House Bill No. by Representative Bacala proposes significant amendments to Louisiana's corporate income tax laws, particularly concerning S corporations and their taxation. A notable change is the adjustment of the mobile workforce employer exemption threshold from twenty-five days to thirty days, impacting tax withholding requirements for nonresident employees. The bill also repeals the S corporation exclusion, which alters the tax treatment for S corporations and their shareholders, including the calculation of carry-forward and carry-back amounts. New definitions and requirements for S corporations are introduced, mandating annual informational returns and clarifying the treatment of income attributable to the state. Importantly, S corporations will not be subject to income tax, but shareholders must account for their pro rata share of income, with tax credits flowing through to them.

Additionally, the bill allows S corporations to file composite returns on behalf of their nonresident shareholders starting January 1, 2026, defining terms such as "composite payment" and "composite return." It establishes that payments made by S corporations for nonresident shareholders will be treated as tax payments on their behalf and outlines the process for claiming credits and overpayments on these returns. The bill repeals existing laws that permitted certain S corporation income exclusions from Louisiana taxable income and removes the requirement for credits earned by S corporations to be utilized at the corporate level. These changes aim to streamline the tax treatment of S corporations, enhance compliance, and clarify reporting requirements, with the provisions taking effect for income tax periods beginning on or after January 1, 2026.

Statutes affected:
HB567 Original: 47:2(A), 47:248(B)(1), 47:2(A)(1), 47:1675(F)(1), 39:2(15, 39:1), 47:1675(G)