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Regular Session, 2013
HOUSE BILL NO. 501
BY REPRESENTATIVES MORENO AND WESLEY BI SHOP
TAX CREDITS: Extends the sunset of the musical and theatrical production base
investment income tax credit
AN ACT1
To amend and reenact R.S. 47:6034(A),(B)(4), (8), (9), (10), and (11), (C)(1)(a)(ii)(aa) and2
(3), (E)(1)(e), (F), and (G) and to repeal R.S. 47:6034(C)(1)(b), (e), and (f) relative3
to tax credits; to provide with respect to the state-certified musical or theatrical4
facility infrastructure income tax credit; to extend the sunset of the tax credit in5
certain circumstances; to provide a deadline for certain projects to receive initial6
certification for the tax credit; to provide relative to certain definitions; to provide7
for certain requirements and limitations; to provide with respect to the application8
for such tax credits and certification of productions and infrastructure projects; to9
provide for the disallowance of credits; to provide for the recovery of credits; and to10
provide for related matters.11
Be it enacted by the Legislature of Louisiana:12
Section 1. R.S. 47:6034(A),(B)(4), (8), (9), (10), and (11), (C)(1)(a)(ii)(aa) and (3),13
(E)(1)(e), (F), and (G) are hereby amended and reenacted to read as follows: 14
ยง6034. Musical and theatrical production income tax credit15
A. Purpose. It is the intention of the legislature in creating these five16
different types of tax credits: a credit for qualified production expenditures made17
from investments in a state-certified musical or theatrical production; a credit for the18
construction, repair, or renovation of facilities related to such productions and19
performances; a credit for qualified transportation costs for performance-related20
property; a credit for the payroll of Louisiana residents employed in connection with21 HLS 13RS-480 ENGROSSED
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a state-certified musical or theatrical production; and a credit for employing college,1
university, and vocational-technical students employed in connection with a state-2
certified musical or theatrical production, to establish and promote Louisiana as one3
of the primary places in the United States in which live performances, from creation4
to presentation are present and thriving. The live performance industry will enhance5
economic development because it fits well with the state's reputation as a tourist6
destination, will offer numerous and varied employment opportunities, and in7
conjunction with the available federal and state incentives, will be an attraction for8
new and relocating businesses and will provide for the reinventing of countless9
abandoned properties as either performance or rehearsal spaces. The live10
performance industry will also spur educational development: Louisiana colleges,11
universities, and vocational-technical schools will be able to offer talented12
undergraduate and graduate students from this state, other states, and around the13
world a real-world opportunity to participate in degree programs across the state that14
work on the various productions in accounting, law, management, and marketing and15
to fill arts-related positions such as actors, writers, producers, stagehands, and16
directors, as well as technicians working on all aspects of the production such as17
lighting, sound, and actual stage production and operations.18
B. Definitions. For the purposes of this Section:19
* * *20
(4) "Limited state-certified musical or theatrical production" means a21
musical or theatrical production or a series of productions occurring in Louisiana by22
a nonprofit community theater that held a public performance before an audience23
within this state during the 2008 calendar year which has been certified, verified, and24
approved in accordance with the provisions of this Section. "Infrastructure25
expenditures" means expenditures directly related to the state-certified infrastructure26
project, including land and land acquisition costs, construction costs, design fees,27
furniture, fixtures, and equipment purchased subject to a sale agreement or capital28
lease. Infrastructure expenditures shall not include indirect costs such as general29 HLS 13RS-480 ENGROSSED
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administrative costs, insurance, or any costs related to the transfer or allocation of1
tax credits. The Department of Economic Development may determine if2
expenditures submitted as production-related costs or capital costs related to an3
infrastructure facility, represent legitimate expenditures for the actual costs or related4
goods or services, having economic substance and a business purpose related to the5
certified production or facility, and not constructive dividends, self-dealing, inflated6
prices or similar transactions entered into for the purpose of inflating the amount of7
tax credits earned rather than for the benefit of the production or facility.8
* * *9
(8) "Related party transaction" means a transaction between parties deemed10
to be related by common ownership or control, under generally accepted auditing11
principles. Related party transaction expenditures may be subject to limitations, as12
provided for by rules and regulations promulgated by the department.13
(9)(a) "Resident" or "resident of Louisiana" means a natural person and, for14
the purpose of determining eligibility for the tax incentives provided by this Section,15
a person who qualifies for any of the following reasons:16
(i) The person is domiciled in the state of Louisiana.17
(ii) The person maintains a permanent place of abode within the state and18
spends in the aggregate more than six months of each year within the state.19
(iii) The person pays taxes to the state on the amount of money paid to such20
person for which a credit is sought pursuant to this Section.21
(b) A company owned or controlled by such a person and which lends the22
services of such a person for a state-certified musical or theatrical production shall23
also be deemed a resident if such company is organized or authorized to do business24
in the state and such company pays taxes to the state on the amount of money paid25
to such company for such services of such person.26
(9) (10) "State-certified musical or theatrical facility infrastructure project"27
or "state-certified infrastructure project" means a capital infrastructure project in the28
state directly related to the production or performance of musical or theatrical29 HLS 13RS-480 ENGROSSED
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productions as defined in this Section, and movable and immovable property and1
equipment related thereto, or any other facility which supports and is a necessary2
component of such facility, a new or rehabilitated proscenium or black-box theatre3
infrastructure project located in the state and any expenditures in the state directly4
related to the construction, repair, or renovation of such project, which are certified,5
verified, and approved as provided for in this Section. The primary purpose of the6
proposed facility must be to host live performances and must have a minimum7
capacity of five hundred. Expenditures attributable to areas other than where live8
performances will take place may comprise no more than twenty-five percent of total9
qualifying expenditures.10
(10)(a) (11)(a) "State-certified musical or theatrical production" means a11
musical or theatrical production performed in this state, including but not limited to12
concerts, musical tours, ballet, dance, comedy revue, or live variety entertainment,13
or a series of productions occurring over the course of a twelve-month period, and14
the recording or filming of such production, which originate, are developed, or have15
their initial public performance before an audience within Louisiana, or which have16
their United States debut within Louisiana, and the production expenditures,17
expenditures for the payroll of residents, transportation expenditures, and18
expenditures for employing college and vocational-technical students related to such19
production or productions, that are certified, verified, and approved as provided for20
in this Section. Non-qualifying projects include, but are not limited to non-touring21
music and cultural festivals, industry seminars, and trade shows, and any production22
activity taking place outside the state.23
(b) A "state-certified musical or theatrical production" which shall be24
eligible for recertification and the credit provided for in this Section shall include a25
previously certified musical or theatrical production which received a credit pursuant26
to this Section, and which is otherwise eligible pursuant to this Section, which27
returns for performances within the state after being performed on Broadway.28 HLS 13RS-480 ENGROSSED
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(11)(a) "Transportation expenditures" means expenditures for the packaging,1
crating, and transportation both to the state for use in a state-certified musical or2
theatrical production of sets, costumes, or other tangible property constructed or3
manufactured out of state, and/or from the state after use in a state-certified musical4
or theatrical production of sets, costumes, or other tangible property constructed or5
manufactured in this state. Such term shall include the packaging, crating, and6
transporting of property and equipment used for special and visual effects, sound,7
lighting, and staging, costumes, wardrobes, make-up and related accessories and8
materials, as well as any other performance or production-related property and9
equipment; provided that transportation services are purchased through a company10
which has a significant business presence in the state.11
(b) "Transportation expenditures" shall not include any costs to transport12
property and equipment to be used only for filming and not in a state-certified13
production, any indirect costs, any expenditures that are later reimbursed by a third14
party, or any amounts that are paid to persons or entities as a result of their15
participation in profits from the exploitation of the production.16
C. Income tax credits for state-certified productions and state-certified17
musical or theatrical facility infrastructure projects:18
(1) There is hereby authorized the following types of credits against the state19
income tax:20
(a)21
* * *22
(ii)(aa) Until For state-certified infrastructure projects which receive initial23
certification on or after July 1, 2013, and before January 1, 2014, a base investment24
credit may be granted earned for certified, verified, and approved expenditures made25
in the state on or before January 1, 2015, for the construction, repair, or renovation26
of a state-certified musical or theatrical facility infrastructure project, or for27
investments made by a company or a financier in such infrastructure project which28
are, in turn, expended for such construction, repair, or renovation, not to exceed ten29 HLS 13RS-480 ENGROSSED
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million dollars per state-certified infrastructure project, under conditions provided1
for in this Item. No more than sixty million dollars in tax credits under this Section2
shall be granted for infrastructure projects per year.3
* * *4
(3) Tax credits associated with a state-certified musical or theatrical5
production or a state-certified musical or theatrical facility infrastructure project shall6
never exceed the total base investment in that production or infrastructure project7
and transportation expenditures.8
* * *9
E. Certification and administration:10
(1)11
* * *12
(e) Prior to the final certification of a production or infrastructure project, the13
applicant shall submit to the Department of Economic Development a report an audit14
of the final amount of expenditures qualifying for credits pursuant to this Section,15
which report the Department of Economic Development may require to be prepared16
by an independent certified public accountant. The Department of Economic17
Development shall review the report audit and shall issue a final tax credit18
certification letter, certifying the applicant and indicating the type and amount of tax19
credits for which the applicant or other companies or financiers are eligible pursuant20
to this Section.21
* * *22
F.(1) Recapture of credits. If the Department of Economic Development, or23
the Department of Revenue find that funds for which a taxpayer received credits24
according to this Section were not expended for expenditures qualifying for a credit25
as provided in this Section, then the taxpayer' s state income tax for such taxable26
period shall be increased by such amount necessary for the recapture of credit27
provided by this Section.28 HLS 13RS-480 ENGROSSED
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(2)(a) Recovery of credits by Department of Revenue. Credits granted to a1
taxpayer, but later disallowed, may be recovered by the secretary of the Department2
of Revenue through any collection remedy authorized by R.S. 47:1561 and initiated3
within three years from December thirty-first of the year in which the credit was4
taken.5
(b) The only interest that may be assessed and collected on recovered credits6
is interest at a rate three percentage points above the rate provided in R.S.7
9:3500(B)(1), which shall be computed from the original date of the return on which8
the credit was taken.9
(3) 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. Disallowance of credits by the Department of Economic12
Development. Tax credits shall be subject to disallowance in whole or in part, if the13
Department of Economic Development finds that a taxpayer has obtained a tax credit14
in violation of the provisions of this Section, including but not limited to fraud or15
misrepresentation, as further provided by rule.16
G. The Department of Economic Development shall prepare, with input from17
the Legislative Fiscal Office, a written report to be submitted to the Senate18
Committee on Revenue and Fiscal Affairs and the House of Representatives19
Committee on Ways and Means no less than sixty days prior to the start of the20
Regular Session of the Legislature in 2008, and every second year thereafter. The21
report shall include the overall impact of the tax credits, the amount of the tax credits22
issued, the number of net new jobs created, the amount of Louisiana payroll created,23
the economic impact of the tax credits and the state-certified musical and theatrical24
productions and infrastructure projects, the amount of new infrastructure that has25
been developed in the state, and any other factors that describe the impact of the26
program. Recovery of credits by the Department of Revenue.27
(1) Credits previously granted to a taxpayer but later disallowed by the28
Department of Economic Development may be recovered by the secretary of the29 HLS 13RS-480 ENGROSSED
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Department of Revenue through any collection remedy authorized by R.S. 47:15611
and initiated within three years from December thirty-first of the year in which the2
credit was taken. If the taxpayer that claimed the credit is an entity, the Department3
of Revenue shall first seek recapture from the entity that claimed the credit. If the4
entire amount of the credit subject to recapture cannot be recaptured from the entity,5
the remaining credit shall be recaptured from owners of the entity. The amount of6
the credit subject to recapture shall be allocated among the partners, members, or7
shareholders in proportion to their ownership interests at the time the credit was8
claimed.9
(2) The only interest that may be assessed and collected on recovered credits10
is interest at a rate three percentage points above the rate provided for in R.S.11
9:3500(B)(1), which shall be computed from the original date of the return on which12
the credit was taken.13
(3) The provisions of this Subsection are in addition to and shall not limit the14
authority of the secretary of the Department of Revenue to assess or to collect under15
any other provision of law.16
Section 2. R.S. 47:6034(C)(1)(b), (e), and (f) are hereby repealed in their entirety.17
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)]
Moreno HB No. 501
Abstract: Extends the sunset of the base investment credit for the musical and theatrical
production income tax credit for projects which receive initial certification on or
after July 1, 2013 and before Jan. 1, 2014, repeals tax credits for transportation
expenses and certain productions for nonprofit community theaters, and changes
definitions.
Present law authorizes various income tax credits related to musical and theatrical
production development in La. A base investment credit may be granted for certified
expenditures for the construction, repair, or renovation of certain infrastructure projects,
including certain investments made therein. The maximum authorized credit per project is
$10,000,000, and the annual limit on total tax credits is $60,000,000. The tax credit sunsets
Dec. 31, 2013.
Proposed law retains present law and extends the sunset date for the base investment tax
credit for projects which receive initial certification on or after July 1, 2013, and before Jan. HLS 13RS-480 ENGROSSED
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1, 2014. For such projects, the tax credit may be earned for expenditures made before Jan.
1, 2015.
Proposed law retains present law with respect to the limitations on the amount of credits per
project as well as the annual overall program limit.
Present law authorizes a tax credit for qualified transportation expenditures for
performance-related property.
Proposed law repeals the tax credit for transportation expenditures.
Present law authorizes a tax credit for base investment in a certain productions for nonprofit
community theater, which credit is equal to 10% of the investment.
Proposed law repeals the tax credit for base investment in productions for nonprofit
community theater.
Present law provides that the secretary of the Dept. of Economic Development may, under
certain circumstances, approve tax credits for an infrastructure project if all or a portion of
the facility is used for purposes other than live performance.
Proposed law repeals present law regarding the approval of such projects by the secretary
of the Dept. of Economic Development.
Proposed law defines "infrastructure expenses" to be expenditures that are directly related
to a state-certified infrastructure project including land and land acquisition costs,
construction costs, design fees, furniture, fixtures, and equipment purchased subject to a sale
agreement or capital lease. Proposed law excludes from the definition of "infrastructure
expenditures" indirect costs such as general administrative costs, insurance, or any costs
related to the transfer or allocation of tax credits.
Present law defines "state-certified musical or theatrical infrastructure project".
Proposed law retains present law definition of "state-certified musical or theatrical
infrastructure project" and adds requirements that the facility have a minimum capacity of
five hundred, and that expenditures for areas other than where live performance will take
place shall comprise no more than 25% of the total qualifying expenditures.
Present law defines "state-certified musical or theatrical production".
Proposed law retains present law definition of "state-certified musical or theatrical
production" and adds a requirement that the production be performed in La.
Present law provides for disallowance and recapture of credits.
Proposed law rewords provisions of present law regarding disallowance and recapture, but
retains the substance of present law.
Proposed law repeals the requirement for the Dept. of Economic Development to report
biannually to the legislature regarding the status of the program.
(Amends R.S. 47:6034(A),(B)(4), (8), (9), (10), and (11), (C)(1)(a)(ii)(aa) and (3), (E)(1)(e),
(F), and (G); Repeals R.S. 47:6034(C)(1)(b), (e), and (f)) HLS 13RS-480 ENGROSSED
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Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Changes program eligibility for projects which receive initial certification on or
after July 1, 2013, and before Jan. 1, 2014. For such projects, the tax credit may
be earned for expenditures made before Jan. 1, 2015.
2. Adds repeal of tax credits for transportation expenditures and for certain
productions for nonprofit community theater.
3. Revises present law regarding disallowance and recapture, of tax credits.
4. Adds and revises definitions.