HLS 19RS-481 REENGROSSED
2019 Regular Session
HOUSE BILL NO. 274
BY REPRESENTATIVE GARY CARTER
TAX CREDITS: Establishes a tax credit pilot program for certain Louisiana-based
manufacturing industries
1 AN ACT
2To enact R.S. 47:6040, relative to tax credits; to establish a tax credit pilot program for
3 certain manufacturing industries; to provide for the amount of the credit; to provide
4 for definitions; to establish eligibility requirements for tax credit applicants; to
5 provide for application requirements; to provide for certification requirements; to
6 provide for the administration of the credit; to authorize the promulgation of rules
7 and regulations; to require the submission of certain reports; to authorize the
8 recapture and recovery of tax credits under certain circumstances; to provide for
9 implementation of the tax credit pilot program; to provide for certain limitations and
10 requirements; to provide for an effective date; and to provide for related matters.
11Be it enacted by the Legislature of Louisiana:
12 Section 1. R.S. 47:6040 is hereby enacted to read as follows:
13 ยง6040. Louisiana-based manufacturing tax credit; pilot program; applications;
14 limitations
15 A. Purpose. The primary purpose of this Section is to encourage private
16 investment in and provide incentives for businesses to further manufacture products
17 and component parts of products into marketable products in Louisiana rather than
18 shipping their products for further processing to other states and countries using
19 Louisiana's port, rail, trucking, and other multimodal methods. It is in the best
20 interest of this state to promote the development of businesses which manufacture
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1 products such as steel, rubber, aluminum, forestry products, coffee, and other food
2 products into marketable products in this state prior to being shipped into intrastate
3 and interstate commerce. Because public funding sources for business investment
4 have not kept pace with the need to expand our economy, it is determined that
5 private investment and public-private partnerships should be encouraged as a means
6 to assist the state in financing investment in manufacturing establishments in our
7 state and in our citizens. The development of unique business investment and
8 opportunities are essential to Louisiana's economic health and the ability of business
9 and industry associated with manufacturing establishments to compete cost
10 effectively on a regional, national, and global scale.
11 B. Definitions. For purposes of this Section, the following words shall have
12 the following meanings unless the context clearly indicates otherwise:
13 (1) "Department" shall mean the Department of Economic Development.
14 (2) "Project" shall mean and include any land, building, or other
15 improvement, and all movable and immovable properties deemed necessary or useful
16 in connection therewith, whether or not previously in existence, located or to be
17 located in a qualified opportunity zone census tract, as certified by the secretary of
18 the United States Treasury, in this state to produce manufacturing establishments
19 which engage in the business of working raw materials into wares and marketable
20 products. "Project" shall also include machinery, equipment, materials, products, or
21 commodities owned by a business entity which are imported to or from a
22 manufacturing establishment, or fabrication, assembly, distribution, processing, or
23 warehouse facility located in Louisiana and which are moved by way of an
24 oceangoing vessel, rail, truck, or other multimodal method during the taxable year.
25 (3) "Qualifying project" shall mean and include a project to be undertaken
26 by a manufacturing establishment or a business that has a minimum capital cost of
27 not less than one and one-half million dollars and at which the predominant trade or
28 business activity conducted will constitute manufacturing products or assembling
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1 raw materials into a marketable product in this state. However, "qualifying project"
2 shall not mean or include manufacturing of chemicals or bulk liquid or gas facilities.
3 C. Tax credit.
4 (1) There is hereby authorized an income and corporate franchise tax credit
5 for expenses associated with construction of a qualifying project in this state. The
6 maximum amount of the credit shall be equal to fifty percent of the costs of the
7 qualifying project, not to exceed one million dollars per project. The total aggregate
8 amount of credits which may be certified and granted by the department in
9 accordance with the provisions of this Section shall not exceed ten million dollars
10 over the five-year life of the pilot program.
11 (2) Tax credits certified and granted by the department may be granted as a
12 lump sum or may be structured over time depending on the applicant and the nature
13 of the business.
14 D. Certification and administration.
15 (1) The credit provided for in this Section shall be granted by the department
16 for a qualifying project if the commissioner of administration, after approval of the
17 Joint Legislative Committee on the Budget, certifies that securing the project will
18 result in a significant positive economic benefit to the state. "Significant positive
19 economic benefit" means net positive tax revenue that shall be determined by taking
20 into account direct, indirect, and induced impacts of the project based on a standard
21 economic impact methodology utilized by the secretary of the department, and the
22 value of the credit, and any other state tax and financial incentives that are used by
23 the department to secure the project. If the commissioner, with the approval of the
24 committee, certifies the qualifying project, then the department may grant a tax
25 credit equal to fifty percent of the costs of the qualifying project, or may grant a
26 credit in a lesser amount which is warranted by the significant positive economic
27 benefit determined by the commissioner; however, no tax credit granted for a
28 qualifying project shall exceed one million dollars. The total amount of tax credits
29 granted on a qualifying project shall not exceed the total cost of the project.
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1 (2) Tax credits granted pursuant to this Section shall be earned by the
2 applicant at the time expenditures are made by an applicant; however, tax credits
3 granted pursuant to the provisions of this Section shall only be claimed for those
4 periods beginning on and after January 1, 2020, and shall not be claimed until project
5 cost expenditures are certified by the department. The department shall certify
6 project cost expenditures no less than twice during the duration of the qualifying
7 project unless the applicant agrees, in writing, to reimburse the department for the
8 costs of any additional certifications.
9 (3) If the tax credit allowed pursuant to this Section exceeds the amount of
10 taxes due for such tax period, then any unused credit may be carried forward as a
11 credit against subsequent tax liability for a period not to exceed five years.
12 (4) The secretary of the department shall determine through the
13 promulgation of rules and regulations in accordance with the Administrative
14 Procedure Act, which projects and expenditures qualify for tax credits. The
15 department shall take the following factors into consideration when determining
16 which projects qualify:
17 (a) The economic impact of the qualifying project on similar or existing
18 manufacturing establishments or businesses located within one hundred miles of the
19 qualifying project.
20 (b) The impact of the qualifying project on the immediate and long-term
21 objectives of the tax credit provided for the investment.
22 (c) The impact of the qualifying project on the employment of Louisiana
23 residents.
24 (d) The impact of the qualifying project on the overall economy of the state.
25 (5)(a) Application. An applicant for the tax credit authorized pursuant to the
26 provisions of this Section shall submit an application for initial certification of the
27 qualifying project to the department that includes the following information:
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1 (i) A preliminary budget including the actual or, if not known, the estimated
2 capital costs of the qualifying project and the qualifying project's estimated
3 Louisiana payroll.
4 (ii) A detailed description of the qualifying project.
5 (iii) A statement that the proposed project will qualify as a qualifying
6 project.
7 (iv) Estimated start and completion dates. The estimated start date shall
8 include the estimated date on which the acquisition, construction, installation, or
9 equipping of the qualifying project was commenced or is expected to commence.
10 (v) The name of each company, or the name or names of its shareholders,
11 partners, members, owners, or beneficiaries to become entitled to the tax credit.
12 (vi) Any other information required by the department.
13 (b) If the application is incomplete, additional information may be requested
14 prior to further action by the department.
15 (c) Prior to final certification of a qualifying project, the applicant shall
16 submit to the department a cost report of project expenditures which the department
17 may require to be prepared by an independent certified public accountant. The
18 department shall review the expenditures and shall issue a tax credit certification
19 letter to the applicant and to the Department of Revenue indicating the amount of tax
20 credits certified for the qualifying project and the amount of the tax credit to be taken
21 each tax year.
22 (6) The secretary of the department, in consultation with the Department of
23 Revenue, shall promulgate rules and regulations in accordance with the
24 Administrative Procedure Act as are necessary to carry out the intent and purposes
25 of this Section. All rules promulgated to implement the provisions of this Section
26 shall be subject to oversight and approval by the House Ways and Means Committee
27 and the Senate Committee on Revenue and Fiscal Affairs.
28 (7) Any taxpayer applying for the credit shall be required to reimburse the
29 department for any audit required in relation to granting the credit.
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1 E. Recapture of credits. If the department finds that funds for which an
2 applicant received credits according to the provisions of this Section are not invested
3 in and expended with respect to capital costs of a qualifying investment, the
4 department shall notify the Department of Revenue who shall disallow the credits on
5 the return and recapture the credits in accordance with Subsection F of this Section.
6 F. Recovery of credits by the Department of Revenue.
7 (1) Tax credits previously granted to a taxpayer, but later disallowed,
8 pursuant to the provisions of Subsection E of this Section, may be recovered by the
9 secretary of the Department of Revenue through any collection remedy authorized
10 by R.S. 47:1561 and initiated within the later of any of the following:
11 (a) Two years from December thirty-first in the year in which the tax credit
12 was claimed.
13 (b) Three years from December thirty-first of the year in which the taxes for
14 the filing period were due.
15 (c) Three years from December thirty-first of the year in which the final tax
16 credit certification letter was issued.
17 (d) The time period for which prescription has been extended, as provided
18 by R.S. 47:1580.
19 (2) The only interest that may be assessed and collected on recovered credits
20 is interest at a rate of three percentage points above the rate provided in R.S.
21 9:3500(B)(1), which shall be computed from the original due date of the return on
22 which the credit was taken.
23 (3) The provisions of this Subsection are in addition to and shall not limit the
24 authority of the secretary of the Department of Revenue to assess or to collect under
25 any other provision of law.
26 G. Implementation of tax credits.
27 (1) No tax credit authorized pursuant to the provisions of this Section shall
28 be certified prior to January 1, 2020, and the tax credits certified shall be claimed for
29 tax periods beginning on or after January 1, 2020.
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1 (2) No tax credit shall be issued pursuant to the provisions of this Section
2 and no initial certification shall be granted by the secretary of the department on or
3 after January 1, 2025.
4 Section 2. This Act shall become effective upon signature by the governor or, if not
5signed by the governor, upon expiration of the time for bills to become law without signature
6by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
7vetoed by the governor and subsequently approved by the legislature, this Act shall become
8effective on the day following such approval.
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 274 Reengrossed 2019 Regular Session Gary Carter
Abstract: Authorizes an income and corporate franchise tax credit pilot program for
expenses associated with the construction of manufacturing establishments that will
assemble raw materials into marketable products in this state.
Proposed law authorizes an income and corporate franchise 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 costs of the qualifying project, not to exceed $1M per
project. The total aggregate amount of credits which may be certified and granted by the
Dept. of Economic Development (DED) shall not exceed $10M over the five-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 or other business located or to be located in a qualified opportunity zone
census tract, that has a minimum capital cost of not less than $1.5M and at which the
predominant trade or business activity will constitute manufacturing products or assembling
raw materials into a marketable product in this state. Proposed law excludes manufacturing
of chemicals or bulk liquid or gas facilities 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.
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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
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 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 Jan. 1, 2025.
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.
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