In which income-tax and franchise-tax periods did a taxpayer claim Louisiana's inventory tax credit?

Plain-English summary

The inventory tax credit was claimed in the income-tax period when the qualifying inventory tax was paid and in the corporation-franchise-tax period immediately after that payment.

The assessment year did not control. No credit existed until payment, and the ruling found no provision moving the income-tax credit to another period.

Income-tax timing

Eligibility and the applicable percentage depended on when the taxpayer paid the inventory tax. Even an old assessment could generate credit if paid during a qualifying period.

The taxpayer claimed the credit on the income-tax return for the payment period.

Franchise-tax timing

Franchise tax was due on the first day of the tax period and computed from the preceding year's closing information. Therefore, inventory tax paid in one year was used in computing the credit for the next franchise-tax period.

This avoided the need to amend the already-determined franchise-tax return for the payment year.

Common questions

Q: Did the inventory assessment year control the income-tax credit year?

A: No. Payment timing controlled.

Q: Was the franchise-tax credit claimed in the same period as payment?

A: No. It was claimed in the immediately following franchise-tax period.

Citations and references

• La. R.S. 47:6006 — inventory tax credit and historical percentage provisions
• La. R.S. 47:609(A) — franchise-tax due date and prior-year computation
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 01-014

Original ruling text

Revenue Ruling
No. 01-014
October 8, 2001

Individual Income Tax, Corporation Income Tax, and Corporation Franchise Tax
Period in which Inventory Tax Credit may be Claimed

This revenue ruling addresses the period in which a qualifying taxpayer may claim credit for
payment of a qualifying inventory tax. The question has been raised whether or not the credit
should be claimed in the tax period in which the inventory tax was paid, or in the tax period
for which the inventory tax was paid.
The provisions of La. Rev. Stat. Ann. §47:6006 (West 2001) do not expressly answer the
question that has been posed. However, the provisions of La. Rev. Stat. Ann. §47:6006(D)(1)
– (5) (West 2001) provide the basis for an answer. These paragraphs state the percentage of
inventory tax paid that is allowed as a credit. They make the determination based upon when
the inventory tax is paid rather than the period for which the inventory tax is paid. Under the
clear reading of these provisions, the inventory tax paid for an inventory tax assessment due
and payable long before the enactment of the credit would be eligible for the credit if that
inventory tax was not paid until one of the periods stated in La. Rev. Stat. Ann.
§47:6006(D)(1) – (5) (West 2001). Eligibility for the credit and the amount of the credit are
contingent upon when the credit is paid. No credit exists until the inventory tax is paid and
there is no provision for carrying the credit to another period. The credit is properly claimed
in the income tax period in which the inventory tax is paid.
Additional complications arise when considering the corporation franchise tax. The franchise
tax is due on the first day of the taxable period. The tax for a given year is usually determined
and due prior to the time the inventory tax creating the credit is paid within that given year. If
the credit was properly claimed in the franchise tax period in which the inventory tax was
paid, the only way to claim the credit against the franchise tax would be to file an amended
return. The resolution to this is provided by La. Rev. Stat. Ann. §47:609(A) (West 2001),
which reads, in part, “[t]he tax is due on the first day of each calendar or fiscal year and
annually thereafter, and is computed on the basis of the previous calendar or fiscal year

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is
issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply principles of law to a specific
set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a
statement of the department's position and is binding on the department until superseded or modified by a
subsequent change in statute, regulation, declaratory ruling, or court decision.

Period in which Inventory Tax
Credit may be Claimed
Page 2 of 2

closing.” It is this provision that causes the revenue, assets, and year-end balance sheet of the
prior year to be used for computation of the current year franchise tax. Inventory tax
payments made in the prior year as of the prior year closing are to be used in computing the
inventory tax credit allowed for a current year.
The periods in which inventory tax credit should be claimed are the income tax period in
which the inventory tax is paid and the franchise tax period immediately following the
payment of the inventory tax.

Cynthia Bridges
Secretary
By: ________
Michael D. Pearson
Senior Policy Consultant
Policy Services Division