§2399.3. Modernization tax credit

A.(1) Except as provided in Subsection B of this Section, an employer may earn and apply for and, if qualified, be granted a refundable credit on any income or corporation franchise tax liability owed to the state by the employer seeking to claim the credit, in the amount approved by the secretary of the department for the amount of qualified expenditures incurred by the employer for a modernization. Except as otherwise provided in this Paragraph, the refundable credit shall be allowed against the income tax for the taxable period in which the credit is earned and the franchise tax for the taxable period following the period in which the credit is earned.

(2)(a) For credits approved prior to July 1, 2015, the following shall apply:

(i) The credits approved by the department shall be granted at the rate of five percent of the amount of qualified expenditures incurred by the employer for modernization with the credit divided in equal portions for five years, subject to the limitations provided for in other Paragraphs of this Subsection.

(ii) The total amount of modernization tax credits granted by the Department of Economic Development in any calendar year shall not exceed ten million dollars irrespective of the year in which claimed. The department shall by rule establish the method of allocating available tax credits to applicants, including but not limited to a first come, first served system, reservation of tax credits for a specified time period, or other method which the department, in its discretion, may find beneficial to the program. In the event that the total amount of credits granted in any calendar year is less than seven million two hundred thousand dollars, any residual amount of unused credits shall carry forward for use in subsequent years and may be granted in addition to the seven million two hundred thousand dollar limit for each year.

(b) For credits approved on and after July 1, 2015, and before July 1, 2017, the following shall apply:

(i) The credits approved by the department shall be granted at the rate of three and six-tenths of one percent of the amount of qualified expenditures incurred by the employer for modernization with the credit divided in equal portions for five years, subject to the limitations provided for in other Paragraphs of this Subsection.

(ii) The total amount of modernization tax credits granted by the Department of Economic Development in any calendar year shall not exceed seven million two hundred thousand dollars irrespective of the year in which claimed. The department shall by rule establish the method of allocating available tax credits to applicants, including but not limited to a first come, first served system, reservation of tax credits for a specified time period, or other method which the department, in its discretion, may find beneficial to the program. In the event that the total amount of credits granted in any calendar year is less than seven million two hundred thousand dollars, any residual amount of unused credits shall carry forward for use in subsequent years and may be granted in addition to the seven million two hundred thousand dollar limit for each year.

(c) For credits approved on and after July 1, 2017, the following shall apply:

(i) The credits approved by the department shall be granted at the rate of four percent of the amount of qualified expenditures incurred by the employer for modernization with the credit divided in equal portions for five years, subject to the limitations provided for in other Paragraphs of this Subsection.

(ii) The total amount of modernization tax credits granted by the Department of Economic Development in any calendar year shall not exceed seven million two hundred thousand dollars irrespective of the year in which claimed. The department shall by rule establish the method of allocating available tax credits to applicants, including but not limited to a first-come, first-served system, reservation of tax credits for a specified time period, or other method which the department, in its discretion, may find beneficial to the program. In the event that the total amount of credits granted in any calendar year is less than seven million two hundred thousand dollars, any residual amount of unused credits shall carry forward for use in subsequent years and may be granted in addition to the seven million two hundred thousand dollar limit for each year.

(d) An employer earns the modernization tax credits in the year in which the project is placed in service, but the employer may not claim modernization tax credits until the department signs a project completion form. No project placed in service before July 1, 2011 shall be eligible for the tax credit authorized pursuant to the provisions of this Section.

(e) After approving modernization tax credits for an employer, the department shall issue a tax credit certificate, a copy of which is to be attached to the tax return of the employer. The tax credit certificate shall contain the employer's name, address, tax identification number, the amount of credit, and other information required by the Department of Revenue. The tax credit certificate, unless rescinded by the department, shall be accepted by the Department of Revenue as proof of the credit.

(f) The Department of Economic Development shall maintain a list of the tax credit certificates issued.

(3)(a) All entities taxed as corporations for Louisiana income or corporation franchise tax purposes shall claim any credit allowed under this Section on their corporation income and corporation franchise tax return.

(b) Individuals shall claim any credit allowed under this Section on their individual income tax return.

(c) Estates or trusts shall claim any credit allowed under this Section on their fiduciary income tax returns.

(d) Entities not taxed as corporations shall claim any credit allowed under this Section on the returns of the partners or members as follows:

(i) Corporate partners or members shall claim their share of the credit on their corporation income or corporation franchise tax returns.

(ii) Individual partners or members shall claim their share of the credit on their individual income tax returns.

(iii) Partners or members that are estates or trusts shall claim their share of the credit on their fiduciary income tax returns.

B. A retention and modernization tax credit shall expire and have no value or effect on tax liability beginning with the eleventh tax year after the tax year in which it was originally granted.

Acts 2009, No. 447, §1; Acts 2015, No. 125, §3, eff. July 1, 2015, §6, eff. July 1, 2018; Acts 2016, 1st Ex. Sess., No. 29, §2, eff. April 1, 2016; Acts 2017, No. 400, §§1, 3, and 4, eff. June 26, 2017.

NOTE: See Acts 2016, 1st Ex. Sess., No. 29, §2, regarding effectiveness.