GREEN SHEET REDIGEST
HB 274 2019 Regular Session Gary Carter
TAX CREDITS: Establishes a tax credit pilot program for certain Louisiana-based
manufacturing industries
DIGEST
Proposed law authorizes an income tax credit for expenses associated with construction of
a qualifying project in this state. The maximum amount of the credit shall be equal to 50%
of the eligible expenditures of the qualifying project, not to exceed $50,000 per project. The
total aggregate amount of credits which may be certified and granted by the Dept. of
Economic Development (DED) shall not exceed $500,000 per year or $1M over the two-year
life of the pilot program. Proposed law authorizes tax credits certified and granted by DED
to be granted as a lump sum or may be structured over time depending on the applicant and
the nature of the business.
Proposed law provides that tax credits shall be earned at the time expenditures are made by
an applicant; however, tax credits shall not be claimed until project cost expenditures are
certified by DED, and cannot be claimed for tax periods prior to Jan. 1, 2020.
Proposed law defines a "qualifying project" as a project undertaken by a manufacturing
establishment located in a qualified opportunity zone census tract, that has a maximum
capital cost of not more than $5M and at which the predominant trade or business activity
will constitute manufacturing products or assembling raw materials imported into the state
through waterborne commerce into a marketable product in this state. Proposed law excludes
manufacturing of chemicals, bulk liquid, oil, or gas from the definition of a "qualifying
project".
Proposed law requires the credit to be granted for a qualifying project if the commissioner
of administration, after approval of the Joint Legislative Committee on the Budget, certifies
that securing the project will result in a significant positive economic benefit to the state.
Further defines "significant positive economic benefit" as net positive tax revenue
determined by taking into account direct, indirect, and induced impacts of the project based
on a standard economic impact methodology utilized by DED and the value of the credit and
any other state tax and financial incentives used by DED to secure the project.
Proposed law authorizes DED to grant a credit in a lesser amount if the lesser amount is
warranted by the significant positive economic benefit determined by the commissioner. The
total amount of credits granted on a project shall not exceed the total cost of the project.
Proposed law authorizes the carry forward of tax credit amounts against subsequent tax
liability if the amount of the credit exceeds the applicant's tax liability for a period not to
exceed five years.
Proposed law authorizes the promulgation of rules and regulations in accordance with the
APA, to determine which projects and expenditures qualify for tax credits. Proposed law
requires specific factors to be considered when determining which projects qualify for the
tax credit.
Proposed law provides for an application process for initial certification of the qualifying
project which includes submission of information such as a preliminary budget, the estimated
capital costs of the project, the project's estimated La. payroll, and estimated start and
completion dates.
Proposed law requires, prior to final certification of a qualifying project, an applicant to
submit a cost report of project expenditures which DED may require to be prepared by an
independent certified public accountant prior to issuance of final certification. Further
requires DED to review the expenditures and to issue a tax certification letter to the applicant
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Prepared by Leonore Heavey. and to Dept. of Revenue (DOR) indicating the amount of tax credits certified for the
qualifying project and the amount of tax credits that may be taken each tax year.
Proposed law requires a taxpayer applying for the credit to reimburse DED for any audit
required in relation to granting the credit.
Proposed law limits credits claimed under the program to an aggregate total of two hundred
and fifty thousand dollars each fiscal year.
Proposed law provides for the recapture and recovery of credits by DOR through any
collection remedy authorized by present law and sets forth specific prescriptive periods in
which the proceedings to recover tax credits must be initiated. Further authorizes the
assessment and collection of interest on recovered credits.
Proposed law prohibits tax credits from being certified or applied against tax liability before
Jan. 1, 2020. Further prohibits tax credits from being issued or initial certifications from
being granted by DED on or after Dec. 31, 2022.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Adds R.S. 47:6040)
Summary of Amendments Adopted by House
The House Floor Amendments to the engrossed bill:
1. Clarify that tax credits cannot be granted or claimed for tax periods prior to
Jan. 1, 2020.
2. Require DED to notify DOR if tax credits are not invested in and expended
on capital costs of a qualifying investment and authorizes DOR to disallow
credits on the taxpayer's tax return and recapture the credits.
3. Make technical amendments.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the reengrossed bill
1. Limit credit application to income tax.
2. Reduce per project credit to $50,000.
3. Change lifetime program cap from $10M to $1M.
4. Add annual credit granting cap of $500,000.
6. Change definition of "qualifying project."
7. Add an annual credit claiming cap of $250,000.
8. Limit time period of the pilot program to two years.
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Prepared by Leonore Heavey.