La. Revenue and Taxation § 47:6020

Current with changes from the 2024 Legislative Session

Section 47:6020 - Angel Investor Tax Credit Program

A. Purpose. The legislature finds that the welfare of the state is enhanced by a healthy entrepreneurial business environment and that ready sources of capital necessary to support this environment are not currently available. The Angel Investor Tax Credit Program is intended to achieve the following purposes:

(1) To encourage third parties to invest in early stage wealth-creating businesses in the state.

(2) To expand the economy of the state by enlarging its base of wealth-creating businesses.

(3) To enlarge the number of quality jobs available to retain the presence of young people educated in Louisiana.

B. Administration.

(1) Program. Investments made on or after January 1, 2011, by qualifying individuals or entities that invest in a Louisiana Entrepreneurial Business as defined by R.S. 51:2303(5)may apply for, and if qualified, be granted a tax credit. The administration of tax credit applications, certification of eligibility and qualification of applicants for tax credits, and the provision for these credits shall be known as the Angel Investor Tax Credit Program, hereinafter referred to as "program".

(2) Rules. The program shall be implemented and administered by the Department of Economic Development, hereinafter referred to as "department". In compliance with the Administrative Procedure Act, the department shall adopt and promulgate rules as are necessary for the efficient and effective administration of this program in keeping with the purposes for which it is enacted. The department shall work closely with the secretary of the Department of Revenue in the development and promulgation of rules. The rules shall include provisions for:

(a) An application process through which the department may certify the eligibility of an investor applicant for receipt of the tax credit and the qualification of an investor to claim the credit against state tax liability.

(b) The presentation of an investor's eligibility certification and any other documentation required in order to earn or claim a credit.

(c) The submission of annual reports by 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.

C. Qualifications.

(1) To qualify for a tax credit, the investor and the investment shall meet all of the following requirements:

(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. The funds invested by the applicant cannot have been raised as a result of illegal activity.

(b) For the purposes of the 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.

(c) 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. The proceeds cannot be used to pay dividends, repay shareholder's loans, redeem shares, or repay debt unless approved by the department.

(d) The investor applicant shall meet the definition of accredited investor established by Rule 501 in Regulation D of the General Rules and Regulations promulgated under the Securities Act of 1933.

(e) 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 in which the investment is made shall meet all the following requirements:

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

(b) Prior to the award of the credit, the department has certified the business as a Louisiana Entrepreneurial Business under the program.

(c) The 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.

D. Tax credits.

(1) The total amount of tax credits granted by the department in any calendar year shall not exceed three million six hundred thousand dollars. The department shall by rule establish the method of allocating available tax credits to investors including but not limited to a first-come, first-served system, reservation of tax credits for a specific time period, or other method which the department, in its discretion, may find beneficial to the program. If the department does not grant the entire three million six hundred thousand dollars in tax credits in any calendar year, the amount of residual unused tax credits shall carry forward to subsequent calendar years and may be granted in any year without regard to the three million six hundred thousand dollar per year limitation. After the approval of an investor pool, the department shall issue a letter identifying the amount of tax credits that are available to that pool; however, no tax credit shall be granted to an investor until the investment has been made in the Louisiana Entrepreneurial Business.

(2)

(a) An investor may apply for and, if qualified, be granted a credit on any income or corporation franchise tax liability owed to the state by the taxpayer seeking to claim the credit in the amount approved by the secretary of the department. The amount of the tax credit shall be based upon the amount of money invested by the investor in the Louisiana Entrepreneurial Business, which investment shall not exceed seven hundred twenty thousand dollars per year per business and one million four hundred forty thousand dollars total per business. Except as otherwise provided in Subparagraph (b) of this Paragraph, the credit shall be allowed against the income tax for the taxable period in which the credit is earned and the franchise tax for the taxable period following the period in which the credit is earned. The credits approved by the department shall be granted at the rate of twenty-five percent of the amount of the investment with the credit divided in equal portions for two years.

(b) After certifying the eligibility of the Louisiana Entrepreneurial Business and the amount of the investment, the secretary of the department shall issue a tax credit certificate, a copy of which is to be attached to the tax return of the angel investor. The tax credit available in the first year shall become deductible from tax liability in the taxpayer's income tax year which occurs twenty-four months from the date the department certifies the amount of the investment.

(c) The tax credit certificate shall contain the investor's name, address, tax identification number, the amount of credit, the name of the qualifying Louisiana Entrepreneurial Business, a statement certifying that the Louisiana Entrepreneurial Business was domiciled in Louisiana at the close of the previous calendar year, and other information which may be required by the Department of Revenue. The tax credit certificate, unless rescinded by the department, shall be accepted by the Department of Revenue as proof of the credit.

(d) The department shall maintain a list of the tax credit certificates issued.

(3)

(a) All entities taxed as corporations for Louisiana income or corporation franchise tax purposes shall claim any credit allowed under this Section on their corporation income and corporation franchise tax return.

(b) Individuals shall claim any credit allowed under this Section on their individual income tax return.

(c) Estates or trusts shall claim any credit allowed under this Section on their fiduciary income tax returns.

(d) Entities not taxed as corporations shall claim any credit allowed under this Section on the returns of the partners or members as follows:

(i) Corporate partners or members shall claim their share of the credit on their corporation income or corporation franchise tax returns.

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

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

(4) A tax credit granted pursuant to the Angel Investor Program shall expire and have no value or effect on tax liability beginning with the eleventh tax year after the tax year in which it was originally granted.

(5)

(a) If at the close of any calendar year in the five-year period beginning with the first year in which a tax credit certificate was issued to an investor, the Louisiana Entrepreneurial Business is no longer domiciled in Louisiana, the tax credit shall be recaptured from the investor unless change of domicile is the result of a merger, consolidation, or other acquisition of such business or all or substantially all of the assets of the business with or by a party not affiliated with the business.

(b) If at the close of any calendar year in the three-year period beginning with the first year a tax credit certificate was issued to an investor, the investor transfers the equity received in connection with the qualified investment, the tax credit shall be recaptured from the investor unless the transfer results from any of the following circumstances:

(i) The liquidation of the business issuing the equity.

(ii) The merger, consolidation, or other acquisition of the business or all or substantially all of the assets of the business with or by a party not affiliated with the business.

(iii) The death of the investor.

(iv) The transfer of the equity in the Louisiana Entrepreneurial Business by the investor is to an entity, trust, or other organization under the control of the investor. For purposes of this Subparagraph, an entity shall be deemed to be in control of an investor if the investor is the beneficiary owner of at least a majority of the outstanding equity securities of the entity or has the right to control the voting power of the entity, trust, or other organization to which the securities are transferred.

E.

(1) Any person making an application, claim for tax credit, or any report, return, statement, or other instrument or providing any other information pursuant to the provisions of the Angel Investor Tax Credit Program who willfully makes a false or fraudulent application, claim, report, return, statement, invoice, or other instrument or who willfully provides any false or fraudulent information, any person who willfully aids or abets another in making a false or fraudulent application, claim, report, return, statement, invoice, or other instrument, or any person who willfully aids or abets another in providing any false or fraudulent information, shall be guilty, upon conviction, of a felony and shall be punished by the imposition of a fine of not less than one thousand dollars and not more than fifty thousand dollars or imprisoned for not less than two years and not more than five years, or both.

(2) Any person convicted of a violation of this Section shall be liable for the repayment of all tax credit amounts which were granted to that person. Interest shall be due on such repayments at the rate of fifteen percent per annum.

F. Transferability of the credit. Any Angel Investor Tax Credits not previously claimed by any taxpayer against its tax may be transferred or sold to another Louisiana taxpayer, subject to the following conditions:

(1) A single transfer or sale may involve one or more transferees. The transferee of the tax credits may transfer or sell such tax credits subject to the conditions of this Subsection.

(2) Transferors and transferees shall submit to the Department of Revenue, in writing, a notification of any transfer or sale of tax credits within ten business days after the transfer or sale of such tax credits. The notification shall include the transferor's tax credit balance prior to transfer, a copy of any tax credit certificate issued by the secretary of the Department of Economic Development, the transferor's remaining tax credit balance after transfer, all tax identification numbers for both transferor and transferee, the date of transfer, the amount transferred, the price paid by the transferee to the transferor, and any other information required by the department or the Department of Revenue. Any information submitted by a transferor or transferee shall be treated by the department and the Department of Revenue as proprietary to the entity or person reporting such information and therefore confidential. However, this shall not prevent the publication of summary data that includes no fewer than three transactions.

(3) Failure to comply with this Subsection will result in the disallowance of the tax credit until the taxpayers are in full compliance.

(4) The transfer or sale of this credit does not extend the time in which the credit can be used. The carryforward period for credit that is transferred or sold begins on the date on which the credit was earned.

(5) To the extent that the transferor did not have rights to claim or use the credit at the time of the transfer, the Department of Revenue shall either disallow the credit claimed by the transferee or recapture the credit from the transferee through any collection method authorized by this Section or R.S. 47:1561. The transferee's recourse is against the transferor.

G. Applications received on or after July 1, 2020, for investments that meet the requirements of Subsection C of this Section and the requirements of 26 U.S.C. 1400Z-1 shall be entitled to an enhanced credit in accordance with the provisions of this Subsection.

(1) The amount of the credit granted by the department shall be thirty-five percent of the amount of the investment with the credit divided in equal portions for two years.

(2)

(a) In addition to the credit cap provided for in Subsection D of this Section, the total amount of credits granted under this Subsection shall not exceed three million six hundred thousand dollars per year for a total program cap of seven million two hundred thousand dollars per year.

(b) If the department does not grant the entire three million six hundred thousand dollars in tax credits in any calendar year authorized pursuant to this Subsection, the amount of unused tax credits shall carry forward to subsequent calendar years and may be granted in any year without regard to the three million six hundred thousand dollar annual cap provided for in this Subsection.

H. No credits shall be granted or reserved under this program for reservation applications received by the department on or after July 1, 2030.

La. Revenue and Taxation § 47:6020

Acts 2005, No. 400, §1; Acts 2011, No. 414, §1, eff. July 8, 2011; Acts 2013, No. 418, §1, eff. June 21, 2013; Acts 2015, No. 104, §, eff. June 19, 2015; Acts 2015, No. 125, §2, eff. July 1, 2015; Acts 2016, 1st Ex. Sess., No. 29, §2; Acts 2017, No. 323, §§1, 3, eff. June 22, 2017; Acts 2017, No. 345, §1, eff. July 1, 2017 and §§2, 3, eff. July 1, 2018; Acts 2017, No. 400, §§1, 2, and 4, eff. June 26, 2017; Acts 2020 1st Ex. Sess., No. 19, §1; Acts 2020 1st Ex. Sess., No. 22, §1, eff. July 13, 2020; Acts 2023, No. 253, §1, eff. June 12, 2023.

Amended by Acts 2023, No. 253,s. 1, eff. 6/12/2023, app. applicable to taxable periods beginning on or after January 1, 2024.

Amended by Acts 2020EX1, No. 19,s. 1, eff. 8/29/2020.

Amended by Acts 2017, No. 400,s. 2, eff. 6/26/2017.

Amended by Acts 2017, No. 345,s. 1, eff. 7/1/2017.

Amended by Acts 2017, No. 323,s. 1, eff. 6/22/2017.

Amended by Acts 2015, No. 125,s. 2, eff. 7/1/2015.

Amended by Acts 2013, No. 418,s. 1, eff. 6/21/2013.

Acts 2005, No. 400, §1; Acts 2011, No. 414, §1, eff. 7/8/2011.

See Acts 2023, No. 253, §2, re: applicability.