On April 17th 2017, seven days into the 2017 Louisiana Regular Legislative Session and two days prior to the deadline for filing bills, Governor John Bel Edwards filed his key piece of legislation, the Commercial Activity Tax (CAT), as House Bill 628 (HB 628) by Representative Sam Jones. A copy of the bill can be found here.
As of last week, indications are that the Chairman of the House Ways and Means Committee will schedule the bill for a hearing this week. The hearing may span multiple days, and the committee will likely vote on the bill at the conclusion of testimony.
The main components of HB 628 are as follows:
| A. | The CAT only applies to entities with gross receipts greater than $150,000. Flow-through organizations, with some exceptions, will be subject to the tax based on tiered levels of gross receipts, and the total amount of tax owed by such entities will range from $250–$12,500. | |||
| B. | For entities taxed as a corporation at the federal level, the tax will be calculated based on the greater of the following: | |||
| a. | Louisiana corporate income tax after all available credit carry-forwards, non-refundable credits, and refundable credits are applied | |||
| b. | A payment between $250–$750, based on gross receipts less than $1.5 million | |||
| c. | If gross receipts from all sources are greater than $1.5 million, an amount equal to $0.35 per $100 of the entity's Louisiana gross receipts | |||
| C. | For entities taxed as a corporation at the federal level, but engaged in the business of "manufacturing," "merchandising," or the "business of gaming," the tax shall be computed as the greater of the following: | |||
| a. | Louisiana corporate income tax after all available credit carry-forwards, non-refundable credits, and refundable credits are applied. | |||
| b. | A payment between $250–$750, based on gross receipts less than $1.5 million | |||
| c. | If gross receipts from all sources are greater than $1.5 million, the lesser of the following: | |||
| i. | $0.35 per $100 of the entity's Louisiana gross receipts | |||
| ii. | $2.76 per $100 of the entity's Louisiana gross profits | |||
"Louisiana gross profits" is defined as Louisiana gross receipts reduced by cost of goods sold attributable to Louisiana gross receipts.
Entities exempt under HB 628 include:
- Financial institutions
- Insurance corporations
- Non-profit organizations
- Agencies, instrumentalities, or political subdivisions of the state
- Farmers cooperatives, homeowners associations, political organizations and rural electric and rural telephone cooperatives
- Cooperative, nonprofit membership corporations organized for the purpose of supplying electrical energy and promoting and extended the use thereof
There are many other details with regard to the 14-page bill. Ryan's Advocacy team will be analyzing the details, watching for potential amendments and following the bill through each step at the Capitol.
(Source: Ryan)
