FREQUENTLY ASKED QUESTIONS: How do Tax Credits work? Tax credits can be used to offset income liablitiy owed to the State of Louisiana. Tax credits are different from deductions in that deductions reduce the amount of income that a taxpayer is taxed upon, while credits offset the taxes themselves on a dollar for dollar basis. When you buy tax credits from LPC, you receive a Certificate of Ownership from the State to evidence your ownership of the credits and a Schedule to help you claim your credits on your return. When you file your tax return, attach the Certificate of Ownership and the Schedule. Inform the Department of Revenue that you wish to apply the credits to your taxes. That's it! If you have paid estimated taxes throughout the year, then you can buy the credits, apply them on your return, and request a refund of all such payments. You may forgo making estimated tax payments if you purchase credits. Purchasing credits eliminates penalties for past due or untimely estimated payments for the same tax year. What's the price and what do I save? The price for tax credits fluctuates with the market. LPC reserves the right to adjust the price periodically, and without notice, to take into account prevailing market conditions. To obtain a free rate quote, please call us at (866) 454-9205. Is there a minimum amount? Yes, the smallest transaction size is $10,000 worth of credits. Above that minimum, any amount, down to the penny, is acceptable. How can I buy them? See the section on Purchasing Tax Credits. How risky is this? Uncertified tax credits can be recaptured by the State if the producer does not expend the necessary funds related to the project. For this reason, LPC does not trade in uncertified credits. All tax credits sold by LPC have been certified by the State. Certified credits can, nonetheless, be recaptured by the State if the producer defrauded the State or if there was a material error involved in the issuance of the credits. To protect against such an event, LPC has signed an agreement with the State to the effect that no credits purchased by LPC and resold to Louisiana taxpayers will ever be recaptured in such circumstances. The State will only look to the producers in the event of fraud or error. In addition, LPC has obtained a Private Letter Ruling from the Department of Revenue which approves of LPC's proposed business method and transaction structure. As an added protection, LPC requires any producer from which it buys credits to provide a transferable warranty that the credits will not fail. These warranties are passed along to our clients. By taking these precautions, LPC provides its customers with the highest level of protection. As a result of these efforts, no tax credit traded by LPC has ever been recaptured or dishonored. What if I buy tax credits and can't use them all this year? The tax credits sold by LPC can be carried forward for 10 years from the date they were originally earned. Can I still deduct my state income taxes from my federal reportable income? You may or may not know that all amounts paid to the state in income taxes are deductible on your federal returns. The IRS recently released a Private Letter Ruling on a virtually identical situation in another state and declared that the use of transferable tax credits to pay state income taxes is sufficient to allow the taxpayer to deduct 100% of his state tax liability from his federal reportable income in accordance with Section 164 of the Internal Revenue Code, as long as the difference between the credit purchase price and the amount of the offset taxes is reported as income or gain. While the PLR is not binding with respect to any taxpayer other than the one to which it was originally issued, LPC has negotiated a legal opinion with the same conclusion from a top tier regional law firm. If you would like such an opinion issued in your name, LPC can arrange for it to be delivered, but an additional charge will apply. Click here to download the Film Tax Credit Order Form For more information, contact us.