2023 Louisiana Laws › Revised Statutes › Title 47 - Revenue and Taxation › §47:6016.1. Louisiana New Markets Jobs Act; premium tax credit

RS 47:6016.1 - Louisiana New Markets Jobs Act; premium tax credit
A. The provisions of this Section shall be known as and may be cited as the "Louisiana New Markets Jobs Act".
B. As used in this Section, the following words, terms, and phrases have the meaning ascribed to them unless a different meaning is clearly indicated by the context:
(1)(a) "Applicable percentage" means fourteen percent for the first and second credit allowance dates and eight and one-half percent for the third and fourth credit allowance dates for all qualified equity investments issued after August 1, 2013, and before August 1, 2020.
(b) "Applicable percentage" means fifteen percent for the fourth through sixth credit allowance dates and ten percent for the seventh credit allowance for all qualified equity investments issued on or after August 1, 2020.
(2) "Credit allowance date" means, with respect to any qualified equity investment, the following:
(a) The date on which such investment is initially made.
(b) Each of the six anniversary dates of such date thereafter.
(3) "Department" means the Department of Revenue, unless otherwise noted.
(4) "Impact business" means a qualified active low-income community business located in Louisiana that is either located in a rural parish or in the recovery zone or is more than fifty percent owned by women, minorities, or military veterans.
(5) "Purchase price" means the amount paid to the issuer of a qualified equity investment for such qualified equity investment.
(6) "Recovery zone" means any parish for which the Federal Emergency Management Agency of the United States Department of Homeland Security has made a determination that the parish is eligible for both individual and public assistance under the declaration of major disaster for the state of Louisiana for the duration of that declaration. Follow-on investments in a qualified active low-income community business that was qualified by its location in a recovery zone at the time of the initial qualified low-income community investment in that business shall be considered qualified low-income community investments even if made after the end of the declaration, subject to other provisions of this Section.
(7) "Rural parish" means the following:
(a) With respect to qualified equity investments issued before August 1, 2023, a parish with a population of less than one hundred thousand as of the July 1, 2019, census estimate by the United States Census Bureau.
(b) With respect to qualified equity investments issued after August 1, 2023, a parish with a population of less than one hundred thousand as of the most recent federal decennial census.
(8) "Qualified active low-income community business" has the meaning given such term in Section 45D of the Internal Revenue Code of 1986, as amended, and 26 CFR 1.45D-1.
(a) With respect to qualified equity investments issued on or after August 1, 2020, a qualified active low-income community business shall also be engaged in an industry assigned a primary North American Industry Classification System code within sector 11, 21, 23, 31, 32, 33, 42, 48, 49, 54, 56, 62, 72, or 81 and have total employees that do not exceed the greater of two hundred fifty and the number of employees set forth for the business's North American Industry Classification System code sector in 13 CFR 121.201.
(b) With respect to qualified equity investments issued on or after August 1, 2020, a business that otherwise satisfies this definition but for being located in a low-income community, as defined in Section 45D of the Internal Revenue Code of 1986, as amended and 26 CFR 1.45D-1, shall satisfy this definition if the business is located in the recovery zone.
(9) "Qualified community development entity" has the meaning given such term in Section 45D of the Internal Revenue Code of 1986, as amended; provided that such entity has entered into, for the current year or any prior year, an allocation agreement with the Community Development Financial Institutions Fund of the U.S. Department of Treasury with respect to credits authorized by Section 45D of the Internal Revenue Code of 1986, as amended, which includes the state of Louisiana within the service area set forth in such allocation agreement. The term shall include qualified community development entities that are controlled by or under common control with any such qualified community development entity. With respect to qualified equity investments issued on or after August 1, 2020, the term excludes any qualified community development entity that, together with its affiliates, has invested less than one hundred million dollars in Louisiana qualified active low-income community businesses or other Louisiana investments.
(10) "Qualified equity investment" means any equity investment in a qualified community development entity that meets each of the following criteria:
(a) Is acquired after August 1, 2013, at its original issuance solely in exchange for cash or, if not so acquired, was a qualified equity investment in the hands of a prior holder.
(b) Has at least one hundred percent of its cash purchase price used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in this state by the first anniversary of the initial credit allowance date with respect to qualified equity investments issued prior to August 1, 2020, and after August 1, 2023, and within nine months of the initial credit allowance date with respect to qualified equity investments issued on or after August 1, 2020, and before August 1, 2023.
(c) Is designated by the issuer as a qualified equity investment under this Paragraph and is certified by the department as not exceeding the limitation contained in Paragraph (E)(5) of this Section.
(11) "Qualified low-income community investment" means any capital or equity investment in, or loan to, any qualified active low-income community business. With respect to any one qualified active low-income community business, the maximum amount of qualified low-income community investments made in that business, on a collective basis with all of its affiliates that may be counted towards satisfaction of Subparagraph (10)(b) of this Subsection is ten million dollars for qualified equity investments issued prior to August 1, 2020, and five million dollars for qualified equity investments issued on or after August 1, 2020, whether issued by one or several qualified community development entities. Any amounts returned or repaid by such qualified active low-income community business to a qualified community development entity may be reinvested in such qualified active low-income community business by such qualified community development entity and not be counted against the ten million dollar limit provided for in this Paragraph.
(12) "State premium tax liability" means any liability incurred by any entity under the provisions of R.S. 22:831, 836, 838, and 842 except for liability incurred under R.S. 22:842(C).
C.(1) Any entity that makes a qualified equity investment is vested with an earned credit against state premium tax liability that may be utilized as follows:
(a) On each credit allowance date of such qualified equity investment the entity, or subsequent holder of the qualified equity investment, shall be entitled to utilize a portion of such credit during the taxable year, including such credit allowance date.
(b) The credit amount shall be equal to the applicable percentage for such credit allowance date multiplied by the purchase price paid to the issuer of such qualified equity investment.
(2) The amount of the credit claimed by an entity shall not exceed the amount of such entity's state premium tax liability for the tax year for which the credit is claimed. Any amount of tax credit that the entity is prohibited from claiming in a taxable year as a result of this Paragraph may be carried forward for use in future taxable years for a period not to exceed five years.
D.(1) Tax credits earned by a partnership, limited liability company, S-corporation, or other pass through entity may be allocated to the partners, members, or shareholders of such entity for their direct use in accordance with the provisions of any agreement among such partners, members, or shareholders.
(2)(a) Any tax credits not previously claimed by a taxpayer against its premium tax may be transferred or sold to another Louisiana taxpayer, subject to the following conditions:
(i) A single transfer or sale may involve one or more transferees.
(ii) Transferors and transferees shall submit to the Department of Insurance, in writing, a notification of any transfer or sale of tax credits within thirty days after the transfer or sale of such tax credits, which notice contains the amount of the remaining tax credit balance after transfer, all tax identification numbers for both transferor and transferee, the date of the transfer, the amount transferred, the price paid by the transferee to the transferor, and any other information required by the Department of Insurance.
(b) Failure to comply with this Paragraph will result in the disallowance of the tax credit until the taxpayers are in full compliance.
(c) The transfer or sale of this credit does not extend the time in which the credit can be used. The carry-forward period for a credit that is transferred or sold begins on the date on which the credit was originally earned.
(d) To the extent that the transferor did not have rights to claim or use the credit at the time of the transfer, the Department of Insurance shall either disallow the credit claimed by the transferee or recapture the credit from the transferee.
E.(1) A qualified community development entity that seeks to have an equity investment designated as a qualified equity investment and eligible for tax credits under this Section shall apply to the department. On a form prescribed by the department, the qualified community development entity shall include each of the following in or attached to its application:
(a) Evidence of the applicant's certification as a qualified community development entity, including evidence that Louisiana is included in the service area of the entity.
(b) A copy of the allocation agreement executed by an applicant, or its controlling entity, and the Community Development Financial Institutions Fund.
(c) A certificate executed by an executive officer of the applicant attesting that the allocation agreement remains in effect and has not otherwise been revoked or cancelled by the Community Development Financial Institutions Fund.
(d) A description of the proposed amount, structure, and purchaser of the qualified equity investment.
(e) Identifying information for any entity that will earn tax credits as a result of the issuance of the qualified equity investment and community businesses in which they will invest when submitting an application.
(f) Evidence that the applicant, on a collective basis with its affiliates, has invested at least one hundred million dollars in Louisiana qualified active low-income community businesses or other Louisiana investments.
(2) Within thirty days after receipt of a completed application containing the information set forth in Paragraph (1) of this Subsection, including the deposit as required in Subsection H of this Section, the department shall grant or deny the application in full or in part. If the department denies any part of the application, it shall inform the qualified community development entity of the grounds for the denial. If the qualified community development entity provides additional information required by the department or otherwise completes its application within fifteen days of the notice of denial, the application shall be considered completed as of the original date of the submission. If the qualified community development entity fails to provide the information or complete its application within the fifteen-day period, the application remains denied and must be resubmitted in full with a new submission date, and the department shall refund the performance deposit.
(3) If the application is granted, the department shall certify the proposed equity investment as a qualified equity investment that is eligible for tax credits under this Section, subject to the limitations contained in Paragraph (5) of this Subsection. The department shall provide written notice of the certification to the qualified community development entity. The notice shall include the names of those entities who will earn the credits and their respective credit amounts. If the names of the entities that are eligible to utilize the credits change due to a transfer of a qualified equity investment or an allocation pursuant to Paragraph (D)(1) of this Section, the qualified community development entity shall notify the Department of Insurance of such change.
(4) The department shall certify qualified equity investments in the order in which applications are received by the department. Applications received on the same day shall be deemed to have been received simultaneously. For applications that are complete and received on the same day, the department shall certify, consistent with remaining qualified equity investment capacity, the qualified equity investments in proportionate percentages based upon the ratio of the amount of qualified equity investment requested in an application to the total amount of qualified equity investments requested in all applications received on the same day.
(5)(a) A total of fifty-five million dollars of qualified equity investment authority shall be available for certification and allocation. The department shall accept applications beginning on August 1, 2013, for allocation and certification of up to fifty-five million dollars of qualified equity investments.
(b) A total of seventy-five million dollars of qualified equity investment authority shall be available for certification and allocation for applications beginning August 1, 2020. The department shall accept applications beginning on August 1, 2020, for allocation and certification of up to seventy-five million dollars of qualified equity investments.
(c) A total of one hundred fifty million dollars of qualified equity investment authority shall be available for certification and allocation for applications beginning August 1, 2023. The department shall accept applications beginning on August 1, 2023, for allocation and certification of up to one hundred fifty million dollars of qualified equity investments.
(d) If a pending request cannot be fully certified due to these limits of qualified equity investment authority, the department shall certify the portion of qualified equity investment authority that may be certified unless the qualified community development entity elects to withdraw its request rather than receive partial certification.
(6) An approved applicant may transfer all or a portion of its certified qualified equity investment authority to its controlling entity or any qualified community development entity that is controlled by or under common control with the applicant, provided that the applicant provides the information required in the application with respect to such transferee and the applicant notifies the department of such transfer with the notice of receipt of the cash investment set forth in Paragraph (7) of this Subsection.
(7) Within thirty days of the applicant receiving certification of qualified equity investment authority, the qualified community development entity or any transferee under Paragraph (6) of this Subsection shall issue the qualified equity investment, receive cash in the amount of the certified amount and, with respect to qualified equity investments issued before August 1, 2020, designate an amount equal to the certified amount as a federal qualified equity investment with the Community Development Financial Institutions Fund. The qualified community development entity or transferee under Paragraph (6) of this Subsection shall provide the department with evidence of the receipt of the cash investment and, with respect to qualified equity investments issued before August 1, 2020, designation of the qualified equity investment as a federal qualified equity investment within five business days after receipt. If the qualified community development entity or any transferee pursuant to Paragraph (6) of this Subsection does not receive the cash investment within thirty days following receipt of the certification notice, the certification shall lapse and the entity may not issue the qualified equity investment without reapplying to the department for certification. Lapsed certifications revert back to the department and shall be reissued, first, pro rata to other applicants whose qualified equity investment allocations were reduced pursuant to Paragraph (4) of this Subsection and, thereafter, in accordance with the application process.
F. The Department of Insurance shall recapture, from the entity that claimed the credit on a return, the tax credit allowed pursuant to this Section if any of the following occur:
(1) Any amount of a federal tax credit available with respect to a qualified equity investment that is eligible for a credit under this Section is recaptured under Section 45D of the Internal Revenue Code of 1986, as amended. In such case, the Department of Insurance's recapture shall be proportionate to the federal recapture with respect to the qualified equity investment.
(2) With respect to qualified equity investments issued before August 1, 2020, the issuer fails to invest an amount equal to one hundred percent of the purchase price of the qualified equity investment in qualified low-income community investments in Louisiana within twelve months of the issuance of the qualified equity investment.
(3) With respect to qualified equity investments issued on or after August 1, 2020, but before August 1, 2023, the issuer fails to invest an amount equal to one hundred percent of the purchase price of the qualified equity investment in qualified low-income community investments in Louisiana within nine months of the issuance of the qualified equity investment with at least fifty percent of the purchase price invested in qualified low-income community investments in impact businesses.
(4) With respect to qualified equity investments issued on or after August 1, 2023, the issuer fails to invest an amount equal to one hundred percent of the purchase price of the qualified equity investment in qualified low-income community investments in Louisiana within twelve months of the issuance of the qualified equity investment with at least fifty percent of the purchase price invested in qualified low-income community investments in impact businesses.
(5) The issuer fails to maintain the levels of investment set forth in Paragraphs (2), (3), and (4) of this Subsection in qualified low-income community investments in Louisiana until the last credit allowance date for the qualified equity investment. For purposes of this Section, an investment shall be considered held by an issuer even if the investment has been sold or repaid if the issuer reinvests an amount equal to the capital returned to or recovered by the issuer from the original investment, exclusive of any profits realized, in another qualified low-income community investment within twelve months of the receipt of the capital. Periodic amounts received during a calendar year as repayment of principal on a loan that is a qualified low-income community investment shall be treated as continuously invested in a qualified low-income community investment if the amounts are reinvested in another qualified low-income community investment by the end of the following calendar year as set forth in 26 CFR 1.45D-1. An issuer shall not be required to reinvest capital returned from qualified low-income community investments after the sixth anniversary of the issuance of the qualified equity investment, the proceeds of which were used to make the qualified low-income community investment, and the qualified low-income community investment shall be considered held by the issuer through the seventh anniversary of the qualified equity investment's issuance.
G. Enforcement of the recapture provisions of Subsection F of this Section shall be subject to a six-month cure period with respect to qualified equity investments issued before August 1, 2020, and a three-month cure period with respect to qualified equity investments issued on or after August 1, 2020. No recapture shall occur until the qualified community development entity has been given notice of noncompliance by the Department of Insurance and afforded six months from the date of such notice to cure the noncompliance.
H.(1) A qualified community development entity that seeks to have an equity investment designated as a qualified equity investment and eligible for tax credits pursuant to this Section shall pay a deposit in the amount of five hundred thousand dollars payable to the department. The entity shall forfeit the deposit in its entirety if either:
(a) The qualified community development entity and all transferees pursuant to Paragraph (E)(6) of this Section fail to issue the total amount of qualified equity investments certified by the department and receive cash in the total amount certified under Paragraph (E)(5) of this Section within the time period set forth in Paragraph (E)(7) of this Section.
(b) The qualified community development entity or any transferee pursuant to Paragraph (E)(6) of this Section that issues a qualified equity investment certified pursuant to this Section fails to meet the investment requirement under Paragraph (F)(2) of this Section by the second credit allowance date of such benefit of the six-month cure period established pursuant to Subsection G of this Section or Paragraph (F)(3) of this Section by the nine-month anniversary of the initial credit allowance date without the benefit of the three-month cure period established pursuant to Subsection G of this Section or Paragraph (F)(4) of this Section by the twelve-month anniversary of the initial credit allowance date without the benefit of the three-month cure period established pursuant to Subsection G of this Section.
(2) The deposit required by Paragraph (1) of this Subsection shall be deposited with the department and held until such time as compliance with the provisions of this Subsection shall have been established. The qualified community development entity may request a return of the deposit from the department no earlier than thirty days after having met all the requirements of Paragraph (1) of this Subsection. The department shall have thirty days to comply with such request or give notice of noncompliance. In the event the qualified community development entity fails to fulfill the conditions of Subparagraph (1)(a) of this Section, then the amount payable from such deposit shall be retained by the department as self-generated funds.
I.(1) An entity claiming a credit pursuant to this Section is not required to pay any additional retaliatory tax levied by R.S. 22:836 as a result of claiming that credit.
(2) In addition to the exclusion in Paragraph (1) of this Subsection, it is the intent of this Act that an entity claiming a credit pursuant to this Section is not required to pay any additional tax that may arise as a result of claiming that credit.
J.(1)(a) Qualified community development entities that issue qualified equity investments before August 1, 2020, and after August 1, 2023, shall submit a report to the department within the first five business days after the first anniversary of the initial credit allowance date that provides documentation as to the investment of one hundred percent of the purchase price in qualified low-income community investments in qualified active low-income community businesses, including qualified low-income community investments made in satisfaction of Paragraph (F)(4) of this Section, located in Louisiana. The report shall include:
(i) A bank statement of the qualified community development entity evidencing each qualified low-income community investment.
(ii) Evidence that the business was a qualified active low-income community business or impact business at the time of such qualified low-income community investment.
(b) Qualified community development entities that issue qualified equity investments on or after August 1, 2020, but before August 1, 2023, shall submit a report to the department within the first five business days after the nine-month anniversary of the initial credit allowance date that provides documentation as to the investment of one hundred percent of the purchase price in qualified low-income community investments in qualified active low-income community businesses, including qualified low-income community investments made in satisfaction of Paragraph (F)(3) of this Section, located in Louisiana. The report shall include:
(i) A bank statement of the qualified community development entity evidencing each qualified low-income community investment.
(ii) Evidence that the business was a qualified active low-income community business or impact business at the time of such qualified low-income community investment.
(2) Thereafter, the qualified community development entity will submit an annual report to the department within forty-five days of the beginning of the calendar year during the compliance period. No annual report shall be due prior to the first anniversary of the initial credit allowance date. The report shall include but is not limited to the following:
(a) Number of employment positions created and retained as a result of qualified low-income community investments.
(b) Average annual salary of positions described in Subparagraph (a) of this Paragraph.
(3) The qualified community development entity is not required to provide the annual report set forth in Paragraph (2) of this Subsection for qualified low-income community investments that have been redeemed or repaid.
K.(1) The department may promulgate rules to implement the provisions of this Section.
(2) The department shall issue all forms and notices required hereunder in accordance with the provisions of this Section.
L. The department shall notify the Department of Insurance of the name of any insurance company allocated tax credits hereunder and the amount of such credits.
M. The provisions of this Section shall apply only to tax returns or reports originally due on or after January 1, 2014.
N. 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.
Acts 2013, No. 265, §1; Acts 2015, No. 357, §1; Acts 2020 1st Ex. Sess., No. 17, §1; Acts 2020, 2nd Ex. Sess., No. 1, §1, eff. Oct. 16, 2020; Acts 2023, No. 433, §1, eff. June 27, 2023.