Before June of 2015, Louisiana Revised Statute 47:6030 allowed a taxpayer to receive a credit of 50% of the cost of an installed solar system – up to a $25,000.00 purchase price. This allowed taxpayers who maximized the opportunity to receive a $12,500.00 tax credit.
This changed on June 19, 2015 when Act 131 amending La. R.S. 47:6030 became effective. Act 131 placed “caps” on the solar tax credit funding. It also imposed filing requirements on taxpayers, and provided that all credits would be granted on a first-come-first-served basis. Here are the highlights:
- For fiscal year 2015-2016, any claim or request should be filed electronically.
- For systems purchased before July 1, 2016, the amount of credit is equal to 50% of the cost of the system, up to the first $25,000.00.
- For systems purchased on or after July 1, 2016, the tax credit is the lesser of $2 x DC watt size of the system, 50% of the cost of the system, OR $10,000.00.
- No more than $10 million in tax credits shall be granted for returns filed on or after July 1, 2015 to before July 1, 2016.
- No more than $10 million in tax credits shall be granted for returns filed on or after July 1, 2016 to before July 1, 2017.
- No more than $5 million in tax credits shall be granted for returns filed on or after July 1, 2017.
- No credits will be authorized, issued, or granted for systems installed on or after July 1, 2018
- So what does all of this mean to taxpayers? Well, frankly . . . a lot since the legislature essentially changed the game on a bunch of folks -- after-the-fact!
Act 131 has some serious constitutional issues. It retroactively altered the rights of taxpayers mid-year by substantially reducing the maximum allowable credit from the original $12,500.00, depending upon when the systems were purchased. Then, it limited the total funding available to pay solar credit taxpayers – which we estimate to be several thousand – to $10 million based on when they filed their returns.
Act 131 essentially made what was once a guaranteed right into a conditional one based on purchase date and tax return filing date – after the right vested. These types of deprivation of property are generally considered to be unconstitutional.
Changing rules midstream means it will be virtually impossible for Louisiana residents to make wise tax decisions, and stay in tax compliance.
Ms. Peggy F. Mosely of Ville Platte provided a perfect illustration of the problem in her Letter to the Editor which was published by The Daily Advertiser on September 17, 2016. Ms. Mosely is a self-described 84-year-old child of the Great Depression, who practices conservation and self-sufficiency by driving a Toyota Prius, growing her own produce, and raising her own animals. She installed solar panels on her modest home (her words) in June of 2015, knowing that the substantial cost would be defrayed by the federal and state tax credits in effect at that time.
She then filed her state tax return in a timely fashion and claimed her solar tax panel credit. The credit was denied based on the date that her return was filed because the funding “cap” for 2015 had been reached. Ms. Mosely wisely sums up the problem. She says, “I acted in good faith with the terms of the contract entered into with the state of Louisiana. AFTER my date of installation, the state passed a law under which I was retroactively denied the agreed upon tax credit ...It’s time for the Legislature to correct this grossly unfair action.”
Ms. Mosely and her solar panel peers surely have reason to complain! Act 131 is problematic on many levels.
However, it would be imprudent to wait for the Legislature to take corrective action. Doing so may cause Ms. Mosely and her contemporaries to lose their rights to contest Act 131. Instead, they should protect their solar tax credit rights by filing their appeals with the Louisiana Board of Tax Appeals. And, time is of the essence! The appeals must be filed within 60 days of the letter received from LDR which formally denied the solar tax credit. For many, this date is on or around October 14, 2016, which is fast approaching!