2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:1675. General administrative provisions for credits against income and corporation franchise tax

RS 47:1675 - General administrative provisions for credits against income and corporation franchise tax
A. Unless specifically provided for herein or in the statute granting the credit against income or corporation franchise tax:
(1) The tax credit is not refundable.
(2) The tax credit does not carry forward or carry back.
(3) The tax credit cannot be used for taxes that became due in a tax year prior to the year in which the credit was initially earned or granted.
(4) The tax credit is not transferable.
(5) The tax credit cannot be used to reduce interest or penalty.
(6)(a) If a tax credit has an annual or total program cap or limit on the total amount of the credit which may be allowed to taxpayers within a certain time period, the tax credit shall be administered on a first-come, first-served basis.
(b) However, all tax credit requests received on the same business day shall be treated as received at the same time, and if the aggregate amount of tax credit requests received on a single business day exceed the amount of tax credits available, tax credits shall be approved on a pro rata basis.
B. Priority of credits. The department shall apply credits against income and corporation franchise tax. The provisions of this Subsection shall supersede and control to the extent of conflict with any other provision of law. Credits and payments shall be applied in the following order:
(1) Current year nonrefundable credits with no carry forward.
(2) Refundable tax credits. Refundable credits, other than the credit provided for in R.S. 47:6006, that are allowable against both income and corporation franchise tax shall be applied first against income tax. Any credit in excess of the income tax liability shall then be applied against corporation franchise tax.
(3) Any carry forward amount from a tax credit earned, granted, or received in a prior year, in the order of the length of the carry forward period remaining, beginning with the shortest carry forward period.
(4) Current year nonrefundable credits with a carry forward, in the order of the length of the carry forward period, beginning with the credit with the shortest carry forward period.
(5) Tax credits that are transferable, but that are not refundable that the taxpayer elects to apply against the tax.
(6) Refundable tax credits provided for in R.S. 47:6006.
(7) Estimated payments, the credit for withholding, and other payments of tax.
C. Definitions.
(1) When used in a statute granting a credit against income or corporation franchise tax, the term "carryover" shall mean carry forward.
(2) Value of donations of property or services. When a credit is available for the donation of property or services, unless otherwise provided in the statute granting the credit:
(a) The value of any donated property shall mean the fair market value of that property.
(b) The value of any service donated shall mean the fair market value of that service in the community in which the service was performed.
D. Unless otherwise provided in the statute granting the credit, credits against income or corporation franchise tax are earned in the tax year in which the person has completed all requirements set forth in the statute granting the credit.
E. Unless otherwise provided in the statute granting the credit, if two or more taxpayers share in costs that would be eligible for any of the following credits, each taxpayer may take the credit in proportion to that taxpayer's respective share of the costs paid or incurred:
(1) Credit for neighborhood assistance, R.S. 47:34 and 287.749.
(2) Credit for donations to assist qualified playgrounds, R.S. 47:6008.
(3) Credit for donations to public schools, R.S. 47:6013.
(4) Credit for rehabilitation of historic structures, R.S. 47:6019.
(5) Any credit for which the statute granting the credit specifically provides for a credit in proportion to that taxpayer's respective share of the costs paid or incurred.
(6) Any other credit listed in regulations promulgated by the secretary.
F. Credits granted, allocated, or transferred to entities not subject to Louisiana income tax or corporation franchise tax.
(1) Unless otherwise provided in the statute granting the credit, if an entity not subject to Louisiana income tax or corporation franchise tax acquires an income or franchise tax credit, the credit shall flow through to partners or members as provided in the operating agreement of the entity. In the absence of an operating agreement, the credit shall flow through to each partner or member in accordance to the partner or member's ownership interest in the entity.
(2) Unless flow through of the credit is prohibited by the statute granting the credit, if an entity not subject to Louisiana income tax or corporation franchise tax earns a credit and has a tax year-end different from that of a partner or member, the credit is available in the same tax year in which the partner or member is required to report any income or loss from that entity.
(3) An entity not subject to Louisiana income tax or corporation franchise tax must prepare and distribute to each partner or member a schedule detailing the partner or member's share of each credit earned and any recapture that is required. Copies of these schedules must be attached to each return on which the credit is claimed.
(4) The provisions of this Subsection shall not apply to entities that make an election pursuant to R.S. 47:287.732.2. Beginning with the taxable year for which the election is first made, the entity shall apply any credits earned at the entity level.
G. Credits granted or allocated to Subchapter S corporations.
(1) Credits earned by, allocated to, or transferred to an S corporation during a year in which the corporation operated as a C corporation shall be used at the corporation level.
(2)(a) Unless otherwise provided in the statute granting the credit, credits earned by, allocated to, or transferred to a corporation during a year in which the corporation operates as an S corporation do not flow through to the shareholders, but shall be used at the corporation level unless the S corporation makes the annual election provided for in Subparagraph (b) of this Paragraph.
(b) An S corporation that earns or otherwise receives a tax credit through allocation or transfer during a year in which the corporation operates as an S corporation may annually elect to flow through the entire amount of the credit to its shareholders. The election may be made for each credit received by the S corporation and shall be made annually. The election shall be in writing and may not be revoked. S corporations that file their corporation income tax returns pursuant to R.S. 47:287.732.2 shall not be eligible to make this flow-through election beginning with the taxable year for which the election is first made.
H. Transferable income or corporation franchise tax credits.
(1) Unless otherwise provided in the statute granting the credit:
(a) A person is not required to apply a transferable credit against its own tax liability prior to transferring all or part of the credit.
(b) If a person either earns the credit or receives the credit by flow through, the credit will be treated as a tax item and can only be applied against tax.
(c) If a person acquires a credit through transfer, the credit is property and can be used to pay any outstanding tax liability for the tax against which the credit was originally granted and any related penalty and interest. Interest and penalties will continue to accrue at the statutory rates until the date the department receives a return on which the credit is claimed. The provisions of Paragraphs (A)(3) and (5) will not apply to this Subparagraph.
(d) A tax credit cannot be claimed on a tax return or utilized as a payment prior to the effective date of transfer, as reflected in the Tax Credit Registry pursuant to R.S. 47:1524, between the transferor and transferee.
(e) To claim a credit on a tax return, either:
(i) The effective date of transfer shall be on or before the due date of the return, without regard to the granting of any extension; or
(ii) On or before the due date of the return, without regard to the granting of any extension, the transferor and transferee shall have executed a binding agreement to transfer the credit. The agreement shall be on a form approved by the secretary. The specific project from which the credit shall be generated, specific type of transferable credit, and the exact amount of credit to be transferred shall not be required terms of the agreement.
(iii) For purposes of this Paragraph, "effective date of transfer" means the date of transfer as reflected in the Tax Credit Registry pursuant to R.S. 47:1524.
(iv) A credit acquired through transfer can be applied to any allowable tax liability that is due for the year the credit was originally earned or to any year due afterward until the applicable carryforward period is over.
(f) A tax credit with an effective date of transfer or an executed transfer agreement entered into after the due date of the return, without regard to the granting of any extension, shall be applied only to any allowable tax, penalty, and interest and shall not be claimed as a credit on a tax return.
(g) A credit acquired through transfer that is applied as a payment may be applied to any allowable tax liability, interest, and penalty that is due provided that the applicable carryforward period of the credit has not expired.
(2) Income from the transfer of a Louisiana transferable tax credit is income from Louisiana sources.
I. Repealed credits and credits with sunset provisions. Unless otherwise provided in the statute granting or repealing the credit, any remaining carry forward from a credit that has been repealed or otherwise made inoperative shall continue to be applied and carried forward under the provisions of the statute granting the credit immediately before it expired or was repealed.
J. Documentation for tax credits.
(1) Record retention.
(a) For credits with no carry forward provision, original records supporting any credit claimed must be maintained for four years following the date the return was filed claiming the credit.
(b) For credits with a carry forward provision, original records supporting the credit must be maintained for four years following the date on which the last return was filed claiming the credit.
(2) Documentation supporting a tax credit shall be provided by a taxpayer claiming a tax credit as required by rule or on forms or instructions provided by the secretary.
Acts 2005, No. 268, §1, eff. for income tax years beginning after Dec. 31, 2004, and franchise tax years beginning after Dec. 31, 2005; Acts 2009, No. 445, §1, eff. July 8, 2009; Acts 2016, 1st Ex. Sess., No. 23, §1, eff. March 10, 2016; Acts 2016, No. 661, §2, eff. June 17, 2016; Acts 2019, No. 442, §1, eff. June 22, 2019.
NOTE: See Acts 2016, 1st Ex. Sess., No. 23, §2 and Acts 2016, No. 661, §3, regarding applicability.
NOTE: See Acts 2019, No. 442, re: applicability.