Louisiana Expands Tax Credits for Ad Valorem Taxes Paid on Inventory

Thoughtware Article Published: Jan 07, 2021
Town Hall Sign for State and Local Taxes

Louisiana Gov. John Bel Edwards recently signed into law several bills passed during the Louisiana Legislature’s Second Extraordinary Session that expanded certain Louisiana income or franchise tax credits for ad valorem taxes paid on inventory.

Act 50–SB 1 extends the carryforward period from five to 10 years for the inventory tax credit for certain businesses. Louisiana allows a credit against Louisiana income or corporation franchise tax for ad valorem taxes paid to political subdivisions on inventory held by manufacturers, distributors, and retailers. If the credit amount exceeds the amount of tax liability for the tax year, the excess credit shall either be refunded or carried forward as a credit against subsequent Louisiana income or corporation franchise tax liabilities. 

Act 56–SB 52 extends the payment deadline for certain tax year 2020 ad valorem taxes to be treated as timely paid. Taxpayers who pay ad valorem taxes on inventory for the 2020 tax year after December 31, 2020, but on or before April 15, 2021, may elect to treat these taxes as having been paid on December 31, 2020. Taxpayers who make this election shall not also claim these taxes as having been paid in 2021 for purposes of the credit for the 2021 tax year.

Act 59–SB 62 provides for the refundable portion of the inventory tax credit for certain manufacturers affected by the 2020 emergencies and disasters. Manufacturers affected by the 2020 emergencies and disasters who paid ad valorem taxes on inventory for the 2020 tax year that was less than or equal to $1 million shall be refunded all of the excess credit. The refundable excess credit shall apply only to taxpayers who employed a minimum of 100 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. This will not apply to manufacturers who have claimed an ad valorem exemption under Article VII, Section 21(F) of the Louisiana Constitution.

To learn more about the Louisiana tax credits on ad valorem taxes paid in 2020, contact your BKD Trusted Advisor™ or use the Contact Us form below.

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