Louisiana R&D Tax Credit Summary

The Louisiana R&D tax credit provides a tax credit for companies that have paid or incurred qualified research expenses while conducting qualified research in Louisiana. The Louisiana R&D Tax Credit Provides up to a 30% tax credit on qualified research expenditures incurred in Louisiana — with no cap and no minimum requirement. The Louisiana R&D Credit reduces income or franchise tax. The tax credit is claimed on the return for the taxable year the qualified expenses were incurred.

ELIGIBILITY

  • The Tax Credit Incentive is open to companies who have incurred research and development expenditures in Louisiana and who meet certain requirements (where listed).

    • Only research and development conducted in Louisiana will qualify for the Tax Credit Incentive.

  • In order for credits to be awarded, a taxpayer must claim the expenditures within one year after December 31 of the year in which the expenditure was incurred.

Ineligible Businesses

The following businesses will be ineligible to participate in the Research and Development tax credit program, unless specifically invited by the Secretary of LED to:

  1. Professional services firms that do not have a pending or issued United States patent related to the qualified research expenditures claimed; and

  2. Businesses primarily engaged in custom manufacturing and custom fabricating that do not have a pending or issued United States patent related to the qualified research expenditures claimed.

Program Statutes & Rules:

All incentive program rules are in the Louisiana Administrative Code maintained by the Office of the State Register. A company must submit the completed Research and Development application and fee.

Based on your application type additional information must be provided:

​1. 6765 - Increase in Louisiana Research and Development (50+ Employees)

  • Calculation Summary

  • Average of three previous tax years * 80% = Base Amount CTY R&D expenditures — Base Amount = increase in LA R&D Increase in LA R&D * (5% or 10%) = R&D Tax Credit

  • The base calculation for 6765 applications (50 or more employees) is 80% of the average of the three previous years’ Louisiana research and development expenditures.

    • The base is then subtracted from the current year's expenditures to reach the increase in research and development expenditures which is then multiplied by credit percentage (5% or 10% based on company size).

  • Filed Federal Form 6765 for the current tax year and the three previous tax years

  • Attach the Louisiana only qualified research expenses for the three previous years (if applicable)

2. Small Business Innovation Research Grant (SBIR/STTR)

  • SBIR/STTR grant

  • Listing of disbursements received (date, amount, grant)

  • Bank statements indicating distribution of funds

3. LQRE-6765 (Less than 50 employees)

  • Calculation Summary

    • Average of three previous tax years * 50% = Base Amount CTY R&D expenditures — Base Amount = increase in LA R&D Increase in LA R&D * (30%) = R&D Tax Credit​

    • The base calculation for LQRE - 6765 applications (less than 50 employees) is 50% of the average of the three previous years’ Louisiana research and development expenditures.

      • The base is then subtracted from the current year's expenditures to reach the increase in research and development expenditures which is then multiplied by 30% credit percentage. View examples of calculations.

  • Filed Federal Form 6765 for the current tax year or a completed Verification Report (in lieu of Fed 6765 Form filing) ​​

  • Detailed narrative of the research and development conducted

  • Breakdown of cost by expenditure category (wages, supplies, contracted research, etc.)

  • Breakdown of cost by each activity (business component)

  • W-2's or K-1's for wages listed on the application

  • 1099's, K-1's and/or invoices for contracted research

  • W-2’s, K-1’s, 1099’s must redact and only leave the last four of social security numbers

  • Financial Statements for the tax year within which you're applying (compiled or reviewed)

  • Tax returns for the tax year within which you're applying

  • Organizational chart for the tax year within which you are applying, please include employee name, title and description of work performed by each employee

Update on Application Processing Time:

LED processes applications on a first in, first out basis. There are three categories of R&D applications:

(1) companies with 50+ employees (“6765”);

(2) companies receiving federal SBIR grants (“SBIR”); and

(3) companies with less than 50 employees (“LQRE-6765”).

 

Currently, 6765 and SBIR applications are processed within 90 days, unless additional information is needed or the application is selected for a detailed review (statutorily required for at least 10% of applications).

 

The LQRE-6765 application process currently requires three to six months due to the detailed review required. To minimize the time needed for processing, all applicants are advised to make sure all requested information is provided in a timely manner.

NEXT STEPS

1. Application is presented to the Louisiana Economic Development review panel.

2. Notification of the decision is sent via email.

3. Louisiana Department of Revenue is notified of the credits certified.

 

Eligible Entities: C-Corporations, S-Corporations, LLCs, Partnerships

Deadline for Tax Filing: Due with Louisiana Tax Return

  • Prior to claiming the R&D Tax Credits, a company must apply for and obtain a credit certification from the Department of Economic Development. The application requires a $250 fee.

    • Complete the application online and submit the fee and additional required documentation for type of business either online or by mail.

    • LED reviews application.

    • Business notified of approval or denial and Louisiana Department of Revenue is notified.

    • If approved, business files or amends state income tax return and claims the tax credits.

    • Louisiana Department of Revenue issues refund once all state liabilities have been resolved.

  • In order for the R&D Tax Credits to be awarded, a taxpayer must claim the expenditures within one year after December 31 in which the expenditures was incurred.

    • For example: a business has a fiscal filing period of July 1, 2014 to June 30, 2015 and the business incurred qualifying research expenses in that time period. Then, the Research and Development application will be due no later than December 31, 2016.

  • Credits should not be claimed on a tax return until certified by LED. If credits are not certified by the return due date, the taxpayer should file and then amend the return upon receipt of any credits.

Data Required to Compute Credit

  • Claim Period Federal Qualified R&D Expenses (QREs)

  • Claim Period Louisiana QREs

  • Louisiana QREs for Prior 3 Years

  • # of LA Employees

Credit Carryforward: 5 Years

  • Credit in excess of the tax liability is refundable for credits claimed on an original return filed after June 30, 2015 and has a carryforward of five (5) years.

Refundable/Transferable Tax Credit: The tax credit was refundable from 2009 through June 30, 2015. As of July 1, 2015, the credit is no longer refundable and has a carry-forward period of five years.

  • Tax credits issues for tax years 2008 are transferable/nonrefundable and can be carried forward for 10 years or the credits can be sold for no less than $0.75 per credit. ​

    • In order to transfer 2008 credits, the owner must complete a sale of credits application, submit a signed purchase agreement (signed by both the seller and owner). Upon approval, a new certification letter will be issues to the original owner of the credits.

  • Note, Tax year 2018 R&D tax credits issues to Small Business Innovation Research (SBIR)/Small Business Technology Transfer Research (STTR) applicants are transferable.  

    • The transferable SBIR R&D tax credits issued to applicants are entered into the Louisiana Department of Revenue Tax Registry. Upon the certification of the tax credits, Form R-6135 Credit Utilization Form will be issued by LDR.

      • The applicant must notify LDR within 10 business days of the transfer.

      • All transferable credits must be transferred by the original due date of the return.

      • See Revenue Information Bulletin 14-005 for more information on transferable tax credits.

Important Links and Forms:

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