State & Local Tax Alert Breaking state and local tax developments from Grant Thornton LLP Louisiana Enacts Broad Range of Tax Increases During Recent Special Session In an effort to cure an estimated $2 billion deficit in the FY 2017 budget, the Louisiana legislature passed a number of tax increases during a Special Session that concluded on March 6, 2016. The tax increases, which are contained in several different bills, were signed into law by Governor John Bel Edwards on varying subsequent dates. The legislation expands the range of businesses that will be subject to the franchise tax. The most significant corporate income tax changes include a flat tax rate and elimination of the tax deduction for federal income taxes paid (both subject to voter approval), new related-party expense addback requirements, the repeal of the three-year sunset of the tax rebate reductions, and changes in the use of net operating losses (NOLs). The numerous sales and use tax changes include a new additional 1 percent sales tax, suspension of exemptions and exclusions from the existing sales tax components, and the enactment of click-through and affiliate nexus provisions. Finally, taxes on cigarettes and alcoholic beverages are increased. Corporate Income and Franchise Tax Businesses Subject to Franchise Tax Expanded 1 For franchise tax years beginning on or after January 1, 2017, legislation expands the purview of the franchise tax by amending the definition of domestic corporation to include all entities that are organized as corporations or are classified as corporations for federal income tax purposes. 2 Thus, the tax now applies to partnerships, joint ventures, and limited liability companies (LLCs) that are treated as corporations for federal income tax purposes. However, the tax does not apply to an LLC that elects to be taxed as an S corporation on the first day of its fiscal or annual year. 3 For purposes of the franchise tax, corporation means a domestic corporation or foreign corporation. 4 In addition, corporations now have franchise tax nexus if they own property through a partnership, LLC taxed as a partnership, joint venture or any other business organization to which the Release date April 25, 2016 States Louisiana Issue/Topic Corporate Income and Franchise Tax, Sales and Use Tax, Other Taxes Contact details John LaBorde Houston T 832.476.3605 E john.laborde@us.gt.com Pat McCown Dallas T 214.561.2350 E pat.mccown@us.gt.com Terry Gaul Houston T 832.476.5088 E terry.gaul@us.gt.com Tracy Watts Houston T 832.476.3607 E tracy.watts@us.gt.com Rick Herrmann Houston T 832.476.3713 E rick.herrmann@us.gt.com Jamie C. Yesnowitz Washington, DC T 202.521.1504 E jamie.yesnowitz@us.gt.com Chuck Jones Chicago T 312.602.8517 E chuck.jones@us.gt.com Lori Stolly Cincinnati T 513.345.4540 E lori.stolly@us.gt.com Priya D. Nair Washington, DC T 202.521.1546 E priya.nair@us.gt.com www.grantthornton.com/salt 1 Act 12 (H.B. 19), Laws 2016 (First Extraordinary Session). 2 LA. REV. STAT. ANN. 12:1368; 47:601(C)(1). 3 Id. Note that this exemption also includes an entity that was acquired in 2012 or 2013 by an entity that was taxed as an S corporation. 4 LA. REV. STAT. ANN. 47:601(C)(3)..
Grant Thornton LLP - 2 corporation is affiliated under rules similar to those of Internal Revenue Code (IRC) Section 1563. 5 The legislation creates a new holding company deduction from taxable capital. 6 Any corporation (under the newly expanded definition) subject to franchise tax that is not eligible to receive one of the existing holding company deductions 7 may deduct its investments in and advances to subsidiaries subject to the franchise tax and in which the corporation owns at least 80 percent. 8 For purposes of this deduction, the term subsidiary is defined as a corporation (again under the newly expanded definition) subject to the Louisiana franchise tax and under 80 percent or greater direct or indirect control by the investor corporation. The deduction is limited to the corporation s investment in the subsidiary multiplied by the subsidiary s Louisiana allocation percentage. 9 The initial tax applicable to corporations that first become subject to the franchise tax is amended. 10 Generally, the initial tax is increased from $10 to $110. 11 However, the initial tax of an entity in existence and actually conducting business in Louisiana during its previous calendar or fiscal year is calculated based on its corporate books on the first day of the calendar or fiscal year in which the tax becomes due. 12 6.5 Percent Flat Corporate Income Tax Rate 13 For tax years beginning on or after January 1, 2017, Louisiana would impose its corporate income tax at a flat rate of 6.5 percent. 14 Currently, Louisiana employs graduated corporate income tax rates ranging from 4 percent to 8 percent. However, this change is contingent on voters approving a constitutional amendment in the November 6, 2016 general election that would eliminate the federal income taxes paid deduction. 15 Tax Deduction for Federal Income Taxes Paid 16 For tax years beginning on or after January 1, 2017, legislation would repeal the deduction for federal income taxes paid 17 if the constitutional amendment in the November 6, 2016 election eliminating the federal income taxes paid deduction is approved by voters. 18 5 LA. REV. STAT. ANN. 47:601(A)(3); 47:605.1. 6 LA. REV. STAT. ANN. 47:602(G). 7 LA. REV. STAT. ANN. 47:602(B) through 47:602(F). 8 Id. 9 LA. REV. STAT. ANN. 47:602(G)(3). 10 LA. REV. STAT. ANN. 47:611. 11 LA. REV. STAT. ANN. 47:611(A). 12 LA. REV. STAT. ANN. 47:611(B). 13 Act 8 (H.B. 29), Laws 2016 (First Extraordinary Session). 14 LA. REV. STAT. ANN. 47:287.12. 15 Act 8 (H.B. 29), Laws 2016 (First Extraordinary Session), 3; see Act 31 (H.B. 31), Laws 2016 (First Extraordinary Session). 16 Act 30 (H.B. 95), Laws 2016 (First Extraordinary Session). 17 LA. REV. STAT. ANN. 47:55(6); 47:93(A), (B); 47.241; 47:287.69; 47:287.442(B)(1); 47:300.6(A); 47:300.7(A); repealing LA. REV. STAT. ANN. 47.287.79; 47:287.83; 47:287.85. 18 Act 30 (H.B. 95), Laws 2016 (First Extraordinary Session), 4; see Act 31 (H.B. 31), Laws 2016 (First Extraordinary Session).
Grant Thornton LLP - 3 Related Party Addbacks Enacted 19 For tax years beginning on or after January 1, 2016, taxpayers are required to add back certain interest expenses, intercompany management fees and intangible expenses paid to affiliated entities. Exceptions to the addback requirement are recognized for: (1) expenses for which the related party s corresponding income is subject to tax in Louisiana, another state or a foreign nation which has an enforceable income tax treaty with the United States, if the recipient was a resident as defined in the income tax treaty with the foreign nation; (2) certain transactions that do not have as a principal purpose the avoidance of any Louisiana tax; and (3) certain conduit expenses (expenses ultimately paid to a third party that is not a related member). 20 Three-Year Sunset of Tax Rebate Reductions Repealed 21 The original three-year sunset provisions allowing for deferred use of items (i.e., catch-up deductions) postponed by the 2015 legislation for the credit for the individual income tax paid to other states, depletion deduction, numerous credits (including the jobs credit), certain enterprise zone and other discretionary credits are repealed. 22 The deferred item reversals are now tied to the legislation that enacted the additional 1 percent sales tax and are therefore further postponed until the sunset of this legislation, currently scheduled for June 30, 2018. NOL Usage Limitations 23 Under existing law, for returns filed on or after July 1, 2015, the NOL deduction is limited to 72 percent of the NOL carryovers to such year. 24 Effective January 1, 2016, the limitation is amended to also provide that the deduction may not exceed 72 percent of Louisiana net income. 25 According to the legislature s fiscal note, the legislation appears to be correcting language in [the 2015 legislation] that has been the subject of dispute with taxpayers regarding the limitation of net operating loss deductions. 26 Also, the limitation no longer expires on June 30, 2018. 27 Any amount of an NOL in excess of 72 percent of Louisiana net income for the taxable year can be carried forward to a future taxable year, subject to the 20-year limitation on carryforwards. 28 Order of Using NOL Carryovers 29 19 Act 16 (H.B. 55), Laws 2016 (First Extraordinary Session). 20 LA. REV. STAT. ANN. 47:287.82. 21 Act 28 (H.B. 22) and Act 29 (H.B. 24), Laws 2016 (First Extraordinary Session). 22 LA. REV. STAT. ANN. 47:227; 47:6034(C)(1)(a)(ii)(bb)(II), (c)(ii), (d)(ii). 23 Act 6 (H.B. 20), Laws 2016 (First Extraordinary Session). 24 LA. REV. STAT. ANN. 47:287.86(A). 25 Note that there appears to be an inconsistency in effective dates. The statute provides that the limitation applies to returns filed on or after July 1, 2015, but H.B. 20 is effective January 1, 2016. 26 Fiscal Note for H.B. 20, Louisiana Legislative Fiscal Office, March 9, 2016. 27 Act 6 (H.B. 20), Laws 2016 (First Extraordinary Session), 3. 28 Revenue Information Bulletin No. 16-013, Louisiana Department of Revenue, April 8, 2016. 29 Act 24 (H.B. 116), Laws 2016 (First Extraordinary Session).
Grant Thornton LLP - 4 Effective January 1, 2017, NOL carryover usage begins with the NOL carryover from the most recent years (LIFO) rather than the (former) earliest tax year (FIFO). 30 This appears to be designed to prevent taxpayers from utilizing older NOLs prior to the end of the carryforward period, resulting in expiration of the NOLs. This is an unprecedented development. Bank Dividend Deduction Restored 31 For tax years beginning on or after January 1, 2015, legislation restores the qualifying bank dividend exclusion from the 72 percent imposed last year back to 100 percent. 32 Sales and Use Tax Additional 1 Percent State-Level Sales Tax Enacted 33 Under existing law, Louisiana imposes a 4 percent state-level sales and use tax that is comprised of four separate components: A general 2 percent tax; 34 An additional 1 percent tax; 35 An additional 0.97 percent tax; 36 and An additional 0.03 percent tax imposed by the Louisiana Tourism Promotion District. 37 Effective April 1, 2016, recent legislation enacts a new component to the state-level sales tax in the form of an additional 1 percent sales tax on sales of tangible personal property and certain services, resulting in a new total state-level sales tax rate of 5 percent. 38 The legislation includes a list of 65 items that are exempt from the new tax effective July 1, 2016. 39 According to the legislature s fiscal note, many items that are not subject to the existing 4 percent tax but are subject to the new 1 percent tax include: business utilities; purchases during sales tax holidays; and manufacturing machinery and equipment from April 1, 2016 to June 30, 2016. 40 This additional tax is scheduled to expire on June 30, 2018. 30 LA. REV. STAT. ANN. 47:287.86(C)(2). 31 Act 1 (H.B. 7), Laws 2016 (First Extraordinary Session). 32 LA. REV. STAT. ANN. 47:287.71(B)(6). 33 Act 26 (H.B. 62), Laws 2016 (First Extraordinary Session). 34 LA. REV. STAT. ANN. 47:302(A). 35 LA. REV. STAT. ANN. 47:321(A). 36 LA. REV. STAT. ANN. 47:331(A). 37 LA. REV. STAT. ANN. 51:1286. Note that this is a special taxing district with boundaries that are conterminous with the state. LA. REV. STAT. ANN. 51:1282. 38 LA. REV. STAT. ANN. 47:321.1. This new tax is nicknamed the clean penny tax. 39 LA. REV. STAT. ANN. 47:321.1(F). 40 Fiscal Note for H.B. 62, Louisiana Legislative Fiscal Office, March 30, 2016.
Grant Thornton LLP - 5 Exemptions and Exclusions from Existing Sales Tax 41 Effective April 1, 2016, recent legislation provides exclusive lists of exclusions and exemptions allowed under each of the components of the total state tax rate. 42 These lists have the effect of temporarily suspending statutory exclusions and exemptions not specified in the legislation. For the existing 2 percent tax, 32 exclusions and exemptions are allowed from April 1, 2016 to July 1, 2018. 43 For the existing 1 percent tax, the legislation lists 31 specific exemptions and exclusions that are the only exemptions and exclusions from April 1, 2016 to July 1, 2016. 44 Because manufacturing machinery and equipment are not on this list, these purchases and uses will be subject to the 1 percent rate for this three-month period. From April 1, 2016 to July 1, 2016, the legislation includes a list of 32 exemptions that may be taken against the 0.97 percent additional sales tax. 45 Note that the exemption for manufacturing machinery and equipment is included in this list. 46 The exemption for utilities used by steelworks and blast furnaces 47 is effective through March 31, 2016 and for all taxable periods on and after April 1, 2019. 48 The sale for resale exemption remains intact and exempt non-enumerated services also remain exempt. 49 Click-Through and Affiliate Nexus 50 For tax periods beginning on and after April 1, 2016, Louisiana has enacted click-through and affiliate nexus provisions. For use tax purposes, dealer includes every person who manufactures or produces tangible personal property for sale at retail, for use or consumption, or distribution, or for storage to be used or consumed in a taxing jurisdiction. 51 The click-through nexus provision is added by expanding the definition of dealer to include any person engaging in business in the state which means the solicitation of business through an independent contractor or any other representative under a certain type of agreement with a Louisiana resident or business. 52 Under the agreement, the 41 Act 25 (H.B. 61), Laws 2016 (First Extraordinary Session). 42 LA. REV. STAT. ANN. 47:302(V); 47:321(L); 47:331(S). 43 LA. REV. STAT. ANN. 47:302(V). 44 LA. REV. STAT. ANN. 47:321(L). 45 LA. REV. STAT. ANN. 47:331(S). 46 LA. REV. STAT. ANN. 47:331(S)(16). 47 LA. REV. STAT. ANN. 47:305.51. 48 LA. REV. STAT. ANN. 47:331(Q). 49 Non-enumerated services are not mentioned in the code, but known to be exempt such as accounting services and services related to real property. 50 Act 22 (H.B. 30), Laws 2016 (First Extraordinary Session). 51 LA. REV. STAT. ANN. 47:302(V)(1). 52 LA. REV. STAT. ANN. 47:302(V)(1)(a).
Grant Thornton LLP - 6 resident or business, for a commission, referral fee, or other consideration must refer potential customers, whether by a link on an Internet Web site, an in-person oral presentation, telemarketing, or otherwise to the seller. If the cumulative gross receipts from sales of tangible personal property to customers in Louisiana who are referred to a person through such an agreement exceed $50,000 during the preceding 12 months, the presumption regarding the status of that person as a dealer may be rebutted if the person can demonstrate that he or she cannot reasonably be expected to have gross receipts in excess of $50,000 for the succeeding 12 months. 53 Affiliate nexus provisions are added by expanding the definition of dealer. Specifically, dealer now includes any person selling tangible personal property or services, the use of which is subject to tax, who sells the same or a substantially similar line of products as a Louisiana retailer under the same or substantially similar business name, using the same trademarks, service marks, or trade names that are the same or substantially similar to those used by the Louisiana retailer. 54 Dealer also includes any person who solicits business and develops and maintains a market in the state through an agent, salesman, independent contractor, solicitor or other representative under an agreement with a Louisiana resident or business (collectively known as an affiliated agent) under which the affiliated agent, for a commission, referral fee, or other consideration engages in activities in Louisiana that benefit the person s development or maintenance of a market for its goods or services in the state, to the extent that those activities of the affiliated agent are sufficient to satisfy the nexus requirement of the U.S. Constitution. 55 Also, these provisions are presumed to apply to any person who holds a substantial ownership interest in a retailer maintaining sales locations in Louisiana, or to any person who is owned by a retailer maintaining sales locations in the state. 56 Vendor Compensation Limited 57 Effective April 1, 2016, vendor compensation is limited to $1,500 per month. 58 There is no vendor compensation provided for the new 1 percent additional sales tax. Tax Base on Hotel Rooms Expanded 59 Effective July 1, 2016, the definition of hotel is expanded for purposes of the sales tax. 60 Previously, a hotel was defined as an establishment with at least six sleeping rooms. The minimum room requirement has been eliminated and the definition now includes a residential unit such as a house, apartment, or condominium. However, hotel does not include any establishment or person leasing apartments or a single family dwelling on a 53 Id. 54 LA. REV. STAT. ANN. 47:302(V)(1)(b). 55 Id. 56 LA. REV. STAT. ANN. 47:302(V)(1)(c). 57 Act 15 (H.B. 43), Laws 2016 (First Extraordinary Session). 58 LA. REV. STAT. ANN. 47:306(A)(3)(a). 59 Act 17 (H.B. 59), Laws 2016 (First Extraordinary Session). 60 LA. REV. STAT. ANN. 47:301(4)(f), (6)(a).
Grant Thornton LLP - 7 month-to-month basis. Thus, the sales tax now applies to online short-term residential rentals. Car Rental Taxes Reinstated 61 Effective April 1, 2016, legislation reinstitutes the state car rental tax of 2.5 percent and the local car rental tax of 0.5 percent that expired in 2012. 62 State Telecommunications Tax Reduction Repealed 63 Existing law imposes a state sales tax on telecommunications services at a rate of 3 percent for intrastate services and 2 percent for interstate and international services. 64 Provisions that would have reduced the 2 percent tax for interstate and international services to 1 percent beginning on April 1, 2016 have been repealed. Cigarette and Alcohol Taxes Cigarette Tax Rate Increased 65 Effective April 1, 2016, the cigarette tax is increased from 86 cents per pack to $1.08 per pack. 66 Discount Rate for Tobacco Dealers Capped 67 Effective April 1, 2016, legislation caps the discount for collecting and accounting for sales tax on tobacco to $1,000 per month. 68 Alcohol Tax Rates Increased 69 Effective April 1, 2016, the excise tax is increased on liquor from 66 cents to 91 cents per liter, on sparkling wines from 42 cents to 61 cents per liter, and on still wines the tax ranges up to 53 cents per liter from 3 to 6 cents per liter. 70 Alcohol Tax Vendor Compensation Reduced 71 61 Act 14 (H.B. 39), Laws 2016 (First Extraordinary Session). 62 LA. REV. STAT. ANN. 47:551. 63 Act 9 (H.B. 72), Laws 2016 (First Extraordinary Session). 64 LA. REV. STAT. ANN. 47:302(C); 47:331(C). 65 Act 4 (H.B. 14), Laws 2016 (First Extraordinary Session). 66 LA. REV. STAT. ANN. 47:841(B)(7). 67 Act 15 (H.B. 43), Laws 2016 (First Extraordinary Session). 68 LA. REV. STAT. ANN. 47:306(A)(3)(a). 69 Act 13 (H.B. 27), Laws 2016 (First Extraordinary Session). 70 LA. REV. STAT. ANN. 26:341(A); 26:342. 71 Act 7 (H.B. 28), Laws 2016 (First Extraordinary Session).
Grant Thornton LLP - 8 Effective April 1, 2016, the vendor discount for collecting alcohol tax is reduced from 3 1/3 percent to 2 1/2 percent. 72 Commentary Coming on top of last year s enigmatic changes, 73 this year s legislation has made Louisiana taxation very complex for the uninformed and a challenge even for knowledgeable practitioners. There are now so many limits to fundamental deductions, exclusions and credits that in practice, it appears that Louisiana is transforming its sales and use tax temporarily into a gross receipts tax one exemption at a time. The tax increases are expected to generate an additional $1.2 billion of tax revenue, leaving the legislature to consider $800 million of spending cuts during the 2016 Regular Session which began on March 14, 2016 and is expected to adjourn sine die on June 6. By state constitution, during regular sessions in even-numbered years, the Louisiana legislature is prohibited from enacting legislation which would enact or increase a statewide tax, or to the same effect by limiting or repealing tax exemptions, exclusions, deductions, or credits. 74 Citing large projected deficits in both the 2017 and 2018 fiscal years (beginning on July 1, 2016 and July 1, 2017, respectively), Governor Edwards called the 2016 Special Session to generate enough revenue to keep the state running. Neither the House nor the Senate wished to be perceived to be the initiator of the needed tax increases. Should the requisite spending cuts not be achieved during the 2016 Regular Session, a second 2016 Special Session may be required. The 2016 Special Session lacked much of the controversy and theatrics of the 2015 Regular Session, which generated $1.2 billion of tax increases deemed by then-governor Bobby Jindal to be non-tax increases. However, the 2016 Special Session will be remembered for its lack of organization, as virtually all the legislation was passed in the final hours with little public debate or discussion. The legislation expanding the entities subject to the franchise tax was enacted to legislatively reverse the UTELCOM 75 decision. Historically, only corporations legally organized as such were subject to the Louisiana franchise tax. In UTELCOM, the passive ownership of a pass-through entity was held to not create nexus for an out-of-state corporation. Although some taxpayers avoided assessments and achieved refunds on the UTELCOM issue, assessments and refund claims remain unresolved and uncertainty continues to abound. Limiting the new holding company deductions to subsidiaries subject to the Louisiana franchise tax and to their Louisiana allocation percentages may be constitutionally suspect 72 LA. REV. STAT. ANN. 26:345; 26:354(D). 73 For a discussion of the major tax legislation enacted in 2015, see GT SALT Alert: Louisiana Enacts Income and Franchise Tax Changes Which May Require Taxpayer Action by June 30, 2015. 74 LA. CONST. art. III, 2(A)(2), (A)(3). 75 UTELCOM, Inc. v. Bridges, 77 So. 3d 39 (La. Ct. App. 2011), review denied, 83 So. 3d 1046 (La. 2012). For a discussion of the UTELCOM issues, see GT SALT Alert: UTELCOM Analysis Endorsed in Louisiana Franchise Tax Nexus Dispute and GT SALT Alert: Louisiana Court of Appeal Clarifies Proper Venue to Consider Corporation Franchise Tax Refund Claims Filed Under UTELCOM.
Grant Thornton LLP - 9 as discriminating against interstate commerce. Courts in other states have responded in mixed fashion to similar types of tax preferences. The November election now takes on added importance beyond federal, state and local elections, as the corporate income tax calculation hangs in the balance. Voters will have to decide whether the 6.5 percent flat corporate income tax rate is enacted in exchange for the loss of the federal income taxes paid deduction. To a taxpayer subject to the currentlygraduated 8.0 percent tax and benefitting from a Louisiana deduction for 35 percent of federal income tax paid (a 5.2 percent effective Louisiana tax rate), the 6.5 percent tax rate would represent a tax increase. The enactment of a broad related party expense addback statute is likely to cause controversy. Adoption of the addback regimes in the majority of separate reporting states has resulted in challenges at the audit level and beyond. It will be interesting to observe and experience how the exceptions to the new addback requirements will be administered by the Louisiana Department of Revenue, and what disclosures, if any, are required to take these exceptions on corporation income tax returns. Deducting NOL carryforwards on a LIFO basis will surely cause some taxpayers to lose the NOLs that they only recently acquired the year after the carryforward period was extended from 15 to 20 years. The Department will be sorely challenged to educate taxpayers and to administer the tax changes. Louisiana auditors will be similarly challenged with the task of ensuring substantial compliance with tax laws and explaining adjustments to taxpayers. Perhaps most complicated are the new sales tax exclusion provisions. The different tax rates applied at different times can be expected to sow confusion with taxpayer personnel, the Department and software alike. Specifically, this legislation phases common exemptions out over the next several years for certain individual components of the sales and use tax for different time periods, in an inconsistent and confusing manner. For example, manufacturing machinery and equipment is taxable at 2 percent from April 1, 2016 to June 30, 2016; taxable at 1 percent from July 1, 2016 through June 30, 2018, non-taxable for one day (July 1, 2018) and back to its present exemption rate after July 1, 2018. The law cleans some of the previous exemptions and exclusions of the existing sales taxes. The legislation also provides so called exclusive lists of remaining applicable exemptions and exclusions. Notably, installation charges, purchases for first use out of Louisiana, business utilities and casual sales are not on these lists. In order to determine exemptions, taxpayers will need to: Check the effective dates for each exemption for each of the three existing sales tax components; Review the exclusive lists of exemptions and exclusions for each of the three existing sales tax components; and Search for exceptions.
Grant Thornton LLP - 10 Items that were previously fully exempt and not on the exclusive lists are taxable at 5 percent from April 1, 2016 to July 1, 2016, taxable at 3 percent from July 2, 2016 to June 30, 2018, 2 percent for one day (July 1, 2018), and the current exemption returns (at least under current law) on July 2, 2018. Similarly, previously existing exempt business utilities (generally steam, water, electricity, natural gas and boiler fuel) 76 are taxable at 5 percent from April 1, 2016 to July 1, 2016, 4 percent from July 2, 2016 to July 1, 2018, 1 percent from July 2, 2018 to April 1, 2019 and again becomes exempt on and after April 2, 2019. 77 The suspension of exclusions and exemptions may also impact the taxability, in whole or in part, of inputs (i.e., labor and material) to those transactions. For ASC 740 tax accounting purposes, the income tax legislation represents a calendar year 1 st quarter 2016 event. The financial accounting effects of the proposed tax rate structure change and the elimination of the federal income tax deduction have not been enacted given that both provisions are subject to voter approval later this year. Many financial statement issuers with Louisiana NOL carryforwards should reconsider the need for and amount of valuation allowances with respect to those tax assets given the changes in the treatment of NOLs. The information contained herein is general in nature and based on authorities that are subject to change. It is not intended and should not be construed as legal, accounting or tax advice or opinion provided by Grant Thornton LLP to the reader. This material may not be applicable to or suitable for specific circumstances or needs and may require consideration of nontax and other tax factors. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Grant Thornton LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, re-keying or using any information storage and retrieval system without written permission from Grant Thornton LLP. This document supports the marketing of professional services by Grant Thornton LLP. It is not written tax advice directed at the particular facts and circumstances of any person. Persons interested in the subject of this document should contact Grant Thornton or their tax advisor to discuss the potential application of this subject matter to their particular facts and circumstances. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed. 76 See LA. REV. STAT. ANN. 47:305. 77 For a detailed chart from the state showing the taxability of different items during the various periods, see http://revenue.louisiana.gov/publications/r-1002a%203-29-16.pdf.