not extend the time in which the22
credit can be used. The carryforward period for credit that is transferred or sold23
begins on the date on which the credit was earned.24
(5) To the extent that the transferor did not have rights to claim or use the25
credit at the time of the transfer, the Department of Revenue shall either disallow the26
credit claimed by the transferee or recapture the credit from the transferee through27
any collection method authorized by this Section or R.S. 47:1561. The transferee's28
recourse is against the transferor.29
Section 2. R.S. 47:6020.1, 6020.2, and 6020.3 are hereby repealed in their entirety.30 ENROLLEDHB NO. 597
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Section 3. The provisions of this Act shall be null and void and of no effect on and1
after July 1, 2015.2
Section 4. This Act shall become effective upon signature by the governor or, if not3
signed by the governor, upon expiration of the time for bills to become law without signature4
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If5
vetoed by the governor and subsequently approved by the legislature, this Act shall become6
effective on the day following such approval.7
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: