§6006. Tax credits for local inventory taxes paid
A.(1) There shall be allowed a credit against any Louisiana income or corporation
franchise tax for ad valorem taxes paid to political subdivisions on inventory held by
manufacturers, distributors, and retailers.
(2) There shall be allowed a credit against any Louisiana income or corporation
franchise tax for ad valorem taxes paid to political subdivisions on natural gas held, used, or
consumed in providing natural gas storage services or operating natural gas storage facilities.
B.(1) Credit for taxes paid by corporations shall be applied to state corporate income
and corporation franchise taxes. Credit for taxes paid by unincorporated persons shall be
applied to state personal income taxes. The secretary shall make a refund to the taxpayer in
the amount to which he is entitled from the current collections of the taxes collected pursuant
to Chapters 1 and 5 of Subtitle II of this Title. If the amount of the credit authorized pursuant
to Subsection A of this Section exceeds the amount of tax liability for the tax year, the
following amounts of the excess credit shall either be refundable or may be carried forward
as a credit against subsequent Louisiana income or corporation franchise tax liability for a
period not to exceed ten years, as follows:
(a) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to
this Section paid to all political subdivisions in the taxable year was less than or equal to five
hundred thousand dollars shall be refunded all of the excess credit.
(b) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to
this Section paid to all political subdivisions in the taxable year was more than five hundred
thousand dollars, but less than or equal to one million dollars, shall be refunded seventy-five
percent of the excess credit, and the remaining twenty-five percent of the excess credit shall
be carried forward as a credit against subsequent tax liability for a period not to exceed ten
years.
(c) Taxpayers whose ad valorem taxes eligible for the credit authorized pursuant to
this Section paid to all political subdivisions in the taxable year was more than one million
dollars shall be refunded seventy-five percent of the first one million dollars of excess credit,
and the remaining amount of the credit shall be carried forward as a credit against subsequent
tax liability for a period not to exceed ten years.
(2) Each taxpayer allowed a credit under this Section shall claim the credit on its
separately filed income or corporate franchise tax return; however, for purposes of the
application of the limitations on refundability of excess credit provided for in Subparagraphs
(1)(a) through (c) of this Subsection, all taxpayers included in one consolidated federal
income tax return filed under the Internal Revenue Code shall be treated as a single taxpayer.
(3)(a) Subparagraphs (1)(a) and (b) of this Subsection shall not apply to any new
business entity formed or registered to do business in this state after April 15, 2016.
(b) New business entities formed or first registered to do business in this state after
April 15, 2016, whose ad valorem taxes paid to all political subdivisions in the taxable year
was less than ten thousand dollars shall be refunded all of the excess credit.
(c) New business entities formed or first registered to do business in this state after
April 15, 2016, whose ad valorem taxes paid to all political subdivisions in the taxable year
was ten thousand dollars or more, but no more than one million dollars shall be refunded
seventy-five percent of the excess credit, and the remaining twenty-five percent of the credit
shall be carried forward as a credit against subsequent tax liability for a period not to exceed
ten years.
(4) Notwithstanding any provision in this Section to the contrary, for a manufacturer,
as defined in Subparagraph (C)(3)(b) of this Section, if the amount of the credit authorized
pursuant to Subsection A of this Section exceeds the amount of tax liability for the tax year,
the excess credit shall not be refundable and may only be carried forward as a credit against
subsequent Louisiana income or corporation franchise tax liability for a period not to exceed
ten years and shall not be refundable.
C. For purposes of this Section, the following terms shall have the meanings ascribed
to them:
(1) "Distributor" means a person engaged in the sale of products for resale or further
processing for resale.
(2) "Inventory" means the aggregate of those items of tangible personal property that
are held for sale in the ordinary course of business, are currently in the process of production
for subsequent sale, or are to physically become a part of the production of such goods.
(a) "Inventory" shall include the following:
(i) Goods or commodities awaiting sale that include but are not limited to the
merchandise of a retail or wholesale concern, the finished goods of a manufacturer, the
commodities from farms, mines, and quarries, and goods that are used or trade-in
merchandise and by-products of a manufacturer.
(ii) Goods or commodities that are in the course of production.
(iii) Raw materials and supplies that will be consumed in the Louisiana
manufacturing process.
(iv) Any item of tangible personal property owned by a retailer that is available for
or subject to a short-term rental and that will subsequently or ultimately be sold by the
retailer. For purposes of this Section, the term "short-term rental" shall mean a rental of an
item of tangible personal property for a period of less than three hundred sixty-five days, for
an undefined period, or under an open-ended agreement.
(b) "Inventory" shall not include the following:
(i) Oil stored in tanks held by a producer prior to the first sale of the oil, and oil
otherwise exempt from ad valorem taxation pursuant to the provisions of the Constitution
of Louisiana.
(ii) Items that would otherwise be considered inventory at any time following the
initial lease by the taxpayer of such items. The provisions of this Item shall not include the
rental of tangible personal property as provided for in Item (a)(iv) of this Paragraph.
(iii) Items that would otherwise be considered inventory any time after the taxpayer
has commenced depreciating the item on the taxpayer's federal tax return. The provisions
of this Item shall not include the rental of tangible personal property as provided for in
Item(a)(iv) of this Paragraph.
(iv) Items that have been subject to use by the taxpayer when owned for more than
eighteen months. The provisions of this Item shall not include the rental of tangible personal
property as provided for in Item (a)(iv) of this Paragraph.
(v) Items that are otherwise exempt from ad valorem taxation pursuant to the
provisions of the Constitution of Louisiana, including, goods, commodities, or personal
property stored in the state for use in interstate commerce as provided for in Article VII,
Section 21(D)(3) of the Constitution of Louisiana.
(3) "Manufacturer" shall mean one of the following:
(a) A person engaged in the business of working raw materials into wares suitable
for use or which gives new shapes, qualities, or combinations to matter which already has
gone through some artificial process.
(b) A person who meets the definition of "manufacturer" as provided in
Subparagraph (a) of this Paragraph and who has claimed the ad valorem exemption under
Article VII, Section 21(F) of the Constitution of Louisiana during the taxable year in which
the local inventory taxes were levied.
(4) "Retailer" means a person engaged in the sale of products to the ultimate
consumer. The term "retailer" shall also include a person engaged in the short-term rental
of tangible personal property classified under code numbers 532412 and 532310 of the North
American Industry Classification System published by the United States Bureau of Census
and who is registered with the Department of Revenue as a retailer as defined in this Section.
D. The credit provided in this Section shall be allowed as follows:
(1) For inventory taxes paid to political subdivisions on or after Ju1y 1, 1992, and
before June 30, 1993, the credit shall be twenty percent of such taxes paid.
(2) For inventory taxes paid to political subdivisions on or after July 1, 1993, and
before June 30, 1994, the credit shall be forty percent of such taxes paid.
(3) For inventory taxes paid to political subdivisions on or after July 1, 1994, and
before June 30, 1995, the credit shall be sixty percent of such taxes paid.
(4) For inventory taxes paid to political subdivisions on or after July 1, 1995, and
before June 30, 1996, the credit shall be eighty percent of such taxes paid.
(5) For inventory taxes paid to political subdivisions on or after July 1, 1996, the
credit shall be one hundred percent of such taxes paid.
E. Commencing no later than January 31, 2016, the House Committee on Ways and
Means and the Senate Committee on Revenue and Fiscal Affairs shall review the credit
authorized pursuant to the provisions of this Section to determine if the economic benefit
provided by such credit outweighs the loss of revenue realized by the state as a result of
awarding such credit. The House and Senate committees shall make a specific
recommendation no later than March 1, 2017, to either continue the credit or to terminate the
credit.
F. At any time after a finding of overvaluation or misclassification of inventory for
the purposes of this credit by audit or on appeal by the Board of Tax Appeals or court that
last reviews the matter, the secretary of the Department of Revenue may intervene in any
proceeding related to the valuation or classification of property as inventory for which a
credit will be claimed pursuant to this Section.
G. Taxpayers that pay ad valorem taxes for the 2020 tax year that are eligible for the
credit provided by this Section but are paid after December 31, 2020, may elect to treat these
taxes as having been paid on December 31, 2020, for purposes of this credit, provided that
the payments are made to the local tax collector on or before April 15, 2021. Taxpayers that
make this election shall not also claim these taxes as having been paid in 2021 for purposes
of claiming this credit for the 2021 tax year.
H.(1) Notwithstanding the provisions of Subparagraphs (B)(1)(b) and (B)(3)(c) of
this Section, for ad valorem taxes on inventory paid for tax year 2020, taxpayers whose ad
valorem taxes eligible for the credit authorized pursuant to this Section paid to all political
subdivisions in the taxable year was less than or equal to one million dollars shall be
refunded all of the excess credit.
(2) The provisions of this Subsection shall apply only to taxpayers that employed a
minimum of one hundred 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.
(3) The provisions of this Subsection shall not apply to manufacturers as defined in
Subparagraph (C)(3)(b) of this Section.
Acts 1991, No. 153, §1; Acts 1994, No. 28, §1; Acts 2002, No. 11, §1, eff. for all
taxable periods beginning after Dec. 31, 2002; Acts 2005, No. 363, §1; Acts 2015, No. 133,
§1; Acts 2015, No. 357, §1, eff. June 29, 2015; Acts 2015, No. 415, §1, eff. Jan. 1, 2016;
Acts 2016, 2nd Ex. Sess., No. 4, §1, eff. June 28, 2016; Acts 2016, 2nd Ex. Sess., No. 5, §2,
eff. June 28, 2016; Acts 2017, No. 338, §1, eff. June 22, 2017; Acts 2017, No. 385, §1, eff.
June 23, 2017; Acts 2020, 2nd Ex. Sess., No. 50, §1, eff. Jan. 1, 2021; Acts 2020, 2nd Ex.
Sess., No. 56, §1, eff. Nov. 5, 2020; Acts 2020, 2nd Ex. Sess., No. 59, §1, eff. Nov. 5, 2020.
NOTE: See Acts 2015, No. 415, §2, re: applicability.
NOTE: See Acts 2016, No. 662, §2, re: applicability.
NOTE: See Acts 2017, No. 338, §2, and No. 385, §2, re: applicability.