TIPS WHEN BUYING TAX CREDITS STORY BY MEG ALSFELD KAUL GUEST COLUMNIST
with removing them.
B
uying Louisiana tax credits is a relatively easy way to reduce your state income tax liability. The following is a sampling of issues you and your legal or tax professional should discuss when making the decision to purchase tax credits.
The credits must be earned in compliance with applicable statutory and regulatory requirements. In certain cases, this may mean the credits are “certified” by a State department, and in some cases your professional may have to review applicable documentation to determine if the credits have been earned by the seller.
viduals selling fake credits or credits they did not own. Therefore, make sure you use a reputable broker and get the advice of an attorney in order to help protect your investment. Ensure you get “clean” title. Tax credits are described as “general intangibles” subject to the Louisiana UCC rules and can be pledged by the person earning the credits as collateral
There have been instances of fraud by individuals selling fake credits or credits they did not own. Therefore, make sure you use a reputable broker and get the advice of an attorney in order to help protect your investment. Reputation matters. Use only reputable brokers or sellers when purchasing credits. There have been instances of fraud by indi-
28
LOUISIANA FILM & VIDEO MAGAZINE
ISSUE ONE
for their indebtedness. A professional can perform a UCC check to determine if the tax credits are subject to such liens and can assist
Put it in writing. Put the details of your agreement with the seller in writing. The seller should warrant that it has neither claimed on its own behalf nor conveyed to any other transferee the tax credits transferred to you. Notify the State. Most statutes require state notification of the credit transfer within 30 days of the transaction, but review the statute and rules governing the particular type of credit being purchased to ensure your compliance with the law. Copies of the transfer document and state tax credit certification letter, if applicable, are typically sent in as well. Some credits, like the motion picture tax credits, also require a processing fee for each transfer. Consider transferability limits. Some tax credits have a limit on the number of times they can be transferred. For example, while motion picture credits are not limited, live performance credits may only be transferred once to one transferee. Always check the law and verify with the seller to ensure that you are within any transfer limits. LFV Meg is an attorney in New Orleans at the law firm of Adams and Reese LLP, with experience in media and entertainment law and tax credit transactions. This article is intended for general information purposes only and is based on the laws and regulations in effect at the time of creation, which are subject to change. Application of the information reported herein to particular facts or circumstances should be analyzed by legal counsel.