Businesses in the state of Louisiana performing research and development activities qualify for a windfall of lucrative R&D tax credits. These credits are given to businesses on both state and federal levels to help promote continued development within the state as well as overall growth in the country.
Most businesses may not know they can apply for these credits, however, so looking over what research and other activities your company has performed recently is crucial to receiving dollar-for-dollar credits.
Eligible Activities For R&D Tax Credits In The State of Louisiana:
Any business that has established research or development activities can be eligible for Louisiana R&D credits. In order to be considered for these credits, however, all research and development must take place in the state of Louisiana. A taxpayer must also claim the R&D expenditures (wages, supply costs, contracted work, etc.) one year after December 31 of the year that these expenditures occurred within their business.
What Type of Research and Development Would Qualify?
Just like the federal qualifications, the state of Louisiana also follows the four-part test. This test states that if your company has performed any activities that would fall under these four categories, it would apply for R&D tax credits.
The four-part test includes activities that:
- Discovers information or techniques that are technological in nature
- Creates new or improved products, services or methods
- Eliminates the uncertainty of products, services or methods
- Involves a process with at least 80% of experimentation
Calculating Louisiana’s R&D Tax Credit
- The base amount is 70% of the average prior three years of qualified research expenses
- For companies that have up to 50 employees, the credit amount would be 40%
- For companies with 50-99 employees, the credit amount would be 20%
- For companies with 100 or more employees, the credit amount would be 8%
- For companies with less than 50 employees, the Federal Form 6765 must be filed for the current tax year or an Agreed Upon Procedures Report can be completed
Business That Would Not Be Eligible:
- Any private business that does not have a patent that is either pending or already issued by the US for the research expenses that will be claimed
- Any business that primarily deals with custom manufacturing and fabricating that does not have a pending and issued patent from the US for any research expenses they want to claim
How To Claim Louisiana R&D Tax Credits:
In order to claim these credits in the state of Louisiana, a form and supporting documents must be submitted to the Department of Economic Development depending on the type and size of your business.
It typically takes about three to six months and additional information may be required of your business such as:
- Any diagrams, notes or mark-ups related to prototypes or other business components
- List of employees who have worked on, supervised or supported the R&D activities so they can be interviewed
- Patents or pending patent applications
The process is very detailed and can be complicated, that is why having a team of tax professionals to help guide you through it can ensure that you claim everything correctly to receive your tax credits.
At National Tax Group, our tax professionals help lead Louisiana businesses through a clear step-by-step process to see if they qualify for R&D tax credits. Give our tax specialists a call at (561) 257-3436 to schedule your free initial assessment.