A Louisiana House panel has advanced a bill that would allow net operating losses to be temporarily carried back.
The House Ways and Means Committee on June 15 reported H.B. 25 with amendments on a vote of 14 to 0. The amended bill would allow 72 percent of NOLs to be carried back for tax years beginning on or after January 1, 2019, through tax years beginning before January 1, 2021.
The bill as introduced June 4 by Rep. Mark Wright (R) would have allowed taxpayers to carry back NOL deductions to each tax year before the loss occurred for tax years starting on or after January 1, 2017, through tax years beginning before January 1, 2022.
However, the bill was pared back after some concerns were expressed about its fiscal note.
“We don’t have a fiscal note on this — it’s to a certain extent not calculable,” Wright said during a June 15 Ways and Means Committee hearing. “Essentially because it’s unclear what kind of losses will occur in this next year, it’s unclear how many NOLs would be carried back.”
Wright said that based on estimates from the Department of Revenue, the bill could result in revenue losses of anywhere from $16 million to $65 million.
Originally, the bill would have provided a temporary five-year carryback to mirror the NOL changes at the federal level under the Coronavirus Aid, Relief, and Economic Security Act.
The act temporarily loosened the limits imposed on NOL carrybacks under the federal Tax Cuts and Jobs Act by allowing taxpayers to carry back NOLs from 2018, 2019, and 2020 for five years. The change is intended to help businesses that have cash flow problems resulting from the COVID-19 pandemic.
The bill is based on a recommendation from the Louisiana Economic Recovery Task Force.
Ways and Means Committee Vice Chair John Stefanski (R) thanked Wright for accepting the committee's amendments and said, "We've got to think about if this is directly helping businesses . . . they're going to have huge losses this year, and [this] allows them to get some relief, because otherwise those losses would be unaccounted for."
"I think it's great legislation," Stefanski said.
H.B. 25 was recommitted to the House Appropriations Committee June 16.
Jason DeCuir, who chairs the Economic Recovery Task Force, told Tax Notes June 16 the House is expected to vote on the bill later this week.