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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), and (F), to enact R.S. 47:6034(H), and to repeal R.S.3
47:6034(C)(1)(b), (e), and (f), relative to tax credits; to provide with respect to the4
state-certified musical or theatrical facility infrastructure income tax credit; to extend5
the sunset of the tax credit in certain circumstances; to provide a deadline for certain6
projects to receive initial certification for the tax credit; to provide relative to certain7
definitions; to provide for certain requirements and limitations; to provide with8
respect to the application for such tax credits and certification of productions and9
infrastructure projects; to provide for the disallowance of credits; to provide for the10
recovery of credits; and to 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), and (F) are hereby amended and reenacted and R.S. 47:6034(H) is hereby enacted14
to read as follows: 15
ยง6034. Musical and theatrical production income tax credit16
A. Purpose. It is the intention of the legislature in creating these five17
different types of tax credits: a credit for qualified production expenditures made18
from investments in a state-certified musical or theatrical production; a credit for the19
construction, repair, or renovation of facilities related to such productions and20
performances; a credit for qualified transportation costs for performance-related21 HLS 13RS-480 REENGROSSED
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property; a credit for the payroll of Louisiana residents employed in connection with1
a state-certified musical or theatrical production; and a credit for employing college,2
university, and vocational-technical students employed in connection with a state-3
certified musical or theatrical production, to establish and promote Louisiana as one4
of the primary places in the United States in which live performances, from creation5
to presentation are present and thriving. The live performance industry will enhance6
economic development because it fits well with the state's reputation as a tourist7
destination, will offer numerous and varied employment opportunities, and in8
conjunction with the available federal and state incentives, will be an attraction for9
new and relocating businesses and will provide for the reinventing of countless10
abandoned properties as either performance or rehearsal spaces. The live11
performance industry will also spur educational development: Louisiana colleges,12
universities, and vocational-technical schools will be able to offer talented13
undergraduate and graduate students from this state, other states, and around the14
world a real-world opportunity to participate in degree programs across the state that15
work on the various productions in accounting, law, management, and marketing and16
to fill arts-related positions such as actors, writers, producers, stagehands, and17
directors, as well as technicians working on all aspects of the production such as18
lighting, sound, and actual stage production and operations.19
B. Definitions. For the purposes of this Section:20
* * *21
(4) "Limited state-certified musical or theatrical production" means a22
musical or theatrical production or a series of productions occurring in Louisiana by23
a nonprofit community theater that held a public performance before an audience24
within this state during the 2008 calendar year which has been certified, verified, and25
approved in accordance with the provisions of this Section. "Infrastructure26
expenditures" means expenditures directly related to the state-certified infrastructure27
project, including land and land acquisition costs, construction costs, design fees,28
furniture, fixtures, and equipment purchased subject to a sale agreement or capital29 HLS 13RS-480 REENGROSSED
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lease. Infrastructure expenditures shall not include indirect costs such as general1
administrative costs, insurance, or any costs related to the transfer or allocation of2
tax credits. The Department of Economic Development may determine whether3
expenditures submitted as production-related costs of capital costs related to an4
infrastructure facility represent legitimate expenditures for the actual costs or related5
goods or services that have economic substance and a business purpose related to the6
certified production or facility, or such costs constitute constructive dividends, self-7
dealing, inflated prices or similar transactions entered into for the purpose of8
inflating the amount of tax credits earned rather than for the benefit of the production9
or facility.10
* * *11
(8) "Related party transaction" means a transaction between parties deemed12
to be related by common ownership or control under generally accepted auditing13
principles. Related party transaction expenditures may be subject to limitations as14
provided for by rules and regulations promulgated by the department.15
(9)(a) "Resident" or "resident of Louisiana" means a natural person and, for16
the purpose of determining eligibility for the tax incentives provided by this Section,17
a person who qualifies for any of the following reasons:18
(i) The person is domiciled in the state of Louisiana.19
(ii) The person maintains a permanent place of abode within the state and20
spends in the aggregate more than six months of each year within the state.21
(iii) The person pays taxes to the state on the amount of money paid to such22
person for which a credit is sought pursuant to this Section.23
(b) A company owned or controlled by such a person and which lends the24
services of such a person for a state-certified musical or theatrical production shall25
also be deemed a resident if such company is organized or authorized to do business26
in the state and such company pays taxes to the state on the amount of money paid27
to such company for such services of such person.28 HLS 13RS-480 REENGROSSED
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(9)(10)(a) "State-certified musical or theatrical facility infrastructure project"1
or "state-certified infrastructure project" , for any project which receives initial2
certification before July 1, 2013, means a capital infrastructure project in the state3
directly related to the production or performance of musical or theatrical productions4
as defined in this Section, and movable and immovable property and equipment5
related thereto, or any other facility which supports and is a necessary component of6
such facility, and any expenditures in the state related to the construction, repair, or7
renovation of such project, which are certified, verified, and approved as provided8
for in this Section.9
(b) "State-certified musical or theatrical facility infrastructure project" or10
"state-certified infrastructure project", for any project which receives initial11
certification on or after July 1, 2013, means a new or rehabilitated proscenium or12
black-box theatre infrastructure project located in the state and any expenditures in13
the state directly related to the construction, repair, or renovation of such project,14
which are certified, verified, and approved as provided in this Section. The primary15
purpose of the proposed facility must be to host live performances and must have a16
minimum capacity of five hundred. Expenditures attributable to areas other than17
where live performances will take place may comprise no more than twenty-five18
percent of total qualifying expenditures.19
(10)(a)(11)(a) "State-certified musical or theatrical production" means a20
musical or theatrical production performed in this state, including but not limited to21
concerts, musical tours, ballet, dance, comedy revue, or live variety entertainment,22
or a series of productions occurring over the course of a twelve-month period, and23
the recording or filming of such production, which originate, are developed, or have24
their initial public performance before an audience within Louisiana, or which have25
their United States debut within Louisiana, and the production expenditures,26
expenditures for the payroll of residents, transportation expenditures, and27
expenditures for employing college and vocational-technical students related to such28
production or productions, that are certified, verified, and approved as provided for29 HLS 13RS-480 REENGROSSED
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in this Section. Non-qualifying projects include, but are not limited to non-touring1
music and cultural festivals, industry seminars, and trade shows, and any production2
activity taking place outside the state.3
(b) A "state-certified musical or theatrical production" which shall be4
eligible for recertification and the credit provided for in this Section shall include a5
previously certified musical or theatrical production which received a credit pursuant6
to this Section, and which is otherwise eligible pursuant to this Section, which7
returns for performances within the state after being performed on Broadway.8
(11)(a) "Transportation expenditures" means expenditures for the packaging,9
crating, and transportation both to the state for use in a state-certified musical or10
theatrical production of sets, costumes, or other tangible property constructed or11
manufactured out of state, and/or from the state after use in a state-certified musical12
or theatrical production of sets, costumes, or other tangible property constructed or13
manufactured in this state. Such term shall include the packaging, crating, and14
transporting of property and equipment used for special and visual effects, sound,15
lighting, and staging, costumes, wardrobes, make-up and related accessories and16
materials, as well as any other performance or production-related property and17
equipment; provided that transportation services are purchased through a company18
which has a significant business presence in the state.19
(b) "Transportation expenditures" shall not include any costs to transport20
property and equipment to be used only for filming and not in a state-certified21
production, any indirect costs, any expenditures that are later reimbursed by a third22
party, or any amounts that are paid to persons or entities as a result of their23
participation in profits from the exploitation of the production.24
C. Income tax credits for state-certified productions and state-certified25
musical or theatrical facility infrastructure projects :.26 HLS 13RS-480 REENGROSSED
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(1) There is hereby authorized the following types of credits against the state1
income tax:2
(a)3
* * *4
(ii)(aa) Until For state-certified infrastructure projects which receive initial5
certification before January 1, 2014, a base investment credit may be granted earned6
for certified, verified, and approved expenditures made in the state on or before7
January 1, 2015, for the construction, repair, or renovation of a state-certified8
musical or theatrical facility infrastructure project, or for investments made by a9
company or a financier in such infrastructure project which are, in turn, expended for10
such construction, repair, or renovation, not to exceed ten million dollars per state-11
certified infrastructure project, under conditions provided for in this Item. No more12
than sixty million dollars in tax credits under this Section shall be granted for13
infrastructure projects per year.14
* * *15
(3) Tax credits associated with a state-certified musical or theatrical16
production or a state-certified musical or theatrical facility infrastructure project shall17
never exceed the total base investment in that production or infrastructure project18
and transportation expenditures.19
* * *20
E. Certification and administration:21
(1)22
* * *23
(e) Prior to the final certification of a production or infrastructure project, the24
applicant shall submit to the Department of Economic Development a report an audit25
of the final amount of expenditures qualifying for credits pursuant to this Section,26
which report audit the Department of Economic Development may require to be27
prepared by an independent certified public accountant. The Department of28
Economic Development shall review the report audit and shall issue a final tax credit29 HLS 13RS-480 REENGROSSED
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certification letter, certifying the applicant and indicating the type and amount of tax1
credits for which the applicant or other companies or financiers are eligible pursuant2
to this Section.3
* * *4
F.(1) Recapture of credits. If the Department of Economic Development, or5
the Department of Revenue find that funds for which a taxpayer received credits6
according to this Section were not expended for expenditures qualifying for a credit7
as provided in this Section, then the taxpayer's state income tax for such taxable8
period shall be increased by such amount necessary for the recapture of credit9
provided by this Section.10
(2)(a) Recovery of credits by Department of Revenue. Credits granted to a11
taxpayer, but later disallowed, may be recovered by the secretary of the Department12
of Revenue through any collection remedy authorized by R.S. 47:1561 and initiated13
within three years from December thirty-first of the year in which the credit was14
taken.15
(b) The only interest that may be assessed and collected on recovered credits16
is interest at a rate three percentage points above the rate provided in R.S.17
9:3500(B)(1), which shall be computed from the original date of the return on which18
the credit was taken.19
(3) The provisions of this Subsection are in addition to and shall not limit the20
authority of the secretary of the Department of Revenue to assess or to collect under21
any other provision of law. Disallowance of credits by the Department of Economic22
Development. Tax credits shall be subject to disallowance in whole or in part, if the23
Department of Economic Development finds that a taxpayer has obtained a tax credit24
in violation of the provisions of this Section, including but not limited to fraud or25
misrepresentation, as further provided by rule.26
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H. Recovery of Credits by the Department of Revenue.1
(1) Credits previously granted to a taxpayer but later disallowed by the2
Department of Economic Development may be recovered by the secretary of the3
Department of Revenue through any collection remedy authorized by R.S. 47:15614
and initiated within three years from December thirty-first of the year in which the5
credit was taken.6
(2) The only interest that may be assessed and collected on recovered credits7
is interest at a rate three percentage points above the rate provided for in R.S.8
9:3500(B)(1), which shall be computed from the original date of the return on which9
the credit was taken.10
(3) The provisions of this Subsection are in addition to and shall not limit the11
authority of the secretary of the Department of Revenue to assess or to collect under12
any other provision of law.13
Section 2. R.S. 47:6034(C)(1)(b), (e), and (f) are hereby repealed in their entirety.14
Section 3. This Act shall become effective on July 1, 2013.15
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: For the tax credit for musical and theatrical facility infrastructure projects,
extends the program for one year for those projects receiving initial certification
before Jan. 1, 2014, also repeals tax credits for musical and theatrical production
transportation expenses and certain productions for nonprofit community theaters,
and changes definitions.
Present law establishes five different types of tax credits related to musical and theatrical
productions.
Proposed law repeals two credits: the credit for qualified transportation costs for
performance-related property, and the credit for projects for nonprofit community theaters.
One of the five credits authorized in present law is a credit for the construction, repair, or
renovation of a state-certified musical or theatrical facility infrastructure project. Present
law further provides that the amount of the base investment credit given for investment in
such projects cannot exceed $10,000,000 per project. Further provides that no more than
$60,000,000 in tax credits under present law may be granted for these projects per year. HLS 13RS-480 REENGROSSED
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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 sunsets the authority to grant credits on Dec. 31, 2013.
Proposed law extends the program by allowing projects which receive initial certification
before Jan. 1, 2014 to continue making qualifying expenditures until Jan. 1, 2015.
Present law defines "infrastructure project" as a capital infrastructure project in La. directly
related to the production or performance of musical or theatrical productions, property and
equipment related thereto, any other facility which supports and is a necessary component
of such facility, and any expenditures in the state related to the construction, repair, or
renovation of such project.
Proposed law retains present law definition of "infrastructure project" for those projects
which receive initial certification before July 1, 2013.
Proposed law revises the definition of "infrastructure project" for those projects which
receive initial certification on or after July 1, 2013. Proposed law defines "infrastructure
project" as a new or rehabilitated proscenium or black-box theatre infrastructure project
located in La. and any expenditures in the state directly related to the construction, repair,
or renovation of such project. Further, the primary purpose of the proposed facility must be
to host live performances and the facility must have a minimum capacity of 500.
Expenditures attributable to areas other than where live performances will take place may
comprise no more than 25% of total qualifying expenditures.
Proposed law defines "infrastructure expenses" as those directly related to a state-certified
infrastructure project or state-certified higher education 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 production" as a musical or
theatrical production or a series of productions occurring over the course of a twelve-month
period, and the recording or filming of such production, which originate, are developed, or
have their initial public performance before an audience within La., or which have their
United States debut within La., and expenditures related thereto. Proposed law retains
present law and adds to the definition by including concerts, musical tours, ballet, dance,
comedy revue, or live variety entertainment.
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.
Effective July 1, 2013.
(Amends R.S. 47:6034(A), (B)(4), (8), (9), (10), and (11), (C)(1)(a)(ii)(aa) and (3), (E)(1)(e),
and (F); Adds R.S. 47:6034(H)) HLS 13RS-480 REENGROSSED
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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.
House Floor Amendments to the engrossed bill.
1. Deletes provisions governing recapture of disallowed credits by the Dept. of
Revenue.
2. Adds specific definitions of "state-certified musical or theatrical infrastructure
project" for projects receiving initial certification both before and after the
effective date of proposed law.
3. Adds July 1, 2013, effective date.