2014 Louisiana Laws
Revised Statutes
TITLE 47 - Revenue and Taxation
RS 47:6015 - Research and development tax credit

§6015. Research and development tax credit

A. The Legislature of Louisiana hereby finds and declares that the health, safety, and welfare of the people of this state are dependent upon the continued encouragement, development, growth, and expansion of the private sector within the state. Therefore, it is declared to be the purpose of this Section to encourage new and continuing efforts to conduct research and development activities within this state.

B.(1) Any taxpayer who employs fifty or more persons and claims for the taxable year a federal income tax credit under 26 U.S.C. 41(a) for increasing research activities shall be allowed a refundable tax credit to be applied against income and corporation franchise taxes due.

(2) Any taxpayer who employs less than fifty persons and claims for the taxable year a federal income tax credit under 26 U.S.C. 41(a) for the taxable year, or meets the requirements of Subparagraph (3)(i) of this Subsection, shall be allowed a refundable tax credit to be applied against income and corporation franchise taxes due.

(3) Each taxpayer seeking the credits authorized in this Section shall apply to the Department of Economic Development for the credits. The taxpayer shall remit an application fee of two hundred fifty dollars with the application. The application shall include all of the following:

(a) A federal income tax return and supporting documentation that shows the amount of the federal research credit for the same taxable year. If claiming the credit under Subsection D of this Section, the taxpayer shall also remit supporting documentation for the federal Small Business Innovation Research Grant.

(b) The total amount of qualified research expenses and the qualified research expenses in this state.

(c) The total number of persons employed in Louisiana by the taxpayer and the number of those persons employed in Louisiana directly engaged in research and development.

(d) The average wages of the persons employed in Louisiana not directly engaged in research and development and the average wages of the persons employed in Louisiana directly engaged in research and development.

(e) The average value of benefits received by all persons employed in Louisiana.

(f) The cost of health insurance coverage offered to all persons employed in Louisiana.

(g) At the department's request, the taxpayer shall provide federal income tax information related to the research and development credit. This information shall include but shall not be limited to IRS forms 8821 and 4506.

(h) Any other information required by the Department of Economic Development.

(i) A taxpayer who employs less than fifty employees may apply for credits without providing a federal income tax return as required by Subparagraph (a) of this Paragraph if all of the following criteria are met:

(i) Unless waived by the secretary of the department, the taxpayer provides the department with a report from a certified public accountant authorized to practice in the state of Louisiana. The report shall be rendered based upon procedures and regulations developed by the department in accordance with the Administrative Procedure Act.

(ii) The taxpayer provides all supporting documentation required by the department to show the amount of qualified research expenses for such taxable year.

(4) The Department of Economic Development shall approve or disapprove each application. No credits shall be granted to a taxpayer under this Section unless the credit is approved by the Department of Economic Development.

(5) The following types of businesses that do not have a pending or issued United States patent directly related to the qualified research expenditures claimed under this Section are ineligible to apply for or receive benefits under this Section, unless specifically invited by the secretary of the department to do so:

(a) Professional services firms as defined by departmental rule.

(b) Businesses primarily engaged in custom manufacturing and custom fabricating as defined by departmental rule.

C.(1) For purposes of determining the amount of the credit earned, an "entity" shall be determined by the total number of employees based on the aggregate of all affiliated companies.

(2) The amount of the credit authorized in this Section shall be equal to either:

(a) Eight percent of the difference, if any, of the Louisiana qualified research expenses for the taxable year minus the base amount, if the taxpayer is an entity that employs one hundred or more persons.

(b) Twenty percent of the difference, if any, of the Louisiana qualified research expenses for the taxable year minus the base amount, if the taxpayer is an entity that employs fifty to ninety-nine persons.

(c) Forty percent of the Louisiana qualified research expenses for the taxable year, if the taxpayer is an entity that employs less than fifty persons.

(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.

D. A taxpayer who receives a federal Small Business Innovation Research Grant as created by the Small Business Innovation Development Act of 1982 (P.L. 97-219), reauthorized by the Small Business Research and Development Enhancement Act (P.L. 102-564), and reauthorized again by the Small Business Reauthorization Act of 2000 (P.L. 106-554), shall be allowed a refundable tax credit in an amount equal to forty percent of the award received during the tax year.

E. As used in this Section, the following terms shall have the meaning hereafter ascribed to them, unless the context clearly indicates otherwise:

(1) "Base amount" shall mean seventy percent of the average annual qualified research expenses within Louisiana during the three years preceding the taxable year.

(2) "Department" shall mean the Department of Economic Development.

(3) "Person" shall mean a natural person.

(4) "Qualified research expenses" and "qualified research" shall have the same meanings as those terms are defined in 26 U.S.C. §41, as amended.

F. The department shall administer the provisions of this Section and shall have the following powers and duties in addition to those granted by other laws of this state:

(1) To monitor the implementation and operation of this Section and conduct a continuing evaluation of the program.

(2) To assist any taxpayer in obtaining the benefits of any incentive or inducement program authorized by Louisiana law.

(3) To promulgate program rules and regulations in consultation with the secretary of the Department of Revenue, in accordance with the Administrative Procedure Act.

(4) To receive information from the Department of Revenue regarding the identity of the taxpayer and the amount of credit claimed for any credits claimed pursuant to this Section. Such information shall not be public record and shall be subject to the same prohibition of disclosure as in the possession of the Department of Revenue.

(5) To audit all relevant records and accounts of any taxpayer applying for credits provided for by this Section.

G.(1) Each year, prior to the issuance of credits, the department shall perform a detailed examination of at least ten percent of all applications received. The department shall select applications for examination based on one or more of the following: a random sampling of applications, the applicant's business sector, and other selection criteria as determined by the department.

(2) If a taxpayer's application is selected for examination, the taxpayer shall submit all supporting documentation required by the department. The department shall use this evidence to verify that the amount of the qualified research expenses incurred in Louisiana for the taxable year support the corresponding tax credit.

(3) Upon examination, the department will disallow any credits that are not substantiated by supporting documentation to include Internal Revenue Service documents.

(4) The applicant bears the burden of proving that its activities meet the definition of qualified research provided in 26 U.S.C. 41(d).

(5) Nothing in this Subsection shall preclude the department from examining a taxpayer's application for research and development credits after the issuance of credits. Credits disallowed following an examination conducted after the issuance of credits will be subject to recovery, recapture, or offset.

H.(1) Credits granted under this Section, but later disallowed in whole or in part, may be recovered by the secretary of the Department of Revenue from the taxpayer applicant through any collection remedy authorized by R.S. 47:1561 that is initiated within three years from December thirty-first of the year in which the credit was originally granted. The only interest that may be assessed and collected on these recovered credits is interest at a rate three percentage points above the rate provided in R.S. 9:3500(B)(1), which shall be computed from the original due date of the return on which the disallowed credit was taken.

(2) The provisions of this Subsection are in addition to and shall not limit the authority of the secretary of the Department of Revenue to assess or to collect under any other provision of law. This includes the disallowance of any disallowed credit claimed by a taxpayer who received the credit through purchase or through a distribution by an entity not taxed as a corporation.

I. A taxpayer shall not receive any other incentive administered by the Department of Economic Development for any expenditures for which the taxpayer has received a credit pursuant to this Section.

J. No credit shall be allowed pursuant to this Section for research expenditures incurred or Small Business Innovation Research Grant funds received after December 31, 2019.

Acts 2002, 1st Ex. Sess., No. 9, §1, eff. for all income tax years beginning on or after Jan. 1, 2003, and franchise tax years beginning on or after Jan. 1, 2004; Acts 2005, No. 402, §1, eff. July 1, 2005; Acts 2009, No. 477, §1, eff. July 9, 2009; Acts 2011, No. 407, §1, eff. July 5, 2011; Acts 2013, No. 257, §1, eff. July 1, 2013, applicable to tax years beginning on or after Jan. 1, 2013.

NOTE: Acts 2002, 1st Ex. Sess., No. 9 §2, provided that the Act would become null and void on Dec. 31, 2006. Acts 2009, No. 477, §2, deleted the termination language.

NOTE: See Acts 2011, No. 407, §3, relative to applicability.