LAC 61:I.6537 — Certification

A. Initial Certification of State-Certified Productions
1. To obtain the approval of the department for a "state-certified production" as required by R.S. 47:6023(B)(5) and (6), the sound recording production company that will produce the sound recording production must submit a written request to the department for approval of the production as a "state-certified production" and setting forth the following facts, when applicable:
a. working title of the sound recording production for which approval is requested;
b. name of the requesting production company;
c. telephone number of requesting production company;
d. name and telephone number of the requesting production company's contact person;
e. approximate beginning and ending date of production in Louisiana;
f. Louisiana office address of requesting production company (if available);
g. telephone number of requesting production company's Louisiana office address (if available);
h. estimated total production-related costs of the sound recording production for which approval is requested;
i. estimated total amount of production-related costs to be expended in Louisiana in connection with the sound recording production for which approval is requested;
j. estimated total payroll to be paid by the requesting production company to Louisiana residents employed by the requesting production company in connection with the production for which approval is requested.;
k. facts sufficient to determine each of the following:
i. that the requesting production company is a sound recording production company as defined by R.S. 47:6023(B)(4);
l. for "state-certified productions" the application shall also include:
i. the distribution plan;
ii. a preliminary budget including estimated Louisiana payroll and estimated base investment;
iii. a description of the type of sound to be recorded;
iv. a list of the principal creative elements including performing artist(s) and producer;
v. the name and address of the recording studio or other location where the recording production will take place;
vi. a statement that the production will qualify as a state-certified production; and
vii. estimated start and completion dates.
2. After review, and upon a determination of qualification, the department shall submit its initial certification of a project as an "initial state-certified production" to investors and to the Secretary of the Department of Revenue, containing a unique identifying number.
3.a. The applicant shall countersign the initial certification letter, acknowledging the conditions therein stated, and return a countersigned original to the department within 30 business days of receipt.
b. If a countersigned original is not returned to the department within the allotted time frame, it shall be nullified unless reissued or confirmed by the department.
4.a. For projects with applications received by LED prior to 2020 rule promulgation, the initial certification shall be effective for expenditures made no more than 12 months prior to the date of application and shall be valid until the project is complete.
b. For projects with applications received by LED on or after 2020 rule promulgation, the initial certification shall be effective for qualifying expenditures made within a period 12 months prior to the date of application and 12 months after the date of initial certification, as outlined in the initial certification letter. Expenditures outside of this approved initial certification period shall not qualify for tax credits.
B. Final Certification of Sound Recording Investor Tax Credits
1. For projects with applications received by LED prior to 2020 rule promulgation, upon project completion, or for projects with applications received by LED on or after 2020 rule promulgation, no later than six months after the expiration of the initial certification period, the applicant shall make a request to LED to proceed to final certification by submitting to the department a cost report of production expenditures to be formatted in accordance with instructions of the department, after which time all claims to tax credits shall be deemed waived. The applicant shall make all records related to the cost report available for inspection by the department and the CPA selected by the department to prepare the expenditure verification report. After review and investigation of the cost report, the CPA shall submit to the department an expenditure verification report. The department shall review such expenditures and shall issue a tax credit certification letter to the investors and the Louisiana Department of Revenue indicating the amount of tax credits certified for the state-certified production.
a. Incorrect Reporting. If an applicant submits a cost report required by the provisions of this Chapter and the report made and filed contains material misstatements, including but not limited to misrepresentation in or intentional omission from the cost report of events, transactions, or other significant information there may be cause for an additional audit.
b. Related Party Transactions. If an audit contains related party transactions in excess of 20 percent of the base investment there may be cause for an additional audit.
c. Reimbursement of Audit Costs. The department may undertake additional audit at the applicant’s expense, to be performed by a state certified public accountant also certified in financial forensics or also certified as a fraud examiner. Audit fees will be assessed at the department’s contracted fee, with a minimum of $2,000 and a maximum of $15,000 fee per audit.
2. After receiving a written request from an investor and after the meeting of all criteria, the department shall issue a letter of certification to such investor signed by the secretary reflecting the investor's name, the dollar amount of sound recording investor tax credits earned by the investor pursuant to R.S. 47:6023(C) through the date of such request, the calendar year in which the sound recording investor tax credits were earned by the investor, the state-certified production with respect to which the investor earned the sound recording investor tax credits, and the identifying number assigned to such state-certified production.
3. The tax credits when issued and upon receipt shall not be transferred to any third party and will be held valid only to the party which was certified by the Department of Economic Development. After certification, the Louisiana Department of Economic Development shall submit the tax credit certification letter to the Department of Revenue on behalf of the investor who earned the sound recording tax credits. The Department of Revenue may require the investor to submit additional information as may be necessary to administer the provisions of this Section. Upon receipt of the tax credit certification letter and any necessary additional information, the secretary of the Department of Revenue shall make payment to the investor in the amount to which he is entitled from the current collections of the taxes collected pursuant to Chapter 1 of Subtitle II of this Title, as amended.
4. Once certification of a project has been granted under the criteria established within this provision and pursuant to R.S. 47:6023, the granting of such credit will be based upon a first come, first serve basis of the approved cost report or audit and shall be set for a maximum aggregate amount not to exceed $2,160,000 during any calendar year. For purposes of this Section the applicant will be considered the investor.
a. However, 50 percent of the aggregate amount of credits certified each year shall be reserved for QMC’s.
b. No more than $100,000 in tax credits may be granted per project, per calendar year.
5. If the total amount of qualifying credits in any particular year exceeds the aggregate amount of tax credits allowed for that year the excess credits will be treated as having been certified for the first day of the subsequent year.
6. The failure of the department to issue a letter of certification in accordance with this Subpart shall not:
a. void or otherwise affect, in any way, the legality or validity of any allocation of sound recording investor tax credits;
b. prohibit any Louisiana taxpayer from claiming sound recording investor tax credits against its Louisiana income tax liability if the sound recording investor tax credits are otherwise allocated or claimed in accordance with R.S. 47:6023(C) and this Subpart; or
c. result in any recapture, forfeiture or other disallowance of sound recording investor tax credits under R.S. 47:6023(G) or otherwise.