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Advisory opinion regarding whether members of the legislature may purchase movie tax credits under the Louisiana Motion Picture Tax Incentive Act and historic tax credits administered by the Louisiana Division of Historic Preservation. |
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MOVIE TAX CREDITS:
The Motion Picture Tax Incentive Act provides a tax credit incentive for qualified Louisiana-based production companies. The credits are in various percentage amounts of the total cost of the production and the tax credits are used to offset production costs or used to make projects more financially viable to be filmed in Louisiana. These tax credits are transferable tax credits. Many out-of-state production companies have no state income tax liability, therefore the companies monetize these tax credits by using various agents to exchange them for cash.
The Louisiana Motion Picture Tax Credit Program is administered by the Office of Entertainment Industry Development (OEID) located within the Department of Economic Development (LED). A person with a prospective project submits an application to OEID. If the applicant meets certain parameters, then it is certified as eligible to receive tax credits on qualifying expenditures. Once production is substantially complete, the applicant submits a request to LED with an accompanying audited cost report of qualifying expenditures. After review, if approved, OEID staff then grants tax credits to the applicant in the form of a final certification letter.
Once tax credits have been awarded, the applicant may elect to use the tax credits in three ways: (1) sell the tax credits to the State at 85% of face value; (2) claim the credits on it own tax return at 100% face value; or (3) sell the tax credits to a third party. Statute allows unlimited transfers to multiple transferee's, with a ten year carry forward using the credits. The process is not complete until all individual purchasers in the chain of title claim the credits on their tax returns.
When tax credits are purchased either from the applicant or a third party, notice must be sent either by the transferor or transferee to LED and the Department of Revenue together with a $200 processing fee paid to LED. No contracts are entered into by any parties with any state agency.
HISTORIC TAX CREDITS:
The Louisiana Division of Historic Preservation administers the Federal Rehabilitation Tax Credit along with the National Park Service and the IRS. The purpose of the tax credit is to encourage the preservation and rehabilitation of historic and older buildings through the issuance of tax credits. A person submits an application to the State Historic Preservation Office and once approved, must submit such documentation to the Department of Revenue. If these tax credits are transfered, then notice must be sent by transferor and transferee to the State Historic Preservation Office and the Department of Revenue. The State Historic Preservation Office has no active role in the transfer of tax credits. No contracts are entered into.
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La. R.S. 42:1113C provides no legislator, member of his immediate family, or legal entity in which he has a controlling interest shall bid on or enter into or be in any way interested in any contract, subcontract, or other transaction involving the legislator's agency.
La. R.S. 42:1113D(1)(a)(i) prohibits any member of legislature, the spouse of such member, and any legal entity of the member from entering into any contract with state government.
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Adopt proposed advisory opinion.
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| Assigned Attorney: |
Tracy Barker |
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