Louisiana Senate Bill SB6

Louisiana 2016 2nd Special Session

• Introduced: 6/6/16
• Refer: 6/6/16
• Refer: 6/7/16
• Report Pass: 6/15/16
• Engrossed: 6/17/16
• Refer: 6/19/16
• Report Pass: 6/20/16
• Enrolled: 6/23/16
• Chaptered: 6/28/16
• Passed: 6/28/16

Caption

Provides for the carry forward rather than the refund of a certain portion of the tax credit for ad valorem taxes paid on inventory. (gov sig) (Item #47) (EN +$17,300,000 GF RV See Note)

Impact

The changes proposed in SB6 are set to impact both corporate and unincorporated taxpayers by providing clear guidelines on refundability and the management of excess credits. The bill delineates specific thresholds pertaining to the amount of ad valorem taxes paid, which determines whether taxpayers qualify for refunds or can opt for rolling over credits. This could significantly influence the cash flow for businesses, impacting how they manage their tax obligations and financial forecasting over the years as they adjust to the new law's requirements.

Summary

Senate Bill 6 aims to amend the provisions regarding refundable tax credits linked to ad valorem taxes paid on inventory in Louisiana. The bill introduces changes to how excess credits are managed, specifically allowing taxpayers to carry forward a portion of their excess credits against future tax liabilities instead of automatically receiving a refund. In this new provision, taxpayers with ad valorem taxes below certain thresholds may receive a full or partial refund, while those exceeding predefined limits may have to carry forward the remaining credits for use in subsequent tax years.

Sentiment

Sentiment surrounding SB6 appears mixed among stakeholders, with supporters arguing that the bill provides a more structured and predictable approach to tax credits for businesses, potentially aiding in budgeting and financial planning. Conversely, opponents may express concerns that such limitation on immediate refunds could hinder smaller businesses that rely on timely tax refunds for liquidity, especially if they have recently paid significant inventory taxes. The debate reflects a broader conversation about balancing fiscal responsibility and providing necessary support to the business community.

Contention

Notable points of contention stem from how the bill shifts the landscape for inventory tax credits, particularly the implications for new businesses that may be formed after a specified date. Those entities will face different rules regarding credit eligibility, which could dissuade new entrepreneurial ventures or create unequal competitive advantages. Additionally, the thresholds for refunds and carry forward allowances present a debate on fairness within tax treatment, with some arguing that it disproportionately affects larger businesses that pay more significant amounts in taxes.