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2015 Regular Session
HOUSE BILL NO. 506
BY REPRESENTATIVE JAMES
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
TAX/CORP INCOME: Requires pro forma income tax returns relative to the potential for
the use of a combined unitary reporting system as a method of income apportionment
1 AN ACT
2To enact R.S. 47:287.733(C), relative to corporation income tax; to establish a pilot program
3 adopting combined unitary reporting for income tax purposes; to provide for
4 definitions; to require the reporting of certain information related to corporation
5 income and groups of corporations; to provide for effectiveness; and to provide for
6 related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:287.733(C) is hereby enacted is enacted to read as follows:
9 ยง287.733. Corporations filing consolidated federal returns
10 * * *
11 C. Combined Reporting.
12 (1) Statement of Intent. In recognition of the fact that corporate business is
13 increasingly conducted on a national and international basis, it is the intent of the
14 Legislature of Louisiana to adopt a unitary combined system of income tax reporting
15 for corporations. Louisiana's separate accounting system is inadequate to measure
16 accurately the income of a corporation with non-Louisiana affiliates and creates tax
17 disadvantages for Louisiana corporations which compete with multistate and
18 multinational corporations doing business in Louisiana. It is the intent of the
19 Legislature of Louisiana, in adopting a unitary combined reporting system, to put all
20 corporations doing business in Louisiana on an equal income tax footing.
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HB NO. 506
1 (2) Definitions. For purposes of this Subsection, the following words and
2 phrases shall have the following meanings unless the context indicates otherwise:
3 (a) "Combined group" means a group of two or more corporations in which
4 more than fifty percent of the voting stock of each member corporation is directly
5 or indirectly owned by a common owner or owners, either corporate or
6 non-corporate, or by one or more of the member corporations, and that are engaged
7 in a unitary business.
8 (b) "Unitary business" means the activities of a group of two or more
9 corporations under common ownership that are sufficiently interdependent,
10 integrated, or interrelated through their activities so as to provide mutual benefit and
11 produce a significant sharing or exchange of value among them or a significant flow
12 of value between the separate parts. The term unitary business shall be construed to
13 the broadest extent permitted under the United States Constitution.
14 (3) Combined reporting.
15 (a) For tax periods beginning on January 1, 2015, and January 1, 2016, each
16 corporation which is part of a unitary business with one or more other corporations
17 must file a pro forma return, to be known as a "combined report", for the combined
18 group comprising the unitary business, to include the combined income of the
19 members of the group. The secretary shall prescribe the manner of and directions
20 for filing the return.
21 (b) The use of a combined report does not disregard the separate identities
22 of the taxpayer members of the combined group. Each taxpayer member is
23 responsible for tax based on its taxable income or loss apportioned to this state.
24 (c) Therefore the members of the unitary business group shall determine
25 their Louisiana taxable income as follows:
26 (i) Each company will be treated as a separate entity and must each file its
27 own income and franchise tax returns. However, the unitary business group will
28 make a combined income statement as the first step in the computation of the
29 Louisiana income tax owed by each company.
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HB NO. 506
1 (ii) The unitary business group's combined net income will be calculated by
2 including the income and deductions of all members of the group.
3 (iii) Each company will compute its Louisiana net income or loss by
4 apportioning and allocating its share of the combined net income to its separate
5 return using the provisions of R.S. 47:287.92 through 287.95. The specific
6 apportionment formula to be used by each corporation will be determined based on
7 the primary business of the group as a whole. Both the Louisiana revenue, wages,
8 and property and the combined revenue, wages, and property are to be determined
9 after inter-company eliminations. The apportionment ratio so computed shall be
10 applied to combined net apportionable income to determine the separate company's
11 Louisiana apportionable income. Items of allocable income and expense, after
12 eliminations, are attributed to the entity that produced the income.
13 (4) Filing requirements. Each combined report shall include all of the
14 following information:
15 (a) A list of the companies included in the combined statement and their
16 federal and Louisiana taxpayer identification numbers.
17 (b) A combined profit and loss statement disclosing each company's
18 statement of profit and loss.
19 (c) A schedule of inter-company eliminations.
20 (d) Apportionment formula calculations disclosing the total combined
21 amount of property, payroll, and sales and each separate company's Louisiana
22 amount of property, payroll, and sales.
23 (e) Schedules showing the computation of each company's Louisiana
24 apportionable and allocable income.
25 (f) Schedules showing the computation of each company's tax credits,
26 Louisiana net operating loss, and federal income tax deduction.
27 (5) The secretary shall prepare a report of findings based upon the filing of
28 the pro forma combined reports for purposes of this pilot program. The report shall
29 be delivered to the House Committee on Ways and Means and the Senate Committee
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HB NO. 506
1 on Revenue and Fiscal Affairs no later than sixty days before commencement of the
2 2017 Regular Session of the Legislature.
3 Section 2. The provisions of this Act shall apply to all taxable periods beginning on
4or after January 1, 2016.
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)]
HB 506 Engrossed 2015 Regular Session James
Abstract: Establishes a pilot program for the use of combined unitary reporting for
purposes of La. corporation income tax and the method for determination of income
subject to the tax.
Present law levies a tax on corporations at the following rates:
(1)4% of the first $25,000 of La. taxable income.
(2)5% of the amount of La. taxable income above $25,000 and less than $50,000
(3)6% of the amount of La. taxable income above $50,000 and less than $100,000
(4)7% of the amount of La. taxable income above $100,000 and less than $200,000
(5)8% on all La. taxable income above $200,000
Proposed law establishes a pilot program for the use of the combined unitary reporting
method for determination of income subject to the tax.
Proposed law requires the filing of informational returns by certain corporate entities to
include specific information regarding income of the members of the combined group.
Proposed law provides for the various methods of determining the apportionable income of
corporations and certain groups of corporations.
Proposed law requires the secretary of the Dept. of Revenue to prepare a report of findings
based on the pilot program, and to provide the report to the House Committee on Ways and
Means and Senate Committee on Revenue and Fiscal Affairs no later than 60 days before
the 2017 R.S.
Applicable to taxable periods beginning on Jan. 1, 2015, and Jan. 1, 2016.
(Adds R.S. 47:297.733(C))
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HB NO. 506
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Change the period of time for the pilot program from tax periods beginning on
or after Jan. 1, 2016, to tax periods beginning on Jan. 1, 2015, and Jan. 1, 2016.
2. Add a requirement for the secretary of the Dept. of Revenue to prepare a report
of findings based on the pilot program, and to provide the report to the House
Committee on Ways and Means and Senate Committee on Revenue and Fiscal
Affairs no later than 60 days before the 2017 R.S.
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