2011 Louisiana Laws
Revised Statutes
TITLE 47 — Revenue and taxation
RS 47:6034 — Musical and theatrical production income tax credit

§6034. Musical and theatrical production income tax credit

A. Purpose. It is the intention of the legislature in creating these five different types of tax credits: a credit for qualified production expenditures made from investments in a state-certified musical or theatrical production; a credit for the construction, repair, or renovation of facilities related to such productions and performances; a credit for qualified transportation costs for performance-related property; a credit for the payroll of Louisiana residents employed in connection with a state-certified musical or theatrical production; and a credit for employing college, university, and vocational-technical students employed in connection with a state-certified musical or theatrical production, to establish and promote Louisiana as one of the primary places in the United States in which live performances, from creation to presentation are present and thriving. The live performance industry will enhance economic development because it fits well with the state's reputation as a tourist destination, will offer numerous and varied employment opportunities, and in conjunction with the available federal and state incentives, will be an attraction for new and relocating businesses and will provide for the reinventing of countless abandoned properties as either performance or rehearsal spaces. The live performance industry will also spur educational development: Louisiana colleges, universities, and vocational-technical schools will be able to offer talented undergraduate and graduate students from this state, other states, and around the world a real-world opportunity to participate in degree programs across the state that work on the various productions in accounting, law, management, and marketing and to fill arts-related positions such as actors, writers, producers, stagehands, and directors, as well as technicians working on all aspects of the production such as lighting, sound, and actual stage production and operations.

B. Definitions. For the purposes of this Section:

(1) "Base investment" means the actual investment made and expended in this state by a state-certified musical or theatrical production as production-related costs or as capital costs of a state-certified musical or theatrical facility infrastructure project.

(2) "Company" or "financier" means any individual, firm, partnership, limited liability company, joint venture, association, corporation, estate, trust, or other entity, group, or combination acting as a unit, and the plural as well as the singular number.

(3) "Expended in the state" or "expenditures in the state" means an expenditure to acquire or lease immovable property located in the state, an expenditure to acquire movable property from a source within the state which is subject to state sales and use tax, or an expenditure as compensation for services performed within the state which is subject to state income tax.

(4) "Limited state-certified musical or theatrical production" means a musical or theatrical production or a series of productions occurring in Louisiana by a nonprofit community theater that held a public performance before an audience within this state during the 2008 calendar year which has been certified, verified, and approved in accordance with the provisions of this Section.

(5) "Musical or theatrical production" means the producing, rehearsing, marketing, administration, recording, performing, and/or filming of a live musical or theatrical performance in the state before live audiences, the costs of which are not certified for other tax credits provided for in Louisiana law, whether or not there is a charge for admission. Such performances shall include, but not be limited to drama, comedy, comedy revue, opera, ballet, jazz, cabaret, and variety entertainment.

(6) "Payroll" means all salary, wages, and other compensation, including related benefits for services performed in Louisiana.

(7)(a) "Production expenditures" means a contemporaneous exchange of cash or cash equivalent for goods or services related to development, production, or operating expenditures in this state for a state-certified musical or theatrical production, including but not limited to expenditures for set construction and operation, including special and visual effects, costumes, wardrobes, make-up, accessories, costs associated with sound, lighting, staging, payroll, and other related costs.

(b) "Production expenditures" shall not include any indirect costs, any expenditures later reimbursed by a third party, and costs related to the transfer of the tax credits, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.

(8)(a) "Resident" or "resident of Louisiana" means a natural person and, for the purpose of determining eligibility for the tax incentives provided by this Section, a person who qualifies for any of the following reasons:

(i) The person is domiciled in the state of Louisiana.

(ii) The person maintains a permanent place of abode within the state and spends in the aggregate more than six months of each year within the state.

(iii) The person pays taxes to the state on the amount of money paid to such person for which a credit is sought pursuant to this Section.

(b) A company owned or controlled by such a person and which lends the services of such a person for a state-certified musical or theatrical production shall also be deemed a resident if such company is organized or authorized to do business in the state and such company pays taxes to the state on the amount of money paid to such company for such services of such person.

(9) "State-certified musical or theatrical facility infrastructure project" or "state-certified infrastructure project" means a capital infrastructure project in the state directly related to the production or performance of musical or theatrical productions as defined in this Section, and movable and immovable property and equipment related thereto, or any other facility which supports and is a necessary component of such facility, and any expenditures in the state related to the construction, repair, or renovation of such project, which are certified, verified, and approved as provided for in this Section.

(10)(a) "State-certified musical or theatrical production" means a musical or theatrical production, or a series of productions occurring over the course of a twelve-month period, and the recording or filming of such production, which originate, are developed, or have their initial public performance before an audience within Louisiana, or which have their United States debut within Louisiana, and the production expenditures, expenditures for the payroll of residents, transportation expenditures, and expenditures for employing college and vocational-technical students related to such production or productions, that are certified, verified, and approved as provided for in this Section. Non-qualifying projects include, but are not limited to non-touring music and cultural festivals, industry seminars, and trade shows.

(b) A "state-certified musical or theatrical production" which shall be eligible for recertification and the credit provided for in this Section shall include a previously certified musical or theatrical production which received a credit pursuant to this Section, and which is otherwise eligible pursuant to this Section, which returns for performances within the state after being performed on Broadway.

(11)(a) "Transportation expenditures" means expenditures for the packaging, crating, and transportation both to the state for use in a state-certified musical or theatrical production of sets, costumes, or other tangible property constructed or manufactured out of state, and/or from the state after use in a state-certified musical or theatrical production of sets, costumes, or other tangible property constructed or manufactured in this state. Such term shall include the packaging, crating, and transporting of property and equipment used for special and visual effects, sound, lighting, and staging, costumes, wardrobes, make-up and related accessories and materials, as well as any other performance or production-related property and equipment; provided that transportation services are purchased through a company which has a significant business presence in the state.

(b) "Transportation expenditures" shall not include any costs to transport property and equipment to be used only for filming and not in a state-certified production, any indirect costs, any expenditures that are later reimbursed by a third party, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.

C. Income tax credits for state-certified productions and state-certified musical or theatrical facility infrastructure projects:

(1) There is hereby authorized the following types of credits against the state income tax:

(a)(i)(aa) A base investment credit may be granted for certified, verified, and approved production expenditures for a state-certified musical or theatrical production, or for investments made by a company or a financier in such production which are, in turn, expended for such production expenditures.

(bb) The initial certification shall be effective for a period of twelve months prior to and twelve months after the date of initial certification.

(ii)(aa) Until January 1, 2014, a base investment credit may be granted for certified, verified, and approved expenditures in the state for the construction, repair, or renovation of a state-certified musical or theatrical facility infrastructure project, or for investments made by a company or a financier in such infrastructure project which are, in turn, expended for such construction, repair, or renovation, not to exceed ten million dollars per state-certified infrastructure project, under conditions provided for in this Item. No more than sixty million dollars in tax credits under this Section shall be granted for infrastructure projects per year.

(bb) If all or a portion of an infrastructure project is a facility which may be used for other purposes not directly related to the production or performance of musical or theatrical production activities, then the project shall be approved only if a determination is made that the multiple-use facility will support and will be necessary to secure musical or theatrical production activities for the musical or theatrical production or performance facility and the applicant provides sufficient contractual assurances that:

(I) The facility will be used for the production or performance of musical or theatrical production activities, or as a support and component thereof, for the useful life of the facility.

(II) No tax credits shall be earned on such multiple-use facilities until the facility directly used in musical or theatrical productions or performances is complete.

(cc) Tax credits for infrastructure projects shall be earned only as follows:

(I) Construction of the infrastructure project shall begin within six months of the initial certification provided for in Subparagraph (E)(1)(d) of this Section.

(II) Expenditures shall be certified, verified, and approved as provided for in this Section, and credits are not earned until such certification.

(III) Twenty-five percent of the total base investment provided for in the initial certification of an infrastructure project pursuant to Subparagraph (E)(1)(d) of this Section shall be certified, verified, and approved as expended before any credits may be earned.

(IV) No tax credit shall be allowed for expenditures made for any infrastructure project two years after its initial certification pursuant to Subparagraph (E)(1)(d) of this Section, unless fifty percent of total base investment provided for in the initial certification of the project pursuant to such Subparagraph has been expended prior to that time. The expenditures may be finally certified at a later date.

(dd) The initial certification may require the tax credits to be taken and/or transferred in the tax period in which the credit is earned or the tax credits may be structured in the initial certification of the project to provide that only a portion of the tax credit be taken over the course of two or more tax years.

(iii) Except as limited for state-certified infrastructure projects as provided for in this Subparagraph, the base investment credit shall be for the following amounts:

(aa) If the total base investment is greater than one hundred thousand dollars and less than or equal to three hundred thousand dollars, a company shall be allowed a tax credit of ten percent of the base investment made by that company.

(bb) If the total base investment is greater than three hundred thousand dollars and less than or equal to one million dollars, a company shall be allowed a tax credit of twenty percent of the base investment made by that company.

(cc) If the total base investment is greater than one million dollars, a company shall be allowed a tax credit of twenty-five percent of the base investment made by that company.

(b) Because the legislature hereby determines that the state lacks the facilities and services necessary to provide adequate resources for the construction of sets, costumes, and related property needed for productions and performances in the state, an additional transportation expenditure tax credit shall be allowed for the following percentages of certified, verified, and approved transportation expenditures as defined in Paragraph (B)(10) of this Section; provided that transportation services are purchased through a company which has a significant business presence in the state:

(i) One hundred percent of such amounts incurred through calendar year 2010.

(ii) Fifty percent of such amounts incurred during the calendar year 2011.

(iii) Twenty-five percent of such amounts incurred during the calendar year 2012.

(iv) No such transportation expenses incurred after December 31, 2012, shall be eligible for such credit.

(c) An additional tax credit of one tenth of one percent of the amount expended to employ students enrolled in Louisiana colleges, universities, and vocational-technical schools in a state certified musical or theatrical production in arts-related positions, such as an actor, writer, producer, stagehand, or director, or as a technician working on aspects of the production such as lighting, sound, and actual stage work, or working indirectly on the production in accounting, law, management, and marketing.

(d) To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified musical or theatrical production, except for the students provided for in Subparagraph (c) of this Paragraph, or the construction of a state-certified musical or theatrical facility infrastructure project, a company shall be allowed an additional tax credit of ten percent of such payroll; however, if the amount paid to any one person exceeds one million dollars, the additional credit shall not include any amount paid to that person that exceeds one million dollars.

(e) If all or a portion of an infrastructure project is a facility which may be used for purposes unrelated to live performance production or production-related activities, then the proposed base investment shall be approved only if the secretary of the Department of Economic Development determines that:

(i) The multiple-use facility will support and be necessary to secure live performance production activity for the project; and

(ii) The applicant provides sufficient contractual assurance that the project, including any multiple-use portion thereof, will be used as a live performance production facility, or as a support and component thereof, for the useful life of the facility.

(f) If the total base investment for a limited state-certified musical or theatrical production is greater than twenty five thousand dollars and less than three hundred thousand dollars, the nonprofit community theater shall be allowed a tax credit of ten percent of the base investment made by the nonprofit community theater for each of the 2009 and 2010 calendar years. However, the total amount of tax credits eligible to be issued pursuant to the provisions of this Subparagraph shall not exceed two hundred fifty thousand dollars for each of the 2009 and 2010 calendar years. Applicants shall be limited to a maximum of two applications per year for the 2009 and 2010 calendar years.

(2)(a) The tax credits shall be earned each calendar year to the extent the Louisiana Department of Economic Development verifies in writing that expenditures qualifying for a credit pursuant to this Section have been expended for the calendar year in accordance with the estimates of such expenditures for the calendar year set forth in the certification of the production or project.

(b) No credit shall be allowed under this Section for any expenditure for which a financier receives a credit pursuant to this Section, or for which a credit is granted under R.S. 47:6007 or 6023. In addition, a state-certified production or state-certified infrastructure project which receives tax credits pursuant to the provisions of this Chapter shall not be eligible to receive the rebates provided for in R.S. 51:2451 through 2461 in connection with the activity for which the tax credits were received.

(3) Tax credits associated with a state-certified musical or theatrical production or a state-certified musical or theatrical facility infrastructure project shall never exceed the total base investment in that production or infrastructure project and transportation expenditures.

(4) The granting of credits under this Section shall be on a first-come, first-served basis. If the total amount of credits applied for in any particular year exceeds the aggregate amount of tax credits allowed for that year, the excess shall be treated as having been applied for on the first day of the subsequent year.

D.(1) The credit shall be allowed against individual or corporate income tax of the companies or financiers of the production or infrastructure project in accordance with their share of the credit as provided for in the application for certification for the production or infrastructure project. A company or financier may on a one-time basis, transfer the credit, and/or any refund of an overpayment, to an individual or other entity including without limitation a bank or other lender, provided that the transfer shall not be effective until receipt by the Department of Revenue of written notice of such transfer. The credit shall be allowed for the taxable period in which expenditures eligible for a credit are expended. Any excess of the credit over the income tax liability against which the credit may be applied shall constitute an overpayment, as defined in R.S. 47:1621(A), and the secretary of the Department of Revenue shall make a refund of such overpayment from the current collections of the taxes imposed by Chapter 1 of Subtitle II of this Title, as amended. The right to a refund of any such overpayment shall not be subject to the requirements of R.S. 47:1621(B).

(2) Application of the credit.

(a) Individuals, estates, and trusts shall claim their share of any credit on their income tax return.

(b) Entities not taxed as corporations shall claim their share of any credit on the returns of the partners or members.

(c) Corporate partners or members shall claim their share of any credit on their corporation income tax returns.

(d) Individual partners or members shall claim their share of any credit on their individual income tax returns.

(e) Partners or members that are estates or trusts shall claim their share of any credit on their fiduciary income tax returns.

E. Certification and administration:

(1)(a)(i) The secretary of the Department of Economic Development shall determine which musical or theatrical productions and which musical or theatrical facility infrastructure projects shall be certified pursuant to this Section through the adoption and promulgation of rules by the Department of Economic Development. The rules shall also provide for all of the following:

(aa) The minimum criteria for such certification.

(bb) The manner in which the department shall decide which expenditures for such productions or infrastructure projects will qualify for the credits provided for in this Section.

(cc) An appeals process in the event that an application for or the certification of a production or infrastructure project, or an expenditure related to such production or project, is denied.

(ii) In addition, these rules shall be approved by the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs in accordance with the provisions of the Administrative Procedure Act. No tax credits shall be granted under this Section until adoption of such rules.

(b) State certification shall not be granted to a production or infrastructure project by any person or company, or financed by any person or company, or any company or financier owned, affiliated, or controlled, in whole or in part, by any company or person, which is in default on a loan made by the state or a loan guaranteed by the state, or which has ever declared bankruptcy under which an obligation of the company or person to pay or repay public funds or monies was discharged as a part of such bankruptcy.

(c) When determining which musical or theatrical productions or musical or theatrical facility infrastructure projects qualify for certification, the Department of Economic Development shall take the following factors into consideration:

(i) The contribution of the production or infrastructure project to establishing the state as a leader in the live performance industry.

(ii) The impact of the production or infrastructure project on the employment of Louisiana residents.

(iii) The extent to which students in Louisiana colleges, universities, and vocational-technical schools will have an opportunity to work in a production in an arts-related position, such as an actor, writer, producer, stagehand, or director, or as a technician working on aspects of the production such as lighting, sound, and actual stage work, or working indirectly on the production in accounting, law, management, and marketing.

(iv) The impact of the production or infrastructure project on the overall economy of the state including the manner in which available federal and state incentives will be utilized in the financing or operation of the infrastructure project.

(v) The availability and kind of musical or theatrical facilities within the area in which a musical or theatrical facility infrastructure project is proposed.

(d) Upon approval the Department of Economic Development shall initially certify a production or project as a state-certified production or state-certified infrastructure project and send notice of such certification to the applicant and to the secretary of the Department of Revenue. The initial certification shall include all of the following:

(i) The total base investment to be expended on the state-certified production or the state-certified infrastructure project.

(ii) The companies and financiers to whom the credits shall be allocated.

(iii) The estimated amounts of the credits to be allocated to each.

(iv) In the case of state-certified infrastructure projects, when such tax credits may be taken or transferred.

(v) A unique identifying number for the state-certified production or state-certified infrastructure project.

(e) Prior to the final certification of a production or infrastructure project, the applicant shall submit to the Department of Economic Development a report of the final amount of expenditures qualifying for credits pursuant to this Section, which report the Department of Economic Development may require to be prepared by an independent certified public accountant. The Department of Economic Development shall review the report and shall issue a final tax credit certification letter, certifying the applicant and indicating the type and amount of tax credits for which the applicant or other companies or financiers are eligible pursuant to this Section.

(f) An applicant applying for the credits shall be required to reimburse the Department of Economic Development for any audits required in relation to granting the certification or tax credits.

(2)(a) Application. An applicant for the tax credit shall submit an application for initial certification to the Department of Economic Development that includes the following information:

(i) The application for state-certified productions shall include:

(aa) An application fee received by the Department of Economic Development based on the following:

(I) Two tenths of one percent times the estimated total incentive tax credits.

(II) The minimum application fee shall not be less than two hundred dollars, and the maximum application fee shall not be more than five thousand dollars.

(III) The application fee shall be deposited upon receipt in the state treasury. After compliance with the requirements of Article VII, Section 9(B) of the Constitution of Louisiana relative to the Bond Security and Redemption Fund and prior to any money being placed into the general fund or any other fund, an amount equal to that deposited as required by this Item shall be credited by the treasurer to a special fund which is hereby created in the state treasury to be known as the Entertainment Promotion and Marketing Fund.

(IV) The money in the fund shall be appropriated by the legislature to be used solely for promotion and marketing of Louisiana's entertainment industry. The money in the fund shall be invested by the treasurer in the same manner as money in the state general fund and interest earned on the investment of the money shall be credited to the fund after compliance with the requirements of Article VII, Section 9(B) of the Constitution of Louisiana relative to the Bond Security and Redemption Fund. All unexpended and unencumbered money in the fund at the end of the year shall remain in the fund.

(bb) A preliminary budget including estimated Louisiana payroll, estimated transportation expenditures, and estimated base investment, including the manner in which available federal and state incentives will be utilized in the financing or operation of the production.

(cc) A general description of the production and performance which may, at the request of the department, include the book, libretto, score, or concept, and plans for recording and/or filming such production.

(dd) A list of the principal creative elements including the cast, musicians, headline performers, conductor, producer, or director.

(ee) A possibility of offering students in Louisiana colleges, universities, and vocational-technical schools an opportunity to work directly in the production in an arts-related position, including a description of possible job or trainee positions working with professional actors, writers, producers, stagehands, directors, or technicians working on all aspects of the production such as lighting, sound, and actual stage work, or working indirectly on the production with professionals in accounting, law, management, and marketing.

(ff) Estimated dates for start and completion of rehearsals before paid performances and the estimated dates of performances in the state.

(gg) Plans, if any, for a national tour or for any performances in other states.

(hh) The companies and financiers to whom the credits shall be allocated and the estimated amounts of the credits to be allocated to each.

(ii) A discussion of any other reasons why the applicant believes the production should be considered a state-certified production as defined in this Section.

(ii) The application for state-certified musical or theatrical facility infrastructure projects shall include:

(aa) An application fee received by the Department of Economic Development based on the following:

(I) Two tenths of one percent times the estimated total incentive tax credits.

(II) The minimum application fee shall not be less than two hundred dollars, and the maximum application fee shall not be more than five thousand dollars.

(III) The application fee shall be deposited upon receipt in the state treasury. After compliance with the requirements of Article VII, Section 9(B) of the Constitution of Louisiana relative to the Bond Security and Redemption Fund and prior to any money being placed into the general fund or any other fund, an amount equal to that deposited as required by this Item shall be credited by the treasurer to a special fund known as the Entertainment Promotion and Marketing Fund.

(IV) The money in the fund shall be appropriated by the legislature to be used solely for promotion and marketing of Louisiana's entertainment industry. The money in the fund shall be invested by the treasurer in the same manner as money in the state general fund and interest earned on the investment of the money shall be credited to the fund after compliance with the requirements of Article VII, Section 9(B) of the Constitution of Louisiana relative to the Bond Security and Redemption Fund. All unexpended and unencumbered money in the fund at the end of the year shall remain in the fund.

(bb) A detailed description of the infrastructure project.

(cc) A preliminary budget, including the manner in which available federal and state incentives will be utilized in the financing or operation of the infrastructure project.

(dd) The companies and financiers to whom the credits shall be allocated and the estimated amounts of the credits to be allocated to each.

(ee) A complete, detailed business plan and market analysis.

(b) Additional information may be requested if deemed necessary by the Department of Economic Development.

(3) In addition to the rules and regulations provided for in Subparagraph (E)(1)(a) of this Section, the secretary of the Department of Economic Development, in consultation with the Department of Revenue, shall adopt and promulgate such other rules and regulations as are necessary to carry out the intent and purposes of this Section in accordance with the general guidelines provided herein.

F.(1) Recapture of credits. If the Department of Economic Development, or the Department of Revenue find that funds for which a taxpayer received credits according to this Section were not expended for expenditures qualifying for a credit as provided in this Section, then the taxpayer's state income tax for such taxable period shall be increased by such amount necessary for the recapture of credit provided by this Section.

(2)(a) Recovery of credits by Department of Revenue. Credits granted to a taxpayer, but later disallowed, may be recovered by the secretary of the Department of Revenue through any collection remedy authorized by R.S. 47:1561 and initiated within three years from December thirty-first of the year in which the credit was taken.

(b) The only interest that may be assessed and collected on 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 date of the return on which the credit was taken.

(3) 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.

G. The Department of Economic Development shall prepare, with input from the Legislative Fiscal Office, a written report to be submitted to the Senate Committee on Revenue and Fiscal Affairs and the House of Representatives Committee on Ways and Means no less than sixty days prior to the start of the Regular Session of the Legislature in 2008, and every second year thereafter. The report shall include the overall impact of the tax credits, the amount of the tax credits issued, the number of net new jobs created, the amount of Louisiana payroll created, the economic impact of the tax credits and the state-certified musical and theatrical productions and infrastructure projects, the amount of new infrastructure that has been developed in the state, and any other factors that describe the impact of the program.

H. Fifty percent of the tax credits annually granted according to the provisions of this Section for infrastructure projects shall be reserved for projects located outside of Jefferson and Orleans parishes, provided that the availability of tax credits for infrastructure projects in Jefferson and Orleans parishes shall not be conditioned upon the granting of infrastructure tax credits for projects outside of those parishes.

I. Brand. As a condition for receiving certification of tax credits under this Section, state-certified productions and infrastructure projects may be required to display the state brand or logo, or both, as prescribed by the secretary of the Department of Economic Development.

Acts 2007, No. 482, §1, eff. July 19, 2007; Acts 2009, No. 448, §1, eff. July 8, 2009; Acts 2009, No. 465, §1, eff. July 8, 2009.