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ACT No. 265
Regular Session, 2013
HOUSE BILL NO. 726 (Substitute for House Bill No. 455 by Representative Leger)
BY REPRESENTATIVE LEGER
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 by the13
context:14
(1) "Applicable percentage" means fourteen percent for the first and second15
credit allowance dates and eight and one-half percent for the third and fourth credit16
allowance dates.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
(b) Each of the six anniversary dates of such date thereafter.21
(3) "Department" means the Department of Revenue, unless otherwise noted.22
(4) "Purchase price" means the amount paid to the issuer of a qualified23
equity investment for such qualified equity investment.24 ENROLLEDHB NO. 726
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(5) "Qualified active low-income community business" has the meaning1
given such term in Section 45D of the Internal Revenue Code of 1986, as amended,2
and 26 CFR 1.45D-1.3
(6) "Qualified community development entity" has the meaning given such4
term in Section 45D of the Internal Revenue Code of 1986, as amended; provided5
that such entity has entered into, for the current year or any prior year, an allocation6
agreement with the Community Development Financial Institutions Fund of the7
United States Treasury Department with respect to credits authorized by Section 45D8
of the Internal Revenue Code of 1986, as amended, which includes the state of9
Louisiana within the service area set forth in such allocation agreement. The term10
shall include qualified community development entities that are controlled by or11
under common control with any such qualified community development entity.12
(7) "Qualified equity investment" means any equity investment in a qualified13
community development entity that meets each of the following criteria:14
(a) Is acquired after the effective date of this Act at its original issuance15
solely in exchange for cash or, if not so acquired, was a qualified equity investment16
in the hands of a prior holder.17
(b) Has at least one hundred percent of its cash purchase price used by the18
issuer to make qualified low-income community investments in qualified active low-19
income community businesses located in this state by the first anniversary of the20
initial credit allowance date.21
(c) Is designated by the issuer as a qualified equity investment under this22
Paragraph and is certified by the department as not exceeding the limitation23
contained in Paragraph (E)(5) of this Section.24
(8) "Qualified low-income community investment" means any capital or25
equity investment in, or loan to, any qualified active low-income community26
business. With respect to any one qualified active low-income community business,27
the maximum amount of qualified low-income community investments made in that28
business, on a collective basis with all of its affiliates that may be counted towards29
satisfaction of Subparagraph (7)(b) of this Subsection is ten million dollars whether30 ENROLLEDHB NO. 726
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issued by one or several qualified community development entities. Any amounts1
returned or repaid by such qualified active low-income community business to a2
qualified community development entity may be reinvested in such qualified active3
low-income community business by such qualified community development entity4
and not be counted against the ten million dollar limit provided for in this Paragraph.5
(9) "State premium tax liability" means any liability incurred by any entity6
under the provisions of R.S. 22:831, 836, 838, and 842.7
C.(1) Any entity that makes a qualified equity investment is vested with an8
earned credit against state premium tax liability that may be utilized as follows:9
(a) On each credit allowance date of such qualified equity investment the10
entity, or subsequent holder of the qualified equity investment, shall be entitled to11
utilize a portion of such credit during the taxable year, including such credit12
allowance date.13
(b) The credit amount shall be equal to the applicable percentage for such14
credit allowance date multiplied by the purchase price paid to the issuer of such15
qualified equity investment.16
(2) The amount of the credit claimed by an entity shall not exceed the17
amount of such entity's state premium tax liability for the tax year for which the18
credit is claimed. Any amount of tax credit that the entity is prohibited from19
claiming in a taxable year as a result of this Paragraph may be carried forward for20
use in future taxable years for a period not to exceed ten years.21
D.(1) Tax credits earned by a partnership, limited liability company, S-22
corporation, or other pass through entity may be allocated to the partners, members,23
or shareholders of such entity for their direct use in accordance with the provisions24
of any agreement among such partners, members, or shareholders.25
(2)(a) Any tax credits not previously claimed by a taxpayer against its26
premium tax may be transferred or sold to another Louisiana taxpayer, subject to the27
following conditions:28
(i) A single transfer or sale may involve one or more transferees.29 ENROLLEDHB NO. 726
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(ii) Transferors and transferees shall submit to the Department of Insurance,1
in writing, a notification of any transfer or sale of tax credits within thirty days after2
the transfer or sale of such tax credits, which notice contains the amount of the3
remaining tax credit balance after transfer, all tax identification numbers for both4
transferor and transferee, the date of the transfer, the amount transferred, the price5
paid by the transferee to the transferor, and any other information required by the6
Department of Insurance.7
(b) Failure to comply with this Paragraph will result in the disallowance of8
the tax credit until the taxpayers are in full compliance.9
(c) The transfer or sale of this credit does not extend the time in which the10
credit can be used. The carry-forward period for a credit that is transferred or sold11
begins on the date on which the credit was originally earned.12
(d) To the extent that the transferor did not have rights to claim or use the13
credit at the time of the transfer, the Department of Insurance shall either disallow14
the credit claimed by the transferee or recapture the credit from the transferee.15
E.(1) A qualified community development entity that seeks to have an equity16
investment designated as a qualified equity investment and eligible for tax credits17
under this Section shall apply to the department. On a form prescribed by the18
department, the qualified community development entity shall include each of the19
following in or attached to its application:20
(a) Evidence of the applicant's certification as a qualified community21
development entity, including evidence that Louisiana is included in the service area22
of the entity.23
(b) A copy of the allocation agreement executed by an applicant, or its24
controlling entity, and the Community Development Financial Institutions Fund.25
(c) A certificate executed by an executive officer of the applicant attesting26
that the allocation agreement remains in effect and has not otherwise been revoked27
or cancelled by the Community Development Financial Institutions Fund.28
(d) A description of the proposed amount, structure, and purchaser of the29
qualified equity investment.30 ENROLLEDHB NO. 726
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(e) Identifying information for any entity that will earn tax credits as a result1
of the issuance of the qualified equity investment and community businesses in2
which they will invest when submitting an application.3
(2) Within thirty days after receipt of a completed application containing the4
information set forth in Paragraph (1) of this Subsection, including the deposit as5
required in Subsection H of this Section, the department shall grant or deny the6
application in full or in part. If the department denies any part of the application, it7
shall inform the qualified community development entity of the grounds for the8
denial. If the qualified community development entity provides additional9
information required by the department or otherwise completes its application within10
fifteen days of the notice of denial, the application shall be considered completed as11
of the original date of the submission. If the qualified community development12
entity fails to provide the information or complete its application within the fifteen-13
day period, the application remains denied and must be resubmitted in full with a14
new submission date, and the department shall refund the performance deposit.15
(3) If the application is granted, the department shall certify the proposed16
equity investment as a qualified equity investment that is eligible for tax credits17
under this Section, subject to the limitations contained in Paragraph (5) of this18
Subsection. The department shall provide written notice of the certification to the19
qualified community development entity. The notice shall include the names of20
those entities who will earn the credits and their respective credit amounts. If the21
names of the entities that are eligible to utilize the credits change due to a transfer22
of a qualified equity investment or an allocation pursuant to Paragraph (D)(1) of this23
Section, the qualified community development entity shall notify the Department24
of Insurance of such change.25
(4) The department shall certify qualified equity investments in the order in26
which applications are received by the department. Applications received on the27
same day shall be deemed to have been received simultaneously. For applications28
that are complete and received on the same day, the department shall certify,29
consistent with remaining qualified equity investment capacity, the qualified equity30 ENROLLEDHB NO. 726
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investments in proportionate percentages based upon the ratio of the amount of1
qualified equity investment requested in an application to the total amount of2
qualified equity investments requested in all applications received on the same day.3
(5) A total of fifty-five million dollars of qualified equity investment4
authority shall be available for certification and allocation. The department shall5
accept applications beginning on August 1, 2013, for allocation and certification of6
up to fifty-five million dollars of qualified equity investments. If a pending request7
cannot be fully certified due to these limits of qualified equity investment authority,8
the department shall certify the portion of qualified equity investment authority that9
may be certified unless the qualified community development entity elects to10
withdraw its request rather than receive partial certification.11
(6) An approved applicant may transfer all or a portion of its certified12
qualified equity investment authority to its controlling entity or any qualified13
community development entity that is controlled by or under common control with14
the applicant, provided that the applicant provides the information required in the15
application with respect to such transferee and the applicant notifies the department16
of such transfer with the notice of receipt of the cash investment set forth in17
Paragraph (7) of this Subsection.18
(7) Within thirty days of the applicant receiving certification of qualified19
equity investment authority, the qualified community development entity or any20
transferee under Paragraph (6) of this Subsection shall issue the qualified equity21
investment, receive cash in the amount of the certified amount, and designate an22
amount equal to the certified amount as a federal qualified equity investment with23
the Community Development Financial Institutions Fund. The qualified community24
development entity or transferee under Paragraph (6) of this Subsection shall provide25
the department with evidence of the receipt of the cash investment and designation26
of the qualified equity investment as a federal qualified equity investment within five27
business days after receipt. If the qualified community development entity or any28
transferee pursuant to Paragraph (6) of this Subsection does not receive the cash29
investment within thirty days following receipt of the certification notice, the30 ENROLLEDHB NO. 726
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certification shall lapse and the entity may not issue the qualified equity investment1
without reapplying to the department for certification. Lapsed certifications revert2
back to the department and shall be reissued, first, pro rata to other applicants whose3
qualified equity investment allocations were reduced pursuant to Paragraph (4) of4
this Subsection and, thereafter, in accordance with the application process.5
F. The Department of Insurance shall recapture, from the entity that claimed6
the credit on a return, the tax credit allowed pursuant to this Section if either of the7
following occur:8
(1) Any amount of a federal tax credit available with respect to a qualified9
equity investment that is eligible for a credit under this Section is recaptured under10
Section 45D of the Internal Revenue Code of 1986, as amended. In such case, the11
Department of Insurance's recapture shall be proportionate to the federal recapture12
with respect to such qualified equity investment.13
(2) The issuer fails to invest an amount equal to one hundred percent of the14
purchase price of the qualified equity investment in qualified low-income15
community investments in Louisiana within twelve months of the issuance of the16
qualified equity investment and maintain such level of investment in qualified low-17
income community investments in Louisiana until the last credit allowance date for18
the qualified equity investment. For purposes of this Section, an investment shall be19
considered held by an issuer even if the investment has been sold or repaid if the20
issuer reinvests an amount equal to the capital returned to or recovered by the issuer21
from the original investment, exclusive of any profits realized, in another qualified22
low-income community investment within twelve months of the receipt of such23
capital. Periodic amounts received during a calendar year as repayment of principal24
on a loan that is a qualified low-income community investment shall be treated as25
continuously invested in a qualified low-income community investment if the26
amounts are reinvested in another qualified low-income community investment by27
the end of the following calendar year as set forth in 26 CFR 1.45D-1. An issuer28
shall not be required to reinvest capital returned from qualified low-income29
community investments after the sixth anniversary of the issuance of the qualified30 ENROLLEDHB NO. 726
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equity investment, the proceeds of which were used to make the qualified low-1
income community investment, and the qualified low-income community investment2
shall be considered held by the issuer through the seventh anniversary of the3
qualified equity investment's issuance.4
G. Enforcement of the recapture provisions of Subsection F of this Section5
shall be subject to a six-month cure period. No recapture shall occur until the6
qualified community development entity has been given notice of noncompliance by7
the Department of Insurance and afforded six months from the date of such notice8
to cure the noncompliance.9
H.(1) A qualified community development entity that seeks to have an equity10
investment designated as a qualified equity investment and eligible for tax credits11
pursuant to this Section shall pay a deposit in the amount of five hundred thousand12
dollars payable to the department. The entity shall forfeit the deposit in its entirety13
if either:14
(a) The qualified community development entity and all transferees pursuant15
to Paragraph (E)(6) of this Section fail to issue the total amount of qualified equity16
investments certified by the department and receive cash in the total amount certified17
under Paragraph (E)(5) of this Section within the time period set forth in Paragraph18
(E)(7) of this Section.19
(b) The qualified community development entity or any transferee pursuant20
to Paragraph (E)(6) of this Section that issues a qualified equity investment certified21
pursuant to this Section fails to meet the investment requirement under Paragraph22
(F)(2) of this Section by the second credit allowance date of such benefit of the six-23
month cure period established pursuant to Subsection G of this Section.24
(2) The deposit required by Paragraph (1) of this Subsection shall be25
deposited with the department and held until such time as compliance with the26
provisions of this Subsection shall have been established. The qualified community27
development entity may request a return of the deposit from the department no28
earlier than thirty days after having met all the requirements of Paragraph (1) of this29
Subsection. The department shall have thirty days to comply with such request or30 ENROLLEDHB NO. 726
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give notice of noncompliance. In the event the qualified community development1
entity fails to fulfill the conditions of Subparagraph (1)(a) of this Section, then the2
amount payable from such deposit shall be retained by the department as self-3
generated funds.4
I.(1) An entity claiming a credit pursuant to this Section is not required to5
pay any additional retaliatory tax levied by R.S. 22:836 as a result of claiming that6
credit.7
(2) In addition to the exclusion in Paragraph (1) of this Subsection, it is the8
intent of this Act that an entity claiming a credit pursuant to this Section is not9
required to pay any additional tax that may arise as a result of claiming that credit.10
J.(1) Qualified community development entities that issue qualified equity11
investments shall submit a report to the department within the first five business days12
after the first anniversary of the initial credit allowance date that provides13
documentation as to the investment of one hundred percent of the purchase price in14
qualified low-income community investments in qualified active low-income15
community businesses located in Louisiana. Such report shall include:16
(a) A bank statement of such qualified community development entity17
evidencing each qualified low-income community investment.18
(b) Evidence that such business was a qualified active low-income19
community business at the time of such qualified low-income community20
investment.21
(2) Thereafter, the qualified community development entity will submit an22
annual report to the department within forty-five days of the beginning of the23
calendar year during the compliance period. No annual report shall be due prior to24
the first anniversary of the initial credit allowance date. The report shall include but25
is not limited to the following:26
(a) Number of employment positions created and retained as a result of27
qualified low-income community investments.28
(b) Average annual salary of positions described in Subparagraph (a) of this29
Paragraph.30 ENROLLEDHB NO. 726
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(3) The qualified community development entity is not required to provide1
the annual report set forth in Paragraph (2) of this Subsection for qualified low-2
income community investments that have been redeemed or repaid.3
K.(1) The department may promulgate rules to implement the provisions4
of this Section.5
(2) The department shall issue all forms and notices required hereunder in6
accordance with the provisions of this Section.7
L. The department shall notify the Department of Insurance of the name8
of any insurance company allocated tax credits hereunder and the amount of such9
credits. 10
M. The provisions of this Section shall apply only to tax returns or reports11
originally due on or after January 1, 2014.12
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: