GREEN SHEET REDIGEST
HB 664 2015 Regular Session Stokes
(KEYWORD, SUMMARY, AND DIGEST as amended by Senate committee
amendments)
TAX/INCOME-CREDIT. Defines" inventory" for purposes of the tax credit for ad
valorem taxes paid on inventory.
DIGEST
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 provides that inventory includes items with a cost of $100,000 or more to the
manufacturer, distributor, or retailer and that are leased to promote the sale thereof. Proposed
law provides that the items will cease to be inventory at the end of 24 months being under
lease.
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 (but not short-term
rental) 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.
Proposed law defines "short-term rental" to include a rental for a period of less than 365
days, a rental for an undefined period, or a rental under an open-ended agreement.
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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Prepared by Ashley Menou. 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.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal Affairs
to the reengrossed bill
1. Adds items of corporeal movable property held by a retailer and available for
short-term rental that will subsequently or ultimately sold by the retailer to the
definition of inventory.
2. Adds that items under a short term lease that, if not under the short-term lease,
would otherwise be considered inventory are excluded from the definition of
inventory.
3. Adds items with a cost of $100,000 or more to the manufacturer, distributor, or
retailer and that are leased to promote the sale thereof to the definition of
inventory, and provides that these items will cease to be inventory after 24
months under a lease.
4. Defines "short-term rental" as a rental for a period of less than 365 days, a rental
for an undefined period, or a rental under an open ended agreement.
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Prepared by Ashley Menou.