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Prepared by Danielle Doiron.
Leger HB No. 726
(KEYWORD, SUMMARY, AND DIGEST as amended by Senate committee
amendments)
TAX CREDITS. Establishes the New Markets Jobs Tax Credit.
DIGEST
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 $55,000,000 of investment authority for certification and
allocation for the purpose of earning tax credits. The department shall begin accepting
applications on August 1, 2013, for allocation and certification of up to $55,000,000 of QEI.
Proposed law requires the issuance of investments within 20 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.
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 Page 2 of 2
Prepared by Danielle Doiron.
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)
Summary of Amendments Adopted by House
House Floor Amendments to the engrossed bill.
1. Changes the time within which the application for a tax credit must be
approved or denied from 30 to 20 days.
2. Changes the date for the start of the application process for the first period in
which tax credits may be granted from November 1, 2013, to August 1, 2013.
3. Changes the date for the start of the application process for the second period
in which tax credits may be granted from September 2, 2013, to August 1,
2014.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the reengrossed bill
1. Reduces the tax credit from $110 million dollars to $55 million dollars.
2. Changes the time within which the application for a tax credit must be
approved or denied from 20 days to 30 days.