HLS 23RS-1105 ENGROSSED
2023 Regular Session
HOUSE BILL NO. 631
BY REPRESENTATIVE NELSON
TAX/CORP INCOME: Provides with respect to the sourcing of sales for purposes of
calculating Louisiana income
1 AN ACT
2To amend and reenact R.S. 47:287.95(L)(1) and to repeal R.S. 47:287.95(M), relative to
3 corporate income tax; to provide for determination of the sales factor for purposes
4 of calculating Louisiana income; to provide for the sourcing of certain sales; to
5 exclude certain sales from the calculation of the sales factor; to provide for
6 applicability; to provide for an effective date; and to provide for related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:287.95(L)(1) is hereby amended and reenacted to read as follows:
9 ยง287.95. Determination of Louisiana apportionment percent
10 * * *
11 L. Sourcing of certain sales.
12 (1) Sales other than sales of tangible personal property are to be sourced to
13 this state if the taxpayer's market for the sale is in this state. The taxpayer's market
14 for a sale is in this state and the sale is assigned to the state for the purpose of this
15 Section as follows:
16 (a) In the case of sale, rental, lease, or license of immovable property, if and
17 to the extent the property is located in the state.
18 (b) In the case of rental, lease, or license of tangible personal property, if and
19 to the extent the property is located in the state.
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1 (c) In the case of sale of a service, if and to the extent the service is delivered
2 to a location in the state. The delivery of a tangible medium representing the output
3 of a service does not control the sourcing of receipts from the underlying service.
4 (d) (c) In the case of lease or license of intangible property, including a sale
5 or exchange of such intangible property where the receipts from the sale or exchange
6 derive from payments that are contingent on the productivity, use, or disposition of
7 the property, if and to the extent the intangible property is used in the state.
8 (e) (d) In the case of the sale of intangible property, other than as provided
9 in Subparagraph (d) (c) of this Paragraph, where the property sold is a contract right,
10 government license, or similar intangible property that authorizes the holder to
11 conduct a business activity in a specific geographic area, if and to the extent that the
12 intangible property is used in or otherwise associated with the state; provided,
13 however, that any sale of intangible property, not otherwise described in this
14 Subparagraph and Subparagraph (d) of this Paragraph, shall be excluded from the
15 numerator and the denominator of the sales factor.
16 * * *
17 Section 2. R.S. 47:287.95(M) is hereby repealed in its entirety.
18 Section 3. The provisions of this Act shall be applicable to tax years beginning on
19or after January 1, 2024.
20 Section 4. This Act shall become effective on January 1, 2024.
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 631 Engrossed 2023 Regular Session Nelson
Abstract: Repeals the requirement that a sale be excluded from the numerator and the
denominator when calculating the sales factor if the taxpayer is not taxable in a state to
which a sale is assigned or if the state of assignment cannot be determined or reasonably
approximated.
Present law establishes methods for attributing income to La. for purposes of determining
corporate income. Further provides that sales attributable to this state shall include sales
where the goods, merchandise, or property are received in this state by the purchaser. The
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HB NO. 631
calculation of the La. apportionment percent of a taxpayer's net apportionable income is
based on various ratios depending on the industry sector of the taxpayer.
Present law requires sales other than sales of tangible personal property to be sourced to La.
if the taxpayer's market for the sale is in this state. Further provides specific provisions for
the sourcing of sales to La. as follows:
(1)In the case of a sale, rental, lease, or license of immovable property, if and to the
extent the property is located in the state.
(2)In the case of a sale, rental, lease, or license of real property or tangible personal
property, if and to the extent the property is located in the state.
(3)In the case of sale of a service, if and to the extent the service is delivered to a
location in the state.
(4)In the case of lease or license of intangible property, if and to the extent the
intangible property is used in the state.
(5)In the case of the sale of intangible property where the property sold is a contract
right, government license, or similar intangible property that authorizes the holder
to conduct a business activity in a specific geographic area, if and to the extent that
the intangible property is used in or is otherwise associated with the state.
Proposed law changes present law by deleting provisions related to the sale, rental, lease, or
license of tangible personal property and deletes references to the rental, lease, or license of
immovable property and the lease or license of intangible property for purposes of assigning
sales to La.
Present law requires sales of intangible property not otherwise described in present law to
be excluded from the numerator and the denominator of the sales factor.
Proposed law repeals this requirement.
Present law provides that if the taxpayer's customer is an individual, the taxpayer shall
source receipts from the sale of a service as follows:
(1)If the customer is a natural person and the service is a direct personal service, the
sale shall be sourced to the state where the customer received the direct personal
service.
(2)Services that are not direct personal services that are delivered to customers who are
natural persons with a La. billing address shall be sourced to this state.
(3)If the sourcing methodology in present law fails to clearly reflect the taxpayer's
market in this state, the taxpayer may utilize, or the department may require, the use
of other criteria and methodologies to approximate the taxpayer's market in this state.
Present law provides that if the taxpayer's customer is an entity unrelated to the taxpayer, the
taxpayer shall source receipts from the sale of a service as follows:
(1)If a service is provided to an unrelated entity and the service has a substantial
connection to a specific geographic location, the income shall be sourced to La. if the
geographic location is in this state. Service receipts that have a substantial
connection to geographic locations in multiple states shall be reasonably sourced
between those states.
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(2)If the service provided to an unrelated entity does not have a substantial connection
to a specific geographic location, sales from services delivered to unrelated entities
shall be sourced to the commercial domicile of the taxpayer.
(3)If the sourcing methodology in present law fails to reflect the taxpayer's market in
this state, the taxpayer may utilize, or the department may require, the use of other
criteria and methodologies to approximate the taxpayer's market in this state.
Proposed law retains present law.
Present law provides that if the taxpayer is not taxable in a state to which a sale is assigned
or if the state of assignment cannot be determined or reasonably approximated then the sale
shall be excluded from the numerator and the denominator of the sales factor.
Proposed law repeals present law.
Proposed law is applicable to tax years beginning on or after Jan. 1, 2024.
Effective Jan. 1, 2024.
(Amends R.S. 47:287.95(L)(1); Repeals R.S. 47:287.95(M))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Delete provisions related to the sale, rental, lease, or license of tangible personal
property and references to the rental, lease, or license of immovable property and
the lease or license of intangible property for purposes of assigning sales to La.
2. Make technical changes.
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