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BHBM Tax Law Alert 6/18/2015


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Thank you for subscribing to our Tax Law Alert. In this newsletter you will find information on updates and changes in the law on both the Federal and State level. If you have any questions, please contact any of the undersigned authors at (504) 569-2900.

STATE TAX LAW UPDATE

2015 Legislative Session

During the 2015 Louisiana Legislative Session, which concluded on June 11, 2015, the Louisiana legislature passed a number of tax bills in an attempt to address Louisiana’s budget shortfall.  The Governor can veto any or all of this legislation on or before July 1, 2015, but many people do not expect the Governor to do so since the legislature passed the “SAVE” Act.  Many of the key tax bills contain tax amendments/increases with effective dates of July 1, 2015, meaning that affected taxpayers have an incentive to file all outstanding Louisiana income tax returns before July 1, 2015.  Please find below summaries of the key tax bills that passed the Louisiana legislature that will affect many Louisiana businesses and individuals in the very near future.

House Bill 624

House Bill 624 implements several tax increases which are effective between July 1, 2015 and July 1, 2018.  Specifically, corporations will only be able to use seventy-two percent (72%) of Net Operating Loss (“NOL”) carryforwards (as opposed to 100% under present law) to offset current year income for tax years beginning on or after January 1, 2015.

In addition only seventy-two percent (72%) (as opposed to 100% under present law) of the following items will be deductible by a corporation for returns filed on or after July 1, 2015: (i) Louisiana Corporate Tax Refunds; (ii) Funds accrued for transit subsidies by a corporation operating a transit system; (iii) Dividends received from national and state banks and associations whose stock is subject to ad valorem taxation; (iv) Dividends (the corporate dividends received deduction is reduced by 28%); and (v) Certain Hurricane recovery benefits.

Only seventy-two percent (72%) of expenses disallowed for federal income tax purposes under Section 280C of the Internal Revenue Code will be deductible by corporations (this includes certain research expenses and amounts for which federal credits are granted (e.g. clinical research testing expenses)).

In addition, depletion deductions for oil and gas wells are reduced from twenty two percent (22%) of the gross income from the property (excluding any rents/royalties paid or incurred by the taxpayer due to the property) to fifteen and eight tenths percent (15.8%) of the gross income from the property (and excluding only 72% of rents/royalties paid). Furthermore, the current law deduction cap of fifty percent (50%) of the net income from the property is reduced to thirty-six percent (36%) of the taxpayer’s net income from the property.  Similarly, depletion deductions for coal and sulphur are also reduced and subject to similar limitations.

Finally under the proposed law, only seventy-two percent (72%) (as opposed to 100% under present law) of income of certain corporations operating a public transit system is excluded from Louisiana income tax.

House Bill 629

House Bill 629 reduces a number of income and corporate franchise tax credits by twenty-eight percent (28%) for tax returns filed on or after July 1, 2015, but before June 30, 2018, regardless of the taxable year to which the return relates.  The reduction in the tax credits in House Bill 629 does not apply to an amended return filed on or after July 1, 2015, but before June 20, 2018, relating to a credit properly claimed on an original return filed prior to July 1, 2015.  There is an exception to the July 1, 2015 timing deadline: if a valid filing extension was allowed by the Louisiana Department of Revenue prior to July 1, 2015, then the reduced portion of the tax credit may be allowed as a credit in the amount of one-third (1/3) of such reduced portion of the credit on the taxpayer’s return for each of the taxable years beginning during calendar years 2017, 2018 and 2019.  The tax credits reduced in House Bill 629 include:

Thus, if a taxpayer is claiming any of the above credits, but does not want the reduction to apply, then the taxpayer should file such tax return (including any returns for years prior to taxable year 2014) prior to July 1, 2015.

House Bill 402

House Bill 402 modifies the requirements that must be met in order for a taxpayer to claim an income or franchise tax credit for taxes paid to other states. House Bill 402 adds the following requirements:

(1) the credit is only allowed if the other state has a similar credit for Louisiana income taxes paid on income derived from property located in, or from services rendered in, or from business transacted in Louisiana (thus a reciprocal tax credit in that state);

(2) the credit is limited to the amount of Louisiana income tax that would have been imposed if the income earned in the other state would have been earned in Louisiana (cap on tax rate is the rate that would be paid to Louisiana); and

(3) the credit is only allowed for income taxes paid to a state that allows a nonresident a credit against the income taxes imposed by that state for taxes paid or payable to the state of residence.  Thus, it is important to determine if the other state to which the tax is paid allows a reciprocal credit; if not, then there will be no credit allowed for the tax paid to the other state (i.e., Texas margins tax).

House Bill 402 is effective for all tax returns filed on or after July 1, 2015, regardless of the taxable year to which the return relates.  House Bill 402 does not apply to an amended return filed on or after July 1, 2015 relating to a claim for a credit properly claimed on an original return filed prior to July 1, 2015. There is an exception to the July 1, 2015 timing dealing: if a valid filing extension was allowed by the Louisiana Department of Revenue prior to July 1, 2015, then the disallowed tax credit shall be allowed as a credit in the amount of one-third (1/3) of such disallowed tax credit on the taxpayer’s return for each of the taxable years beginning during calendar years 2017, 2018 and 2019.  House Bill 402 is only effective beginning July 1, 2015 and remains effective through June 30, 2018.

House Bill 218

The provisions of House Bill 218 are effective for tax returns filed on or after July 1, 2015, regardless of the taxable year to which the tax return relates.  There is an exception to the July 1, 2015 filing deadline if the taxpayer filed an amended tax return on or after July 1, 2015, relating to a net operating loss deduction properly claimed on an original return filed prior to July 1, 2015.

Unlike much of the other tax legislation, House Bill 218 does not contain a sunset provision.  House Bill 218 extends the time period for the carryforward of net operating losses for tax years beginning January 1, 2000 from fifteen (15) years (current law) to twenty (20) years immediately following the year in which the loss occurred. House Bill 218 also eliminates the current three (3) year carryback of net operating losses.  Under current law, a taxpayer with a net operating loss in a given year could either carry the net operating loss forward for fifteen (15) years or make an election to carry that election back for three (3) years.  Under House Bill 218, the taxpayer has no choice but to carry that net operating loss forward for up to twenty (20) years.

There is an inconsistency in the amendment of La. R.S. 47:1621 which authorizes refunds resulting from the application of net operating loss carryforwards for returns filed on or after July 1, 2015, and the amendment to La. R.S. 47:1623 which provides that no refund shall be allowed for any claim for this deduction on any return filed on or after July 1, 2015, regardless of the taxable year to which the return relates.  The amendment to La. R.S. 47:1623 contained in House Bill 218 is overboard and unclear in its use of the term “this deduction.”

House Bill 805

House Bill 805 alters both the tax credit for ad valorem taxes paid to local governments on inventory and the research and development tax credit.

Ad Valorem Tax Credit

Under present law, an eligible taxpayer is entitled to a refund for any allowable credit authorized under La R.S. 47:6006, which exceeds the taxpayer’s liability for taxes imposed by Louisiana for either Louisiana income or corporation franchise tax.

House Bill 805 amends the nature of the credit for certain taxpayers by providing that the credit is nonrefundable and can only be carried forward rather than refunded to such taxpayers.  Specifically, House Bill 805 provides that for eligible taxpayers whose ad valorem taxes paid on inventory to all political subdivisions was less than $10,000, then any such taxpayer shall be refunded the entire excess credit amount.  However, House Bill 805 provides that for eligible taxpayers whose ad valorem taxes paid on inventory to all political subdivisions was $10,000 or more, then any such taxpayer shall be refunded seventy-five percent (75%) of the excess credit and the remaining twenty-five percent (25%) of the excess credit may be carried forward to offset subsequent tax liabilities for up to five (5) years.

Research and Development Tax Credit

As with the ad valorem tax credit for inventory, under present law, any excess research and development tax credits can be refunded to taxpayers.  However, House Bill 805 changes the nature of the research and development credit authorized by La R.S. 47:6015 by providing that if any such tax credit exceeds the amount of tax liability for the tax year, the excess credit may be carried forward as a credit against Louisiana income or corporation franchise tax liability for up to five (5) years.

Effective Date

If enacted, the provisions of House Bill 805 shall apply for these credits on any return filed on or after July 1, 2015, regardless of the taxable year to which the return relates. However, the provisions of House Bill 805 will not apply to an amended return filed on or after July 1, 2015 as long as the credits were properly claimed on the original return filed prior to July 1, 2015.

House Bill 664

House Bill 664 adds certain definitions to more narrowly define inventory for purposes of La. R.S. 47:6006 (Tax Credits for local inventory taxes paid).

Under present law, only the terms “manufacturer,” “distributor” and “retailer” are defined in La. R.S. 47:6006.  However, House Bill 664 adds a definition of “inventory” and gives specific examples of items that are included in inventory and those items which are not included in inventory.  Additionally, House Bill 664 adds a new section to the relevant statute which allows the Secretary of the Department of Revenue to intervene in any proceeding related to the valuation or classification of property as inventory for purposes of the credit allowed under La. R.S. 47:6006 when there is a finding of overvaluation or misclassification for the purposes of this credit by audit or on appeal by the Board of Tax Appeals or court that last reviews the matter.

Effective Date

If enacted, the provisions of House Bill 664 are effective for all tax years beginning on or after January 1, 2016.

House Bill 829

Summary 

The bill provides for an annual program cap of $180 million on allowance of motion picture tax credits.

Present law 

Present law provides an income tax credit to Louisiana taxpayers for investment in state-certified productions earned at the time expenditures are made by a motion picture production company in a state-certified production.  The amount of the credit is equal to 30% of the base investment made by the investor if the total base investment is more than $300,000, with an additional credit equal to 5% of the base investment expended on payroll for Louisiana residents employed in connection with a state-certified production (but is not applicable to payroll of any one person that exceeds $1 million).  The credit is allowed against the income tax for the taxable period in which the credit is earned or for the taxable period in which initial certification authorizes the credit.

Proposed Law Highlights 

Credits are Earned when Expenditures Certified – Changes present law by providing that tax credits are earned at the time expenditures are certified (rather than the time the expenditures are made) and that the credits are allowed against income tax for the taxable period in which the credit is certified.

Cap on Credits – the maximum amount of credits that may be claimed against income tax allowed on returns (or credits transferred to the state) regardless of the year of certification of the credit are capped at $180 million per fiscal year for fiscal years 2015-2016, 2016-2017 and 2017-2018.  Any credits disallowed to a taxpayer due to the cap are carried over to subsequent years.  If the total credits claimed by taxpayers are less than the $180 million cap, any remaining cap amount shall increase the cap amount allowed in subsequent years.

Cap on Single Production – the maximum amount of credits available for any single state-certified production is capped at $30 million.

Allows Credit for Certain Marketing Expenses – Adds eligibility for marketing and promotion expenses of the state-certified production as a “production expenditure”; however, the amount of these expenses eligible for tax credits cannot exceed 15% of the total state certified tax credits for the production.

Credit for Resident Payroll – Increases the amount of the tax credit for payroll expenditures for Louisiana residents from 5% to 10% and increases the $1 million salary income limitation to $3 million.

Effective Date

If enacted, the provisions of House Bill 829 are effective July 1, 2015 (beginning in fiscal year 2018-2019, the $180 million cap on tax credits is no longer applicable).

Senate Bill 102

Summary 

The bill limits production expenditures for certain services (i.e., “Above the Line” services) to 40% of total production expenditures in the state.

Proposed Law Highlights  

Provides that the term “production expenditures” for purposes of the motion picture investor credit does not include expenditures for “Above the Line” (ATL) services for production that exceed 40% of total production expenditures in the state for the production.  “Above the Line services” is defined as services such as those of a producer, executive producer, line producer, co-producer, assistant producer, actor, director, casting director, screenwriter, and other services of job positions that are associated with the creative financial control of a production and customarily considered as above the line services in the film and television industry.

Applies based on applications for productions received on and after July 1, 2015, rather than upon certification of production.

Effective Date 

If enacted, the provisions of House Bill 102 are effective for applications for productions received on and after July 1, 2015.

House Bill No. 604

Summary 

The bill requires an independent verification of expenditures for certification of certain tax credits, including, the motion picture tax credit and the research and development tax credit.  Authorizes the Louisiana Department of Economic Development to impose and collect a verification report fee to reflect the actual costs of the report.

Present Law 

Present law provides certain entertainment industry tax credits and the research and development tax credit, all of which provide for tax credits based on expenditures which are eligible for “certification” by the Department of Economic Development.  Under present law, cost reports of expenditures must be submitted to the Department of Economic Development for consideration for the granting of tax credits based on certification of such expenditures as eligible.

Proposed Law Highlights 

Requires that a verification report be prepared and submitted by a CPA who is engaged and assigned by the Department of Economic Development to provide independent verification of the cost reports of expenditures submitted by a business seeking certification of tax credits.

The applicant seeking certification of expenditures for tax credits shall be responsible for and assessed a verification report fee.

Only those expenditures which are confirmed verified within the verification report shall be eligible for certification for tax credit purposes.

Effective Date

If enacted, the provisions of House Bill 604 are effective for all applications submitted on or after January 1, 2016.

House Bill No. 748

Summary 

The bill makes several changes regarding the procedures involved with initial certification of expenses for motion picture productions granted initial certification on or after Jan. 1, 2016.

Proposed Law Highlights 

Reduces the number of times expenditures can be certified and changes the timing of certifications for expenditures to once after the project is completed (rather than twice during the production).

Specifies that initial certification shall be effective for qualifying expenditures made within 12 months before and 24 months after the date of initial certification.

Prohibits the claiming (or transfer) of a tax credit by a “bad faith holder” (i.e., a person who participated in material misrepresentation or fraudulent acts in connection with the certification of tax credits, or who prior to or at the time of certification of such tax credits knew or reasonably should have known of such material misrepresentation or fraudulent acts).  Tax credits shall be deemed disallowed (and may be recaptured) upon a determination of bad faith.

Effective Date 

If enacted, the provisions of House Bill 748 are effective for initial certifications issued on or after January 1, 2016.

House Bill No. 735

Summary 

The bill requires, for purposes of the motion picture investor tax credit, the withholding of individual income taxes from income earned by employees for services related to the production.

Proposed Law Highlights 

Specifies that any individual receiving any payments for the performance of services used directly in a production activity, and claimed as a production expenditure for certification of a tax credit, is deemed to be receiving Louisiana taxable income.

Requires 6% withholding from any payroll that will be submitted as a motion picture production expense eligible for a state income tax credit.  The payee company must electronically report and remit the withholding’s made to the Louisiana Department of Revenue on a quarterly basis.

Authorizes the Louisiana Department of Revenue to collect a $200 fee per production for implementation costs.

Effective Date 

If enacted, the provisions of House Bill 735 are applicable to productions receiving initial certification on or after Jan. 1, 2016.

Senate Bill 103 

Summary 

The bill excludes certain expenditures as eligible expenditures for purposes of the motion picture investor tax credit.

Proposed Law Highlights 

Provides that “expenditures” do not include expenditures for airfare or expenditures for bond fees, insurance premiums, finance fees, loan interest fees, or payments of a similar nature, paid to investors in the production unless made to certain insurance producers, financial institutions, or a business and industrial development company regulated by the office of financial institutions.

Provides for allocation of expenditures on a pro rata basis and allocation of fees as a percentage of production activity in and out of state.

Effective Date 

If enacted, the provisions of Senate Bill 103 are applicable to productions with applications received by the office of entertainment industrial development on and after January 1, 2016.

House Bill 338

Summary of Key Changes 

Provides for alternative remedies available to local collectors for the collection of taxes owed, which include assessment and distraint, summary court proceeding, or ordinary lawsuit.  (La. R.S. 47:337.45)

Adds a demand in reconvention and a third-party demand as additional remedies in any court or before the BTA. (La. R.S. 47:337.45)

Adds the option of filing a pleading with the BTA as an alternative to filing suit in district court to recover taxes paid under protest for purposes of state and local sales and use, income, and corporation franchise taxes. (La. R.S. 47:1576)

Adds authorization for BTA approval of the reasonableness of the attorney fees charged in the same manner as in a district court if a local collector hires a private attorney to assist in the collection of taxes, penalties, or interest due. (La. R.S. 47:337.13.1)

Provides for circumstances in which the time limit for prescription may be suspended if a taxpayer claims a refund or credit of an overpayment of taxes. (La. R.S. 47:1623)

Authorizes the BTA and its Local Tax Division to enter into an agreement with the Office of the Judicial Administrator of the Supreme Court relative to the selection and compensation of ad hoc judges for the BTA or its Local Tax Division. (La. R.S. 47:1403, 1417)

Administrative Changes  

Increases amount dedicated to the BTA from the local share of use tax proceeds from $5,000 to $55,000. (La. R.S. 47:302)

Establishes Local Tax Division as an independent agency within the Department of State Civil Service. (La. R.S. 47:1401)

Authorizes the BTA to create an escrow account, and to select a bank or financial institution to serve as a fiscal agent. (La. R.S. 47:1439)

Subjects account transactions to audit by the legislative auditor. (La. R.S. 47:1439)

Membership Changes 

Provides for additional compensation and benefits for the hearing judge of the Local Tax Division. (Amends Section 5 of Act No. 640 of the 2014 Regular Session of the Legislature).

Effective Date 

The bill is effective upon earlier of: (1) Signature by Governor, or (2) expiration of the time for bills to become law without gubernatorial action (August 15, 2015).  Sent to Governor on 6/5/15 for executive approval.

House Bill 387

Summary of Key Changes 

Maintains the amount of the tax credit for 25% of eligible costs and expenses incurred prior to Jan. 1, 2018.

Decreases the amount of the tax credit from 25% to 20% for eligible costs and expenses incurred on and after Jan. 1, 2018, regardless of the year in which the property is placed in service.

Extends sunset of tax credit from January 1, 2018 to January 1, 2022.

Prohibits projects whose rehabilitation costs and expenses are paid for with state or federal funds from being eligible to receive the tax credits, unless the state or federal funds used in the rehabilitation are reported as taxable income or are structured as repayable loans.

Directs the state historic preservation office to consult with the Dept. of Revenue in determining the amount of the application fee to be collected and requires that the application fee be distributed equitably between the entities.

Effective Date 

The bill is effective upon earlier of: (1) Signature by Governor, or (2) expiration of the time for bills to become law without gubernatorial action (August 15, 2015).

House Bill 466

Summary of Key Changes 

Prohibits eligibility of a business with NAICS Code of 44, 45, or 72 (Retail, Accommodation and Food Services) from receiving benefits pursuant to present law for projects whose contract is not entered into before July 1, 2015, unless an advance notification for the project was filed prior to June 10, 2015, and the related claim for benefits is filed on or after July 1, 2016. (La. R.S. 47:1787).

Effective Date 

The bill is effective upon earlier of: (1) Signature by Governor, or (2) expiration of the time for bills to become law without gubernatorial action (August 15, 2015).  

Note: Legislation partially overlaps with House Bill 635, described below, with different effective date. 

House Bill 635 

Summary of Key Changes 

Prohibits eligibility of a business with NAICS Code of 44, 45, or 722 (RetailFood Services and Drinking Places) from receiving benefits pursuant to present law for projects whose contract is not entered into before July 1, 2015, unless an advance notification for the project was filed prior to July 1, 2015, and the related claim for benefits is filed on or after July 1, 2016.

Reduces the amount of the rebate from 100% to 80% of La. severance taxes that were paid to the state if the secretary of the Dept. of Economic Development grants a La. Mega Project Energy Assistance Rebate of severance taxes paid on natural gas consumed or used directly in the operation of the mega-project facility or consumed indirectly in the manufacture or creation of energy sold to the mega-project facility for its operation.

Reduces the rebate for the benefits associated with the Quality Jobs Program to an amount not to exceed the amount of the benefit rate multiplied by 80% of the gross payroll of new direct jobs, with respect to projects for which an advance notice was filed on or after July 1, 2015.

Reduces the amount of the rebate for the Corporate Headquarters Relocation Program which grants a rebate to relocate or expand Louisiana headquarters from 25% to 20% of “relocation costs”, with respect to those projects for which an advance notification was filed on or after July 1, 2015.

Reduces the amount of the rebate for the Competitive Projects Payroll Incentive Program which offers a rebate in exchange for the creation of new jobs from 1.5% to 1.2% of certain qualified capital expenditures, with respect to those projects for which an invitation to apply is extended by the secretary on or after July 1, 2015.  Further reduces the amount of the credit from a maximum of 15% to 12% of new payroll, with respect to those projects for which an invitation to apply is extended by the secretary on or after July 1, 2015.

Effective Dates 

Section 1 (eligibility of businesses to participate in Enterprise Zone Program) is effective on July 1, 2015 (shall expressly supersede the provisions of House Bill 466, regardless of the final order of passage).  Section 2 is effective on July 1, 2015 and shall remain effective through June 30, 2018 and Section 3 is effective on July 1, 2018.

House Bill 555 [Vetoed]

Summary of Key Changes 

Expands the definition of dealer for purposes of the collection of the additional 4% state sales and use tax to include the following activities and attributes:

a)  solicitation of business through an independent contractor or any other representative pursuant to an agreement with a La. resident under which the resident, for a commission, referral fee, or other consideration of any kind, directly or indirectly refers potential customers, whether by website link, personal presentation, telemarketing, or otherwise, to the seller. For purposes of qualification as a “dealer” through an agreement with a La. resident to maintain a business in La., the presumption that a person is a dealer, based upon annual gross receipts from sales of property delivered in La. that exceed $50,000, is rebuttable if the person can demonstrate that he cannot reasonably be expected to have gross receipts in excess of $50,000 in the following 12 months.

b)  Sale of the same or a substantially similar line of products as a La. retailer under the same or substantially similar business name.

c)  Holding a substantial ownership interest, directly or through a subsidiary, in a retailer maintaining sales locations in La. or who is owned in whole or in substantial part by a retailer maintaining sales locations in La.

d)  Solicitation of business or maintenance of a market in La. through an agent, salesman, independent contractor, or other representative (affiliated agent), through an agreement with the dealer.

Allows any taxpayer from whom a dealer has “actually collected and remitted” the state 4% in lieu of the local sales tax to obtain a refund if, within 30 days from the remittance of the tax, the taxpayer provides the secretary with either of the following:

a)  A certified copy of a use tax return that has been filed with the relevant parish sales and use tax collector concerning the same transaction, together with the proof of payment of all state and local use taxes due on the transaction.

b) A certified copy of an affidavit that has been filed with the sales and use tax commission affirming that the delivery and all use of the property subject to tax will be in a parish where no use tax is imposed by any local taxing authority.

Prohibits the determination that certain business activities establishes a person as a dealer for purposes of sales and use tax from being used in a determination of whether the person is liable for the payment of state income or franchise taxes.

Provides that if the U.S. Congress enacts legislation authorizing states to require a remote seller to collect sales taxes on taxable transactions, the federal law shall preempt the provisions of proposed law. Further, directs the secretary of the Dept. of Revenue to promulgate rules to carry out the provisions of the federal law within 90 days of its effectiveness. However, the Dept. of Revenue, for purposes of the promulgation of the rules, shall consult with the sales and use tax commission established under present law for purposes of the distribution of the proceeds of the additional 4% state sales and use tax to the parishes.

Effective Date 

The bill is effective upon earlier of: (1) Signature by Governor, or (2) expiration of the time for bills to become law without gubernatorial action (August 15, 2015).

House Bill 779 

Summary 

Amends R.S. 47:6030 to redefine and limit the solar electric credit against income tax for primary single-family residences. 

For purchased systems 

Purchased and installed from 1/1/08 and before 7/1/15: Credit of 50% of first $25,000 of cost.

Purchased and installed from 7/1/15 and before 1/1/18: Credit is smaller of:

(i)      $2 x size of system measured in DC watts

(ii)     50% of cost

(iii)    $10,000

A statewide maximum of $10 M will apply for credits claimed on returns filed on or after 7/1/15, reduced to $5 M for returns filed on or after 7/1/17.  No credits will apply for installations on or after 1/1/18. 

Applied on a first-come, first served basis.

For leased systems 

Purchased and installed before 1/8/14: Credit is 50% of first $25,000 of cost, provided it costs no more than $4.50/watt and provides no more than 6 kilowatts.

Installed from 1/1/14 and before 1/1/18: Credit is 38% of first $20,000 of cost, provided it costs no more than $3.50/watt and provides no more than 6 kilowatts ($2/watt from 7/1/15 – 12/31/17).

An additional statewide maximum for leased systems will have the same aggregate amounts and times as for purchased systems.

Applied on a first-come, first-served basis.

The credit is limited to solar electric systems and no longer applies to solar thermal systems.  Only one credit per one installation per residence will apply (subsequent installations will not qualify).  No credit will apply if the installer or affiliate finances the cost and installation.

Effective Date 

Effective upon the Governor’s signature.

House Bill 244

The proposed law extends the Angel Investor Tax Credit program from July 1, 2015 through June 30, 2017.  The bill is effective upon the Governor’s signature.

House Bill 828

The proposed law would reduce and eventually eliminate the corporate franchise tax; under the proposed law, the corporate franchise tax rates would phase out as follows:

(a)   80% of normal rates for tax years beginning on or after 1/1/16 and before 1/1/17;

(b)  60% of normal rates for years 1/1/17 and before 1/1/18;

(c)  40% for years 1/1/18 and before 1/1/19;

(d)  20% for years 1/1/19 and before 1/1/20;

(e)  0% for years on or after 1/1/20.

The bill is effective July 1, 2015.

House Concurrent Resolution No. 8

Effective July 1, 2015, suspends all exemptions from sales/use tax for sales of steam, water, electric power or energy and natural gas of business utilities for 60 days after final adjournment of the 2016 Regular Session of the Legislature.

House Bill 549

The proposed law will exempt severance tax for 24 months or until payout of well costs is achieved for horizontally drilled wells and horizontally drilled recompletion wells from which production commenced after 7/31/94 and on or before 6/30/2015.  Beginning 7/1/15, the exemption for such horizontal wells shall be:

(a)   100% of the oil price is at or below $70/barrel; or if the natural gas is at or below $4.50 per million BTU;

(b)   80% of the oil price is above $70/barrel or if the natural gas is more than $4.50 but at or below $5.50 per million BTU;

(c)  60% if the oil price is above $80/barrel; or if natural gas is above $5.50 but at or below $6.00/million BTU;

(d)  40% if the oil price is above $90/barrel; or if natural gas is above $6.00 but below $6.50/million BTU;

(e)  20% if the oil price is above $100/barrel but below $110/barrel; or natural gas is above $6.50 but at or below $7.00/million BTU;

(f)   0% of the oil price exceeds $110/barrel; or if natural gas exceeds $7.00/million BTU.

The bill is effective July 1, 2015.

House Bill 84

The proposed law would tax laundry, cleaning, pressing and dyeing services for parish sales/use tax at the place where the article is returned to the customer (rather than where the services are “delivered” to the customer).  The bill is effective August 1, 2015. 

Senate Bill 284

The proposed law creates the Student Assessment for a Valuable Education (SAVE) Credit program for each student in a public institution of higher education.  Each such student or parent/guardian will be assessed an amount which will become a tax credit against Louisiana individual income, sales/use gasoline and special fuels taxes.  By June 30th of each year, the Board of Regents will certify the student head count to the Department of Revenue, which will calculate the total credits and notify the State Treasurer, which will be directed to deposit the amount into a Higher Education Initiatives Fund.  No student or parent/guardian shall be required to pay any assessment that is not offset by a SAVE Credit. The bill is effective on the Governor’s signature (if not signed, on expiration of 20 days).

House Bill 360

This bill presents a proposed amendment to Sec. 21 of the Louisiana Constitution to be submitted to the voters which would exempt from property tax land and property owned in Louisiana by another state or by a political subdivision of another state.  The bill is effective upon approval by voters.

CONCLUSION

If there are any updates regarding this legislation, we will send another alert. Please contact your friends at Baldwin Haspel Burke & Mayer, LLC if you have any questions regarding the applicability of any of the tax bills.

By: Leon Rittenberg III, Matthew Miller, Andrew Sullivan, John Rouchell and Matthew Treuting 

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