SLS 13RS-479 ORIGINAL
Page 1 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2013
SENATE BILL NO. 234
BY SENATOR MORRELL AND REPRESENTATI VE LEGER
TAX/TAXATION. Authorizes the issuance of New Market Jobs Tax Credits. (8/1/13)
AN ACT1
To enact R.S. 22:832.1, relative to insurance premium tax credits; to establish the Louisiana2
New Markets Jobs tax credit; to authorize a premium tax credit for investments in3
low-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. 22:832.1 is hereby enacted to read as follows:8
ยง832.1. Louisiana New Markets Jobs Act; premium tax credit9
A. The provisions of this Section shall be known as and may be cited as10
the "Louisiana New Markets Jobs Act".11
B. As used in this Section, the following words, terms, and phrases have12
the meaning ascribed to them unless a different meaning is clearly indicated in13
the context:14
(1) "Applicable percentage" means zero percent for the first two credit15
allowance dates and ten percent for the next four credit allowance dates.16
(2) "Credit allowance date" means, with respect to any qualified equity17 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 2 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
investment, the following:1
(a) The date on which such investment is initially made.2
(b) Each of the six anniversary dates of such date thereafter.3
(3) "Department" means the Department of Insurance.4
(4) "Letter ruling" means a written interpretation of law to a specific5
set of facts provided by the applicant requesting a letter ruling.6
(5) "Purchase price" means the amount paid to the issuer of a qualified7
equity investment for such qualified equity investment.8
(6) "Qualified active low-income community business" has the meaning9
given such term in Section 45D of the Internal Revenue Code of 1986, as10
amended, and 26 CFR Sec. 1.45D-1. A business shall be considered a qualified11
active low-income community business for the duration of the qualified12
community development entity's investment in, or loan to, the business if the13
entity reasonably expects, at the time it makes the investment or loan, that the14
business will continue to satisfy the requirements for being a qualified active15
low-income community business throughout the entire period of the investment16
or loan.17
(7) "Qualified community development entity" has the meaning given18
such term in Section 45D of the Internal Revenue Code of 1986, as amended;19
provided that such entity has entered into, for the current year or any prior20
year, an allocation agreement with the Community Development Financial21
Institutions Fund of the U.S. Treasury Department with respect to credits22
authorized by Section 45D of the Internal Revenue Code of 1986, as amended,23
which includes the state of Louisiana within the service area set forth in such24
allocation agreement. The term shall include qualified community development25
entities that are controlled by or under common control with any such qualified26
community development.27
(8) "Qualified Equity Investment" means any equity investment in a28
qualified community development entity that meets each of the following29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 3 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
criteria:1
(a) Is acquired after the effective date of this Act at its original issuance2
solely in exchange for cash or, if not so acquired, was a qualified equity3
investment in the hands of a prior holder.4
(b) Has at least one hundred percent of its cash purchase price used by5
the issuer to make qualified low-income community investments in qualified6
active low-income community businesses located in this state by the first7
anniversary of the initial credit allowance date.8
(c) Is designated by the issuer as a qualified equity investment under this9
Paragraph and is certified by the department as not exceeding the limitation10
contained in Paragraph (E)(5) of this Section.11
(9) "Qualified low-income community investment" means any capital12
or equity investment in, or loan to, any qualified active low-income community13
business. With respect to any one qualified active low-income community14
business, the maximum amount of qualified low-income community investments15
made in that business, on a collective basis with all of its affiliates that may be16
counted towards satisfaction of Subparagraph (7)(b) of this Subsection is ten17
million dollars whether issued by one or several qualified community18
development entities. Any amounts returned or repaid by such qualified active19
low-income community business may be reinvested in such qualified active low-20
income community business and not be counted against such ten million dollar21
limit.22
(10) "State premium tax liability" means any liability incurred by any23
entity under the provisions of R.S. 22:831, 836, 838 and 842 or, if the tax24
liability under R.S. 22:831, 836, 838 and 842 is eliminated or reduced, the term25
shall also mean any tax liability imposed by the state on an insurance company26
or other person that had premium tax liability under the laws of this state.27
C.(1) Any entity that makes a qualified equity investment is vested with28
an earned credit against state premium tax liability that may be utilized as29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 4 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
follows:1
(a) On each credit allowance date of such qualified equity investment the2
entity, or subsequent holder of the qualified equity investment, shall be entitled3
to utilize a portion of such credit during the taxable year including such credit4
allowance date.5
(b) The credit amount shall be equal to the applicable percentage for6
such credit allowance date multiplied by the purchase price paid to the issuer7
of such qualified equity investment.8
(2) The amount of the credit claimed by an entity shall not exceed the9
amount of such entity's state premium tax liability for the tax year for which the10
credit is claimed. Any amount of tax credit that the entity is prohibited from11
claiming in a taxable year as a result of this Paragraph may be carried forward12
for use in future taxable years for a period not to exceed ten years.13
D.(1) Tax credits earned by a partnership, limited liability company, S-14
corporation, or other pass through entity may be allocated to the partners,15
members, or shareholders of such entity for their direct use in accordance with16
the provisions of any agreement among such partners, members, or17
shareholders.18
(2)(a) Any tax credits not previously claimed by a taxpayer against its19
premium tax may be transferred or sold to another Louisiana taxpayer, subject20
to the following conditions:21
(i) A single transfer or sale may involve one or more transferees.22
(ii) Transferors and transferees shall submit to the department, in23
writing, a notification of any transfer or sale of tax credits within thirty days24
after the transfer or sale of such tax credits which notice contains the amount25
of the remaining tax credit balance after transfer, all tax identification numbers26
for both transferor and transferee, the date of the transfer, the amount27
transferred, the price paid by the transferee to the transferor, and any other28
information required by the department.29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 5 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(b) Failure to comply with this Paragraph will result in the disallowance1
of the tax credit until the taxpayers are in full compliance.2
(c) The transfer or sale of this credit does not extend the time in which3
the credit can be used. The carry forward period for a credit that is transferred4
or sold begins on the date on which the credit was originally earned.5
(d) To the extent that the transferor did not have rights to claim or use6
the credit at the time of the transfer, the department shall either disallow the7
credit claimed by the transferee or recapture the credit from the transferee.8
E.(1) A qualified community development entity that seeks to have an9
equity investment designated as a qualified equity investment and eligible for10
tax credits under this Section shall apply to the department. The qualified11
community development entity shall include each of the following in or attached12
to its application:13
(a) Evidence of the applicant's certification as a qualified community14
development entity, including evidence that Louisiana is contained in the service15
area of the entity.16
(b) A copy of the allocation agreement executed by an applicant, or its17
controlling entity, and the Community Development Financial Institutions18
Fund.19
(c) A certificate executed by an executive officer of the applicant20
attesting that the allocation agreement remains in effect and has not otherwise21
been revoked or cancelled by the Community Development Financial22
Institutions Fund.23
(d) A description of the proposed amount, structure, and purchaser of24
the qualified equity investment.25
(e) Identifying information for any entity that will earn tax credits as a26
result of the issuance of the qualified equity investment.27
(f) Examples of the types of qualified active low-income businesses in28
which the applicant, its controlling entity, or affiliates of its controlling entity29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 6 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
have invested under the Federal New Markets Tax Credit Program. Applicants1
are not required to identify qualified active low-income community businesses2
in which they will invest when submitting an application.3
(2) Within thirty days after receipt of a completed application4
containing the information set forth in Paragraph (1) of this Subsection,5
including the deposit as required in Subsection (H) of this Section, the6
department shall grant or deny the application in full or in part. If the7
department denies any part of the application, it shall inform the qualified8
community development entity of the grounds for the denial. If the qualified9
community development entity provides additional information required by the10
department or otherwise completes its application within fifteen days of the11
notice of denial, the application shall be considered completed as of the original12
date of the submission. If the qualified community development entity fails to13
provide the information or complete its application within the fifteen day14
period, the application remains denied and must be resubmitted in full with a15
new submission date, and the department shall refund the performance deposit.16
(3) If the application is granted, the department shall certify the17
proposed equity investment as a qualified equity investment that is eligible for18
tax credits under this Section, subject to the limitations contained in Paragraph19
(5) of this Subsection. The department shall provide written notice of the20
certification to the qualified community development entity. The notice shall21
include the names of those entities who will earn the credits and their respective22
credit amounts. If the names of the entities that are eligible to utilize the credits23
change due to a transfer of a qualified equity investment or an allocation24
pursuant to Paragraph (D)(1), the qualified community development entity shall25
notify the department of such change.26
(4) The department shall certify qualified equity investments in the27
order in which applications are received by the department. Applications28
received on the same day shall be deemed to have been received simultaneously.29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 7 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
For applications that are complete and received on the same day, the1
department shall certify, consistent with remaining qualified equity investment2
capacity, the qualified equity investments in proportionate percentages based3
upon the ratio of the amount of qualified equity investment requested in an4
application to the total amount of qualified equity investments requested in all5
applications received on the same day.6
(5) A total of one hundred twenty-five million dollars of qualified equity7
investment authority shall be available for certification and allocation. The8
department shall accept applications beginning on September 1, 2013, for9
allocation and certification of up to sixty-two million five hundred thousand10
dollars of qualified equity investments. The department shall accept11
applications for the remaining sixty-two million five hundred thousand dollars12
of such authority beginning on September 1, 2014. If a pending request cannot13
be fully certified due to these limits, the department shall certify the portion14
that may be certified unless the qualified community development entity elects15
to withdraw its request rather than receive partial certification.16
(6) An approved applicant may transfer all or a portion of its certified17
qualified equity investment authority to its controlling entity or any qualified18
community development entity that is controlled by or under common control19
with the applicant, provided that the applicant provides the information20
required in the application with respect to such transferee and the applicant21
notifies the department of such transfer with the notice of receipt of the cash22
investment set forth in Paragraph (7) of this Subsection.23
(7) Within thirty days of the applicant receiving notice of certification,24
the qualified community development entity or any transferee under Paragraph25
(6) of this Subsection shall issue the qualified equity investment, receive cash in26
the amount of the certified amount and designate an amount equal to the27
certified amount as a federal qualified equity investment with the Community28
Development Financial Institutions Fund. The qualified community29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 8 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
development entity or transferee under Paragraph (6) of this Subsection shall1
provide the department with evidence of the receipt of the cash investment and2
designation of the qualified equity investment as a federal qualified equity3
investment within five business days after receipt. If the qualified community4
development entity or any transferee pursuant to Paragraph (6) of this5
Subsection does not receive the cash investment within thirty days following6
receipt of the certification notice, the certification shall lapse and the entity may7
not issue the qualified equity investment without reapplying to the department8
for certification. Lapsed certifications revert back to the department and shall9
be reissued, first, pro rata to other applicants whose qualified equity investment10
allocations were reduced pursuant to Paragraph (4) of this Subsection and,11
thereafter, in accordance with the application process.12
F. The department shall recapture, from the entity that claimed the13
credit on a return, the tax credit allowed pursuant to this Section if either of the14
following occur:15
(1) Any amount of a federal tax credit available with respect to a16
qualified equity investment that is eligible for a credit under this Section is17
recaptured under Section 45D of the Internal Revenue Code of 1986, as18
amended. In such case, the department's recapture shall be proportionate to19
the federal recapture with respect to such qualified equity investment.20
(2) The issuer fails to invest an amount equal to one hundred percent of21
the purchase price of the qualified equity investment in qualified low-income22
community investments in Louisiana within twelve months of the issuance of the23
qualified equity investment and maintain such level of investment in qualified24
low-income community investments in Louisiana until the last credit allowance25
date for the qualified equity investment. For purposes of this Section, an26
investment shall be considered held by an issuer even if the investment has been27
sold or repaid if the issuer reinvests an amount equal to the capital returned to28
or recovered by the issuer from the original investment, exclusive of any profits29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 9 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
realized, in another qualified low-income community investment within twelve1
months of the receipt of such capital. Periodic amounts received during a2
calendar year as repayment of principal on a loan that is a qualified low-income3
community investment shall be treated as continuously invested in a qualified4
low-income community investment if the amounts are reinvested in another5
qualified low-income community investment by the end of the following6
calendar year as set forth in 26 CFR Sec. 1.45D-1. An issuer shall not be7
required to reinvest capital returned from qualified low-income community8
investments after the sixth anniversary of the issuance of the qualified equity9
investment, the proceeds of which were used to make the qualified low-income10
community investment, and the qualified low-income community investment11
shall be considered held by the issuer through the seventh anniversary of the12
qualified equity investment's issuance.13
G. Enforcement of the recapture provisions of Subsection F of this14
Section shall be subject to a six month cure period. No recapture shall occur15
until the qualified community development entity has been given notice of16
noncompliance by the department and afforded six months from the date of17
such notice to cure the noncompliance.18
H.(1) A qualified community development entity that seeks to have an19
equity investment designated as a qualified equity investment and eligible for20
tax credits pursuant to this Section shall pay a deposit in the amount of five21
hundred thousand dollars to the department for deposit in the New Markets22
performance guarantee account, which is hereby established. The entity shall23
forfeit the deposit in its entirety if either:24
(a) The qualified community development entity and all transferees25
pursuant to Paragraph (E)(6) of this Section fail to issue the total amount of26
qualified equity investments certified by the department and receive cash in the27
total amount certified under Paragraph (E)(5) of this Section within the time28
period set forth in Paragraph (E)(7) of this Section.29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 10 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(b) The qualified community development entity or any transferee1
pursuant to Paragraph (E)(6) of this Section that issues a qualified equity2
investment certified pursuant to this Section fails to meet the investment3
requirement under Paragraph (F)(2) of this Section by the second credit4
allowance date of such benefit of the six month cure period established pursuant5
to Subsection G of this Section.6
(2) The deposit required by Paragraph (1) of this Subsection shall be7
deposited with the department and held in the New Markets performance8
guarantee account until such time as compliance with the provisions of this9
Subsection shall have been established. The qualified community development10
entity may request a return of the deposit from the department no earlier than11
thirty days after having met all the requirements of Paragraph (1) of this12
Subsection. The department shall have thirty days to comply with such request13
or give notice of noncompliance.14
I.(1) The department shall issue letter rulings regarding the tax credit15
program authorized under and subject to the terms and conditions set forth in16
this Section, subject to the terms and conditions set forth in this Section.17
(2) The department shall respond to a request for a letter ruling within18
sixty days of receipt of such request. The applicant may provide a draft letter19
ruling for the department's consideration. The applicant may withdraw the20
request for a letter ruling, in writing, prior to the issuance of the letter ruling.21
The department may refuse to issue a letter ruling for good cause, but shall list22
the specific reasons for refusing to issue the letter ruling. Good cause includes23
but is not limited to:24
(a) The applicant requests the department to determine whether a25
statute is constitutional or a regulation is lawful.26
(b) The request involves a hypothetical situation or alternative plans.27
(c) The facts or issues presented in the request are unclear, overbroad,28
insufficient, or otherwise inappropriate as a basis upon which to issue a letter29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 11 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
ruling.1
(d) The issue is currently being considered in a rulemaking procedure,2
contested case, or other agency or judicial proceeding that may definitely3
resolve the issue.4
(3) Letter rulings shall bind the department and the department's agents5
and their successors until such time as the entity or its shareholders, members,6
or partners, as applicable, claim all of such credits on a Louisiana tax return or7
report, subject to the terms and conditions set forth in properly published8
regulations. The letter ruling shall apply only to the applicant.9
(4) In rendering letter rulings and making other determinations under10
this Section, to the extent applicable, the department shall look to Section 45D11
of the Internal Revenue Code of 1986, as amended, and the rules and12
regulations issued thereunder for guidance.13
J.(1) An entity claiming a credit pursuant to this Section is not required14
to pay any additional retaliatory tax levied by R.S. 22:836 as a result of claiming15
that credit.16
(2) In addition to the exclusion in Paragraph (1) of this Subsection, it is17
the intent of this act that an entity claiming a credit pursuant to this Section is18
not required to pay any additional tax that may arise as a result of claiming that19
credit.20
K.(1) Qualified community development entities that issue qualified21
equity investments shall submit a report to the department within the first five22
business days after the first anniversary of the initial credit allowance date that23
provides documentation as to the investment of one hundred percent of the24
purchase price in qualified low-income community investments in qualified25
active low-income community businesses located in Louisiana. Such report26
shall include:27
(a) A bank statement of such qualified community development entity28
evidencing each qualified low-income community investment.29 SB NO. 234
SLS 13RS-479 ORIGINAL
Page 12 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
(b) Evidence that such businesses was a qualified active low-income1
community business at the time of such qualified low-income community2
investment.3
(2) Thereafter, the qualified community development entity will submit4
an annual report to the department within forty-five days of the beginning of5
the calendar year during the compliance period. No annual report shall be due6
prior to the first anniversary of the initial credit allowance date. The report7
shall include but is not limited to the following:8
(a) Number of employment positions created and retained as a result of9
qualified low-income community investments.10
(b) Average annual salary of positions described in Subparagraph (a)11
of this Paragraph.12
(3) The qualified community development entity is not required to13
provide the annual report set forth in Paragraph (2) of this Subsection for14
qualified low-income community investments that have been redeemed or15
repaid.16
L.(1) The department may promulgate rules to implement the provisions17
of this Section.18
(2) The department shall issue all forms and notices required hereunder19
in accordance with the provisions of this Section.20
M. The provisions of this Section shall apply only to tax returns or21
reports originally due on or after January 1, 2014.22
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Danielle Doiron.
DIGEST
Present law taxes insurers based on the amount of premiums, called a "premium tax".
Proposed law creates the Louisiana New Markets Jobs Act which provides an income tax
credit against the premium tax liability for any entity which makes an investment of private
capital into a "qualified community development entity" (QCDE or "entity") located in
Louisiana. The QCDE must have at least 100% of its cash purchase price used by the issuer
to make "qualified low-income community investments" in "qualified active low-income
community businesses" located in the state. SB NO. 234
SLS 13RS-479 ORIGINAL
Page 13 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
The tax credit is equal to 0% of the purchase price of the "qualified equity investment" [QEI]
for the first two years and 10% of the purchase price for the next four years. The total of all
such credits taken cannot exceed the entity's state premium tax liability for the tax year for
which the credit is claimed; however, any credits that are not used are carried forward for
up to 10 years. A total of $125,000,000 of QEI investment authority is available for
certification and allocation by the Department of Insurance. The department is required to
accept applications beginning September 1, 2013, for allocation of up to $62,500,000.00 of
QEI.
"Qualified equity investment" [QEI or "investment"] is defined as an equity investment in
a "qualified active low-income community business" (QALICB or "business") that meets
certain criteria. A business is considered a QALICB for the duration of the qualified
community development entity's investment in, or loan to, the business if the entity
reasonably expects, at the time it makes the investment or loan, that the business will
continue to satisfy the requirements for being a qualified active low-income community
business throughout the entire period of the investment or loan.
Proposed law provides several definitions, including a "qualified community development
entity" (QCDE or "entity") to mean that which is ascribed in Section 45D of the Internal
Revenue Code. Under federal law, a QALICB 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. QCDE are privately managed
investment entities that have received New Market Tax Credit allocation authority.
Proposed law provides that the premium tax credits earned by partnerships, limited liability
companies, S-corporations, or other pass through entities can be allocated to the partners,
members, or shareholders of such entities and provides that any unclaimed tax credits are
transferable to one or more transferees.
Proposed law provides that a QCDE entity seeking to have an equity investment designated
as a QEI investment must apply to the Department of Insurance (department) in an
application for certification. Proposed law requires the department to grant or deny such
application by a QCDE entity within 20 days after receipt. Further requires the department
to inform such entity of the grounds for denial of any part of the application, extending such
entity the right to provide additional information or to complete its application within 15
days of notice of the denial.
Proposed law requires the department to certify QEI investments in the order in which the
applications are received by the department.
Proposed law requires QCDE entities or their transferees to issue the QEI investment within
30 days of receiving notice of certification. Further requires the entities or their transferees
to provide the department with evidence of the receipt of the cash investment and the
designation of the investment within five business days after receipt. Proposed law provides
that in the event that a QCDE entity or its transferee does not receive the cash investment
within 30 days of receipt of the certification notice, the certification lapses.
Proposed law further requires the department to recapture the tax credit from the entity that
claimed such tax credit following the occurrence of either of the following events:
(1)Any amount of a federal tax credit available with respect to a QEI investment that
is eligible for a credit under proposed law is recaptured under Section 45D of the
Internal Revenue Code, as amended. Proposed law requires the department's
recapture to be proportionate to the federal recapture.
(2)The issuer fails to invest an amount equal to 100% of the purchase price of the QEI
investment in a QLICI investment in Louisiana within 12 months of the issuance of
the QEI investment and to further maintain such level of investment until the last SB NO. 234
SLS 13RS-479 ORIGINAL
Page 14 of 14
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
credit allowance date for the qualified equity investment.
Proposed law provides for a six month cure period before the department recaptures an
entity's credits. A recapture can only occur after the entity has been given notice of
noncompliance and six months from the date of such notice to cure such noncompliance.
Proposed law requires any QCDE entity seeking to have an equity investment qualified must
pay a $500,000 deposit to the department for deposit in the New Markets performance
guarantee account. Proposed law requires the department to hold the $500,000 deposit in
the New Markets performance guarantee account until such time as the entity meets
compliance standards set forth by proposed law. Further allows the entity to request a return
of such deposit after 30 days of meeting compliance requirements.
Proposed law requires the department, upon request, to issue letter rulings regarding the tax
credit program. Further requires the department to seek guidance from Section 45D of the
Internal Revenue Code of 1986 in issuing such letter rulings and to respond to such requests
within 60 days.
Proposed law requires QCDE entities that issue QEI investments to submit a report to the
department within the first five business days after the first anniversary of the initial credit
allowance date. Such report must provide documentation as to the investment of 100% of
the purchase price in QLICI investments in a QALICB businesses located in Louisiana.
Proposed law further requires the entity to submit an annual report to the department within
45 days of the beginning of the calendar year for the compliance period. The report must
include the number of employment positions created and retained as a result of the
investments and the average annual salary of such positions.
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. 22:832.1)