Louisiana House Bill HB423

Louisiana 2015 Regular Session

• Introduced: 4/2/15
• Refer: 4/2/15
• Refer: 4/13/15

Caption

Removes the carryback provisions for the net operating loss deduction for purposes of the corporate income tax

Impact

The proposed changes under HB 423 could significantly affect business tax computations, particularly for companies that experience fluctuations in profitability. By repealing the carryback provisions, businesses will no longer have the opportunity to recuperate tax liabilities in the form of refunds from previous profitable years. This shift may present cash flow challenges, especially for small or newly established businesses that rely on such provisions to manage their financial stability effectively during lean periods.

Summary

House Bill 423 seeks to amend the current structure of calculating corporate income tax by eliminating the three-year carryback provision for net operating loss deductions. Presently, Louisiana law allows corporations to carry back losses for three years or carry them forward for up to 15 years to offset future profits. This bill proposes to remove the option for carryback, requiring businesses to only carry losses forward. The intention is to potentially simplify the tax regulations surrounding corporate income, aligning with broader fiscal strategies intended to generate more immediate tax revenue for the state.

Sentiment

General sentiment surrounding HB 423 appears to be mixed. Supporters argue that removing the carryback option streamlines the tax code, creating a more predictable fiscal environment for planning and revenue forecasting. However, detractors express concern that the removal disproportionately impacts struggling businesses and could hinder economic recovery for entities that face transient loss periods. The debate reflects broader discussions about the balance between tax reform and providing adequate support to businesses during downturns.

Contention

Notable points of contention include the broader implications for economic stability and tax equity. Critics highlight that eliminating the carryback provision could lead to inequities where firms with varying capacities to absorb loss impacts suffer differently under state tax systems. Additionally, there are concerns about how these changes align with the state's economic development goals, particularly in scenarios where businesses are trying to navigate through challenging financial landscapes.