La. Revenue and Taxation § 47:6023

Current with changes from the 2024 Legislative Session

Section 47:6023 - Sound recording investor tax credit

A. Purpose. The primary objective of this Section is to encourage development in Louisiana of a strong capital base for sound recording productions in order to achieve a more independent, self-supporting music and sound recording industry. This objective is divided into immediate and long-term objectives as follows:

(1) Immediate objectives are to:

(a) Attract private investment for the production of musical recordings or sound recordings in Louisiana.

(b) Develop a tax and capital infrastructure which encourages private investment. This tax infrastructure is to provide for state participation in the form of tax credits to encourage investment in state-certified sound recording productions.

(c) Develop a tax infrastructure utilizing tax credits which encourage investments in multiple state-certified production projects.

(2) Repealed by Acts 2017, No. 275, §2.

B. Definitions. For the purposes of this Section:

(1) "Base investment" shall mean the actual investment made and expended in the state by a state-certified production as production-related costs and QMC payroll expenditures for Qualified Music Companies approved by the office and the secretary on or after July 1, 2017. Expenditures comprising the base investment shall not include the expenditure verification report fee paid by the sound recording production company for purposes of verification of the company's cost report for production expenditures.

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

(3) "New jobs" means full-time employment in Louisiana of an average of thirty hours or more per week, filled by Louisiana residents at the project site designated in the contract, who were not previously on the QMC's payroll in Louisiana, nor previously on the payroll of such QMC's parent entity, subsidiary, or affiliate in Louisiana, or previously on the payroll of any business whose physical location and employees are substantially the same as those of the QMC in Louisiana, as approved by the secretary.

(4) "Qualified Music Company" or "QMC" means an entity authorized to do business in Louisiana, engaged directly or indirectly in the production, distribution and promotion of music, certified by the secretary as meeting the eligibility requirements of this Section, and executing a contract providing the terms and conditions for its participation.

(5) "QMC payroll" means wages reported in box 1 on a W-2 form.

(6) "Resident copyright" means the copyright of a musical composition written by a Louisiana resident or owned by a Louisiana-domiciled music company as evidenced by documents of ownership such as registrations with the United States Copyright Office or performing rights organizations which denote authors and music publishing entities.

(7) "Sound recording" means a recording of music, poetry, or spoken-word performance made in Louisiana, in whole or in part. The term "sound recording" shall not include the audio portions of dialogue or words spoken and recorded as part of television news coverage or athletic events.

(8) "Sound recording production company" shall mean a company engaged in the business of producing sound recordings as defined in this Section. Sound recording production company shall not mean or include any person or company, or any company 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, nor 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.

(9) "State-certified production" means a sound recording production, or a series of productions, including but not limited to master and demonstration recordings, occurring over the course of a twelve-month period, and base investment related to such production or productions that are approved by the Louisiana Department of Economic Development within one hundred eighty days of the receipt by the Department of Economic Development of a complete application for initial certification of a production. If the production is not approved within one hundred eighty days, the Department of Economic Development shall provide a written report to the Senate Committee on Revenue and Fiscal Affairs and the House Committee on Ways and Means which states the reason that the production has not been approved.

C. Investor tax credit; state-certified productions.

(1) There is hereby authorized a credit against the state income tax for investments made in state-certified productions. The tax credit shall be earned by investors at the time expenditures are certified by the Louisiana Department of Economic Development according to the total base investment certified for the sound recording production company per calendar year; however, no credit shall be allowed under this Section for any expenditures for which a credit was granted under R.S. 47:6007, 6022, or 6034.

(a) For state-certified productions certified on and after July 1, 2007, and prior to July 1, 2015, and state-certified infrastructure projects which have applied on or before August 1, 2009, each investor shall be allowed a tax credit of twenty-five percent of the base investment made by that investor in excess of fifteen thousand dollars or, if a resident of this state, in excess of five thousand dollars.

(b) For state-certified productions certified on and after July 1, 2015, which have been applied on or after July 1, 2015, and before July 1, 2017, each investor shall be allowed a tax credit of eighteen percent of the base investment made by that investor in excess of fifteen thousand dollars or, if a resident of this state, in excess of five thousand dollars.

(c) Project-based production credit. For applications for state-certified productions received on or after July 1, 2017, each investor shall be allowed a tax credit of eighteen percent of the base investment made by that investor in excess of twenty-five thousand dollars. However, if the investor who is applying for the tax credit is a Louisiana resident, the eighteen percent tax credit shall be allowed on base investments which exceed ten thousand dollars.

(d) Company-based QMC payroll credit. For applications for Qualified Music Companies received on or after July 1, 2017, or for applications for Qualified Music Companies that have been submitted but that have not received final certification by July 1, 2019, to the extent that base investment is expended on payroll for Louisiana residents in connection with a QMC, tax credits shall be earned at the following rates:

(i) Tier 1. A payroll credit of ten percent shall be earned for each new job whose QMC payroll is equal to or greater than thirty-five thousand dollars per year, up to sixty-six thousand dollars per year.

(ii) Tier 2. A payroll credit of fifteen percent shall be earned for each new job whose QMC payroll is equal to or greater than sixty-six thousand dollars per year, but no greater than two hundred thousand dollars per year.

(e) Resident copyright credit. To the extent that the base investment by a QMC is expended on a sound recording production of a resident copyright, the investor shall be allowed an additional ten percent increase in the base investment rate.

(2) Sound recording investor tax credits associated with a state-certified production or tax credits for a Qualified Music Company shall never exceed the total base investment in that production.

(3) Except as otherwise provided in this Paragraph, the aggregate amount of credits certified for all investors pursuant to this Section during any calendar year shall not exceed two million one hundred sixty thousand dollars. However, fifty percent of the aggregate amount of credits certified each year shall be reserved for QMCs. No more than one hundred thousand dollars in tax credits may be granted per project, per calendar year.

(a) An application for initial certification of a project shall be submitted to the Louisiana Department of Economic Development prior to the granting of the credit, and the granting of credits under this Section shall be on a first-come, first-served basis. The secretary of the Louisiana Department of Economic Development shall determine through the promulgation of rules the administration of the annual aggregate maximum. 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.

(b) 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 will be treated as having been applied for on the first day of the subsequent year.

(4)

(a) Company-based QMC payroll credit. A business shall be eligible for participation in the program if the business meets all of the following criteria:

(i) The business is engaged directly or indirectly in the production, distribution, and promotion of music.

(ii) The business creates a minimum of three new jobs meeting or exceeding the Tier 1 minimum wage requirements, in accordance with the provisions of Subparagraph (C)(1)(d) of this Section.

(iii) The business is approved by the secretary of the Department of Economic Development.

(iv) Repealed by Acts 2019, No. 363, §2, eff. June 18, 2019.

(b) Notwithstanding the amount of the credit earned by the investor pursuant to this Section, application of tax credits earned and claimed against an investor's income tax liability shall never reduce the investor's income tax liability below fifty percent of the amount of the liability prior to application of the credit. Any excess credit may be carried forward for up to five years and shall be applied against the subsequent income tax liability of the taxpayer.

(5) Repealed by Acts 2021, No. 401, §2, eff. June 16, 2021.

D. Certification and administration.

(1) The secretary of the Department of Economic Development shall determine through the adoption and promulgation of rules which expenditures qualify according to this Section. 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. When determining which expenditures qualify, the Louisiana Department of Economic Development shall take the following factors into consideration:

(a) The impact of the production on the immediate and long-term objectives of this Section.

(b) The impact of the production on the employment of Louisiana residents.

(c) The impact of the production on the overall economy of the state.

(d) The availability of similar infrastructure facilities within fifty miles of the proposed infrastructure project.

(2)

(a) An applicant for the sound recording investor tax credit shall submit an application for initial certification to the Louisiana Department of Economic Development that includes the following information:

(i) For state-certified productions the application shall include:

(aa) The distribution plan.

(bb) A preliminary budget including estimated Louisiana payroll and estimated base investment.

(cc) A description of the type of sound to be recorded.

(dd) A list of the principal creative elements including performing artist(s) and producer.

(ee) The name and address of the recording studio or other location where the recording production will take place.

(ff) A statement that the production will qualify as a state-certified production.

(gg) Estimated start and completion dates.

(ii) For state-certified sound recording infrastructure projects the application shall include:

(aa) A detailed description of the infrastructure project.

(bb) A preliminary budget.

(cc) A statement that the project meets the definition of a state-certified infrastructure project.

(dd) Estimated start and completion dates.

(b) If the application is incomplete, additional information may be requested prior to further action by the Louisiana Department of Economic Development.

(c)

(i) The Louisiana Department of Economic Development shall directly engage and assign a certified public accountant to prepare an expenditure verification report on a sound recording production company's cost report of production expenditures. The applicant shall be responsible for payment of the expenditure verification report fee in accordance with R.S. 36:104.1, and shall make all records related to the tax credit application available to the department and the accountant.

(ii) The applicant will be assessed the department's actual cost for the expenditure verification report fee. The maximum fee shall be as follows:

(aa) One thousand five hundred dollars for verification of a cost report reflecting expenditures of at least ten thousand dollars but less than twenty-five thousand dollars.

(bb) Three thousand dollars for verification of a cost report reflecting expenditures of at least twenty-five thousand dollars but less than fifty thousand dollars.

(cc) Five thousand dollars for verification of a cost report reflecting expenditures of at least fifty thousand dollars, but less than one hundred thousand dollars.

(dd) Seven thousand five hundred dollars for verification of a cost report reflecting expenditures of more than one hundred thousand dollars.

(iii) At the time of application, the applicant may be required to submit a deposit in an amount up to fifty percent of the expenditure verification report fee required pursuant to the provisions of Item (ii) of this Subparagraph.

(d) The Louisiana Department of Economic Development shall submit its initial certification of a project as a state-certified production to investors and to the secretary of the Department of Revenue. The initial certification shall include a unique identifying number for each state-certified production.

(e) Qualified Music Companies may submit one request for final certification of tax credits per calendar year and state-certified productions may request final certification of credits upon project completion by submitting to the department a cost report of production expenditures to be formatted in accordance with instructions of the department. The applicant shall make all records related to the cost report available for inspection by the department and the accountant selected by the department to prepare the expenditure verification report. After review and investigation of the cost report, the accountant shall submit to the department an expenditure verification report. Sound recording investor tax credits shall be certified only upon the receipt and approval by the department of an expenditure verification report submitted by a certified public accountant in accordance with this Subparagraph. The department shall review the expenditure verification report, and for those expenditures found to be qualified the department shall issue a tax credit certification letter to the investors indicating the amount of tax credits certified for the state-certified production.

(3) The secretary of the Louisiana Department of Economic Development, in consultation with the Department of Revenue, shall adopt and promulgate such rules and regulations as are necessary to carry out the intent and purposes of this Section in accordance with the general guidelines provided herein.

(4) With input from the Legislative Fiscal Office, the Louisiana Department of Economic Development shall prepare a written report to be submitted to the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs no less than sixty days prior to the start of the Regular Session of the Legislature in 2007, 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 new jobs created, the amount of Louisiana payroll created, the economic impact of the tax credits and sound recording industry, and any other factors that describe the impact of the program.

E. Tax credit certification letter for Qualified Music Company credit and project-based production tax credit.

(1) After certification, the Louisiana Department of Economic Development shall submit the tax credit certification letter to the Department of Revenue on behalf of the QMC or the investor who earned the sound recording tax credits. The Department of Revenue may require the QMC or the investor to submit additional information as may be necessary to administer the provisions of this Section. Upon receipt of the tax credit certification letter and any necessary additional information, the secretary of the Department of Revenue shall make payment to the QMC or the investor in the amount to which he is entitled from the current collections of the taxes collected pursuant to Chapter 1 of Subtitle II of this Title, as amended.

(2) The provisions of this Subsection shall be applicable to Qualified Music Companies with applications received on or after July 1, 2021. Qualified Music Companies with applications received prior to July 1, 2021, shall continue to be applied and carried forward pursuant to the provisions of Subparagraph (C)(4)(b) of this Section.

F. Recapture of credits. If the Department of Economic Development finds that funds for which an investor received credits according to this Section are not invested in and expended with respect to a state-certified production within twenty-four months of the date that such credits are earned, then the investor's state income tax for such taxable period shall be increased by such amount necessary for the recapture of credit provided by this Section.

G. Recovery of credits by Department of Revenue.

(1) Credits previously 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 twenty-four-month investment period specified in Subsection F of this Section ends.

(2) 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.

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

I. No credits shall be granted pursuant to the provisions of this Section for applications received on or after July 1, 2026.

J. Repealed by Acts 2019, No. 363, §2, eff. June 18, 2019.

La. Revenue and Taxation § 47:6023

Acts 2005, No. 485, §1, eff. July 12, 2005, applicable to tax years beginning on and after Jan. 1, 2006; Acts 2007, No. 368, §1, eff. July 10, 2007; Acts 2009, No. 475, §1; Acts 2013, No. 385, §1; Acts 2015, No. 125, §2, eff. July 1, 2015; Acts 2015, No. 357, §1, eff. June 29, 2015; Acts 2015, No. 412, §2; Acts 2016, 1st Ex. Sess., No. 29, §2; Acts 2017, No. 275, §§1, 2; Acts 2017, No. 323, §1, eff. June 22, 2017; Acts 2017, No. 400, §1 and 4, eff. June 26, 2017; Acts 2019, No. 363, §§1, 2, eff. June 18, 2019; Acts 2021, No. 401, §1, 2, eff. June 16, 2021.

Amended by Acts 2021, No. 401,ss .1, .2eff. 6/16/2021.

Amended by Acts 2019, No. 363,s. 1, s.2eff. 6/19/2019.

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

Amended by Acts 2015, No. 412,s. 2, eff. 8/1/2015.

Amended by Acts 2015, No. 357,s. 1, eff. 6/29/2015.

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

Amended by Acts 2013, No. 385,s. 1, eff. 8/1/2013.

Acts 2005, No. 485, §1, eff. 7/12/2005, applicable to tax years beginning on and after 1/1/2006; Acts 2007, No. 368, §1, eff. 7/10/2007; Acts 2009, No. 475, §1.

See Acts 2016, 1st Ex. Sess., No. 29, §2, regarding effectiveness.