Louisiana Feeling the Blues After Various Sales Tax and Credits & Incentives Changes
Author: Jana Gradeva
During the 2015 legislative session, the Louisiana State Legislature was faced with the difficult task of bridging the state’s $1.6 billion budget deficit. This challenge was amplified by the state’s constitutional balanced budget requirement and the governor’s signing of the American Tax Reform pledge to not raise taxes.
As a result, the legislature made a number of changes affecting various state and local tax laws to kick off the new fiscal year. Some included modifications to the sales and use tax and credits and incentives law provisions.
Sales & Use Tax
HCR 8 – Currently under review by the Louisiana Secretary of State, this bill suspends the current 0.97 percent sales and use tax exemption for business utilities including sales of steam, water, electric power or energy and natural gas. The bill also effectively suspends the Louisiana Tourism Promotion District’s 0.03 percent tax exemption. The suspension takes effect July 1, 2015, and continues until 60 days after final adjournment of the 2016 regular legislative session.
HB 555 – This bill, passed by the legislature but vetoed by Gov. Bobby Jindal, would expand the definition of a “dealer” to include affiliate and agency nexus provisions for remote sellers. The expanded definition in R.S. 47:301 would include in-state solicitation by a third-party agent, affiliate and click-through provisions. In addition, tax collection activities would be performed by the Department of Revenue on behalf of the parishes and distributed to the parishes quarterly based on population.
The passage of this bill would have mostly affected out-of-state online retailers. However, in vetoing the bill on June 19, Jindal said, “the idea of affiliate nexus has been litigated in several states, forcing those states to change their laws to conform with the court’s respective decision and creating financial instability as a result.” The governor’s position is that Commerce Clause issues with affiliate nexus needs to be addressed federally, and that passage of this bill could expose the state to expensive litigation.
Credits & Incentives
HB 635 – The bill amends various statutes related to rebate programs. The Louisiana Mega Project Energy Assistance, Quality Jobs Program, Corporate Headquarters Relocation Program, Competitive Projects Payroll Incentive Program and Enterprise Zone rebates all were reduced by 20 percent, allowing instead for an 80 percent rebate of taxes paid to the state. The new rebate rules apply to rebate applications made on or after July 1, 2015, and will remain in effect until June 30, 2018. Retail trade and food service and drinking establishments now are excluded from eligibility to participate in the Enterprise Zone program starting July 1, 2015.
HB 779 – The bill amends the Solar Energy Systems Tax Credit to allow for a maximum of a $10 million tax credit for the purchase or lease of solar energy systems between July 1, 2015, and July 1, 2016, for single-family residences. The $10 million tax credit also will be available for systems installed between July 1, 2016, and July 1, 2017, for single-family residences. The tax credit will be reduced to $5 million for systems installed on single-family residences after July 1, 2017. The credits end December 31, 2017.
HB 829 – This bill caps the aggregate total of the Motion Picture Tax Credit program to $180 million for fiscal years 2015 - 2016, 2016 - 2017 and 2017 - 2018. The minimum project spending requirement has been lowered from $300,000 to $50,000, with the additional requirement to employ Louisiana residents for investments totaling less than $300,000. However, the credit is capped at $30 million for a single state-certified production.
To learn more about how these changes could affect your organization, contact your BKD advisor.