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2023 Regular Session
SENATE BILL NO. 170
BY SENATOR CARTER
TAX/TAXATION. Establishes a tax credit pilot program for certain Louisiana-based
manufacturing industries. (gov sig)
1 AN ACT
2 To enact R.S. 47:6043, relative to tax credits; to establish a tax credit pilot program for
3 certain manufacturing industries; to provide for the amount of the credit; to establish
4 eligibility requirements for tax credit applicants; to provide for application and
5 certification requirements; to provide for the administration of the credit; to authorize
6 the promulgation of rules and regulations; to require submission of certain reports;
7 to authorize the recovery of tax credits under certain circumstances; to provide for
8 implementation of the tax credit pilot program; to provide for certain limitations and
9 requirements; to provide for an effective date; and to provide for related matters.
10 Be it enacted by the Legislature of Louisiana:
11 ยง6043. Louisiana-based manufacturing tax credit; pilot program; applications;
12 limitations
13 A. Purpose. The primary purpose of this Section is to encourage private
14 investment in and provide incentives for businesses to further manufacture
15 products and component parts of products into marketable products in
16 Louisiana rather than shipping their products for further processing to other
17 states and countries using Louisiana's port, rail, trucking, and other multi
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1 modal methods. It is in the best interest of this state to promote the development
2 of businesses that manufacture products such as steel, rubber, aluminum,
3 forestry products, coffee, and other food products into marketable products in
4 this state prior to being shipped into intrastate and interstate commerce.
5 Because public funding sources for business investment have not kept pace with
6 the need to expand our economy, it is determined that private investment and
7 public-private partnerships should be encouraged as a means to assist the state
8 in financing investment in manufacturing establishments in our state and in our
9 citizens. The development of unique business investment and opportunities are
10 essential to Louisiana's economic health and the ability of business and industry
11 associated with manufacturing establishments to compete cost effectively on a
12 regional, national, and global scale.
13 B. Definitions. For purposes of this Section, the following words shall
14 have the following meanings unless the context clearly indicates otherwise:
15 (1) "Department" shall mean the Department of Economic Development.
16 (2) "Eligible expenditures" shall mean and include any land, building,
17 or other improvement, and all movable and immovable properties deemed
18 necessary or useful in connection therewith. "Eligible expenditures" shall also
19 include machinery, equipment, materials, products, or commodities owned by
20 a manufacturing establishment or fabrication, assembly, distribution,
21 processing, or warehousing facility located in Louisiana and classified as capital
22 expenditures for federal income tax purposes.
23 (3) "Qualifying project" shall mean and include a project to be
24 undertaken by a manufacturing establishment that has a maximum capital cost
25 of not more than five million dollars and at which the predominant trade or
26 business activity conducted will constitute manufacturing products or
27 assembling raw materials imported through waterborne commerce into a
28 marketable product in this state. However, "qualifying product" shall not mean
29 or include manufacturing of chemicals, bulk liquid, oil, or gas.
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1 C. Tax credit.
2 (1) There is hereby authorized an income tax credit for eligible
3 expenditures associated with construction of a qualifying project in this state.
4 The maximum amount of the credit shall be equal to fifty percent of the eligible
5 expenditures of the qualifying project, not to exceed fifty thousand dollars per
6 project. The total aggregate amount of credits which may be certified and
7 granted by the department in accordance with the provisions of this Section
8 shall not exceed five hundred thousand dollars per year and one million dollars
9 over the two-year life of the pilot program.
10 (2) Tax credits certified and granted by the department may be
11 structured over time depending on the applicant and the nature of the business.
12 (3) Department of Revenue taxpayer claim cap.
13 (a) Claims against state income tax allowed on returns for tax credits to
14 the Department of Revenue as provided for in Paragraph (D)(1) of this Section
15 shall be limited to an aggregate total of two hundred and fifty thousand dollars
16 each fiscal year. If less than two hundred and fifty thousand dollars of such tax
17 credits are claimed in a fiscal year, the remaining amount, plus any amounts
18 remaining from previous fiscal years, shall be added to the two hundred and
19 fifty thousand dollar limit of subsequent fiscal years until that amount of tax
20 credits are claimed and allowed by the Department of Revenue.
21 (b)(i) Claims for tax credits to the Department of Revenue shall be
22 allowed on a first-come, first-served basis. Any taxpayer whose claim for such
23 tax credits is disallowed because the fiscal year cap has been reached may use
24 the tax credits against state income tax due on an original return filed in the
25 next fiscal year, and his claim shall have priority over other claims filed after
26 the date of his original claim.
27 (ii) If a claim against state income tax for a tax credit is disallowed
28 because the fiscal year cap has been reached, the Department of Revenue may
29 provide for an abatement of interest pursuant to R.S. 47:1601 and a waiver of
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1 delinquent payment penalties pursuant to R.S. 47:1603.
2 D. Certification and administration.
3 (1) The credit provided for in this Section shall be granted by the
4 department for a qualifying project if the commissioner of administration, after
5 approval of the Joint Legislative Committee on the Budget, certifies that
6 securing the project will result in a significant positive economic benefit to the
7 state. "Significant positive economic benefit" means net positive tax revenue
8 that shall be determined by taking into account direct, indirect, and induced
9 impacts of the project based on a standard economic impact methodology
10 utilized by the secretary of the department, and the value of the credit, and any
11 other state tax and financial incentives that are used by the department to
12 secure the project. If the commissioner, with the approval of the committee,
13 certifies the qualifying project, then the department may grant a tax credit
14 equal to fifty percent of the eligible expenditures of the qualifying project, or
15 may grant a credit in a lesser amount which is warranted by the significant
16 positive economic benefit determined by the commissioner; however, no tax
17 credit granted for a qualifying project shall exceed fifty thousand dollars. The
18 total amount of tax credits granted on a qualifying project shall not exceed the
19 total cost of the project.
20 (2) Tax credits granted pursuant to this Section shall be earned by the
21 applicant at the time expenditures are made by an applicant; however, tax
22 credits granted pursuant to the provisions of this Section shall only be claimed
23 for those periods beginning on and after January 1, 2024, and shall not be
24 claimed until project cost expenditures are certified by the department. The
25 department shall certify project cost expenditures no less than twice during the
26 duration of the qualifying project unless the applicant agrees, in writing, to
27 reimburse the department for the costs of any additional certifications.
28 (3) If the tax credit allowed pursuant to this Section exceeds the amount
29 of taxes due for such tax period, then any unused credit may be carried forward
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1 as a credit against subsequent tax liability for a period not to exceed five years.
2 (4)(a) Application. An applicant for the tax credit authorized pursuant
3 to the provisions of this Section shall submit an application for initial
4 certification of the qualifying project to the department that includes the
5 following information:
6 (i) A preliminary budget including the actual or, if not known, the
7 estimated capital costs of the qualifying project and the qualifying project's
8 estimated Louisiana payroll.
9 (ii) A detailed description of the qualifying project.
10 (iii) A statement that the proposed project will qualify as a qualifying
11 project.
12 (iv) Estimated start and completion dates. The estimated start date shall
13 include the estimated date on which the acquisition, construction, installation,
14 or equipping of the qualifying project was commenced or is expected to
15 commence.
16 (v) The name of each company, or the name or names of its shareholders,
17 partners, members, owners, or beneficiaries to become entitled to the tax credit.
18 (vi) Any other information required by the department.
19 (b) If the application is incomplete, additional information may be
20 requested prior to further action by the department.
21 (c) Prior to final certification of a qualifying project, the applicant shall
22 submit to the department a cost report of project expenditures which the
23 department shall require to be prepared by an independent certified public
24 accountant. The department shall review the expenditures and shall issue a tax
25 credit certification letter to the applicant and to the Department of Revenue
26 indicating the amount of tax credits certified for the qualifying project and the
27 amount of the tax credit to be taken each tax year.
28 (5) The secretary of the department, in consultation with the Department
29 of Revenue, may promulgate rules and regulations in accordance with the
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1 Administrative Procedure Act as are necessary to carry out the intent and
2 purposes of this Section.
3 (6) Any taxpayer applying for the credit shall be required to reimburse
4 the department for any audit required in relation to granting the credit.
5 E. Recapture of credits. If the department finds that funds for which an
6 applicant received credits according to the provisions of this Section are not
7 invested in and expended with respect to capital costs of a qualifying
8 investment, the department shall notify the Department of Revenue who shall
9 disallow the credits on the return and recapture the credits in accordance with
10 Subsection F of this Section.
11 F. Recovery of credits by the Department of Revenue.
12 (1) Tax credits previously granted to a taxpayer, but later disallowed,
13 pursuant to the provisions of Subsection E of this Section, may be recovered by
14 the secretary of the Department of Revenue through any collection remedy
15 authorized by R.S. 47:1561 and initiated within the later of any of the following:
16 (a) Two years from December thirty-first in the year in which the tax
17 credit was claimed.
18 (b) Three years from December thirty-first of the year in which the taxes
19 for the filing period were due.
20 (c) Three years from December thirty-first of the year in which the final
21 tax credit certification letter was issued.
22 (d) The time period for which prescription has been extended, as
23 provided by R.S. 47:1580.
24 (2) The only interest that may be assessed and collected on recovered
25 credits is interest at a rate of three percentage points above the rate provided
26 in R.S. 9:3500(B)(1), which shall be computed from the original due date of the
27 return on which the credit was taken.
28 (3) The provisions of this Subsection are in addition to and shall not
29 limit the authority of the secretary of the Department of Revenue to assess or
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1 to collect under any other provision of law.
2 G. Implementation of tax credits.
3 (1) No tax credit authorized pursuant to the provisions of this Section
4 shall be certified prior to January 1, 2024, and the tax credits certified shall be
5 claimed for tax periods beginning on or after January 1, 2024.
6 (2) No tax credit shall be issued pursuant to the provisions of this Section
7 and no initial certification shall be granted by the secretary of the department
8 on or after January 1, 2026.
9 Section 2. This Act shall become effective upon signature by the governor or, if not
10 signed by the governor, upon expiration of the time for bills to become law without signature
11 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
12 vetoed by the governor and subsequently approved by the legislature, this Act shall become
13 effective on the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Danielle B. Clapinski.
DIGEST
SB 170 Original 2023 Regular Session Carter
Proposed law authorizes an income tax credit for expenses associated with construction of
a qualifying project in this state. The maximum amount of the credit shall be equal to 50%
of the eligible expenditures of the qualifying project, not to exceed $50,000 per project. The
total aggregate amount of credits which may be certified and granted by the Department of
Economic Development (DEQ) shall not exceed $1,000,000 over the life of the pilot
program. Proposed law authorizes tax credits certified and granted by DEQ to be structured
over time depending on the applicant and the nature of the business.
Proposed law provides that tax credits shall be earned at the time expenditures are made by
an applicant; however, tax credits shall not be claimed until project's eligible expenditures
are certified by DEQ, and cannot be claimed for tax periods prior to Jan. 1, 2024.
Proposed law defines "eligible expenditures" to include land, buildings, or other
improvements, and all moveable and immovable properties deemed necessary or useful in
connection therewith. The term also includes machinery equipment, materials, products or
commodities owned by a manufacturing, fabrication, assembly, distribution, processing, or
warehousing facility located in Louisiana that are classified as capital expenditures for
federal income tax purposes.
Proposed law defines a "qualifying project" as a project undertaken by a manufacturing
establishment that has a minimum capital cost of not more than $5,000,000 and at which the
predominant trade or business activity will constitute manufacturing products or assembling
raw materials into a marketable product in this state. Proposed law excludes manufacturing
of chemicals or bulk liquid or gas facilities from the definition of a "qualifying project".
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Proposed law requires the credit to be granted for a qualifying project if the commissioner
of administration, after approval of the Joint Legislative Committee on the Budget, certifies
that securing the project will result in a significant positive economic benefit to the state.
Proposed law authorizes DEQ to grant a credit in a lesser amount if the lesser amount is
warranted by the significant positive economic benefit determined by the commissioner.
The total amount of credits granted on a project shall not exceed the total cost of the project.
Proposed law authorizes the carry forward of tax credit amounts against subsequent tax
liability if the amount of the credit exceeds the applicant's tax liability for a period not to
exceed five years.
Proposed law authorizes the secretary of DEQ, in consultation with the Department of
Revenue, to determine which projects and expenditures qualify for tax credits.
Proposed law provides for an application process for initial certification of the qualifying
project which includes submission of information such as a preliminary budget, the
estimated capital costs of the project, the project's estimated La. payroll, and estimated start
and completion dates.
Proposed law requires, prior to final certification of a qualifying project, an applicant to
submit a cost report of project expenditures which DEQ shall require to be prepared by an
independent certified public accountant prior to issuance of final certification. Further
requires DEQ to review the expenditures and to issue a tax certification letter to the applicant
and to the Department of Revenue indicating the amount of tax credits certified for the
qualifying project and the amount of tax credits that may be taken each tax year.
Proposed law requires a taxpayer applying for the credit to reimburse DEQ for any audit
required in relation to granting the credit.
Proposed law provides for the recapture and recovery of credits by the Department of
Revenue through any collection remedy authorized by present law and sets forth specific
prescriptive periods in which the proceedings to recover tax credits must be initiated. Further
authorizes the assessment and collection of interest on recovered credits.
Proposed law prohibits tax credits from being certified or applied against tax liability before
Jan. 1, 2024. Further prohibits tax credits from being issued or initial certifications from
being granted by DEQ on or after Jan. 1, 2026.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Adds R.S. 47:6043)
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