Changes to Louisiana Corporate Franchise Law Tax

The changes to the Louisiana corporate franchise tax adopted during the Session appear to be potentially more far reaching than the changes to the state sales and use tax. For tax periods beginning on or after January 1, 2017, Act 12 (signed by the Governor and effective March 10, 2016) expands the Louisiana corporate franchise tax to all entities (whether state law corporations or not) taxed as C corporations for federal income tax purposes including those entities whose only connection with Louisiana is through an ownership interest in a second entity doing business in Louisiana.

Act 12 expands the franchise tax by changing the definition of taxable corporations to include corporations who file as subchapter C on their federal income tax. Previously, only corporations were subject to the state franchise tax. Additionally, any corporations who own property in Louisiana, either directly or indirectly through related business entities including partnerships, joint ventures, corporate subsidiaries or other business organizations will be subject to the franchise tax.

Act 12 also requires that an LLC must be treated and taxed in the state of Louisiana in the same manner it is treated and taxed for federal income tax. It also raises the initial franchise tax from $10 to $110.

If you are not sure whether you are now subject to the franchise tax or unclear about how these changes will affect your filing status with the state, schedule an appointment with us today. We will help you understand Act 12 and other changes to the Louisiana state tax code, file an extension for you if needed and get your returns filed quickly and correctly.

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