HLS 13RS-709 ORIGINAL
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Regular Session, 2013
HOUSE BILL NO. 455
BY REPRESENTATIVE LEGER
TAX CREDITS: Establishes the Louisiana New Markets Jobs tax credit
AN ACT1
To enact R.S. 22:832.1, relative to insurance premium tax credits; to establish the Louisiana2
New Markets Jobs tax credit; to authorize a premium tax credit for investments in3
low-income community development; to provide for the amount of the tax credit; to4
provide for eligibility for and usage of the tax credit; and to provide for related5
matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 22:832.1 is hereby enacted to read as follows: 8
ยง832.1. Louisiana New Markets Jobs Act; premium tax credit9
A. The provisions of this Section shall be known as and may be cited as the10
"Louisiana New Markets Jobs Act".11
B. As used in this Section, the following words, terms, and phrases have the12
meaning ascribed to them unless a different meaning is clearly indicated in the13
context:14
(1) "Applicable percentage" means zero percent for the first two credit15
allowance dates and ten percent for the next four credit allowance dates.16
(2) "Credit allowance date" means, with respect to any qualified equity17
investment, the following:18
(a) The date on which such investment is initially made.19
(b) Each of the six anniversary dates of such date thereafter.20 HLS 13RS-709 ORIGINAL
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(3) "Department" means the Department of Insurance.1
(4) "Letter ruling" means a written interpretation of law to a specific set of2
facts provided by the applicant requesting a letter ruling.3
(5) "Purchase price" means the amount paid to the issuer of a qualified4
equity investment for such qualified equity investment.5
(6) "Qualified active low-income community business" has the meaning6
given such term in Section 45D of the Internal Revenue Code of 1986, as amended,7
and 26 CFR 1.45D-1. A business shall be considered a qualified active low-income8
community business for the duration of the qualified community development9
entity's investment in, or loan to, the business if the entity reasonably expects, at the10
time it makes the investment or loan, that the business will continue to satisfy the11
requirements for being a qualified active low-income community business12
throughout the entire period of the investment or loan.13
(7) "Qualified community development entity" has the meaning given such14
term in Section 45D of the Internal Revenue Code of 1986, as amended; provided15
that such entity has entered into, for the current year or any prior year, an allocation16
agreement with the Community Development Financial Institutions Fund of the17
United States Treasury Department with respect to credits authorized by Section 45D18
of the Internal Revenue Code of 1986, as amended, which includes the state of19
Louisiana within the service area set forth in such allocation agreement. The term20
shall include qualified community development entities that are controlled by or21
under common control with any such qualified community development.22
(8) "Qualified equity investment" means any equity investment in a qualified23
community development entity that meets each of the following criteria:24
(a) Is acquired after the effective date of this Act at its original issuance25
solely in exchange for cash or, if not so acquired, was a qualified equity investment26
in the hands of a prior holder.27
(b) Has at least one hundred percent of its cash purchase price used by the28
issuer to make qualified low-income community investments in qualified active low-29 HLS 13RS-709 ORIGINAL
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income community businesses located in this state by the first anniversary of the1
initial credit allowance date.2
(c) Is designated by the issuer as a qualified equity investment under this3
Paragraph and is certified by the department as not exceeding the limitation4
contained in Paragraph (E)(5) of this Section.5
(9) "Qualified low-income community investment" means any capital or6
equity investment in, or loan to, any qualified active low-income community7
business. With respect to any one qualified active low-income community business,8
the maximum amount of qualified low-income community investments made in that9
business, on a collective basis with all of its affiliates that may be counted towards10
satisfaction of Subparagraph (8)(b) of this Subsection is ten million dollars whether11
issued by one or several qualified community development entities. Any amounts12
returned or repaid by such qualified active low-income community business may be13
reinvested in such qualified active low-income community business and not be14
counted against such ten million dollar limit.15
(10) "State premium tax liability" means any liability incurred by any entity16
under the provisions of R.S. 22:831, 836, 838, and 842 or, if the tax liability under17
R.S. 22:831, 836, 838, and 842 is eliminated or reduced, the term shall also mean18
any tax liability imposed by the state on an insurance company or other person that19
had premium tax liability under the laws of this state.20
C.(1) Any entity that makes a qualified equity investment is vested with an21
earned credit against state premium tax liability that may be utilized as follows:22
(a) On each credit allowance date of such qualified equity investment the23
entity, or subsequent holder of the qualified equity investment, shall be entitled to24
utilize a portion of such credit during the taxable year, including such credit25
allowance date.26
(b) The credit amount shall be equal to the applicable percentage for such27
credit allowance date multiplied by the purchase price paid to the issuer of such28
qualified equity investment.29 HLS 13RS-709 ORIGINAL
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(2) The amount of the credit claimed by an entity shall not exceed the1
amount of such entity's state premium tax liability for the tax year for which the2
credit is claimed. Any amount of tax credit that the entity is prohibited from3
claiming in a taxable year as a result of this Paragraph may be carried forward for4
use in future taxable years for a period not to exceed ten years.5
D.(1) Tax credits earned by a partnership, limited liability company, S-6
corporation, or other pass through entity may be allocated to the partners, members,7
or shareholders of such entity for their direct use in accordance with the provisions8
of any agreement among such partners, members, or shareholders.9
(2)(a) Any tax credits not previously claimed by a taxpayer against its10
premium tax may be transferred or sold to another Louisiana taxpayer, subject to the11
following conditions:12
(i) A single transfer or sale may involve one or more transferees.13
(ii) Transferors and transferees shall submit to the department, in writing, a14
notification of any transfer or sale of tax credits within thirty days after the transfer15
or sale of such tax credits which notice contains the amount of the remaining tax16
credit balance after transfer, all tax identification numbers for both transferor and17
transferee, the date of the transfer, the amount transferred, the price paid by the18
transferee to the transferor, and any other information required by the department.19
(b) Failure to comply with this Paragraph will result in the disallowance of20
the tax credit until the taxpayers are in full compliance.21
(c) The transfer or sale of this credit does not extend the time in which the22
credit can be used. The carry forward period for a credit that is transferred or sold23
begins on the date on which the credit was originally earned.24
(d) To the extent that the transferor did not have rights to claim or use the25
credit at the time of the transfer, the department shall either disallow the credit26
claimed by the transferee or recapture the credit from the transferee.27
E.(1) A qualified community development entity that seeks to have an equity28
investment designated as a qualified equity investment and eligible for tax credits29 HLS 13RS-709 ORIGINAL
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under this Section shall apply to the department. The qualified community1
development entity shall include each of the following in or attached to its2
application:3
(a) Evidence of the applicant's certification as a qualified community4
development entity, including evidence that Louisiana is contained in the service5
area of the entity.6
(b) A copy of the allocation agreement executed by an applicant, or its7
controlling entity, and the Community Development Financial Institutions Fund.8
(c) A certificate executed by an executive officer of the applicant attesting9
that the allocation agreement remains in effect and has not otherwise been revoked10
or cancelled by the Community Development Financial Institutions Fund.11
(d) A description of the proposed amount, structure, and purchaser of the12
qualified equity investment.13
(e) Identifying information for any entity that will earn tax credits as a result14
of the issuance of the qualified equity investment.15
(f) Examples of the types of qualified active low-income businesses in which16
the applicant, its controlling entity, or affiliates of its controlling entity have invested17
under the Federal New Markets Tax Credit Program. Applicants are not required to18
identify qualified active low-income community businesses in which they will invest19
when submitting an application.20
(2) Within thirty days after receipt of a completed application containing the21
information set forth in Paragraph (1) of this Subsection, including the deposit as22
required in Subsection H of this Section, the department shall grant or deny the23
application in full or in part. If the department denies any part of the application, it24
shall inform the qualified community development entity of the grounds for the25
denial. If the qualified community development entity provides additional26
information required by the department or otherwise completes its application within27
fifteen days of the notice of denial, the application shall be considered completed as28
of the original date of the submission. If the qualified community development29 HLS 13RS-709 ORIGINAL
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entity fails to provide the information or complete its application within the fifteen-1
day period, the application remains denied and must be resubmitted in full with a2
new submission date, and the department shall refund the performance deposit.3
(3) If the application is granted, the department shall certify the proposed4
equity investment as a qualified equity investment that is eligible for tax credits5
under this Section, subject to the limitations contained in Paragraph (5) of this6
Subsection. The department shall provide written notice of the certification to the7
qualified community development entity. The notice shall include the names of8
those entities who will earn the credits and their respective credit amounts. If the9
names of the entities that are eligible to utilize the credits change due to a transfer10
of a qualified equity investment or an allocation pursuant to Paragraph (D)(1) of this11
Section, the qualified community development entity shall notify the department of12
such change.13
(4) The department shall certify qualified equity investments in the order in14
which applications are received by the department. Applications received on the15
same day shall be deemed to have been received simultaneously. For applications16
that are complete and received on the same day, the department shall certify,17
consistent with remaining qualified equity investment capacity, the qualified equity18
investments in proportionate percentages based upon the ratio of the amount of19
qualified equity investment requested in an application to the total amount of20
qualified equity investments requested in all applications received on the same day.21
(5) A total of one hundred twenty-five million dollars of qualified equity22
investment authority shall be available for certification and allocation. The23
department shall accept applications beginning on September 1, 2013, for allocation24
and certification of up to sixty-two million five hundred thousand dollars of qualified25
equity investments. The department shall accept applications for the remaining26
sixty-two million five hundred thousand dollars of such authority beginning on27
September 1, 2014. If a pending request cannot be fully certified due to these limits,28
the department shall certify the portion that may be certified unless the qualified29 HLS 13RS-709 ORIGINAL
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community development entity elects to withdraw its request rather than receive1
partial certification.2
(6) An approved applicant may transfer all or a portion of its certified3
qualified equity investment authority to its controlling entity or any qualified4
community development entity that is controlled by or under common control with5
the applicant, provided that the applicant provides the information required in the6
application with respect to such transferee and the applicant notifies the department7
of such transfer with the notice of receipt of the cash investment set forth in8
Paragraph (7) of this Subsection.9
(7) Within thirty days of the applicant receiving notice of certification, the10
qualified community development entity or any transferee under Paragraph (6) of11
this Subsection shall issue the qualified equity investment, receive cash in the12
amount of the certified amount and designate an amount equal to the certified13
amount as a federal qualified equity investment with the Community Development14
Financial Institutions Fund. The qualified community development entity or15
transferee under Paragraph (6) of this Subsection shall provide the department with16
evidence of the receipt of the cash investment and designation of the qualified equity17
investment as a federal qualified equity investment within five business days after18
receipt. If the qualified community development entity or any transferee pursuant to19
Paragraph (6) of this Subsection does not receive the cash investment within thirty20
days following receipt of the certification notice, the certification shall lapse and the21
entity may not issue the qualified equity investment without reapplying to the22
department for certification. Lapsed certifications revert back to the department and23
shall be reissued, first, pro rata to other applicants whose qualified equity investment24
allocations were reduced pursuant to Paragraph (4) of this Subsection and, thereafter,25
in accordance with the application process.26
F. The department shall recapture, from the entity that claimed the credit on27
a return, the tax credit allowed pursuant to this Section if either of the following28
occur:29 HLS 13RS-709 ORIGINAL
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(1) Any amount of a federal tax credit available with respect to a qualified1
equity investment that is eligible for a credit under this Section is recaptured under2
Section 45D of the Internal Revenue Code of 1986, as amended. In such case, the3
department's recapture shall be proportionate to the federal recapture with respect to4
such qualified equity investment.5
(2) The issuer fails to invest an amount equal to one hundred percent of the6
purchase price of the qualified equity investment in qualified low-income7
community investments in Louisiana within twelve months of the issuance of the8
qualified equity investment and maintain such level of investment in qualified low-9
income community investments in Louisiana until the last credit allowance date for10
the qualified equity investment. For purposes of this Section, an investment shall be11
considered held by an issuer even if the investment has been sold or repaid if the12
issuer reinvests an amount equal to the capital returned to or recovered by the issuer13
from the original investment, exclusive of any profits realized, in another qualified14
low-income community investment within twelve months of the receipt of such15
capital. Periodic amounts received during a calendar year as repayment of principal16
on a loan that is a qualified low-income community investment shall be treated as17
continuously invested in a qualified low-income community investment if the18
amounts are reinvested in another qualified low-income community investment by19
the end of the following calendar year as set forth in 26 CFR 1.45D-1. An issuer20
shall not be required to reinvest capital returned from qualified low-income21
community investments after the sixth anniversary of the issuance of the qualified22
equity investment, the proceeds of which were used to make the qualified low-23
income community investment, and the qualified low-income community investment24
shall be considered held by the issuer through the seventh anniversary of the25
qualified equity investment's issuance.26
G. Enforcement of the recapture provisions of Subsection F of this Section27
shall be subject to a six month cure period. No recapture shall occur until the28
qualified community development entity has been given notice of noncompliance by29 HLS 13RS-709 ORIGINAL
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the department and afforded six months from the date of such notice to cure the1
noncompliance.2
H.(1) A qualified community development entity that seeks to have an equity3
investment designated as a qualified equity investment and eligible for tax credits4
pursuant to this Section shall pay a deposit in the amount of five hundred thousand5
dollars to the department for deposit in the New Markets performance guarantee6
account, which is hereby established. The entity shall forfeit the deposit in its7
entirety if either:8
(a) The qualified community development entity and all transferees pursuant9
to Paragraph (E)(6) of this Section fail to issue the total amount of qualified equity10
investments certified by the department and receive cash in the total amount certified11
under Paragraph (E)(5) of this Section within the time period set forth in Paragraph12
(E)(7) of this Section.13
(b) The qualified community development entity or any transferee pursuant14
to Paragraph (E)(6) of this Section that issues a qualified equity investment certified15
pursuant to this Section fails to meet the investment requirement under Paragraph16
(F)(2) of this Section by the second credit allowance date of such benefit of the six17
month cure period established pursuant to Subsection G of this Section.18
(2) The deposit required by Paragraph (1) of this Subsection shall be19
deposited with the department and held in the New Markets performance guarantee20
account until such time as compliance with the provisions of this Subsection shall21
have been established. The qualified community development entity may request a22
return of the deposit from the department no earlier than thirty days after having met23
all the requirements of Paragraph (1) of this Subsection. The department shall have24
thirty days to comply with such request or give notice of noncompliance.25
I.(1) The department shall issue letter rulings regarding the tax credit26
program authorized under and subject to the terms and conditions set forth in this27
Section, subject to the terms and conditions set forth in this Section.28 HLS 13RS-709 ORIGINAL
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(2) The department shall respond to a request for a letter ruling within sixty1
days of receipt of such request. The applicant may provide a draft letter ruling for2
the department's consideration. The applicant may withdraw the request for a letter3
ruling, in writing, prior to the issuance of the letter ruling. The department may4
refuse to issue a letter ruling for good cause but shall list the specific reasons for5
refusing to issue the letter ruling. Good cause includes but is not limited to:6
(a) The applicant requests the department to determine whether a statute is7
constitutional or a regulation is lawful.8
(b) The request involves a hypothetical situation or alternative plans.9
(c) The facts or issues presented in the request are unclear, overbroad,10
insufficient, or otherwise inappropriate as a basis upon which to issue a letter ruling.11
(d) The issue is currently being considered in a rulemaking procedure,12
contested case, or other agency or judicial proceeding that may definitely resolve the13
issue.14
(3) Letter rulings shall bind the department and the department's agents and15
their successors until such time as the entity or its shareholders, members, or16
partners, as applicable, claim all of such credits on a Louisiana tax return or report,17
subject to the terms and conditions set forth in properly published regulations. The18
letter ruling shall apply only to the applicant.19
(4) In rendering letter rulings and making other determinations under this20
Section, to the extent applicable, the department shall look to Section 45D of the21
Internal Revenue Code of 1986, as amended, and the rules and regulations issued22
thereunder for guidance.23
J.(1) An entity claiming a credit pursuant to this Section is not required to24
pay any additional retaliatory tax levied by R.S. 22:836 as a result of claiming that25
credit.26
(2) In addition to the exclusion in Paragraph (1) of this Subsection, it is the27
intent of this Act that an entity claiming a credit pursuant to this Section is not28
required to pay any additional tax that may arise as a result of claiming that credit.29 HLS 13RS-709 ORIGINAL
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K.(1) Qualified community development entities that issue qualified equity1
investments shall submit a report to the department within the first five business days2
after the first anniversary of the initial credit allowance date that provides3
documentation as to the investment of one hundred percent of the purchase price in4
qualified low-income community investments in qualified active low-income5
community businesses located in Louisiana. Such report shall include:6
(a) A bank statement of such qualified community development entity7
evidencing each qualified low-income community investment.8
(b) Evidence that such businesses was a qualified active low-income9
community business at the time of such qualified low-income community10
investment.11
(2) Thereafter, the qualified community development entity will submit an12
annual report to the department within forty-five days of the beginning of the13
calendar year during the compliance period. No annual report shall be due prior to14
the first anniversary of the initial credit allowance date. The report shall include but15
is not limited to the following:16
(a) Number of employment positions created and retained as a result of17
qualified low-income community investments.18
(b) Average annual salary of positions described in Subparagraph (a) of this19
Paragraph.20
(3) The qualified community development entity is not required to provide21
the annual report set forth in Paragraph (2) of this Subsection for qualified low-22
income community investments that have been redeemed or repaid.23
L.(1) The department may promulgate rules to implement the provisions24
of this Section.25
(2) The department shall issue all forms and notices required hereunder in26
accordance with the provisions of this Section.27
M. The provisions of this Section shall apply only to tax returns or reports28
originally due on or after January 1, 2014.29 HLS 13RS-709 ORIGINAL
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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. HLS 13RS-709 ORIGINAL
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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)