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)]
Leger HB No. 455
Abstract: Creates the Louisiana New Markets Jobs Act.
Present law taxes insurers based on the amount of premiums, called a "premium tax".
Proposed law creates the Louisiana New Markets Jobs Act which provides an earned income tax
credit against the premium tax liability for any entity who makes an investment of private capital into
low-income community businesses located in Louisiana.
Proposed law provides several definitions, including "qualified active low-income community
business" (QALICB or "business") and a "qualified community development entity" (QCDE or
"entity") to mean that which is ascribed in Section 45D of the Internal Revenue Code. Under federal
law, a QALICB is defined as a business located in either a census tract with a poverty rate of at least
20% or a census tract with a median income that does not exceed 80% of the benchmark median
income. QCDE are privately managed investment entities that have received New Market Tax
Credit allocation authority.
Proposed law defines "qualified equity investment" (QEI or "investment") as an equity investment
in a QCDE entity that meets certain criteria and defines "qualified low-income community
investment" (QLICI or "investment") as any capital or equity investment in, or loan to, any QALICB
business.
Proposed law further provides that such tax credit is equal to 0% for the first two years and 10% for
the next four years, multiplied by the purchase price paid to the issuer of such QEI investment. The
total of all such credits taken cannot exceed the entity's state premium tax liability for the tax year
for which the credit is claimed; however, any credits that are not used in the first taxable year eligible
for use are carried forward for up to ten years.
Proposed law provides that the premium tax credits earned by partnerships, limited liability
companies, S-corporations, or other pass through entities can be allocated to the partners, members,
or shareholders of such entities and provides that any unclaimed tax credits are transferable to one
or more transferees.
Proposed law provides that a QCDE entity seeking to have an equity investment designated as a QEI
investment must apply to the Department of Insurance (department) in an application for
certification. Proposed law requires the department to grant or deny such application by a QCDE
entity within 20 days after receipt. Further requires the department to inform such entity of the grounds for denial of any part of the application, extending such entity the right to provide additional
information or to complete its application within 15 days of notice of the denial.
Proposed law requires the department to certify QEI investments in the order in which the
applications are received by the department.
Proposed law provides that a total of $125,000,000 of QEI investment authority is available for
certification and allocation. Further requires the department to accept applications beginning
September 1, 2013, for allocation and certification of up to $62,500,000.00 of QEI.
Proposed law requires QCDE entities or their transferees to issue the QEI investment within 30 days
of receiving notice of certification. Further requires the entities or their transferees to provide the
department with evidence of the receipt of the cash investment and the designation of the investment
within five business days after receipt. Proposed law provides that in the event that a QCDE entity
or its transferee does not receive the cash investment within 30 days of receipt of the certification
notice, the certification lapses.
Proposed law further requires the department to recapture the tax credit from the entity that claimed
such tax credit following the occurrence of either of the following events:
(1)Any amount of a federal tax credit available with respect to a QEI investment that is eligible
for a credit under proposed law is recaptured under Section 45D of the Internal Revenue
Code, as amended. Proposed law requires the department's recapture to be proportionate to
the federal recapture.
(2)The issuer fails to invest an amount equal to 100% of the purchase price of the QEI
investment in a QLICI investment in Louisiana within 12 months of the issuance of the QEI
investment and to further maintain such level of investment until the last credit allowance
date for the qualified equity investment.
Proposed law provides for a six month cure period before the department recaptures an entity's
credits. A recapture can only occur after the entity has been given notice of noncompliance and six
months from the date of such notice to cure such noncompliance.
Proposed law requires any QCDE entity seeking to have an equity investment qualified must pay
a $500,000 deposit to the department for deposit in the New Markets performance guarantee account.
Proposed law requires the department to hold the $500,000 deposit in the New Markets performance
guarantee account until such time as the entity meets compliance standards set forth by proposed
law. Further allows the entity to request a return of such deposit after 30 days of meeting compliance
requirements.
Proposed law requires the department, upon request, to issue letter rulings regarding the tax credit
program. Further requires the department to seek guidance from Section 45D of the Internal
Revenue Code of 1986 in issuing such letter rulings and to respond to such requests within 60 days. Proposed law requires QCDE entities that issue QEI investments to submit a report to the department
within the first five business days after the first anniversary of the initial credit allowance date. Such
report must provide documentation as to the investment of 100% of the purchase price in QLICI
investments in a QALICB businesses located in Louisiana. Proposed law further requires the entity
to submit an annual report to the department within 45 days of the beginning of the calendar year for
the compliance period. The report must include the number of employment positions created and
retained as a result of the investments and the average annual salary of such positions.
Proposed law authorizes the department to promulgate rules to implement the provisions of proposed
law.
Proposed law applies to tax returns or reports originally due on or after January 1, 2014.
(Adds R.S. 22:832.1)