La. Admin. Code tit. 13 § I-545

Current through Register Vol. 50, No. 11, November 20, 2024

Section I-545 - [Effective until 4/20/2025] Eligible Items: Buildings and Facilities Used in Manufacturing, Leased Property, Capitalized Materials, Integral Parts of the Manufacturing Operation, Rehabilitation and Restoration of Property, Relocations, Used Equipment

A. The following items may be eligible for the tax exemption:

1. Buildings and Facilities Used in Manufacturing. The board shall consider for tax exemption buildings and facilities used in the operation of new manufacturing establishments located within the state of Louisiana (subject to the limitations stated in §543) and additions to manufacturing establishments within the state of Louisiana. Exemptions are granted to the owners of buildings that house a manufacturing establishment and facilities that are operated specifically in the manufacturing of a product. The board recognizes two categories of ownership:

a. owners who engage in manufacturing at said facilities; and

b. owners who are not engaged in manufacturing at said manufacturing establishment, but who have provided either or both of the following for a predetermined manufacturing establishment:

i. buildings to house a manufacturing establishment;

ii. facilities that consist of manufacturing equipment operated specifically in the manufacturing process;

c. owners who are not engaged in manufacturing at the manufacturing establishment are eligible for the exemption only if the manufacturer at the site is obligated to pay the property taxes if the exemption were not granted.

2. Leased Property. Leased property is eligible for the exemption, if the property is used in the manufacturing process, is and remains on the plant site, and the manufacturer is obligated under the lease agreement to pay the property taxes if the exemption were not granted.

3. Capitalized Materials

a. Capitalized materials which are an essential and integral part of a manufacturing process, but do not form part of the finished product, may be exempted along with the manufacturing establishment. Some examples of these are:

i. ammonia in a freezing plant;

ii. solvent in an extraction plant; and

iii. catalyst in a manufacturing process.

b. To be eligible for exemption, a manufacturing establishment must be in an operational status and engaged in manufacturing. An owner of a new manufacturing establishment under construction may apply for an exemption with the expectation that the manufacturing establishment will become operational. If the manufacturing establishment fails to become operational or ceases operations without a reasonable expectation of recommencing operations, the facility shall no longer be eligible for exemption and its contract shall be subject to termination under §569

4. Integral Parts of the Manufacturing Operation. Property that is an integral part of the manufacturing operation is eligible for the tax exemption.

a. The following activities are considered to be integral to the manufacturing process:

i. quality control/quality assurance;

ii. packaging;

iii. transportation of goods on the site during the manufacturing process;

iv. other on site essential activities as approved by the secretary and the board.

5. Rehabilitation and Restoration of Property

a. Capital expenditures for the rehabilitation or restoration of an existing establishment may be exempted if it is not maintenance. If replacements or upgrades are made as part of a rehabilitation or restoration to an establishment, only the capital expenditures in excess of original cost shall be eligible for tax exemption. A deduction for the original cost of property to be replaced shall not be made if the project will result in capital additions that exceed $50,000,000.

b. Exemption may be granted on the costs of rehabilitation or restoration of a partially or completely damaged facility, but only on the amount in excess of the original cost.

c. Original costs deducted from rehabilitation or restoration made or rebuilding shall be clearly documented.

d. A deduction for the original cost of property to be replaced as part of a rehabilitation or restoration, as provided by sections a or b above, shall not be made if the project is related to the replacement or reconstruction of property after the destruction of or damage to such property, as a result of a qualified disaster.

6. Relocations

a. A manufacturing establishment moved from one location in the state to another place within the state shall be eligible for the unexpired consecutive years, if any, of the tax exemption contract granted at the original location.

b. If a manufacturing establishment moves from one location in the state to another location within the state, the company shall be required to seek approval of the parish governing authority, the school board, the sheriff, and any municipality in which the manufacturing establishment will be located if these local governing authorities are different than those that approved the exemption at the original site.

7. Used Equipment. Used equipment is eligible for tax exemption provided no ad valorem property taxes have been paid in Louisiana on said property.

La. Admin. Code tit. 13, § I-545

Promulgated by the State Board of Commerce and Industry and the Department of Economic Development, LR 50, exp. 10/21/2024 (Emergency), Promulgated by the Board of Commerce and Industry and the Louisiana Economic Development, LR 51, exp. 4/20/2025 (Emergency).

AUTHORITY NOTE: Promulgated in accordance with Article VII, Part 2, Section 21(F) of the Louisiana Constitution of 1974.