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Regular Session, 2011
SENATE BILL NO. 135
BY SENATOR CLAITOR
TAX/TAXATION. Extends the research and development tax credit program from
December 31, 2013 to December 31, 2019; changes it from a refundable and transferable
credit to a "rebate"; authorizes the rebate for the employment of any persons in Louisiana
rather than residents; and changes its calculation. (gov sig)
AN ACT1
To amend and reenact R.S. 47:6015, relative to tax credits; to change the research and2
development tax credit to a rebate and make certain changes in its calculation and3
administration; to provide for a limitation on the receipt of other tax benefits and4
incentives; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 47:6015 is hereby amended and reenacted to read as follows: 7
§6015. Research and development tax credit rebate8
A. The Legislature of Louisiana hereby finds and declares that the health,9
safety, and welfare of the people of this state are dependent upon the continued10
encouragement, development, growth, and expansion of the private sector within the11
state. Therefore, it is declared to be the purpose of this Section to encourage new and12
continuing efforts to conduct research and development activities within this state.13
B.(1) Any taxpayer who employs more than fifty Louisiana residents persons14
and claims for the taxable year a federal income tax credit under 26 U.S.C. §41(a)15
for increasing research activities shall be allowed a refundable tax credit rebate to16
be applied against income and corporation franchise taxes due.17 SB NO. 135
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(2) Any taxpayer who employs up to fifty Louisiana residents persons and1
incurs qualified research expenses as defined in 26 U.S.C.§41(b), for the taxable2
year, shall be allowed a refundable tax credit rebate to be applied against income3
and corporation franchise taxes due.4
(3) Each taxpayer seeking the credits rebates authorized in this Section shall5
apply to the Department of Economic Development for the credits rebates. The6
taxpayer shall remit an application fee of two hundred fifty dollars with the7
application. The application shall include all of the following:8
(a) In cases where the taxpayer employs more than fifty Louisiana residents9
persons, a federal income tax return and supporting documentation that shows the10
amount of the federal research credit for the same taxable year. The supporting11
documentation for a taxpayer who employs up to fifty Louisiana residents persons12
shall show the amount of the qualified research expenses for the same taxable year.13
If claiming the credit rebate under Subsection D of this Section, the taxpayer shall14
also remit supporting documentation for the federal Small Business Innovation15
Research Grant.16
(b) The total amount of qualified research expenses and the qualified research17
expenses in this state.18
(c) The total number of Louisiana residents employed persons employed in19
Louisiana by the taxpayer and the number of those Louisiana residents persons20
employed in Louisiana directly engaged in research and development.21
(d) The average wages of the Louisiana resident employees persons22
employed in Louisiana not directly engaged in research and development and the23
average wages of the Louisiana resident employees persons employed in Louisiana24
directly engaged in research and development.25
(e) The average value of benefits received by all Louisiana resident26
employees persons employed in Louisiana.27
(f) The cost of health insurance coverage offered to all Louisiana resident28
employees persons employed in Louisiana.29 SB NO. 135
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(g) Any other information required by the Department of Economic1
Development.2
(4) The Department of Economic Development shall approve or disapprove3
each application. No credits rebates shall be granted to a taxpayer under this Section4
unless the credit rebate is approved by the Department of Economic Development.5
C.(1) For purposes of determining the amount of the rebate earned, an6
"entity" shall be determined by the total number of employees based on the7
aggregate of all affiliated companies.8
(2) The amount of the credit rebate authorized in this Section shall be equal9
to either:10
(a) Eight percent of the state's apportioned share of the taxpayer's11
expenditures for increasing research activities difference, if any, of the Louisiana12
qualified research expenses for the taxable year minus the base amount, if the13
taxpayer is an entity that employs one hundred or more Louisiana residents persons.14
(b) Twenty percent of the state's apportioned share of the taxpayer's15
expenditures for increasing research activities difference, if any, of the Louisiana16
qualified research expenses for the taxable year minus the base amount, if the17
taxpayer is an entity that employs fifty to ninety-nine Louisiana residents persons.18
(c) Twenty-five percent of the state's apportioned share of the federal19
research credit claimed for research expenditures in the state if the taxpayer claims20
the alternative incremental tax credit under 26 U.S.C. §41.21
(d) Forty percent of the state's apportioned share of the taxpayer's Louisiana22
qualified research expenses for the taxable year, conducted in this state if the23
taxpayer is an entity that employs fewer than fifty Louisiana residents persons.24
(2) The state's apportioned share of a taxpayer's expenditures for increasing25
research activities shall be the excess of the taxpayer's qualified research expenses26
for the taxable year over the base amount, as determined under 26 U.S.C. §41,27
multiplied by a percentage equal to the ratio of the qualified research expenses in this28
state for the taxable year to the taxpayer's total qualified research expenses for the29 SB NO. 135
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taxable year.1
(3)(a) All entities taxed as corporations for Louisiana income or corporation2
franchise tax purposes shall claim any credit allowed under this Section on their3
corporation income and corporation franchise tax return.4
(b) Individuals shall claim any credit allowed under this Section on their5
individual income tax return.6
(c) Estates or trusts shall claim any credit allowed under this Section on their7
fiduciary income tax returns.8
(d) Entities not taxed as corporations shall claim any credit allowed under this9
Section on the returns of the partners or members as follows:10
(i) Corporate partners or members shall claim their share of the credit on their11
corporation income or corporation franchise tax returns.12
(ii) Individual partners or members shall claim their share of the credit on13
their individual income tax returns.14
(iii) Partners or members that are estates or trusts shall claim their share of15
the credit on their fiduciary income tax returns.16
D. A taxpayer who receives a federal Small Business Innovation Research17
Grant as created by the Small Business Innovation Development Act of 1982 (P.L.18
97-219), reauthorized by the Small Business Research and Development19
Enhancement Act (P.L. 102-564), and reauthorized again by the Small Business20
Reauthorization Act of 2000 (P.L. 106-554), shall be allowed a refundable tax credit21
rebate in an amount equal to forty percent of the award received during the tax year.22
E. As used in this Section, the following terms shall have the meaning23
hereafter ascribed to them, unless the context clearly indicates otherwise:24
(1) "Department" shall mean the Department of Economic Development.25
(2) "Base amount" shall mean seventy percent of the average annual26
qualified research expenses within Louisiana during the three years preceding27
the taxable year.28
(2) (3) The terms "base amounts", "qualified research expenses", and29 SB NO. 135
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"qualified research" shall have the same meanings as those terms are defined in 261
U.S.C. §41, as amended.2
(4) "Person" shall mean a natural person.3
F. The department shall administer the provisions of this Section and shall4
have the following powers and duties in addition to those granted by other laws of5
this state:6
(1) To monitor the implementation and operation of this Section and conduct7
a continuing evaluation of the program.8
(2) To assist any taxpayer in obtaining the benefits of any incentive or9
inducement program authorized by Louisiana law.10
(3) To promulgate program rules and regulations regarding the sale of tax11
credits allowed by this Section, in consultation with the secretary of the Department12
of Revenue, in accordance with the Administrative Procedure Act.13
(4) To receive information from the Department of Revenue regarding the14
identity of the taxpayer and the amount of credit rebate claimed for any credits15
claimed pursuant to this Section. Such information shall not be public record and16
shall be subject to the same prohibition of disclosure as in the possession of the17
Department of Revenue.18
(5) To audit all relevant records and accounts of any taxpayer applying19
for rebates provided for by this Section.20
G. After approval of the rebate, the Louisiana Department of Economic21
Development shall submit the rebate certification to the Department of Revenue22
on behalf of the taxpayer who earned the Research and Development rebate.23
The Department of Revenue may require the taxpayer to submit additional24
information as may be necessary to administer the provisions of this Section.25
Upon receipt of the rebate certification and any additional information required26
by the Department of Revenue, the secretary of the Department of Revenue27
shall make payment to the taxpayer in the amount to which he is entitled from28
the current collections of the taxes collected pursuant to Chapter 1 of this Title.29 SB NO. 135
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H.(1) Recovery of credits rebates by Department of Revenue. Credits1
Rebates granted under this Section, but later disallowed in whole or in part, may be2
recovered by the secretary of the Department of Revenue from the taxpayer applicant3
through any collection remedy authorized by R.S. 47:1561 that is initiated within4
three years from December thirty-first of the year in which the credit rebate was5
originally granted. The only interest that may be assessed and collected on these6
recovered credits rebates is interest at a rate three percentage points above the rate7
provided in R.S. 9:3500(B)(1), which shall be computed from the original due date8
of the return on which the disallowed credit rebate was taken.9
(2) The provisions of this Subsection are in addition to and shall not limit the10
authority of the secretary of the Department of Revenue to assess or to collect under11
any other provision of law. This includes the disallowance of any disallowed credit12
claimed by a taxpayer who received the credit through purchase or through a13
distribution by an entity not taxed as a corporation.14
I. A taxpayer shall not receive any other state tax credit, exemption,15
exclusion, rebate, or any other tax incentive for any expenditures for which the16
taxpayer has received a tax credit under this Section.17
H. J. No credit rebate shall be allowed pursuant to this Section for research18
expenditures incurred or Small Business Innovation Research Grant funds received19
after December 31, 2013 2019.20
Section 2. The provisions of this Act shall be applicable to tax years beginning on21
and after January 1, 2011. However, any refundable research and development tax credits22
earned and granted prior to the effective date of this Act shall continue to be valid, effective,23
and transferable according to the terms of the original grant.24
Section 3. This Act shall become effective upon signature by the governor or, if not25
signed by the governor, upon expiration of the time for bills to become law without signature26
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If27
vetoed by the governor and subsequently approved by the legislature, this Act shall become28
effective on the day following such approval.29 SB NO. 135
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The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Riley Boudreaux.
DIGEST
Present law grants refundable and transferable research and development tax credits for
expenditures incurred or Small Business Innovation Research Grant funds received through
December 31, 2013.
Proposed law changes the credit to a "rebate" payable by the Department of Revenue upon
receipt of a rebate certification from the Department of Economic Development from the
current collections of income taxes and extends the program through December 31, 2019.
Present law grants a credit if a taxpayer claims for the taxable year a federal income tax
credit under 26 U.S.C. §41(a) of 8% of the "state's apportioned share" of the taxpayer's
expenditures for increasing research activities, if the taxpayer employs 100 or more
Louisiana residents; 25% if he employs 50 to 99 Louisiana residents.
The "state's apportioned share" was defined as the excess of the taxpayer's qualified research
expenses for the taxable year over the base amount as defined in the federal law, multiplied
by a percentage equal to the ratio of the qualified research expenses in the state for the
taxable year to the taxpayer's total qualified research expenses for the taxable year.
Proposed law grants a "rebate" of 8% of the difference of the "Louisiana qualified research
expenses" as defined in 26 U.S.C. §41 for the taxable year minus the "base amount", if the
taxpayer employs 100 "persons" in the state; 20% if he employs 50 to 99 "persons".
"Base amount" is defined as 70% of the average annual "qualified research expenses within
Louisiana" during the three years preceding the taxable year.
Present law grants a credit if a taxpayer claims for the taxable year a federal income tax
credit under 26 U.S.C. §41(b) of 40% of the "state's apportioned share" of the taxpayer's
qualified research expenses conducted in this state if the taxpayer employs fewer than 50
Louisiana residents.
Proposed law grants a rebate of 40% of the "Louisiana qualified research expenses" as
defined in 26 U.S.C. §41 for the taxable year if the taxpayer employs fewer than 50
"persons".
Present law granted a further credit of 25% of the state's apportioned share of the federal
research credit claimed for research expenditures in the state if the taxpayer claimed the
alternative incremental tax credit under 26 U.S.C. §41.
Proposed law deletes this provision.
Present law authorizes a taxpayer who receives a federal Small Business Innovation
Research Grant a credit in an amount equal to 40% of the award received during the tax year.
Proposed law retains present law but changes the credit to a rebate.
Proposed law requires the size of the "entity" for purposes of determining the amount of the
rebate earned to be determined by the total number of employees based on the aggregate of
all affiliated companies.
Proposed law prohibits a taxpayer from receiving any other state tax credit, exemption,
exclusion, rebate or any other tax incentive for any expenditures for which he receives a
rebate. SB NO. 135
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Proposed law specifically grants DED the authority to audit all relevant records and accounts
of applicants for the rebate and authorizes the Department of Revenue to require an applicant
to submit additional information before a rebate is paid.
Applicable to tax years beginning on and after January 1, 2011.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 47:6015)