HLS 21RS-360 ORIGINAL
2021 Regular Session
HOUSE BILL NO. 534
BY REPRESENTATIVE WRIGHT
TAX CREDITS: Establishes the Louisiana Re-shoring Incentive Program
1 AN ACT
2To enact Chapter 55-A of Title 51 of the Louisiana Revised Statute of 1950, to be comprised
3 of R.S. 51:3126, relative to the establishment of the Louisiana Re-shoring Incentive
4 Program; to provide for the payment of income tax credits and state sales and use tax
5 credits to certain eligible businesses; to provide for the procedures and requirements
6 for the execution of certain contracts; to provide for definitions; to provide for the
7 administration of the program; to prohibit the approval of certain contracts after a
8 certain date; to authorize the promulgation of rules and regulations; to provide for
9 an effective date; and to provide for related matters.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. Chapter 55-A of Title 51 of the Louisiana Revised Statute of 1950,
12comprised of R.S. 51:3126, is hereby enacted to read as follows:
13 CHAPTER 55-A. LOUISIANA RE-SHORING INCENTIVE PROGRAM
14 ยง3126. Louisiana Re-shoring Incentive Program
15 A. Definitions. The following words or terms as used in this Chapter shall
16 have the following meanings, unless a different meaning appears from the context:
17 (1) "Basic health benefits plan" means coverage for basic hospital care,
18 coverage for physician care, and coverage for health care which is determined by the
19 department to have a value of at least one dollar and twenty-five cents per hour and
20 which is the same coverage as is provided to employees employed in a bona fide
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1 executive, administrative, or professional capacity by the employers who are exempt
2 from the minimum wage and maximum hour requirements of the federal Fair Labor
3 Standards Act, 29 U.S.C. 201 et seq.
4 (2) "Business" means an individual, firm, joint venture, association,
5 corporation, estate, partnership, business trust, receiver, syndicate, or other legal
6 business entity.
7 (3) "Department" means the Department of Economic Development.
8 (4) "New jobs" means permanent full-time direct new jobs based at the
9 facilities designated in the contract and filled by residents of the state.
10 (5) "New payroll" means payment by the business to its employees for new
11 jobs, exclusive of benefits, and defined as wages in R.S. 23:1472.
12 (6) "Program" means the Louisiana Re-Shoring Incentive Program.
13 (7) "Qualified business" means a business certified by the secretary as
14 meeting the eligibility requirements of Subsection B of this Section and that executes
15 a contract providing the terms and conditions for its participation.
16 (8) "Regional economic development organization" means One Acadiana,
17 the South Louisiana Economic Council, the Baton Rouge Area Chamber, the Central
18 Louisiana Economic Development Alliance, the Northeast Louisiana Economic
19 Alliance, the North Louisiana Economic Partnership, Greater New Orleans, Inc., and
20 the Southwest Louisiana Economic Development Alliance.
21 (9) "Re-shoring" means bringing jobs, services, production, research, or
22 manufacturing to Louisiana from overseas with the aim of creating employment
23 opportunities, boosting local economies, or balancing trade deficits.
24 (10) "Secretary" means the secretary of the department.
25 (11) "Significant positive economic benefit" means net positive tax revenue.
26 This shall be determined by taking into account direct, indirect, and induced impacts
27 based on a standard economic impact methodology utilized by the department, the
28 value of the tax credit, and any other state tax and financial incentives that are used
29 by the department to secure the project.
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1 B. Eligibility requirements. (1) A business shall be eligible for participation
2 in the program if either of the following requirements are met:
3 (a) The business is a new business that is locating in Louisiana and will be
4 re-shoring its supply chain for the manufacture or production of its products in
5 Louisiana.
6 (b) The business is an existing Louisiana business whose current production
7 of goods is outside of this state or the United States and the business provides
8 documentation that shows it is relocating the supply chain for the production of its
9 products into Louisiana.
10 (2) An eligible business shall offer, or offer within ninety days of the
11 effective date of qualifying for the incentive tax credits pursuant to the provisions of
12 this Chapter, a basic health benefits plan to the individuals it employs as provided
13 in Paragraph (A)(1) of this Section.
14 (3)(a) In addition to the eligibility requirements provided for in Paragraph
15 (1) of this Subsection, businesses selected by regional economic development
16 organizations in accordance with this Paragraph shall also be eligible to participate
17 in the program.
18 (b) No later than December 20, 2021, each regional economic development
19 organization may select up to two businesses from its economic development region
20 for participation in the program. Each regional economic development organization
21 shall base its selection of a business on whether the business will diversify the
22 region's economy.
23 (c) Each business selected by a regional economic development authority
24 shall also be approved by the secretary.
25 C. Applications and contract approval and administration. (1) A business
26 may apply for a contract by submitting to the department certified statements and
27 substantiating documents as the department may require.
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1 (2) The secretary may certify eligibility of the business on terms and
2 conditions specified by the secretary in a proposed contract, if the secretary
3 determines all of the following:
4 (a) The business meets the eligibility requirements provided for in
5 Subsection B of this Section.
6 (b) Securing the project will result in a significant positive economic benefit
7 to the state.
8 (3)(a)(i) The secretary shall execute the contract with the business and
9 provide a copy of the executed contract to the Department of Revenue prior to the
10 payment of any benefits pursuant to the contract.
11 (ii) No new contract shall be approved on or after December 31, 2024, but
12 contracts existing on that date may continue and may be renewed.
13 (b) The contract shall include the following:
14 (i) The amount of the tax credit, which shall be a percentage of new payroll,
15 up to a maximum of ten percent.
16 (ii) The maximum amount of new payroll eligible for the tax credit.
17 (iii) The number of new jobs and amount of new payroll required to be
18 created and maintained and any other performance obligations required to be met in
19 order to remain qualified for participation in the program.
20 (iv) Designation of the facility or facilities eligible for participation in the
21 program.
22 (v) Monitoring of performance and consequences for failure to perform and
23 other contract violations.
24 (vi) The initial term of the contract, which may be up to five years, and any
25 renewal term available at the discretion of the secretary, which may be up to an
26 additional five years.
27 (4)(a) In addition, a qualified business shall be entitled to either a state sales
28 and use tax credit for capital expenditures for the facility or facilities designated in
29 the contract as provided for in Subparagraph (b) of this Paragraph, or an income tax
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1 credit for project facility expenses as provided for in Subparagraph (c) of this
2 Paragraph.
3 (b) Any qualified business which receives a contract pursuant to this Chapter
4 shall also be entitled to a credit of sales and use tax imposed by the state on
5 purchases of materials used in the construction of a building, or any addition or
6 improvement thereon, for housing any business or machinery and equipment used
7 in that business.
8 (c)(i) In lieu of a state sales and use tax credit, a qualified business shall be
9 entitled to an income tax credit for project facility expenses equal to one and two-
10 tenths percent of the amount of qualified capital expenditures for the facility or
11 facilities designated in the contract.
12 (ii) For purposes of this Subparagraph, the term "qualified capital
13 expenditures" means amounts classified as capital expenditures for federal income
14 tax purposes related to the project plus exclusions from capitalization provided for
15 in 26 U.S.C. 263(a)(1), minus the capitalized cost of land, capitalized leases of land,
16 capitalized interest, capitalized costs of manufacturing machinery and equipment to
17 the extent capitalized manufacturing machinery and equipment costs are excluded
18 from sales and use tax pursuant to R.S. 47:301(3), and the capitalized cost for the
19 purchase of an existing building. When a qualified business purchases an existing
20 building and capital expenditures are used to rehabilitate the building, only the costs
21 of the rehabilitation shall be considered qualified capital expenditures. Additionally,
22 a qualified business shall be allowed to increase its qualified capital expenditures to
23 the extent the qualified business's capitalized basis is properly reduced by claiming
24 a federal credit.
25 (iii) A qualified business earns the project facility expense tax credit in the
26 qualified business's fiscal year in which the project is placed in service, but the
27 qualified business may not be issued the project facility expense tax credit until the
28 department signs a project completion report or such other time as provided for by
29 rule by the department.
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1 D. Annual certification of eligibility. (1) The qualified business shall file
2 requests for approval of tax credits with the department. The request shall include
3 documentation signed by a corporate officer of the qualified business certifying its
4 continued eligibility for the program as provided in Subsection B of this Section, its
5 actual new payroll, and the performance of any other contractual obligations for the
6 subject year. The qualified business may be subject to a limited audit by the
7 department, at the expense of the qualified business, to verify its eligibility and
8 performance. The approved contract between the qualified business and the
9 department shall authorize continued tax credits as long as the business remains
10 eligible for the program and complies with the terms and performance obligations
11 of the contract. If a qualified business fails to maintain the eligibility requirements
12 for participation in the program or fails to meet all performance obligations of the
13 contract, the secretary may suspend or terminate its participation in the program.
14 (2) After verification of continued eligibility and performance, the
15 department shall send a tax credit certification letter to the Department of Revenue
16 stating the amount of new payroll for the subject year, the amount of the tax credit
17 to be issued, and the entity to which the tax credit shall be issued. The Department
18 of Revenue may require the business to submit additional information as may be
19 necessary to properly issue the tax credit. Payment of tax credits shall be made from
20 the current collections of the taxes imposed pursuant to Title 47 of the Louisiana
21 Revised Statutes of 1950. If the amount of the tax credit allowed pursuant to the
22 provisions of this Section exceeds the amount of the taxpayer's tax liability for the
23 same tax period, then unused credit amounts may be carried forward as a credit
24 against subsequent tax liability for a period not to exceed five years.
25 E. Incentive limitations. A taxpayer shall not receive any other incentive
26 administered by the department for any expenditures or jobs for which the taxpayer
27 has received a tax credit pursuant to this Section.
28 F. Rules. The department may promulgate rules in accordance with the
29 Administrative Procedure Act, subject to oversight by the House Committee on
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1 Ways and Means and the Senate Committee on Revenue and Fiscal Affairs, as are
2 necessary to implement the provisions of this Section.
3 Section 2. This Act shall become effective upon signature by the governor or, if not
4signed by the governor, upon expiration of the time for bills to become law without signature
5by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
6vetoed by the governor and subsequently approved by the legislature, this Act shall become
7effective 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 534 Original 2021 Regular Session Wright
Abstract: Establishes an income tax credit of up to 10% of new payroll for qualified
businesses and either a state sales and use tax credit for capital expenditures for
facilities or a project facility expense tax credit for businesses that re-shore jobs,
services, production, research, or manufacturing to La. from overseas.
Proposed law authorizes an incentive program for qualified businesses that re-shore jobs,
services, production, research, or manufacturing to La. from overseas with the aim of
creating employment opportunities, boosting local economies, or balancing trade deficits.
The incentives include an income tax credit of up to 10% of new payroll for qualified
businesses and either a state sales and use tax credit for capital expenditures for facilities or
a project facility expense tax credit.
Proposed law provides that the state sales and use tax credit shall be on purchases of
materials used in the construction of a building, or any addition or improvement to the
building, for housing a legitimate business enterprise or machinery and equipment used in
that enterprise.
Proposed law provides that the project facility expense tax credit shall be equal to 1.2% of
the amount of qualified capital expenditures for the facility designated in the contract.
Proposed law defines "qualified capital expenditures" as amounts classified as capital
expenditures for federal income tax purposes related to the project plus exclusions from
capitalization provided for in federal tax law, minus certain capitalized costs and the cost for
the purchase of an existing building. A qualified business earns the project facility expense
tax credit in the fiscal year in which the project is placed in service but may not be issued
the tax credit until the Dept. of Economic Development (DED) signs a project completion
report.
Proposed law defines a qualified business as one which meets either of the following
eligibility requirements:
(1)A new business that is locating in La. that will be re-shoring its supply chain for the
manufacture or production of its products in La.
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(2)An existing La. business whose current production of goods is outside of this state
or the U.S. and the business provides documentation that it is relocating the supply
chain for the production of its products into La.
Proposed law authorizes businesses selected by regional economic development
organizations to also participate in the incentive program if approved by the secretary of
DED. No later than Dec. 20, 2021, each regional economic development organization may
select up to two businesses from its region to participate in the program. Each regional
economic development organization is required to base its selection of a business on whether
the sector will diversify the region's economy.
Proposed law requires a qualified business to offer, or offer within 90 days of the date of
qualifying for the incentive tax credits in proposed law, a basic health benefits plan to
individuals it employs that includes coverage for basic hospital care, physician care, and
health care and is determined by DED to have a value of at least $1.25 per hour and which
is the same coverage as is provided to employees employed in a bona fide executive,
administrative, or professional capacity by the employers who are exempt from the
minimum wage and maximum hour requirements of federal law.
Proposed law establishes an application process for participation in the incentive program
as well as a process for businesses to apply for an incentive contract with DED. Authorizes
the secretary of DED to certify that a business meets the eligibility requirements provided
for in proposed law and that securing the project will result in a significant positive
economic benefit to the state.
Proposed law requires the contract for the payment of a payroll tax credit to include the
following:
(1)The amount of the tax credit, which is a percentage of new payroll, up to a maximum
of 10%.
(2)The maximum amount of new payroll eligible for the credit.
(3)The number of new jobs and amount of new payroll required to be created and
maintained and any other performance obligations required to be met in order to
remain qualified for participation in the program.
(4)Designation of the facility or facilities eligible for participation in the program.
(5)Monitoring of performance and consequences for failure to perform and other
contract violations.
(6)An initial contract term of up to five years, and any renewal term available at the
discretion of the secretary, which may be up to an additional five years.
Proposed law requires a business to annually certify its eligibility and to file requests for
approval of tax credits with DED. After verification of continued eligibility and
performance, DED shall send a tax credit certification letter to the Dept. of Revenue, stating
the amount of actual new payroll for the subject year, the amount of credit to be issued, and
the entity to which the tax credit shall be issued. Tax credits shall be paid from the current
collections of the taxes imposed pursuant to present law. Further provides that if the amount
of the tax credit exceeds the amount of the taxpayer's tax liability for the same tax period,
then unused credit amounts may be carried forward as a credit against subsequent tax
liability for a period not to exceed five years.
Proposed law prohibits a taxpayer who received the incentive provided for in proposed law
from receiving any other incentive administered by DED for any expenditures or jobs for
which the taxpayer has received a tax credit pursuant to proposed law.
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Proposed law authorizes the department to promulgate rules in accordance with present law
subject to oversight by the Ways and Means and Revenue and Fiscal Affairs committees to
implement the provisions of proposed law.
Proposed law prohibits any new contract from being approved on or after Dec. 31, 2024, but
contracts existing on that date may continue and may be renewed.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Adds R.S. 51:3126)
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