2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:6006. Tax credits for local inventory taxes paid

RS 47:6006 - Tax credits for local inventory taxes paid
A.(1) There shall be allowed a credit against any Louisiana income or corporation franchise tax for ad valorem taxes paid to political subdivisions on inventory held by manufacturers, distributors, and retailers.
(2) There shall be allowed a credit against any Louisiana income or corporation franchise tax for ad valorem taxes paid to political subdivisions on natural gas held, used, or consumed in providing natural gas storage services or operating natural gas storage facilities.
B.(1) Credit for taxes paid by corporations shall be applied to state corporate income and corporation franchise taxes. Credit for taxes paid by unincorporated persons shall be applied to state personal income taxes. The secretary shall make a refund to the taxpayer in the amount to which he is entitled from the current collections of the taxes collected pursuant to Chapters 1 and 5 of Subtitle II of this Title. If the amount of the credit authorized pursuant to Subsection A of this Section exceeds the amount of tax liability for the tax year, the following amounts of the excess credit shall either be refundable or may be carried forward as a credit against subsequent Louisiana income or corporation franchise tax liability for a period not to exceed ten years, as follows:
(a) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to this Section paid to all political subdivisions in the taxable year was less than or equal to five hundred thousand dollars shall be refunded all of the excess credit.
(b) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to this Section paid to all political subdivisions in the taxable year was more than five hundred thousand dollars, but less than or equal to one million dollars, shall be refunded seventy-five percent of the excess credit, and the remaining twenty-five percent of the excess credit shall be carried forward as a credit against subsequent tax liability for a period not to exceed ten years.
(c) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to this Section paid to all political subdivisions in the taxable year was more than one million dollars shall be refunded seventy-five percent of the first one million dollars of excess credit, and the remaining amount of the credit shall be carried forward as a credit against subsequent tax liability for a period not to exceed ten years.
(2) Each taxpayer allowed a credit under this Section shall claim the credit on its separately filed income or corporate franchise tax return; however, for purposes of the application of the limitations on refundability of excess credit provided for in Subparagraphs (1)(a) through (c) of this Subsection, all taxpayers included in one consolidated federal income tax return filed under the Internal Revenue Code shall be treated as a single taxpayer.
(3)(a) Subparagraphs (1)(a) and (b) of this Subsection shall not apply to any new business entity formed or registered to do business in this state after April 15, 2016.
(b) New business entities formed or first registered to do business in this state after April 15, 2016, whose ad valorem taxes paid to all political subdivisions in the taxable year was less than ten thousand dollars shall be refunded all of the excess credit.
(c) New business entities formed or first registered to do business in this state after April 15, 2016, whose ad valorem taxes paid to all political subdivisions in the taxable year was ten thousand dollars or more, but no more than one million dollars shall be refunded seventy-five percent of the excess credit, and the remaining twenty-five percent of the credit shall be carried forward as a credit against subsequent tax liability for a period not to exceed ten years.
(4) Notwithstanding any provision in this Section to the contrary, for a manufacturer, as defined in Subparagraph (C)(3)(b) of this Section, if the amount of the credit authorized pursuant to Subsection A of this Section exceeds the amount of tax liability for the tax year, the excess credit shall not be refundable and may only be carried forward as a credit against subsequent Louisiana income or corporation franchise tax liability for a period not to exceed ten years and shall not be refundable.
C. For purposes of this Section, the following terms shall have the meanings ascribed to them:
(1) "Distributor" means a person engaged in the sale of products for resale or further processing for resale.
(2) "Inventory" means the aggregate of those items of tangible personal property that are held for sale in the ordinary course of business, are currently in the process of production for subsequent sale, or are to physically become a part of the production of such goods.
(a) "Inventory" shall include the following:
(i) Goods or commodities awaiting sale that include but are not limited to the merchandise of a retail or wholesale concern, the finished goods of a manufacturer, the commodities from farms, mines, and quarries, and goods that are used or trade-in merchandise and by-products of a manufacturer.
(ii) Goods or commodities that are in the course of production.
(iii) Raw materials and supplies that will be consumed in the Louisiana manufacturing process.
(iv) Any item of tangible personal property owned by a retailer that is available for or subject to a short-term rental and that will subsequently or ultimately be sold by the retailer. For purposes of this Section, the term "short-term rental" shall mean a rental of an item of tangible personal property for a period of less than three hundred sixty-five days, for an undefined period, or under an open-ended agreement.
(b) "Inventory" shall not include the following:
(i) Oil stored in tanks held by a producer prior to the first sale of the oil, and oil otherwise exempt from ad valorem taxation pursuant to the provisions of the Constitution of Louisiana.
(ii) Items that would otherwise be considered inventory at any time following the initial lease by the taxpayer of such items. The provisions of this Item shall not include the rental of tangible personal property as provided for in Item (a)(iv) of this Paragraph.
(iii) Items that would otherwise be considered inventory any time after the taxpayer has commenced depreciating the item on the taxpayer's federal tax return. The provisions of this Item shall not include the rental of tangible personal property as provided for in Item(a)(iv) of this Paragraph.
(iv) Items that have been subject to use by the taxpayer when owned for more than eighteen months. The provisions of this Item shall not include the rental of tangible personal property as provided for in Item (a)(iv) of this Paragraph.
(v) Items that are otherwise exempt from ad valorem taxation pursuant to the provisions of the Constitution of Louisiana, including, goods, commodities, or personal property stored in the state for use in interstate commerce as provided for in Article VII, Section 21(D)(3) of the Constitution of Louisiana.
(3) "Manufacturer" shall mean one of the following:
(a) A person engaged in the business of working raw materials into wares suitable for use or which gives new shapes, qualities, or combinations to matter which already has gone through some artificial process.
(b) A person who meets the definition of "manufacturer" as provided in Subparagraph (a) of this Paragraph and who has claimed the ad valorem exemption under Article VII, Section 21(F) of the Constitution of Louisiana during the taxable year in which the local inventory taxes were levied.
(4) "Retailer" means a person engaged in the sale of products to the ultimate consumer. The term "retailer" shall also include a person engaged in the short-term rental of tangible personal property classified under code numbers 532412 and 532310 of the North American Industry Classification System published by the United States Bureau of Census and who is registered with the Department of Revenue as a retailer as defined in this Section.
D. The credit provided in this Section shall be allowed as follows:
(1) For inventory taxes paid to political subdivisions on or after Ju1y 1, 1992, and before June 30, 1993, the credit shall be twenty percent of such taxes paid.
(2) For inventory taxes paid to political subdivisions on or after July 1, 1993, and before June 30, 1994, the credit shall be forty percent of such taxes paid.
(3) For inventory taxes paid to political subdivisions on or after July 1, 1994, and before June 30, 1995, the credit shall be sixty percent of such taxes paid.
(4) For inventory taxes paid to political subdivisions on or after July 1, 1995, and before June 30, 1996, the credit shall be eighty percent of such taxes paid.
(5) For inventory taxes paid to political subdivisions on or after July 1, 1996, the credit shall be one hundred percent of such taxes paid.
E. Commencing no later than January 31, 2016, the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs shall review the credit authorized pursuant to the provisions of this Section to determine if the economic benefit provided by such credit outweighs the loss of revenue realized by the state as a result of awarding such credit. The House and Senate committees shall make a specific recommendation no later than March 1, 2017, to either continue the credit or to terminate the credit.
F. At any time after a finding of overvaluation or misclassification of inventory for the purposes of this credit by audit or on appeal by the Board of Tax Appeals or court that last reviews the matter, the secretary of the Department of Revenue may intervene in any proceeding related to the valuation or classification of property as inventory for which a credit will be claimed pursuant to this Section.
G. Taxpayers that pay ad valorem taxes for the 2020 tax year that are eligible for the credit provided by this Section but are paid after December 31, 2020, may elect to treat these taxes as having been paid on December 31, 2020, for purposes of this credit, provided that the payments are made to the local tax collector on or before April 15, 2021. Taxpayers that make this election shall not also claim these taxes as having been paid in 2021 for purposes of claiming this credit for the 2021 tax year.
H.(1) Notwithstanding the provisions of Subparagraphs (B)(1)(b) and (B)(3)(c) of this Section, for ad valorem taxes on inventory paid for tax year 2020, taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to this Section paid to all political subdivisions in the taxable year was less than or equal to one million dollars shall be refunded all of the excess credit.
(2) The provisions of this Subsection shall apply only to taxpayers that employed a minimum of one hundred full-time employees at each location in the state for whom withholding tax was remitted to the Department of Revenue for at least one month within each of the first three quarters of calendar year 2020.
(3) The provisions of this Subsection shall not apply to manufacturers as defined in Subparagraph (C)(3)(b) of this Section.
Acts 1991, No. 153, §1; Acts 1994, No. 28, §1; Acts 2002, No. 11, §1, eff. for all taxable periods beginning after Dec. 31, 2002; Acts 2005, No. 363, §1; Acts 2015, No. 133, §1; Acts 2015, No. 357, §1, eff. June 29, 2015; Acts 2015, No. 415, §1, eff. Jan. 1, 2016; Acts 2016, 2nd Ex. Sess., No. 4, §1, eff. June 28, 2016; Acts 2016, 2nd Ex. Sess., No. 5, §2, eff. June 28, 2016; Acts 2017, No. 338, §1, eff. June 22, 2017; Acts 2017, No. 385, §1, eff. June 23, 2017; Acts 2020, 2nd Ex. Sess., No. 50, §1, eff. Jan. 1, 2021; Acts 2020, 2nd Ex. Sess., No. 56, §1, eff. Nov. 5, 2020; Acts 2020, 2nd Ex. Sess., No. 59, §1, eff. Nov. 5, 2020.
NOTE: See Acts 2015, No. 415, §2, re: applicability.
NOTE: See Acts 2016, No. 662, §2, re: applicability.
NOTE: See Acts 2017, No. 338, §2, and No. 385, §2, re: applicability.