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2023 Regular Session
SENATE BILL NO. 1
BY SENATOR ALLAIN
TAX/FRANCHISE/CORPORATE. Phases-out the corporate franchise tax. (See Act)
1 AN ACT
2 To amend and reenact R.S. 47:601(D)(2) and 1675(J) and to enact R.S. 47:601(E) and
3 1675(K), relative to the corporation franchise tax; to provide for the reduction of
4 franchise tax under certain circumstances; to provide for the utilization of credits
5 against repealed taxes; to provide for an effective date; and to provide for related
6 matters.
7 Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 47:601(D)(2) and 1675(J) are hereby amended and reenacted and R.S.
9 47:601(E) and 1675(K) are hereby enacted to read as follows:
10 §601. Imposition of tax
11 * * *
12 D.(1) * * *
13 (2) Except as otherwise provided in R.S. 47:601.1 or 601.2, for taxable
14 periods beginning on or after January 1, 2023, the annual rate of tax shall be two
15 dollars and seventy-five cents for each one thousand dollars, or major fraction
16 thereof, in excess of three hundred thousand dollars of taxable capital, as modified
17 by Subsection E of this Section.
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1 E. (1) For franchise tax periods beginning on or after January 1, 2025,
2 and before January 1, 2031, the tax levied pursuant to the provisions of this
3 Chapter shall be reduced by twenty-five percent for each year that monies are
4 deposited into the Revenue Stabilization Trust Fund in accordance with Article
5 VII, Section 10.15(D) of the Constitution of Louisiana and R.S. 39:100.112(D).
6 (2) The reduction shall be effective for taxable periods beginning on or
7 after January first of the year following the monies being deposited into the
8 Revenue Stabilization Trust Fund in accordance with Paragraph (1) of this
9 Subsection.
10 (3) If the tax levied pursuant to the provisions of this Chapter is reduced
11 by one hundred percent, no franchise tax shall be assessed, levied, or collected
12 by the state nor paid by domestic or foreign corporations on taxable capital.
13 * * *
14 §1675. General administrative provisions for credits against income and corporation
15 franchise tax
16 * * *
17 J. Credit utilization against repealed taxes. Tax credits that were
18 available to be applied against a tax that was repealed and that were earned in
19 a tax period prior to the repeal of the tax, may continue to be applied against
20 that tax for any applicable period prior to the repeal of the tax until the credit
21 either expires or is exhausted. Nothing in this Subsection shall be interpreted
22 to authorize an expansion of any provision of any tax credit.
23 K. Documentation for tax credits.
24 (1) Record retention.
25 (a) For credits with no carry forward provision, original records supporting
26 any credit claimed must be maintained for four years following the date the return
27 was filed claiming the credit.
28 (b) For credits with a carry forward provision, original records supporting the
29 credit must be maintained for four years following the date on which the last return
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1 was filed claiming the credit.
2 (2) Documentation supporting a tax credit shall be provided by a taxpayer
3 claiming a tax credit as required by rule or on forms or instructions provided by the
4 secretary.
5 Section 2. This Act shall take effect and become operative if and when the Act which
6 originated as Senate Bill No. 6 of this 2023 Regular Session of the Legislature becomes
7 effective.
The original instrument was prepared by Leonore Heavey. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Danielle Clapinski.
DIGEST
SB 1 Reengrossed 2023 Regular Session Allain
Present law levies a corporation franchise tax on domestic corporations and foreign
corporations that exercise their charter, or are qualified to do business or actually do business
in this state, or own or use any part or all of their capital, plant, or any other property in this
state.
Proposed law provides for a 25 percent reduction in the corporation franchise tax rate in each
year the combined corporation income and franchise tax collections exceed $600 million and
money is deposited into the Revenue Stabilization Trust fund. The rate reduction shall be
effective January first of the year following money being deposited into the Revenue
Stabilization Trust Fund. Further provides the reductions are only allowed based upon
collections during franchise tax periods beginning on or after January 1, 2025, and before
January 1, 2031.
Proposed law clarifies that credits that were earned in a tax period prior to the repeal of the
tax may continue to be used against that tax for any applicable period prior to the repeal of
the tax.
Effective when the Act which originated as Senate Bill No. 6 of this 2023 Regular Session
of the Legislature becomes effective.
(Amends R.S. 47:601(D)(2) and 1675(J); adds R.S. 47:601(E) and 1675(K))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Revenue and Fiscal
Affairs to the original bill
1. Phases-out the franchise tax over a four-year period instead of repealing it.
2. Removes provisions of proposed law that disallow utilization of tax credits
against franchise tax.
3. Changes effectiveness of proposed law to when the Act which originated as
Senate Bill No. 6 of this 2023 Regular Session of the Legislature becomes
effective.
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4. Makes technical changes.
Senate Floor Amendments to engrossed bill
1. Removes the automatic phase-out of the franchise tax and provides for a 25
percent per year rate reduction when certain requirements are met within a
six year window.
2. Makes technical corrections.
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Coding: Words which are struck through are deletions from existing law;
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