HLS 15RS-409 REENGROSSED
2015 Regular Session
HOUSE BILL NO. 664
BY REPRESENTATIVE STOKES
TAX/INCOME-CREDIT: Defines" inventory" for purposes of the tax credit for ad valorem
taxes paid on inventory
1 AN ACT
2To amend and reenact R.S. 47:6006(C) and to enact R.S. 47:6006(E), relative to tax credits;
3 to provide for certain definitions; to provide for the amount of the credit; to provide
4 for renditions of inventory; to provide for an effective date; and to provide for related
5 matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 47:6006(C) is hereby amended and reenacted and R.S. 47:6006(E)
8is hereby enacted to read as follows:
9 ยง6006. Tax credits for local inventory taxes paid
10 * * *
11 C. For purposes of this Section, the following terms shall have the meaning
12 ascribed to them:
13 (1) The term "manufacturer" as used herein means a person engaged in the
14 business of working raw materials into wares suitable for use or which gives new
15 shapes, qualities, or combinations to matter which already has gone through some
16 artificial process.
17 (2) The term "distributor" as used herein means a person engaged in the sale
18 of products for resale or further processing for resale.
19 (3) The term "retailer" as used herein means a person engaged in the sale of
20 products to the ultimate consumer.
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1 (4) The term "inventory" means the aggregate of those items of tangible
2 personal property that are held exclusively for sale in the ordinary course of business,
3 are currently in the process of production for subsequent sale, or are to physically
4 become a part of the production of such goods.
5 (a) "Inventory" shall include the following:
6 (i) Goods or commodities awaiting sale that include but are not limited to the
7 merchandise of a retail or wholesale concern, the finished goods of a manufacturer,
8 the commodities from farms, mines, and quarries, and goods that are used or trade-in
9 merchandise and by-products of a manufacturer.
10 (ii) Goods or commodities that are in the course of production.
11 (iii) Raw materials and supplies that will be consumed in the Louisiana
12 manufacturing process.
13 (b) "Inventory" shall not include the following:
14 (i) Oil stored in tanks held by a producer prior to the first sale of the oil, and
15 oil otherwise exempt from ad valorem taxation pursuant to the provisions of the
16 Constitution of Louisiana.
17 (ii) Items that would otherwise be considered inventory at any time
18 following the initial lease by the taxpayer of such items.
19 (iii) Items that would otherwise be considered inventory any time after the
20 taxpayer has commenced depreciating the item on the taxpayer's federal tax return.
21 (iv) Items that have been subject to use by the taxpayer when owned for
22 more than eighteen months.
23 (v) Items that are otherwise exempt from ad valorem taxation pursuant to the
24 provisions of the Constitution of Louisiana, including, goods, commodities, or
25 personal property stored in the state for use in interstate commerce as provided for
26 in Article VII, Section 21(D)(3) of the Constitution of Louisiana.
27 * * *
28 E. At any time after a finding of overvaluation or misclassification of
29 inventory for the purposes of this credit by audit or on appeal by the Board of Tax
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HB NO. 664
1 Appeals or court that last reviews the matter, the secretary of the Department of
2 Revenue may intervene in any proceeding related to the valuation or classification
3 of property as inventory for which a credit will be claimed pursuant to this Section.
4 Section 2. This Act shall become effective January 1, 2016 and shall be applicable
5to all tax years beginning on and 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 664 Reengrossed 2015 Regular Session Stokes
Abstract: Defines inventory for purposes of the inventory tax credit and authorizes the
secretary of Dept. of Revenue to intervene in certain proceedings.
Present law authorizes an income or corporation franchise tax for ad valorem tax paid to
political subdivisions on inventory held by manufacturers, distributors, and retailers and on
certain natural gas. The amount of the tax is equal to 100% of taxes paid.
Proposed law defines "inventory" for the purpose of the credit to include certain items of
tangible personal property that are being held for sale in the ordinary course of business, are
in the process of production for subsequent sale, or are to become a part of the production
of the good for sale.
Proposed law excludes from the definition of "inventory" certain oil that is stored in tanks,
items that would be considered inventory following the initial lease of the item by the
taxpayer, items for which depreciation has commenced for the purposes of a taxpayer's
federal tax return, items that are subject to use by the taxpayer for longer than 18 months,
and items otherwise exempt from ad valorem taxation pursuant to the La. Constitution.
Proposed law authorizes the secretary to intervene in any proceeding related to the valuation
or classification of property as inventory for which a credit will be claimed pursuant to
present law when there is a finding of overvaluation or misclassification of inventory in
certain circumstances.
Effective Jan. 1, 2016, and for all tax years thereafter.
(Amends R.S. 47:6006(C); Adds R.S. 47:6006(E))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Delete provisions of proposed law that changed the amount of inventory tax
credit.
2. Specify that tangible property has to be held "exclusively" for sale in the
ordinary course of business for the purposes of qualifying as "inventory".
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3. Delete provision of proposed law that authorized the secretary to require a
taxpayer to file it's rendition of inventory with the parish assessor when there has
been a finding of overvaluation or misclassification of inventory for purposes of
the inventory tax credit.
The House Floor Amendments to the engrossed bill:
1. With respect to items excluded from the definition of "inventory", add the
qualification that items that would be considered inventory following the initial
lease of the item be items leased by the taxpayer.
2. With respect to items excluded from the definition of "inventory", change the
limitation from an intervening or incidental use of an item by the taxpayer to any
use by the taxpayer for longer than 18 months.
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