GREEN SHEET REDIGEST
HB 289 2021 Regular Session McFarland
TAX CREDITS: Establishes an income and corporate franchise tax credit for Class
II and Class III railroads
DIGEST
Beginning Jan. 1, 2022, proposed law authorizes an income tax and corporate franchise tax
credit for eligible taxpayers.
Proposed law defines eligible taxpayer as any railroad that owns, operates, or leases railroad
track in La. and is classified by the United States Surface Transportation Board as a Class
II or Class III railroad.
Proposed law provides the total amount of credits granted in a calendar year shall not exceed
$2 million. Further provides the total amount of credits available for each taxpayer each year
shall be the lesser of 50% of the taxpayer's qualified expenditures or the total number of
miles of track owned, operated, or leased within La. multiplied by $4,500.
Proposed law provides that if the amount of the tax credit exceeds the taxpayer's liability in
the year the credit is earned, the excess credit may be carried forward for a period not to
exceed seven years from when the credit was earned.
Proposed law requires a taxpayer claiming the credit to submit an application for the credit
to the Department of Revenue (Dept.) identifying the amount the taxpayer expects to claim
as a credit in a taxable year. Further provides the application shall provide for the taxpayer's
amount of eligible expenditures, and the number of miles of track owned, operated, or leased
by the taxpayer.
Proposed law provides the application shall be submitted to the Dept. no later than 30 days
prior to the end of the applicable taxable year.
Proposed law provides the tax credit awarded to the taxpayer shall not exceed the amount
set forth in the credit application.
Proposed law provides that any tax credit that has not been claimed may be transferred or
sold within five years to an eligible transferee, beginning the year in which the credit was
earned. Further provides that the transfer or sale may only take place if the credit is recorded
in the tax registry pursuant to present law (R.S. 47:1524).
Proposed law requires transferors and transferees to submit a written transfer notification to
the department within 10 days after the transfer of the credits. Requires the transfer
notification to include the transferor's tax credit balance prior to transfer, the remaining
balance after transfer, all federal and La. tax identification numbers for both transferor and
transferee, the date of transfer, the amount of credit transferred, and any other information
required by the department.
Proposed law provides for a transfer processing fee of $200 payable to the department.
Proposed law provides for disallowance of the tax credit until the parties are in full
compliance with the provisions of proposed law.
Proposed law defines "eligible transferee" as any taxpayer subject to La. income tax or
corporate franchise tax.
Proposed law defines "qualified railroad track maintenance expenditures" as the gross
expenditures made on or after Jan. 1, 2022, by an eligible taxpayer for repairs, maintenance,
reconstruction, or replacement of railroad track or for new construction of industrial leads,
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Prepared by Curry J. Lann. switches, spurs, sidings or for the extension of existing sidings if the expenditures are made
on track located in La. and the track is owned, operated, or leased by the eligible taxpayer.
Applicable to taxable years occurring on or after Jan. 1, 2022.
Effective Jan. 1, 2022.
(Adds R.S. 47:6042)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means
to the original bill:
1. Change the total amount of credits granted in a calendar year from $7.5
million to $4.5 million.
2. Change the total amount of credits available for each taxpayer in a year from
the lesser of 50% of the taxpayer's qualified expenditures or the total number
of miles of track owned, operated, or leased within La. multiplied by $7,500
to the total number of miles of track owned, operated or leased within La.
multiplied by $4,500.
The House Floor Amendments to the engrossed bill:
1. Require Class II or III railroads receiving the tax credit authorized pursuant
to proposed law to charge broadband providers an amount equal to the actual
costs incurred by the railroad for installation of broadband infrastructure if it
is required to cross over certain railroad track.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the reengrossed bill
1. Deletes provision requiring Class II or III railroads receiving the tax credit to
charge broadband providers an amount equal to the actual costs incurred by
the railroad for installation of broadband infrastructure.
2. Reduces the cap on the total amount of credits granted in a calendar year from
$4.5 million to $2 million.
3. Provides for a transfer processing fee.
4. Makes technical changes.
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Prepared by Curry J. Lann.