RÉSUMÉ DIGEST
Act 144 (SB 106) 2015 Regular Session Morrell
New law, relative to the motion picture investor tax credit, prohibits, after January 1, 2014,
a transfer or sale of tax credits from being effective until recorded in the tax credit registry
in R.S. 47:1524. Deletes a provision of prior law providing that the effectiveness of a tax
credit transfer between the transferor and the transferee could be provided by agreement of
the parties or, in the absence of an agreement, in accordance with the provisions of the
Louisiana Civil Code and its ancillaries.
Prior law defined a "motion picture" to include nationally or internationally distributed
feature-length film, video, television pilot, and television series made in La. The term
"motion picture" did not include the production of television coverage of news and athletic
events.
New law expands the definition of an eligible "motion picture" to include viewing on any
digital online platform as may be further defined by the Governor's Office of Film and
Television Development (office) through the promulgation of rules.
Prior law defined "production expenditures" to include preproduction, production, and
postproduction expenditures in this state directly relating to a state-certified production.
However, the term specifically excluded expenditures for marketing and distribution.
New law adds eligibility for marketing expenditures for all state-certified productions
approved on or after January 1, 2016.
Prior law provided that expenditures shall be certified no more than twice during the duration
of a state-certified production unless the motion picture production company agreed to
reimburse the office for the costs of any additional certifications.
New law limits such certifications to once per production, but, if at the time of application
for initial certification, the office is notified that post-production activities will take place in
Louisiana, a supplemental request for certification of expenditures directly related to such
post-production activity may be submitted for consideration by the office. The cost of any
verification or audit of such expenditures must be borne by the motion picture production
company.
New law deletes the exception for productions approved up to July 1, 2009, to the provision
that qualifying expenditures must be made within 12 months of initial certification allowing
a production which had commenced to have a valid initial certification until the production
was completed. Specifically limits earning of credits to expenditures made during the initial
certification period.
New law provides that such initial certification is within a period 12 months prior to and 24
months after the date of the initial certification.
New law reduces the time unused tax credit may be carried forward from 10 years to 5 years.
New law requires the Department of Revenue (DOR) to make a payment of a refund to a
motion picture production company's irrevocable designee provided tax credits are
transferred to the DOR within one calendar year of certification. Allows a bank or other
lender to be named as an irrevocable designee in the initial tax credit certification or other
document submitted thereafter by a motion picture production company to the office. 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 having the rights of a transferee, it may also elect to
transfer the credits to the DOR.
New law makes conviction for a criminal offense as an incident to obtaining or attempting
to obtain motion picture investor tax credits a criterion for determining who qualifies for a
credit.
Prior law provided that prior to any final certification of the state-certified production, the
motion picture production company shall submit to the office and the secretary a production audit report. Provided that the office and the secretary shall review the report and may require
additional information needed to make a determination. Provides that within 120 days of the
receipt of the report and all required supporting information, the office and the secretary shall
issue a tax credit certification letter indicating the amount of tax credits certified for the
state-certified production to the investors for all qualifying expenditures verified by the
office.
New law provides that no later than six months after the expiration of the initial certification
period for the applicable state-certified production, a state-certified motion picture
production company applicant shall make a request to the office to proceed to final
certification by submitting to the office a cost report of production expenditures to be
formatted in accordance with instructions of the office. Provides that 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. Provides that 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 report and may require additional information needed to make a determination as
to final certification of all tax credits for that production. Within 120 days of the receipt of
the report and all required supporting information, the office and the secretary shall issue a
tax credit certification letter indicating the amount of tax credits certified for the
state-certified production to the applicant for all qualifying expenditures verified by the
office.
New law provides that tax credits shall not be considered entitlements, and the taxpayer must
bear the burden of clearly and unequivocally establishing eligibility for tax credits.
Prior law required 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 such credits were earned. Authorized the secretary of the DOR to
initiate collection of tax credits disallowed within three years from December 31st of the year
in which the 24-month investment period ended. Limited the interest that may be assessed
and collected on recovered credits to a rate three percentage points above the rate provided
in R.S. 9:3500(B)(1).
Effective January 1, 2016, new law deletes these provisions and prohibits a "bad faith holder"
from claiming tax credits, transferring tax credits to the office for 85% of value as provided
in prior law, or transferring or selling tax credits. A "bad faith holder" 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 DOR such tax credits shall be deemed disallowed as to the bad faith holder.
Authorizes the DOR to recover subsequently disallowed tax credits previously transferred
to LED or claimed by a bad faith holder through any collection remedy authorized by law,
plus interest and penalties provided by law for the delinquent payment of taxes, and
authorizes the department to recapture any amounts and other damages from a bad faith
holder. Additionally, 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 DOR shall have
the same right of recourse against a previous bad faith holder as provided to transferees in
prior law.
New law authorizes the secretary of the DOR to recover disallowed tax credits through any
collection remedy authorized by R.S. 47:1561 and initiated within the latter of any of the
following:
(1)Two years from December 31st of the year in which the tax credit was paid.
(2)Three years from December 31st of the year in which the taxes for the filing period
were due. (3)Three years from December 31st of the year in which the final tax credit certification
letter was issued.
(4)The time period for which prescription has been extended, as provided for the
suspension and interruption of prescription against taxes by R.S. 47:1580.
New law establishes standards for audit reports for certification of expenditures for
state-certified motion picture infrastructure program tax credits. Requires infrastructure
project applicants to submit all requests and required documentation for final certification
on or before December 31, 2015, after which time all such claims to tax credits are deemed
to be waived. Requires the request to be accompanied by an audit performed by an
independent certified public accountant. Within 365 days after receipt, or December 31,
2016, whichever occurs first, the office, the secretary, and the division must issue a denial
letter or a tax credit certification letter to the investors indicating the amount of tax credits
certified for the project. The applicant is authorized to appeal a denial.
New law prohibits motion picture infrastructure tax credits to be certified after July 1, 2017.
Effective July 1, 2015, but only if the commissioner of administration and the legislative
auditor provide written notice to the Senate president, the House speaker, and the La. State
Law Institute that they have determined that an Act or Acts were enacted in the 2015 RS
sufficient to offset any tax increases provided for in the Acts of such Session over a five-year
period.
(Amends R.S. 47:1524(D)(2) and (3) and 6007(B)(5), (10)-(16), (C)(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))