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Regular Session, 2013
HOUSE BILL NO. 563
BY REPRESENTATIVE THIBAUT
TAX CREDITS: Changes eligibility and provides for administrative changes for the
Research and Development Tax Credit
AN ACT1
To amend and reenact R.S. 47:6015(B), (C)(2)(c), (G), (H), and (I), and to enact R.S.2
47:6015(J), relative to the research and development tax credit; to provide for3
eligibility for the credit; to provide with respect to administration of the credit; to4
provide for the examination of certain records; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 47:6015(B), (C)(2)(c), (G), (H), and (I), are hereby amended and7
reenacted and R.S. 47:6015(J) is hereby enacted to read as follows: 8
§6015. Research and development tax credit9
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B.(1) Any taxpayer who employs fifty or more than fifty persons and claims11
for the taxable year a federal income tax credit under 26 U.S.C. §41(a) for increasing12
research activities shall be allowed a refundable tax credit to be applied against13
income and corporation franchise taxes due.14
(2) Any taxpayer who employs up to fifty less than fifty persons and incurs15
qualified research expenses as defined in claims, for the taxable year, a federal16
income tax credit under 26 U.S.C.§41(ba), for the taxable year, or meets the17
requirements of (i) of Paragraph (3) of this subsection, shall be allowed a refundable18
tax credit to be applied against income and corporation franchise taxes due.19 HLS 13RS-1077 ORIGINAL
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(3) Each taxpayer seeking the credits authorized in this Section shall apply1
to the Department of Economic Development for the credits. The taxpayer shall2
remit an application fee of two hundred fifty dollars with the application. The3
application shall include all of the following:4
(a) In cases where the taxpayer employs more than fifty persons, a A federal5
income tax return and supporting documentation that shows the amount of the6
federal research credit for the same taxable year. The supporting documentation for7
a taxpayer who employs up to fifty persons shall show the amount of the qualified8
research expenses for the same taxable year. If claiming the credit under Subsection9
D of this Section, the taxpayer shall also remit supporting documentation for the10
federal Small Business Innovation Research Grant.11
(b) The total amount of qualified research expenses and the qualified12
research expenses in this state.13
(c) The total number of persons employed in Louisiana by the taxpayer and14
the number of those persons employed in Louisiana directly engaged in research and15
development.16
(d) The average wages of the persons employed in Louisiana not directly17
engaged in research and development and the average wages of the persons18
employed in Louisiana directly engaged in research and development.19
(e) The average value of benefits received by all persons employed in20
Louisiana.21
(f) The cost of health insurance coverage offered to all persons employed in22
Louisiana.23
(g) At the department's request, the taxpayer shall provide federal income tax24
information related to the research and development credit. This information shall25
include, but shall not be limited to, IRS forms 8821 and 4506.26
(h) Any other information required by the Department of Economic27
Development.28 HLS 13RS-1077 ORIGINAL
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(i) A taxpayer who employees less than fifty employees may apply for credits1
under this Section if all of the following criteria are met:2
(i) The taxpayer provides the department with a report from an independent3
certified public accountant licensed in the state of Louisiana finding that:4
(aa) The taxpayer would not financially benefit from claiming the federal5
income tax credit for increasing research activities under 26 U.S.C. §41(a); and6
(bb) The taxpayer is in compliance with the procedures as defined by the7
department.8
(ii) The taxpayer provides all supporting documentation required by the9
department to show the amount of qualified research expenses for such taxable year.10
(4) The Department of Economic Development shall approve or disapprove11
each application. No credits shall be granted to a taxpayer under this Section unless12
the credit is approved by the Department of Economic Development.13
(5) The following types of businesses are ineligible to apply for or receive14
benefits under this Section, unless specifically invited by the secretary of the15
department to do so:16
(i) Professional services firms as defined by departmental rule; and17
(ii) Businesses primarily engaged in custom manufacturing and custom18
fabricating as defined by departmental rule.19
C.20
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(2) The amount of the credit authorized in this Section shall be equal to22
either:23
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(c) Forty percent of the Louisiana qualified research expenses for the taxable25
year, if the taxpayer is an entity that employs fewer less than fifty persons.26
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G. (1) Each year, prior to the issuance of credits, the department shall1
perform a detailed examination of at least ten percent of all applications received.2
The department shall select applications for examination based on one or more of the3
following: a random sampling of applications, the applicant's business sector, and/or4
other selection criteria as determined by the department.5
(2) If a taxpayer's application is selected for examination, the taxpayer shall6
submit all supporting documentation required by the department. The department7
shall use this evidence to verify that the amount of the qualified research expenses8
incurred in Louisiana for the taxable year support the corresponding tax credit.9
(3) Upon examination, the department will disallow any credits that are not10
substantiated by supporting documentation to include Internal Revenue Service11
documents.12
(4) The applicant bears the burden of proving that its activities meet the13
Internal Revenue Code Section 41(d) definition of qualified research.14
(5) Nothing in this Subsection shall preclude the department from examining15
a taxpayer's application for research and development credits after the issuance of16
credits. Credits disallowed following an examination conducted after the issuance17
of credits will be subject to recovery, recapture, or offset.18
H. (1) Recovery of credits by Department of Revenue. Credits granted under19
this Section, but later disallowed in whole or in part, may be recovered by the20
secretary of the Department of Revenue from the taxpayer applicant through any21
collection remedy authorized by R.S. 47:1561 that is initiated within three years from22
December thirty-first of the year in which the credit was originally granted. The23
only interest that may be assessed and collected on these recovered credits is interest24
at a rate three percentage points above the rate provided in R.S. 9:3500(B)(1), which25
shall be computed from the original due date of the return on which the disallowed26
credit was taken.27
(2) The provisions of this Subsection are in addition to and shall not limit the28
authority of the secretary of the Department of Revenue to assess or to collect under29 HLS 13RS-1077 ORIGINAL
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any other provision of law. This includes the disallowance of any disallowed credit1
claimed by a taxpayer who received the credit through purchase or through a2
distribution by an entity not taxed as a corporation.3
H. I. A taxpayer shall not receive any other incentive administered by the4
Department of Economic Development for any expenditures for which the taxpayer5
has received a credit pursuant to this Section.6
I. J No credit shall be allowed pursuant to this Section for research7
expenditures incurred or Small Business Innovation Research Grant funds received8
after December 31, 2019.9
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Section 2. This Act shall be applicable to tax years beginning on or after January 1,11
2012. This Act shall become effective on July 1, 2013; if vetoed by the governor and12
subsequently approved by the legislature, this Act shall become effective on July 1, 2013,13
or on the day following such approval by the legislature, whichever is later.14
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)]
Thibaut HB No. 563
Abstract: Amends the research and development tax credit and provides for eligibility for
the credit, administration of the credit, and for the examination of documents which
support the credit.
Present law provides for research and development state tax credits for taxpayers who
employ a certain number of people and who are eligible for federal tax credits for qualified
expenditures.
Proposed law retains present law and provides that taxpayers seeking the tax credit shall
provide certain federal income tax information that is requested by the Department of
Economic Development. Proposed law also provides that taxpayers who can provide an
independent certified public accountant's report showing that the taxpayer would not benefit
from the federal tax credit may now be eligible for the state tax credit. Proposed law further
provides that professional services firms and businesses primarily engaged in custom
manufacturing and custom fabricating are not eligible for the tax credit.
Proposed law requires the Department of Economic Development to perform a detailed
examination of at least ten percent of the tax credit applications, including a review and
verification of documents to support qualified research expenditures. HLS 13RS-1077 ORIGINAL
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Proposed law provides that the applicant shall bear the burden of proofing that its research
activities meet federal guidelines.
Proposed law provides that the department shall disallow tax credits not supported by
documentation and may recover, recapture, or offset tax credits previously issued but
subsequently found to be disallowed after examination.
Effective on July 1, 2013.
(Amends R.S. 47:6015(B), (C)(2)(c), (G), (H), and (I); Adds R.S. 47:6015(J))