2009 Louisiana Laws TITLE 47 Revenue and taxation :: RS 47:6020.1 Angel investor tax credit program; establishment; qualifications; administration

§6020.1.  Angel Investor Tax Credit Program; establishment; qualifications; administration

A.  Qualifying individuals or entities that invest in a Louisiana Entrepreneurial Business as defined by R.S. 51:2303(5) may earn, apply for, and be granted a refundable tax credit on any income or corporation franchise tax liability.  Such credits shall be earned and granted for a period of five tax years as provided in this Part.  The administration of applications for these credits and the provision of these credits shall be called the Angel Investor Tax Credit Program.

B.(1)  The Angel Investor Tax Credit Program shall be implemented and administered by the Department of Economic Development.  In compliance with the Administrative Procedure Act and this Part, the department shall adopt and promulgate such rules as are necessary for the efficient and effective administration of this program in keeping with the purposes for which it is enacted.

(2)  In providing for the implementation and administration of the program, the department shall work closely with the secretary of the Department of Revenue in order to promulgate rules.  Such rules shall include provisions for:

(a)  The Department of Economic Development to certify the eligibility of any taxpayer applicant for receipt of the tax credit provided for in this Part and the qualification of any taxpayer claimant to claim the credit against state tax liability.

(b)  The presentation of a taxpayer's eligibility certification and any other documentation required to be applied for to earn or claim a credit.

(c)  Provide for an annual report of the Louisiana Entrepreneurial Business regarding the use of proceeds, number of employees, amount of payroll, annual revenue, and any other information requested by the Department of Economic Development.

C.(1)  To qualify for an angel investor tax credit for five tax years all of the following qualifications shall be required by each applicant:

(a)  The investment in the Louisiana Entrepreneurial Business must be an investment that is at risk and not secured or guaranteed.  "At risk" means that the repayment of the investment is entirely dependent on the success of the Louisiana Entrepreneurial Business.

(b)  The funds invested by the applicant cannot have been raised as a result of other Louisiana tax incentive programs, funds pooled or organized through capital placement agreements for the purpose of equity and venture capital investing unless approved by the Department of Economic Development, or as the result of illegal activity.

(c)  For the purposes of this Angel Investor Tax Credit Program, an angel investor or investors cannot be the principal owner or owners of the business who are involved in the operation of the business as a full-time professional activity nor can their spouses and relatives within the third degree of consanguinity or affinity.  A principal owner means one or more persons who own an aggregate of fifty percent or more of the Louisiana Entrepreneurial Business.

(d)  The use of proceeds from the investment must be used for capital improvements, plant equipment, research and development, working capital for the business, or other business activity as may be approved by the Department of Economic Development.  The proceeds cannot be used to pay dividends, repay shareholder's loans, redeem shares, or repay debt unless approved by the Department of Economic Development.

(e)  The applicant shall meet the definition of accredited investor established by the Department of Economic Development.

(f)  The investment in the Louisiana Entrepreneurial Business by the applicant must be maintained for three years unless otherwise approved by the Department of Economic Development.

(2)  To qualify for an angel investor tax credit the Louisiana Entrepreneurial Business shall meet all the following requirements:

(a)  The principal business operations of the business are located in Louisiana.

(b)  Prior to the investment by the taxpayer, the business has received approval as qualified to receive angel investor tax credits by the Department of Economic Development.

(c)  The Louisiana Entrepreneurial Business must demonstrate that it will be a wealth-creating business for Louisiana by demonstrating in its business plan that it will have more than fifty percent of its sales from outside Louisiana.

(d)  The business is not a business engaged primarily in retail sales, real estate, professional services, gaming or gambling, natural resource extraction or exploration, or financial services including venture capital funds.

Acts 2005, No. 400, §1; Acts 2007, No. 445, §1.

NOTE:  Acts 2005, No. 400, provides that the provisions of the Act "shall become effective for all income tax and franchise tax years beginning on or after January 1, 2005.  However, this Act shall become null and void on December 31, 2009."