2009 Louisiana Laws TITLE 47 Revenue and taxation :: RS 47:1675 General administrative provisions for credits against income and corporation franchise tax

§1675.  General administrative provisions for credits against income and corporation franchise tax

A.  Unless specifically provided for herein or in the statute granting the credit against income or corporation franchise tax:

(1)  The tax credit is not refundable.

(2)  The tax credit does not carry forward or carry back.

(3)  The tax credit cannot be used for taxes that became due in a tax year prior to the year in which the credit was initially earned or granted.

(4)  The tax credit is not transferable.

(5)  The tax credit cannot be used to reduce interest or penalty.

(6)(a)  If a tax credit has an annual or total program cap or limit on the total amount of the credit which may be allowed to taxpayers within a certain time period, the tax credit shall be administered on a first-come, first-served basis.

(b)  However, all tax credit requests received on the same business day shall be treated as received at the same time, and if the aggregate amount of tax credit requests received on a single business day exceed the amount of tax credits available, tax credits shall be approved on a pro rata basis.

B.  Priority of credits. Unless otherwise provided in the statute granting the credit, the department will apply credits against income and corporation franchise tax in the following order:

(1)  Current year nonrefundable credits with no carry forward.

(2)  Any carry forward amount from a tax credit earned, granted, or received in a prior year, in the order of the length of the carry forward period remaining, beginning with the shortest carry forward period.

(3)  Current year nonrefundable credits with a carry forward, in the order of the length of the carry forward period, beginning with the credit with the shortest carry forward period.

(4)  Tax credits that are transferable, but that are not refundable that the taxpayer elects to apply against the tax.

(5)  Refundable tax credits.

(6)  Estimated payments, the credit for withholding, and other payments of tax.

C.  Definitions.

(1)  When used in a statute granting a credit against income or corporation franchise tax, the term "carryover" shall mean carry forward.

(2)  Value of donations of property or services.  When a credit is available for the donation of property or services, unless otherwise provided in the statute granting the credit:

(a)  The value of any donated property shall mean the fair market value of that property.

(b)  The value of any service donated shall mean the fair market value of that service in the community in which the service was performed.

D.  Unless otherwise provided in the statute granting the credit, credits against income or corporation franchise tax are earned in the tax year in which the person has completed all requirements set forth in the statute granting the credit.

E.  Unless otherwise provided in the statute granting the credit, if two or more taxpayers share in costs that would be eligible for any of the following credits, each taxpayer may take the credit in proportion to that taxpayer's respective share of the costs paid or incurred:

(1)  Credit for neighborhood assistance, R.S. 47:34 and 287.749.

(2)  Credit for donations to assist qualified playgrounds, R.S. 47:6008.

(3)  Credit for donations to public schools, R.S. 47:6013.

(4)  Credit for rehabilitation of historic structures, R.S. 47:6019.

(5)  Any credit for which the statute granting the credit specifically provides for a credit in proportion to that taxpayer's respective share of the costs paid or incurred.

(6)  Any other credit listed in regulations promulgated by the secretary.

F.  Credits granted, allocated, or transferred to entities not subject to Louisiana income tax or corporation franchise tax.

(1)  Unless otherwise provided in the statute granting the credit, if an entity not subject to Louisiana income tax or corporation franchise tax acquires an income or franchise tax credit, the credit shall flow through to partners or members as provided in the operating agreement of the entity.  In the absence of an operating agreement, the credit shall flow through to each partner or member in accordance to the partner or member's ownership interest in the entity.

(2)  Unless flow through of the credit is prohibited by the statute granting the credit, if an entity not subject to Louisiana income tax or corporation franchise tax earns a credit and has a tax year-end different from that of a partner or member, the credit is available in the same tax year in which the partner or member is required to report any income or loss from that entity.

(3)  An entity not subject to Louisiana income tax or corporation franchise tax must prepare and distribute to each partner or member a schedule detailing the partner or member's share of each credit earned and any recapture that is required.  Copies of these schedules must be attached to each return on which the credit is claimed.

G.  Credits granted or allocated to Subchapter S Corporations.

(1)  Credits earned by, allocated to, or transferred to an S corporation during a year in which the corporation operated as a C corporation must be used at the corporation level.

(2)(a)  Unless otherwise provided in the statute granting the credit, credits earned by, allocated to, or transferred to a corporation during a year in which the corporation operates as an S corporation do not flow through to the shareholders, but must be used at the corporation level unless the S corporation makes the annual election provided for in Subparagraph (b) of this Paragraph.

(b)  Flow through election for S corporations.  An S corporation that earns or otherwise receives a tax credit through allocation or transfer during a year in which the corporation operates as an S corporation may annually elect to flow through the entire amount of the credit to its shareholders.  The election may be made for each credit received by the S corporation and shall be made annually.  The election shall be in writing and may not be revoked.

H.  Transferable income or corporation franchise tax credits.

(1)  Unless otherwise provided in the statute granting the credit:

(a)  A person is not required to apply a transferable credit against its own tax liability prior to transferring all or part of the credit.

(b)  If a person either earns the credit or receives the credit by flow through, the credit will be treated as a tax item and can only be applied against tax.

(c)  If a person acquires a credit through transfer, the credit is property and can be used to pay any outstanding tax liability for the tax against which the credit was originally granted and any related penalty and interest.  Interest and penalties will continue to accrue at the statutory rates until the date the department receives a return on which the credit is claimed.  The provisions of Paragraphs (A)(3) and (5) will not apply to this Subparagraph.

(2)  Income from the transfer of a Louisiana transferable tax credit is income from Louisiana sources.

I.  Repealed credits and credits with sunset provisions.  Unless otherwise provided in the statute granting or repealing the credit, any remaining carry forward from a credit that has been repealed or otherwise made inoperative shall continue to be applied and carried forward under the provisions of the statute granting the credit immediately before it expired or was repealed.

J.  Documentation for tax credits.

(1)  Record retention.

(a)  For credits with no carry forward provision, original records supporting any credit claimed must be maintained for four years following the date the return was filed claiming the credit.

(b)  For credits with a carry forward provision, original records supporting the credit must be maintained for four years following the date on which the last return was filed claiming the credit.

(2)  Documentation supporting a tax credit shall be provided by a taxpayer claiming a tax credit as required by rule or on forms or instructions provided by the secretary.

Acts 2005, No. 268, §1, eff. for income tax years beginning after Dec. 31, 2004, and franchise tax years beginning after Dec. 31, 2005; Acts 2009, No. 445, §1, eff. July 8, 2009.