A Louisiana bill that would have created a temporary carryback for net operating losses has died with the Legislature’s adjournment.
H.B. 25, sponsored by Rep. Mark Wright (R), passed the House Ways and Means Committee with amendments on June 16. It was sent to the House Appropriations Committee, but the committee never took up the bill before the Legislature adjourned its special session on June 30.
The amended bill would have allowed 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 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 (CARES) Act.
The CARES 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.
H.B. 25 was amended after some concerns were expressed about its fiscal note.
Wright said during a June 15 Ways and Means Committee meeting that based on estimates from the Department of Revenue, the amended bill could have resulted in revenue losses of anywhere from $16 million to $65 million.
The bill is based on a recommendation from the Louisiana Economic Recovery Task Force.
Jason DeCuir, a Ryan LLC lobbyist who chairs the task force, told Tax Notes June 30 that the proposal failed to advance in part because the state Legislative Fiscal Office wasn’t providing fiscal notes fast enough.
“People weren’t against the policy; they weren’t providing timely notes. It’s hard for legislators to move a bill when they’re concerned about the cost,” DeCuir said.
According to DeCuir, there is a possibility of revisiting the proposal in a special session in October or November now that there is a new head of the fiscal office who is committed to providing more timely fiscal notes.
In addition to the NOL carryback proposal, the task force would like to see tax reform addressed in another special session, DeCuir said.
The task force is working on completing its third report, which is due to the Legislature on the last day of July. “There is a lot of will from business leaders to not just create the report but take these policy ideas and put them into [bills] and have the legislators consider them in session,” he added.
Wright could not be reached for comment by press time.