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)]
CONFERENCE COMMITTEE REP ORT DIGEST
HB 748 2015 Regular Session Stokes
Keyword and oneliner of the instrument as it left the House
TAX CREDITS: Provides relative to the motion picture investor tax credit and the motion picture
infrastructure investor tax credit
Report adopts Senate amendments to:
1. Add authorization for the certification of additional supplemental expenditures related to
post-production activities in La. under certain circumstances.
2. Add authorization for a bank or other lender to be named as an irrevocable designee in an
initial tax credit certification.
3. Delete authority for the denial of an application for initial certification at the discretion of the
secretary of the Dept. of Economic Development.
4. Delete certain revisions regarding the authority of the Dept. of Revenue to disallow and
recapture tax credits.
Report rejects Senate amendments which would have:
1. Add marketing expenditures to the definition of "production expenditures" beginning July
1, 2015.
2. Change the timing for the earning of tax credits.
3. Authorize the use of tax credits against a prior year's tax liability.
4. Technical amendments.
Report amends the bill to:
1. Change the name of the program from motion picture investor tax credit to motion picture production tax credit.
2. Add marketing expenditures to the definition of "production expenditures" beginning Jan.
1, 2016.
3. Conform provisions of this bill with those of House Bill No. 604 regarding changes in the
basis for the office's consideration of production expenditures for certification from a
production audit report to a cost report of production expenditures and a production
expenditure verification report.
4. Substantially revises present law regarding the disallowance and recapture of tax credits in
cases of fraud, including provisions specific to a "bad faith holder" of tax credits.
5. With respect to recovery of tax credits that have been disallowed deletes provisions limiting
interest and changes the prescriptive periods for the authority of the Dept. of Revenue to
initiate collection.
6. Add specific effectiveness provisions.
Digest of the bill as proposed by the Conference Committee
Present law authorizes a tax credit against state income tax based on motion picture production
expenditures for state-certified productions. The tax credit is calculated as a percentage of the total
base investment dollars certified per project.
Present law authorizes an income tax credit equal to 30% of production expenditures for all state-
certified productions approved after July 1, 2009. Also provides an additional tax credit equal to 5%
of the base investment expended on payroll for La. residents employed in connection with all state-
certified productions.
Proposed law changes the name of the program from motion picture investor tax credit to motion
picture production tax credit.
Proposed law for productions granted initial certification on or after Jan. 1, 2016, makes several
changes regarding the procedures and time periods involved with initial certification of expenditures.
Proposed law changes the present law definition for motion picture to include eligibility for motion
pictures developed for viewing online, changes present law definition for production expenditures
to include marketing expenses, and adds a definition for "taxpayer".
Proposed law further changes present law by reducing the number of times expenditures can be
certified and changes the timing of certifications for expenditures from twice during the production
to once after the project is completed.
Proposed law provides that if at the time of application for initial certification, the production company notifies the office of entertainment industry development of the Dept. of Economic
Development ("office") that post-production activities will occur in La., a supplemental request for
certification of expenditures may be submitted for consideration and the cost of any verification will
be paid by the production company.
Proposed law specifies that the initial certification shall be effective for qualifying expenditures
made within 12 months before and 24 months after the date of initial certification.
Proposed law authorizes a motional picture production company to name a bank or other lender as
an irrevocable designee in the initial certification under certain circumstances, and provides for the
rights and protections of such an irrevocable designee. As an irrevocable designee, a bank or other
lender may elect to have the tax credits issued directly to it from the office, and in addition to the
rights of a transferee may also elect to transfer the credits to the Dept. of Revenue in accordance with
the proposed law.
Present law requires a motion picture production company applicant to submit to the office a
production audit report before final certification of expenditures for a state-certified production. The
audit report is reviewed by the office and within 120 days of receipt the office shall issue a tax credit
certification letter indicating the amount of the tax credits certified for the production.
Proposed law retains present law, but changes the documents submitted for substantiation of
qualifying expenditures, as well as the review of such information. Within 6 months of the end of
the initial certification period a motion picture production company shall make a request to the office
to proceed to final certification by submitting a cost report of production expenditures. The applicant
shall make all records related to the cost report available for inspection by the office and the qualified
accountant selected by the office to prepare the production expenditure verification report, after
which time all such claims to tax credits shall be deemed waived. After review and investigation
of the cost report, the accountant shall submit to the office and the secretary a production expenditure
verification report. The office and the secretary shall review the production expenditure verification
report for determinations relative to the certification of tax credits based upon qualifying
expenditures.
Proposed law substitutes the expenditure verification report for the production audit report as the
basis for the office's review of a state-certified production's cost report of production expenditures.
Present law requires an investor's state income tax to be increased by the amount necessary for the
recapture of tax credits if the office finds that monies for which an investor received tax credits were
not invested in and expended with respect to a state-certified production within 24 months of the date
that the credits were earned. Authorizes the secretary of the Dept. of Revenue to initiate collection
of tax credits disallowed within 3 years from Dec. 31
st
of the year in which the 24 month investment
period ended. Interest which may be recovered on recaptured tax credits is limited to three
percentage points above the rate established in R.S. 9:3500(B)(1).
Proposed law repeals present law with respect the recapture and recovery of tax credits. Proposed
law prohibits the transfer or claiming of a tax credit by a "bad faith holder", which is defined as a person who participated in material misrepresentation or fraudulent acts in connection with the
certification of tax credits, or who prior to or at the time of certification of such tax credits knew or
reasonably should have known of such material misrepresentation or fraudulent acts, or a legal entity
owned or controlled by such a person. Upon a determination of bad faith by the Dept. of Revenue
such tax credits shall be deemed disallowed as to the bad faith holder.
Proposed law further provides that previously transferred or claimed tax credits by a bad faith holder
which are subsequently disallowed may be recovered by the secretary of the Dept. of Revenue
through any collection remedy authorized under present law specific to the authority of the Dept. of
Revenue, plus interest and penalties provided by present law specific to the Dept. of Revenue for the
delinquent payment of taxes. The Dept. of Revenue is authorized to recapture any amounts and other
damages from a bad faith holder using any collection remedy authorized by law.
Proposed law provides that in the event tax credits obtained through material misrepresentation or
fraudulent acts are claimed by a taxpayer who is not a bad faith holder, the Dept of Revenue shall
have the right of recourse against a bad faith holder as provided to a transferee pursuant to present
law.
Proposed law establishes a schedule of prescriptive periods for the initiation of recovery of
disallowed tax credits by the Dept. of Revenue, as follows: 2 years from Dec. 31
st
in the year in
which a tax credit was transferred to the office; 3 years from Dec. 31
st
of the year in which the taxes
for the filing period were due, or in which the final tax credit certification letter was issued; and a
time period for which prescription has been extended, as provided by R.S. 47:1580.
Proposed law adds requirements regarding submission and consideration of audit reports for final
certification of state-certified expenditures for the motion picture infrastructure investor tax credits.
Proposed law concerning motion picture infrastructure investor tax credit becomes effective July 1,
2015.
Proposed law governing disallowance, recapture, and recovery of tax credits becomes effective July
1, 2015.
All other provisions of proposed law become effective Jan. 1, 2016.
(Amends R.S. 47:1524(D)(2) and (3), and 6007(section heading), (B)(5), (10) through (16),
(C)(subsection heading), (1)(intro. para.), (a)(iii), and (b)(iii), (2), and (4)(b) and (f), (D)(2)(d)(i), (E),
and (F); Adds R.S. 47:6007(B)(17) and (18), (C)(1)(c)(iii), (D)(1)(d)(iv) and (2)(d)(iii), (G), and (H);
Repeals R.S. 47:1524(D)(3))