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 Original 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 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 retains present law.
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.
(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)(e); Repeals R.S. 47:287.95(M))