Louisiana Issues Guidance for Corporate, Personal Income Tax Solar Energy System Credits

The Louisiana Department of Revenue (LDR) issued guidance concerning legislation enacted in 2017 that provides an exception to the cap on corporate and personal income tax credits for solar energy systems. Under the 2017 legislation, a taxpayer may receive the full amount of the credit if the claim for the credit:

– was denied or would have been denied for any portion of the original claim because of the credit cap;

– relates to a solar energy system that was purchased and installed on or before December 31, 2015; and

– meets all the requirements of an eligible system.

For taxpayers with qualifying systems who were previously denied because of the credit cap, no additional or new claim for a purchased energy system is required. For taxpayers previously denied for a system purchased and installed after December 31, 2015, no amendment concerning the date of purchase and installation is permitted. If a taxpayer qualifies for a credit, and the claim for a credit would have been denied because of the cap, the taxpayer may file an original return or amend his or her previously filed original return to claim the credit. The original or amended return must claim a credit for a system that was purchased and installed before December 31, 2015, and meet all other requirements of an eligible system. The amended return must be electronically filed with the LDR no later than August 31, 2017.

In order for a claim to be eligible under the 2017 legislation, all supporting documentation must be submitted to the LDR no later than November 1, 2017. This requirement applies to all taxpayers, including those which were previously denied and those which would have been denied. For purposes of this requirement, any submission of documents received by the LDR or postmarked on or before November 1, 2017, will be considered timely. The term “supporting documentation,” for purposes of this requirement, means:

– a completed Form R-1086 for the corresponding tax period;

– proof of purchase in the form of an itemized receipt or a copy of the contract signed by the taxpayer demonstrating either full payment or payment through financing; and

– all other documentation requested by the LDR.

For qualifying taxpayers, the 2017 legislation allows for the full payment of the credit for which the system is eligible. However, the full payment must be issued in three equal installments over three fiscal years, beginning with the 2017-18 fiscal year and ending with the 2019-20 fiscal year. In addition, the legislation provides a $5 million per fiscal year credit cap on the amount of credits that may be issued by the LDR in a given fiscal year. In the event the aggregate amount of eligible credits to be paid in a given fiscal year exceeds the $5 million credit cap, qualifying taxpayers will receive their pro rata share of the $5 million fiscal year cap in three equal installments beginning with the 2017-18 fiscal year and ending with the 2019-20 fiscal year, and will receive the remainder of any outstanding credit due in the fourth year or the 2020-21 fiscal year.

The 2017 legislation was previously reported. (TAXDAY, 2017/07/03, S.17)

Revenue Information Bulletin No. 17-012, Louisiana Department of Revenue, July 24, 2017, ¶202-795

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