Louisiana Administrative Code
Title 61 - REVENUE AND TAXATION
Part I - Taxes Collected and Administered by the Secretary of Revenue
Chapter 16 - Louisiana Entertainment Industry Tax Credit Programs
Subchapter C - Louisiana Sound Recording Investor Tax Credit Program
Section I-1667 - Certification Procedures

Universal Citation: LA Admin Code I-1667

Current through Register Vol. 50, No. 9, September 20, 2024

A. Application

1. An application for a state certified production shall be submitted to the director, including:

a. a distribution plan;

b. a preliminary budget, including estimated base investment;

c. a statement that the project will qualify as a state certified production; and

d. the applicant shall provide additional information upon request.

2. An application fee in the amount equal to 0.5 percent of the total estimated tax credits with a minimum fee of $500 and a maximum fee of $15,000 shall be submitted with each application.

3. Expenditure Verification Report Fee. Upon project completion, or no more than once annually, the department shall directly engage and assign a CPA to prepare an expenditure verification report on an applicants cost report of production or project expenditures. Applicants shall submit an advance deposit at the time of application, or for projects with on-going approved activity, may submit a request for a supplemental annual verification report and submit a corresponding supplemental advance deposit, and shall later be assessed the departments actual cost based upon an hourly rate not to exceed $250, in the amounts set forth below:

a. for applicants with project expenditures less than $1,000,000, an advance deposit of $7,500, with a maximum fee of $15,000;

b. for applicants with project expenditures greater than $1,000,000, an advance deposit of $15,000, with a maximum fee of $25,000;

c. any unused balance shall be refunded to the applicant within 60 days following receipt of CPAs final invoice and payment of all CPA costs.

B. Qualification

1. The office shall determine whether a production or project qualifies, by meeting all requirements of R.S. 47:6022 and these regulations, and taking the following factors into consideration.

a. The contribution of the production or project to the goal of creating an independent, self-supporting digital interactive media industry.

b. The impact of the production or project on the employment of Louisiana residents.

c. The impact of the production or project on the overall economy of the state.

2. Duration of Tax Credits

a. Tax credits may be granted under R.S. 47:6022 until such statute is amended, modified or repealed.

3. Amount of Tax Credits. Tax credits are earned per calendar year at the time funds are expended in Louisiana on a state certified production.

a. For applications for state-certified productions submitted to the office prior to July 1, 2009 and subsequently approved by the office and the secretary, a tax credit shall be earned by producers as follows.

i. The producer shall earn tax credits at the rate of 20 percent of the base investment for the first and second years following certification of the project as a state certified production.

ii. The producer shall earn tax credits at the rate of 15 percent of the base investment for the third and fourth years following certification of the project as a state certified production.

iii. The producer shall earn tax credits at the rate of 10 percent of the base investment for the fifth and sixth years following certification of the project as a state certified production.

iv. No tax credits may be earned after the sixth year following certification of the project as a state certified production.

b. For applications for state-certified productions submitted to the office on or after July 1, 2009 but before July 11, 2011, and subsequently approved by the office and the secretary, a tax credit shall be earned by a digital interactive media company as follows.

i. Expenditures made on or after July 1, 2009 shall earn tax credits at the rate of 25 percent of the base investment:

(a.) to the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, a digital interactive media company shall earn additional tax credits at the rate of 10 percent of payroll;

(b). the initial certification shall be effective for expenditures made prior to the date of initial certification and shall be valid until the production is completed.

(i). The production shall be considered complete when it receives its first commercial release, or other appropriate benchmark as agreed to between the parties and outlined in the initial certification.

ii. Expenditures made prior to July 1, 2009 may qualify for tax credits as follows.

(a). The initial certification shall indicate a beginning date for qualifying expenditures to earn tax credits (hereafter known as "start date") which shall be no earlier than June 30, 2005, the effective date of the original LA Digital Media Act, R.S. 47:6022.

(b). Tax credits shall be earned when expenditures are made, at the following rates.

(i). For each of the first and second years following the start date, the producer shall earn tax credits at the rate of 20 percent of the base investment.

(ii). For each of the third and fourth years following the start date, the producer shall earn tax credits at the rate of 15 percent of the base investment.

(iii). For each of the fifth and sixth years following the start date, the producer shall earn tax credits at the rate of 10 percent of the base investment.

(c). As an illustrative example, if a company applies on August 1, 2009, but indicates that it may have qualifying expenditures dating back to August 1, 2007, the producer would earn tax credits at the following rates.

(i). Expenditures made from August 1, 2007-June 30, 2009 would earn tax credits at the rate of 20 percent for the first and second years after the start date.

(ii). Expenditures made July 1, 2009 onwards would earn at the flat rate of 25 percent, with the possibility of an additional 10 percent for payroll expenditures.

(d). The initial certification letter shall specifically state the applicable tax credit rates for each state certified production.

c. For applications for state-certified productions submitted to the office on or after July 11, 2011 but before July 1, 2015, and subsequently approved by the office and the secretary, tax credits shall be earned by an approved digital media company as follows.

i. Expenditures made after July 1, 2009 shall earn tax credits at the rate of 25 percent of the base investment.

(a). To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, a company shall earn additional tax credits at the rate of 10 percent of payroll.

(b). The initial certification shall be effective for expenditures made no more than six months prior to the date of initial certification and shall be valid until the project is completed.

(c). The production shall be considered complete when it receives its first commercial release, or other appropriate benchmark as agreed to between the parties and outlined in the initial certification.

d. For applications for state-certified productions submitted to the office on or after July 1, 2015, and subsequently approved by the office and the secretary, tax credits shall be earned by an approved digital media company at the prevailing statutory rate, currently as follows.

i. Qualifying expenditures made within the approved six-month "look back period" but prior to July 1, 2015 shall earn tax credits at the rate of 25 percent of the base investment, qualifying expenditures made after July 1, 2015 shall earn tax credits at the prevailing statutory rate, currently 18 percent of the base investment.

ii. To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, qualifying expenditures made prior to July 1, 2015 shall earn tax credits at 10 percent of payroll, qualifying expenditures made after July 1, 2015 shall earn tax credits at the prevailing statutory rate, currently 7.2 percent of payroll.

iii. The initial certification shall be deemed effective from date of application and shall be valid for qualifying expenditures and activities as outlined between the parties in the initial certification letter

C. Initial Certification

1. After review and upon a determination of qualification, initial certification will be issued by the office and the secretary, including:

a. classification of the project as a state certified production;

b. a unique identifying number;

c. the total anticipated base investment;

d. the entity names and allocation percentages for tax credits.

2. Additional information may be requested by the director in order to make a determination of eligibility for the program.

3. Initial certification shall be issued in the amount determined to be eligible, and shall be sent to each producer or digital media company and to the secretary.

4. Once an initial certification is issued, the applicant or official representative must countersign and return an original to the director, within 30 business days, acknowledging initial certification status.

5. 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 and as outlined in the initial certification letter.

D. Final Certification and Accounting Requirements

1. Prior to final certification of tax credits of a state-certified production or any portion thereof, the producer or digital interactive media company shall submit to the office:

a. a cost report of production expenditures:

i. the cost report of expenditures shall be subject to an agreed-upon procedures engagement conducted by a certified public accountant in accordance with statements on standards for attestation engagements established by the American Institute of Certified Public Accountants;

ii. the accountant shall issue a report in the form of procedures and findings. The accountant shall be a certified public accountant licensed in the state of Louisiana and shall be an independent third party unrelated to the digital interactive media company;

iii. the agreed-upon procedures have been established by the office and the secretary, with assistance from the Society of Louisiana Certified Public Accountants, as promulgated in accordance with the Administrative Procedure Act;

b. any additional information as requested by the office and/or the secretary, reasonably necessary to determine eligibility for tax credits, including but not limited to a request for an additional audit at the applicants expense;

i. incorrect reporting - if an applicant submits a cost report required by the provisions of this Chapter and the report made and filed contains material misstatements, including but not limited to misrepresentation in or intentional omission from the cost report of events, transactions, or other significant information there may be cause for an additional audit;

ii. related party transactions - if an audit contains related party transactions in excess of 20 percent of the total expenditures reported in the submitted audit there may be cause for an additional audit;

iii. reimbursement of audit costs - the department may undertake additional audit at the applicant's expense, to be performed by a state certified public accountant also certified in financial forensics or also certified as a fraud examiner. Audit fees will be assessed at the department's contracted fee, with a minimum of $2,000 and a maximum of $15,000 fee per audit.

2. Upon completion of all or a portion of a state-certified production, the office shall review the production expenses and upon a determination of qualification the office and the secretary will issue a final tax credit certification letter including:

a. the amount of tax credits;

b. the unique identifying number for the state certified production.

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:6022 and R.S. 36:104.

Disclaimer: These regulations may not be the most recent version. Louisiana may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

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