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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
* * *10
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 federal income16
tax credit under 26 U.S.C.§41(ba), for the taxable year, or meets the requirements of17
Subparagraph (3)(i) of this Subsection, shall be allowed a refundable tax credit to be18
applied against income and corporation franchise taxes due.19 HLS 13RS-1077 REENGROSSED
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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 REENGROSSED
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(i) A taxpayer who employs less than fifty employees may apply for credits1
without providing a federal income tax return as required by Subparagraph (a) of this2
Paragraph if all of the following criteria are met:3
(i) Unless waived by the secretary of the department, the taxpayer provides4
the department with a report from an independent certified public accountant5
licensed in the state of Louisiana, conducted in accordance with standards for6
attestation engagements established by the American Institute of Certified Public7
Accountants, finding that:8
(aa) The taxpayer would not financially benefit, in the same tax year as the9
application, from claiming the federal income tax credit for increasing research10
activities under 26 U.S.C. §41(a);11
(bb) The taxpayer's activities meet the I.R.C. §41(d) and (e) definitions of12
qualified research; and13
(cc) The taxpayer is in compliance with the procedures as defined by the14
department.15
(ii) The taxpayer provides all supporting documentation required by the16
department to show the amount of qualified research expenses for such taxable year.17
(4) The Department of Economic Development shall approve or disapprove18
each application. No credits shall be granted to a taxpayer under this Section unless19
the credit is approved by the Department of Economic Development.20
(5) The following types of businesses that do not have a pending or issued21
United States patent directly related to the qualified research expenditures claimed22
under this Section are ineligible to apply for or receive benefits under this Section,23
unless specifically invited by the secretary of the department to do so:24
(a) Professional services firms as defined by departmental rule.25
(b) Businesses primarily engaged in custom manufacturing and custom26
fabricating as defined by departmental rule.27
C.28
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(2) The amount of the credit authorized in this Section shall be equal to1
either:2
* * *3
(c) Forty percent of the Louisiana qualified research expenses for the taxable4
year, if the taxpayer is an entity that employs fewer less than fifty persons.5
* * *6
G.(1) Each year, prior to the issuance of credits, the department shall7
perform a detailed examination of at least ten percent of all applications received.8
The department shall select applications for examination based on one or more of the9
following: a random sampling of applications, the applicant's business sector, and10
other selection criteria as determined by the department.11
(2) If a taxpayer's application is selected for examination, the taxpayer shall12
submit all supporting documentation required by the department. The department13
shall use this evidence to verify that the amount of the qualified research expenses14
incurred in Louisiana for the taxable year support the corresponding tax credit.15
(3) Upon examination, the department will disallow any credits that are not16
substantiated by supporting documentation to include Internal Revenue Service17
documents.18
(4) The applicant bears the burden of proving that its activities meet the19
definition of qualified research provided in 26 U.S.C. §41(d).20
(5) Nothing in this Subsection shall preclude the department from examining21
a taxpayer's application for research and development credits after the issuance of22
credits. Credits disallowed following an examination conducted after the issuance23
of credits will be subject to recovery, recapture, or offset.24
H.(1) Recovery of credits by Department of Revenue. Credits granted under25
this Section, but later disallowed in whole or in part, may be recovered by the26
secretary of the Department of Revenue from the taxpayer applicant through any27
collection remedy authorized by R.S. 47:1561 that is initiated within three years from28
December thirty-first of the year in which the credit was originally granted. The29 HLS 13RS-1077 REENGROSSED
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only interest that may be assessed and collected on these recovered credits is interest1
at a rate three percentage points above the rate provided in R.S. 9:3500(B)(1), which2
shall be computed from the original due date of the return on which the disallowed3
credit was taken.4
(2) The provisions of this Subsection are in addition to and shall not limit the5
authority of the secretary of the Department of Revenue to assess or to collect under6
any other provision of law. This includes the disallowance of any disallowed credit7
claimed by a taxpayer who received the credit through purchase or through a8
distribution by an entity not taxed as a corporation.9
H.I. A taxpayer shall not receive any other incentive administered by the10
Department of Economic Development for any expenditures for which the taxpayer11
has received a credit pursuant to this Section.12
I.J. No credit shall be allowed pursuant to this Section for research13
expenditures incurred or Small Business Innovation Research Grant funds received14
after December 31, 2019.15
Section 2. This Act shall be applicable to tax years beginning on or after January 1,16
2012. This Act shall become effective on July 1, 2013; if vetoed by the governor and17
subsequently approved by the legislature, this Act shall become effective on July 1, 2013,18
or on the day following such approval by the legislature, whichever is later.19
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: Revises various provisions of the research and development tax credit, including
administrative provisions governing applications by businesses with less than 50
employees and eligibility for the credit for businesses which engage in custom
manufacturing or fabricating.
Present law provides for research and development income tax credits for taxpayers
(businesses) who employ a certain number of people and who are eligible for federal tax
credits for certain qualified research and development expenditures. There is an application
process through which a business submits documents to the Dept. of Economic Development
(department). HLS 13RS-1077 REENGROSSED
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Proposed law retains present law and requires that businesses seeking the tax credit provide
certain federal income tax information as may be requested by the department.
Proposed law authorizes eligibility for businesses with less than 50 employees if the business
can provide to the department a report by an independent certified public accountant relative
to the taxpayer's expenditures qualifying for federal research and development tax credits
and other information.
Proposed law further provides that unless the business has a U.S. patent issued or pending
which is directly related to research expenditures for which the tax credit is sought,
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 to perform a detailed examination of at least 10% of
the tax credit applications, including a review and verification of documents to support
qualified research expenditures.
Proposed law provides that the applicant shall bear the burden of proving 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 which had been previously
issued.
Effective on July 1, 2013.
(Amends R.S. 47:6015(B), (C)(2)(c), (G), (H), and (I); Adds R.S. 47:6015(J))
Summary of Amendments Adopted by House
House Floor Amendments to the engrossed bill.
1. Added exceptions in the application process for businesses employing less than
50.
2. Added provisions regarding the report required from a certified public accountant
relative to the taxpayer's expenditures qualifying for federal income tax credits.
3. Added provision allowing eligibility for professional services firms and
businesses engaged primarily in custom manufacturing and fabrication if those
businesses have a U.S. patent issued or pending which is directly related to
research expenditures for which the tax credit is sought.