The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Leonore Heavey.
DIGEST
SB 13 Original 2020 First Extraordinary Session Ward
Present law provides for the Louisiana New Markets Jobs Act tax credit that may be claimed against
insurance premium tax. Eligibility for the credit is based on the investment of private capital in a
low-income community business located in La.
Present law defines "qualified active low-income community business" (QALICB or business) as
an entity which under federal law is defined as a business located in either a census tract with a
poverty rate of at least 20% or a census tract with a median income that does not exceed 80% of the
benchmark median income. Further defines a "qualified community development entity" (QCDE or
entity) as a privately managed investment entity that has received New Market Tax Credit allocation
authority.
Proposed law adds two additional qualifications to the definition of "qualified active low-income
community business" by limiting the QALICB to NAICS codes 11, 21, 23, 31, 32, 33, 42, 48, 49,
54, 56, 62, 72, or 81 and limiting the number of employees to no greater of two hundred fifty or the
number of employees set forth for the business's NAICS code sector.
(1)NAICS 11 – Agriculture, Forestry, Fishing and Hunting
(2)NAICS 21 – Mining
(3)NAICS 23 – Construction
(4)NAICS 31 to 33 – Manufacturing
(5)NAICS 42 – Wholesale Trade
(6)NAICS 48 and 49 – Transportation and Warehousing
(7)NAICS 54 – Professional, Scientific, and Technical Services
(8)NAICS 56 – Administrative and Support and Waste Management and Remediation Services
(9)NAICS 62 – Health Care and Social Assistance
(10)NAICS 72 – Accommodation and Food Services
(11) NAICS 81 – Other Services (except Public Administration) Present law defines the types of investments required for tax credit eligibility.
Present law caps the amount of qualified low-income community investment in a qualified
low-income community business at ten million dollars.
Proposed law caps the amount of qualified low-income community investment in a qualified
low-income community business at five million dollars.
Present law provides that the amount of the tax credit shall be the product of multiplying the amount
of the investment purchase price (investment authority) by the following percentages: 14% for the
first and second years and 8.5% for the third and fourth years. The total of all such credits taken
cannot exceed the taxpayer's state premium tax liability for the tax year for which the credit is
claimed; however, unused credits may be carried forward for up to 10 years. Unclaimed tax credits
are transferable to one or more transferees.
Proposed law retains present law provisions for carry forward and transferability of the credit and
provides that the amount of the tax credit shall be the product of multiplying the amount of the
investment purchase price (investment authority) by the following percentages: 15% for the fourth,
fifth, sixth, and seventh years.
Present law authorized a total of $55 million of investment authority for certification and allocation
for the purpose of earning tax credits.
Proposed law authorizes an additional $100 million of investment authority for certification and
allocation for the purpose of earning tax credits.
Present law requires that investments eligible for the award of tax credits be certified by the Dept.
of Revenue. If a QCDE applies for certification of investments, the department shall inform the
entity within 30 days of application whether the application is certified or denied. In the case of a
denial, the entity shall have the right to provide additional information regarding the application
within 15 days of the denial.
Present law requires the issuance of investments within 20 days of receiving certification.
Proposed law retains present law certification and issuance timelines.
Present law provides for conditions under which the Dept. of Insurance shall recapture tax credits
that include a recapture of federal tax credits by the federal government, or a failure to invest an
amount equal to 100% of the purchase price of the investment within 12 months of the issuance of
the investment.
Proposed law retains present law recapture provisions and adds a recapture condition for investments
made on or after August 1, 2020, if there has been a failure to invest an amount equal to 100% of the
purchase price of the investment within nine months of the issuance of the investment or less than
30% of the purchase price was invested in "impact businesses". Proposed law defines "impact business" as qualified active low-income community business either
located in a rural parish (population of less than 100,000) or more than fifty percent owned by
women, minorities, or military veterans.
Present law requires the payment of a deposit of $500,000 for an application for qualification of an
investment. The deposit shall be paid to the Dept. of Revenue and deposited into the new markets
performance guarantee account which is established by present law. The deposit is returnable after
compliance with the requirements of present law.
Present law requires reporting by a QCDE to the Dept. of Revenue within five days of the first
anniversary of the initial credit allowance date, as well as annual reporting with regard to the number
of employment positions created and retained as a result of the investments and the average annual
salary of the positions.
Proposed law retains present law QCDE anniversary date reporting provisions and further authorizes
reports to be submitted on the nine-month anniversary date.
Present law requires the Dept. of Revenue to notify the Dept. of Insurance of the name of any
insurance company allocated tax credits, as well as the amount of any credits.
Proposed law retains this notification provision.
Effective August 1, 2020.
(Amends R.S. 47:6016.1(B), (E)(5) and (7), (F), (G), (H)(1)(b), and (J)(1); adds R.S.
47:6016.1(E)(1)(f))