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Regular Session, 2013
HOUSE BILL NO. 726 (Substitute for House Bill No. 455 by Representative Leger)
BY REPRESENTATIVE LEGER
TAX CREDITS: Establishes the New Markets Jobs Tax Credit
AN ACT1
To enact R.S. 47:6016.1, relative to tax credits; to provide with respect to the Louisiana2
New Markets Jobs Act; to authorize a premium tax credit for investments in low-3
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. 47:6016.1 is hereby enacted to read as follows: 8
ยง6016.1. 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 three credit15
allowance dates and fifteen percent for the next three credit allowance dates and zero16
percent for the final credit allowance date.17
(2) "Credit allowance date" means, with respect to any qualified equity18
investment, the following:19
(a) The date on which such investment is initially made.20 HLS 13RS-2064 ENGROSSED
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(b) Each of the six anniversary dates of such date thereafter.1
(3) "Department" means the Department of Revenue, unless otherwise noted.2
(4) "Purchase price" means the amount paid to the issuer of a qualified3
equity investment for such qualified equity investment.4
(5) "Qualified active low-income community business" has the meaning5
given such term in Section 45D of the Internal Revenue Code of 1986, as amended,6
and 26 CFR 1.45D-1.7
(6) "Qualified community development entity" has the meaning given such8
term in Section 45D of the Internal Revenue Code of 1986, as amended; provided9
that such entity has entered into, for the current year or any prior year, an allocation10
agreement with the Community Development Financial Institutions Fund of the11
United States Treasury Department with respect to credits authorized by Section 45D12
of the Internal Revenue Code of 1986, as amended, which includes the state of13
Louisiana within the service area set forth in such allocation agreement. The term14
shall include qualified community development entities that are controlled by or15
under common control with any such qualified community development entity.16
(7) "Qualified equity investment" means any equity investment in a qualified17
community development entity that meets each of the following criteria:18
(a) Is acquired after the effective date of this Act at its original issuance19
solely in exchange for cash or, if not so acquired, was a qualified equity investment20
in the hands of a prior holder.21
(b) Has at least one hundred percent of its cash purchase price used by the22
issuer to make qualified low-income community investments in qualified active low-23
income community businesses located in this state by the first anniversary of the24
initial credit allowance date.25
(c) Is designated by the issuer as a qualified equity investment under this26
Paragraph and is certified by the department as not exceeding the limitation27
contained in Paragraph (E)(5) of this Section.28 HLS 13RS-2064 ENGROSSED
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(8) "Qualified low-income community investment" means any capital or1
equity investment in, or loan to, any qualified active low-income community2
business. With respect to any one qualified active low-income community business,3
the maximum amount of qualified low-income community investments made in that4
business, on a collective basis with all of its affiliates that may be counted towards5
satisfaction of Subparagraph (7)(b) of this Subsection is ten million dollars whether6
issued by one or several qualified community development entities. Any amounts7
returned or repaid by such qualified active low-income community business to a8
qualified community development entity may be reinvested in such qualified active9
low-income community business by such qualified community development entity10
and not be counted against the ten million dollar limit provided for in this Paragraph.11
(9) "State premium tax liability" means any liability incurred by any entity12
under the provisions of R.S. 22:831, 836, 838, and 842.13
C.(1) Any entity that makes a qualified equity investment is vested with an14
earned credit against state premium tax liability that may be utilized as follows:15
(a) On each credit allowance date of such qualified equity investment the16
entity, or subsequent holder of the qualified equity investment, shall be entitled to17
utilize a portion of such credit during the taxable year, including such credit18
allowance date.19
(b) The credit amount shall be equal to the applicable percentage for such20
credit allowance date multiplied by the purchase price paid to the issuer of such21
qualified equity investment.22
(2) The amount of the credit claimed by an entity shall not exceed the23
amount of such entity's state premium tax liability for the tax year for which the24
credit is claimed. Any amount of tax credit that the entity is prohibited from25
claiming in a taxable year as a result of this Paragraph may be carried forward for26
use in future taxable years for a period not to exceed ten years.27
D.(1) Tax credits earned by a partnership, limited liability company, S-28
corporation, or other pass through entity may be allocated to the partners, members,29 HLS 13RS-2064 ENGROSSED
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or shareholders of such entity for their direct use in accordance with the provisions1
of any agreement among such partners, members, or shareholders.2
(2)(a) Any tax credits not previously claimed by a taxpayer against its3
premium tax may be transferred or sold to another Louisiana taxpayer, subject to the4
following conditions:5
(i) A single transfer or sale may involve one or more transferees.6
(ii) Transferors and transferees shall submit to the Department of Insurance,7
in writing, a notification of any transfer or sale of tax credits within thirty days after8
the transfer or sale of such tax credits which notice contains the amount of the9
remaining tax credit balance after transfer, all tax identification numbers for both10
transferor and transferee, the date of the transfer, the amount transferred, the price11
paid by the transferee to the transferor, and any other information required by the12
Department of Insurance.13
(b) Failure to comply with this Paragraph will result in the disallowance of14
the tax credit until the taxpayers are in full compliance.15
(c) The transfer or sale of this credit does not extend the time in which the16
credit can be used. The carry forward period for a credit that is transferred or sold17
begins on the date on which the credit was originally earned.18
(d) To the extent that the transferor did not have rights to claim or use the19
credit at the time of the transfer, the Department of Insurance shall either disallow20
the credit claimed by the transferee or recapture the credit from the transferee.21
E.(1) A qualified community development entity that seeks to have an equity22
investment designated as a qualified equity investment and eligible for tax credits23
under this Section shall apply to the department. On a form prescribed by the24
department, the qualified community development entity shall include each of the25
following in or attached to its application:26
(a) Evidence of the applicant's certification as a qualified community27
development entity, including evidence that Louisiana is contained in the service28
area of the entity.29 HLS 13RS-2064 ENGROSSED
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(b) A copy of the allocation agreement executed by an applicant, or its1
controlling entity, and the Community Development Financial Institutions Fund.2
(c) A certificate executed by an executive officer of the applicant attesting3
that the allocation agreement remains in effect and has not otherwise been revoked4
or cancelled by the Community Development Financial Institutions Fund.5
(d) A description of the proposed amount, structure, and purchaser of the6
qualified equity investment.7
(e) Identifying information for any entity that will earn tax credits as a result8
of the issuance of the qualified equity investment and community businesses in9
which they will invest when submitting an application.10
(2) Within thirty days after receipt of a completed application containing the11
information set forth in Paragraph (1) of this Subsection, including the deposit as12
required in Subsection H of this Section, the department shall grant or deny the13
application in full or in part. If the department denies any part of the application, it14
shall inform the qualified community development entity of the grounds for the15
denial. If the qualified community development entity provides additional16
information required by the department or otherwise completes its application within17
fifteen days of the notice of denial, the application shall be considered completed as18
of the original date of the submission. If the qualified community development19
entity fails to provide the information or complete its application within the fifteen-20
day period, the application remains denied and must be resubmitted in full with a21
new submission date, and the department shall refund the performance deposit.22
(3) If the application is granted, the department shall certify the proposed23
equity investment as a qualified equity investment that is eligible for tax credits24
under this Section, subject to the limitations contained in Paragraph (5) of this25
Subsection. The department shall provide written notice of the certification to the26
qualified community development entity. The notice shall include the names of27
those entities who will earn the credits and their respective credit amounts. If the28
names of the entities that are eligible to utilize the credits change due to a transfer29 HLS 13RS-2064 ENGROSSED
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of a qualified equity investment or an allocation pursuant to Paragraph (D)(1) of this1
Section, the qualified community development entity shall notify the Department2
of Insurance of such change.3
(4) The department shall certify qualified equity investments in the order in4
which applications are received by the department. Applications received on the5
same day shall be deemed to have been received simultaneously. For applications6
that are complete and received on the same day, the department shall certify,7
consistent with remaining qualified equity investment capacity, the qualified equity8
investments in proportionate percentages based upon the ratio of the amount of9
qualified equity investment requested in an application to the total amount of10
qualified equity investments requested in all applications received on the same day.11
(5) A total of one hundred ten million dollars of qualified equity investment12
authority shall be available for certification and allocation. The department shall13
accept applications beginning on November 1, 2013, for allocation and certification14
of up to fifty-five million dollars of qualified equity investments. The department15
shall accept applications for the remaining fifty-five million dollars of such authority16
beginning on September 2, 2014. If a pending request cannot be fully certified due17
to these limits of qualified equity investment authority, the department shall certify18
the portion of qualified equity investment authority that may be certified unless the19
qualified community development entity elects to withdraw its request rather than20
receive partial certification.21
(6) An approved applicant may transfer all or a portion of its certified22
qualified equity investment authority to its controlling entity or any qualified23
community development entity that is controlled by or under common control with24
the applicant, provided that the applicant provides the information required in the25
application with respect to such transferee and the applicant notifies the department26
of such transfer with the notice of receipt of the cash investment set forth in27
Paragraph (7) of this Subsection.28 HLS 13RS-2064 ENGROSSED
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(7) Within thirty days of the applicant receiving certification of qualified1
equity investment authority, the qualified community development entity or any2
transferee under Paragraph (6) of this Subsection shall issue the qualified equity3
investment, receive cash in the amount of the certified amount and designate an4
amount equal to the certified amount as a federal qualified equity investment with5
the Community Development Financial Institutions Fund. The qualified community6
development entity or transferee under Paragraph (6) of this Subsection shall provide7
the department with evidence of the receipt of the cash investment and designation8
of the qualified equity investment as a federal qualified equity investment within five9
business days after receipt. If the qualified community development entity or any10
transferee pursuant to Paragraph (6) of this Subsection does not receive the cash11
investment within thirty days following receipt of the certification notice, the12
certification shall lapse and the entity may not issue the qualified equity investment13
without reapplying to the department for certification. Lapsed certifications revert14
back to the department and shall be reissued, first, pro rata to other applicants whose15
qualified equity investment allocations were reduced pursuant to Paragraph (4) of16
this Subsection and, thereafter, in accordance with the application process.17
F. The Department of Insurance shall recapture, from the entity that claimed18
the credit on a return, the tax credit allowed pursuant to this Section if either of the19
following occur:20
(1) Any amount of a federal tax credit available with respect to a qualified21
equity investment that is eligible for a credit under this Section is recaptured under22
Section 45D of the Internal Revenue Code of 1986, as amended. In such case, the23
Department of Insurance's recapture shall be proportionate to the federal recapture24
with respect to such qualified equity investment.25
(2) The issuer fails to invest an amount equal to one hundred percent of the26
purchase price of the qualified equity investment in qualified low-income27
community investments in Louisiana within twelve months of the issuance of the28
qualified equity investment and maintain such level of investment in qualified low-29 HLS 13RS-2064 ENGROSSED
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income community investments in Louisiana until the last credit allowance date for1
the qualified equity investment. For purposes of this Section, an investment shall be2
considered held by an issuer even if the investment has been sold or repaid if the3
issuer reinvests an amount equal to the capital returned to or recovered by the issuer4
from the original investment, exclusive of any profits realized, in another qualified5
low-income community investment within twelve months of the receipt of such6
capital. Periodic amounts received during a calendar year as repayment of principal7
on a loan that is a qualified low-income community investment shall be treated as8
continuously invested in a qualified low-income community investment if the9
amounts are reinvested in another qualified low-income community investment by10
the end of the following calendar year as set forth in 26 CFR 1.45D-1. An issuer11
shall not be required to reinvest capital returned from qualified low-income12
community investments after the sixth anniversary of the issuance of the qualified13
equity investment, the proceeds of which were used to make the qualified low-14
income community investment, and the qualified low-income community investment15
shall be considered held by the issuer through the seventh anniversary of the16
qualified equity investment's issuance.17
G. Enforcement of the recapture provisions of Subsection F of this Section18
shall be subject to a six month cure period. No recapture shall occur until the19
qualified community development entity has been given notice of noncompliance by20
the Department of Insurance and afforded six months from the date of such notice21
to cure the noncompliance.22
H.(1) A qualified community development entity that seeks to have an equity23
investment designated as a qualified equity investment and eligible for tax credits24
pursuant to this Section shall pay a deposit in the amount of five hundred thousand25
dollars payable to the department. The entity shall forfeit the deposit in its entirety26
if either:27
(a) The qualified community development entity and all transferees pursuant28
to Paragraph (E)(6) of this Section fail to issue the total amount of qualified equity29 HLS 13RS-2064 ENGROSSED
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investments certified by the department and receive cash in the total amount certified1
under Paragraph (E)(5) of this Section within the time period set forth in Paragraph2
(E)(7) of this Section.3
(b) The qualified community development entity or any transferee pursuant4
to Paragraph (E)(6) of this Section that issues a qualified equity investment certified5
pursuant to this Section fails to meet the investment requirement under Paragraph6
(F)(2) of this Section by the second credit allowance date of such benefit of the six7
month cure period established pursuant to Subsection G of this Section.8
(2) The deposit required by Paragraph (1) of this Subsection shall be9
deposited with the department and held until such time as compliance with the10
provisions of this Subsection shall have been established. The qualified community11
development entity may request a return of the deposit from the department no12
earlier than thirty days after having met all the requirements of Paragraph (1) of this13
Subsection. The department shall have thirty days to comply with such request or14
give notice of noncompliance. In the event the qualified community development15
entity fails to fulfill the conditions of Subparagraph (1)(a) of this Section, then the16
amount payable from such deposit shall be retained by the department as self-17
generated funds.18
I.(1) An entity claiming a credit pursuant to this Section is not required to19
pay any additional retaliatory tax levied by R.S. 22:836 as a result of claiming that20
credit.21
(2) In addition to the exclusion in Paragraph (1) of this Subsection, it is the22
intent of this Act that an entity claiming a credit pursuant to this Section is not23
required to pay any additional tax that may arise as a result of claiming that credit.24
J.(1) Qualified community development entities that issue qualified equity25
investments shall submit a report to the department within the first five business days26
after the first anniversary of the initial credit allowance date that provides27
documentation as to the investment of one hundred percent of the purchase price in28 HLS 13RS-2064 ENGROSSED
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qualified low-income community investments in qualified active low-income1
community businesses located in Louisiana. Such report shall include:2
(a) A bank statement of such qualified community development entity3
evidencing each qualified low-income community investment.4
(b) Evidence that such business was a qualified active low-income5
community business at the time of such qualified low-income community6
investment.7
(2) Thereafter, the qualified community development entity will submit an8
annual report to the department within forty-five days of the beginning of the9
calendar year during the compliance period. No annual report shall be due prior to10
the first anniversary of the initial credit allowance date. The report shall include but11
is not limited to the following:12
(a) Number of employment positions created and retained as a result of13
qualified low-income community investments.14
(b) Average annual salary of positions described in Subparagraph (a) of this15
Paragraph.16
(3) The qualified community development entity is not required to provide17
the annual report set forth in Paragraph (2) of this Subsection for qualified low-18
income community investments that have been redeemed or repaid.19
K.(1) The department may promulgate rules to implement the provisions20
of this Section.21
(2) The department shall issue all forms and notices required hereunder in22
accordance with the provisions of this Section.23
L. The department shall notify the Department of Insurance of the name24
of any insurance company allocated tax credits hereunder and the amount of such25
credits. 26
M. The provisions of this Section shall apply only to tax returns or reports27
originally due on or after January 1, 2014.28 HLS 13RS-2064 ENGROSSED
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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. 726
Abstract: Creates the Louisiana New Markets Jobs Act to provide credits against the
insurance premium tax.
Present law taxes insurers based on the amount of premiums, called a "premium tax".
Proposed law establishes the Louisiana New Markets Jobs Act for purposes of a tax credit
which may be claimed against insurance premium tax. Eligibility for the credit is based on
the investment of private capital in a low-income community business located in La.
Proposed law defines "qualified active low-income community business" (QALICB or
business) as an entity which under federal law 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.
Proposed law defines a "qualified community development entity" (QCDE or entity) as a
privately managed investment entity that has received New Market Tax Credit allocation
authority.
Proposed law defines the types of investments required for tax credit eligibility.
Proposed law provides that the amount of the tax credit shall be the product of multiplying
the amount of the investment purchase price by the following percentages: 0% for the first
three years, 15% for the next three years, and 0% thereafter. The total of all such credits
taken cannot exceed the taxpayer's state premium tax liability for the tax year for which the
credit is claimed; however, unused credits may be carried forward for up to 10 years.
Unclaimed tax credits are transferable to one or more transferees.
Proposed law requires that investments eligible for the award of tax credits be certified by
the Dept. of Revenue. If a QDE applies for certification of investments, the department shall
inform such entity within 30 days of application whether there is certification or a denial of
an application. In the case of a denial, the entity shall have the right to provide additional
information regarding the application within 15 days of the denial.
Proposed law authorizes a total of $110,000,000 of investment authority for certification and
allocation for the purpose of earning tax credits. The department shall begin accepting
applications on November 1, 2013, for allocation and certification of up to $55,000,000 of
QEI. Allocation of the remaining $55,000,000 shall be available starting with an application
process which begins November 1, 2014.
Proposed law requires the issuance of investments within 30 days of receiving certification
and that evidence thereof be provided to the Dept. of Revenue.
Proposed law provides for conditions under which the Dept. of Insurance shall recapture tax
credits which include a recapture of federal tax credits by the federal government, or a
failure to invest an amount equal to 100% of the purchase price of the investment within 12
months of the issuance of the investment. HLS 13RS-2064 ENGROSSED
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Proposed law requires the payment of a deposit of $500,000 for an application for
qualification of an investment. The deposit shall be paid to the Dept. of Revenue and
deposited into the New Markets performance guarantee account which is established by
proposed law. The deposit is returnable after compliance with the requirements of proposed
law.
Proposed law requires reporting by a QCDE to the Dept. of Revenue within five days of the
first anniversary of the initial credit allowance date, as well as annual reporting with regard
to the number of employment positions created and retained as a result of the investments
and the average annual salary of such positions.
Proposed law requires the Dept. of Revenue to notify the Dept. of Insurance of the name of
any insurance company allocated tax credits, as well as the amount of any credits.
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. 47:6016.1)