§ 22:832 — Reduction of tax when certain investments are made in Louisiana

Louisiana § 22:832

• Jurisdiction: Louisiana
• Title 22: Insurance

Text

§832. Reduction of tax when certain investments are made in Louisiana
A.(1) The amount of the tax payable shall be reduced from the amount otherwise
fixed in this Part if the payer files a sworn statement with the annual report required by this
Part showing as of the end of each fiscal quarter reporting period that at least the following
amounts of the total admitted assets of the payer, less assets in an amount equal to the
reserves on its policies issued in foreign countries in which it is authorized to do business
and which countries require an investment therein as a condition of doing business, are
invested and maintained in qualifying Louisiana investments as hereinafter defined in
Subsection C of this Section.
(2) The amount of tax credit granted shall be as provided in Subsection B of this
Section and based on the average of the percentage of qualifying Louisiana investments held
at the end of each fiscal quarter for the fiscal year.
(3) However, Paragraph (1) of this Subsection notwithstanding, for any taxable year
beginning on or after January 1, 2016, and before January 1, 2018, for all payers, except for
life insurance companies writing life insurance premiums with total admitted assets of fifteen
million dollars or less and health maintenance organizations subject to the tax in R.S.
22:842(B), the amount of the tax credit granted shall not exceed ninety-five percent of the
tax credit for the average percentage of qualifying Louisiana investments as provided in
Subsection B of this Section.
B. If one-sixth of the total admitted assets of the payer are in qualifying Louisiana
investments, then the tax payable shall be thirty-three and one-third percent of the amount
otherwise fixed in this Part; if at least one-fifth of the total admitted assets of the payer are
in qualifying Louisiana investments, then the tax payable shall be twenty-five percent of the
amount otherwise fixed in this Part; if at least one-fourth of the total admitted assets of the
payer are in qualifying Louisiana investments, the tax payable shall be fifteen percent of the
amount otherwise fixed in this Part; and if at least one-third of the total admitted assets of
the payer are in qualifying Louisiana investments, then the tax payable shall be five percent
of the amount otherwise fixed in this Part.
C. For the purposes of this Part, beginning January 1, 2017, "a qualifying Louisiana
investment" is hereby defined as:
(1) Bonds of this state or bonds of municipal, school, road, or levee districts, or other
political subdivisions of this state or bonds approved for issue by the Louisiana State Bond
Commission.
(2) Mortgages on property located in this state.
(3) Real property located in this state.
(4) Policy loans to residents of Louisiana, or other loans to residents of this state, or
to corporations domiciled in this state.
(5) Common or preferred stock in corporations domiciled in this state.
(6) In addition to the investments provided for in Paragraphs (1) through (5) of this
Subsection, for purposes of health maintenance organizations subject to the tax in R.S.
22:842(B), for taxable years beginning on or after January 1, 2017, "a qualifying Louisiana
investment" is hereby defined as:
(a) Certificates of deposit issued in Louisiana by any bank, savings and loan
association, or savings bank any of which has a main office or branch in Louisiana or by a
trust company with a main office or branch in Louisiana if such trust company holds such
funds in trust and invests them in certificates of deposit issued by a bank, savings and loan
association, or savings bank with a main office or branch in Louisiana.
(b) Cash on deposit in an account in Louisiana in any bank, savings and loan
association, or savings bank, or a trust company holding such funds in trust, any of which has
a main office or branch in Louisiana.
(c) Such investments shall be considered as qualifying Louisiana investments only
when made by a health maintenance organization that meets all of the following criteria:
(i) Offers fully insured commercial or Medicare Advantage products.
(ii) Is domiciled, licensed, and operating in this state.
(iii) Maintains its primary corporate office and at least seventy percent of its
employees in this state.
(iv) Maintains in this state its core business functions which may include utilization
review services, claim payment processes, customer processes, customer service call centers,
enrollment services, information technology services, and provider relations.
(7)(a) For purposes of businesses issuing life insurance policies subject to the tax in
R.S. 22:842(A), for taxable years beginning on or after January 1, 2024, "a qualifying
Louisiana investment" is defined as:
(i) Certificates of deposit issued in Louisiana by any bank, savings and loan
association, or savings bank, any of which has a main office or branch in Louisiana, or by
a trust company with a main office or branch in Louisiana if the trust company holds funds
in trust and invests them in certificates of deposit issued by a bank, savings and loan
association, or savings bank with a main office or branch in Louisiana.
(ii) Cash on deposit in an account in Louisiana with any bank, savings and loan
association, or savings bank, or a trust company holding funds in trust, any of which has a
main office or branch in Louisiana.
(b) An investment shall be considered a qualifying Louisiana investment pursuant
to the provisions of this Paragraph only when made by a business that meets all of the
following criteria:
(i) Issues life insurance policies.
(ii) Has total admitted assets under three million dollars.
(iii) Is domiciled, licensed, and operating in Louisiana.
(iv) Maintains its primary corporate office in Louisiana and has at least seventy
percent of its employees in Louisiana.
(v) Maintains in Louisiana its core business functions, which include but are not
limited to the utilization of review services, claim payment processes, customer processes,
customer service call centers, enrollment services, information technology services, and
provider relations.
D. Recognizing that it is in the public interest to create an incentive for
environmentally clean industry to locate in this state and to broaden the economic base; to
encourage investment in this state; and to enhance the economic and financial climate of the
state, the legislature finds that a premium tax reduction for insurers investing in certain
qualified Louisiana assets promotes the public interest.
E.(1)(a) Recognizing that it is also in the public interest to ensure sufficient
availability of venture capital for purposes of technological development and job creation,
the premium tax reduction for insurers investing in certified capital companies as defined in
R.S. 51:1921 et seq., or in industrial or economic development corporations as defined in
R.S. 12:951 et seq., shall be computed as one hundred percent of the amount of the
investment at the time the investment is made. The premium tax reduction shall be available
for, but not limited to, taxes charged on insurance premiums under R.S. 22:439, 831, 836,
838, and 842. Notwithstanding any provision of law to the contrary, the premium tax
reduction shall not be available for taxes charged on insurance premiums under R.S. 22:345,
833, 834, 835, 837, and 1476. The investment shall be in the form of cash or debt
instruments that are obligations of the investing insurance company to the certified capital
company or the industrial or economic development corporation. Such debt instruments
shall be converted into cash at a rate of not less than ten percent per year from the date of the
investment.
(b) For purposes of this Subsection, the term "investment" shall include the
investment of cash or a note by an insurance company in exchange for either (i) equity in a
certified Louisiana capital company or (ii) a loan receivable from a certified Louisiana capital
company which has a stated final maturity date of not less than five years from the
origination date of the loan and shall not be repaid in a manner which results in the loan
receivable being repaid faster than if the loan receivable were repaid by level debt service
payments.
(2) The premium tax reduction determined as provided in Paragraph (1) of this
Subsection shall be subject to the following limitations:
(a) For investments made during any taxable year beginning on or after January 1,
1989, and before January 1, 1990, the tax reduction shall not exceed forty percent of the tax
liability for that taxable year.
(b) For investments made during any taxable year beginning on or after January 1,
1990, and before January 1, 1991, the tax reduction shall not exceed thirty percent of the tax
liability for the respective taxable year.
(c) For investments made on or after January 1, 1991, and before January 1, 1999,
the tax reduction utilized in any year for any group of affiliates shall not exceed twenty-five
percent of the gross premium tax liability for such group, before any credits, for the year in
which the investment was made.
(d) For investments made after December 31, 2003, no tax reduction shall be
allowed.
(3) The tax reduction as determined by Paragraph (1) of this Subsection and as
limited in Paragraph (2) of this Subsection shall be applied as follows: (a) for tax reduction
credits granted to investors prior to January 1, 2001, the tax reduction shall be applied to the
premium tax liability not to exceed ten percent of the premium tax reduction in any one year
until one hundred percent of the premium tax reduction has been claimed by the insurer; or
(b) for tax reduction credits granted to investors after January 1, 2001, the tax reduction shall
not be applied to any premium tax liability generated within two years from the date of
investment and shall be applied to the premium tax liability not to exceed twelve and one-half percent of the premium tax reduction in any one year until one hundred percent of the
premium tax reduction has been claimed by the insurer; provided, the reduction in any
taxable year shall not exceed the premium tax liability for such taxable year.
Notwithstanding the provisions of this Paragraph to the contrary, if a holder of premium tax
reduction credits authorized under this Subsection does not use credits that are generated
after December 31, 1999, and which are eligible to be used in a given calendar year, those
premium tax reduction credits may be carried forward and used in any subsequent year until
such credits are exhausted; provided, the reduction in any taxable year shall not exceed the
premium tax liability for such taxable year.
(4) The premium tax reductions described in Paragraphs (1), (2), and (3) of this
Subsection shall have the same rights with respect to transferability accorded to income tax
credits, as described in R.S. 51:1924(F) and be subject to the same forfeiture and repayment
provisions as income tax credits, as described in R.S. 51:1927(C) and 1928(A).
F.(1) For purposes of a domestic health maintenance organization with no fewer than
five hundred employees residing in Louisiana during the 2016 calendar year, when such
health maintenance organization invests at least twenty-five million dollars in bonds of this
state or bonds of municipal, school, road, or levee districts, or other political subdivisions
of this state or bonds approved for issue by the Louisiana State Bond Commission as
provided for in Paragraph (C)(2) of this Section for the last two calendar quarters in the 2016
calendar year, then the tax payable for the calendar year 2016 shall be fifty percent of the
amount otherwise levied in R.S. 22:842(B). For purposes of determining the number of
employees residing in Louisiana and the dollar amount of the investment in the bonds,
"domestic health maintenance organization" shall include the domestic health maintenance
organization and its affiliates.
(2) This provision shall not be applicable to a health maintenance organization that
is eligible for a tax reduction under any other provision of this Section.
(3) The reduction authorized in this Subsection shall not be applicable to premiums
collected or received pursuant to Title XIX of the Social Security Act, Subchapter XIX,
Chapter 7, of Title 42 of the United States Code.

Legislative History

Acts 1958, No. 125; Acts 1981, No. 662, §1; Acts 1984, No. 537, §1; Acts 1988, No. 130, §1; Acts 1989, 1st Ex. Sess., No. 15, §1, eff. March 17, 1989; Acts 1992, No. 849, §1; Acts 1993, No. 724, §1; Acts 1994, 3rd Ex. Sess., No. 9, §1; Acts 1996, No. 21, §1, eff. June 27, 1996; Acts 1998, No. 70, §1, eff. Oct. 1, 1998; Acts 2002, No. 84, §1, eff. June 25, 2002; Acts 2006, No. 587, §1; Redesignated from R.S. 22:1068 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 478, §2, eff. July 1, 2010; Acts 2009, No. 503, §1; Acts 2016, 1st Ex. Sess., No. 10, §1, eff. Mar. 9, 2016; Acts 2016, 2nd Ex. Sess., No. 7, §1, eff. June 24, 2016; Acts 2017, No. 313, §1, eff. Jan. 1, 2018; Acts 2023, No. 310, §1, eff. Jan. 1, 2024.