Frequently Asked Questions

Corporation Income and Franchise Taxes

1. How does Louisiana tax a corporation that is classified by the IRS as an "S" (small business) corporation?

   Louisiana taxes Subchapter S corporations, known as S corporations or Sub S corporations, in the same manner as regular corporations, with one exception. For federal tax purposes, an S corporation will determine its items of income and expense in the same manner as if it were a regular "C" corporation. Since the classification of a Subchapter S corporation is a determination made under federal law, any question regarding that classification must be referred to the IRS.
   
   A corporation classified by the IRS as an "S" corporation may exclude all or part of its income derived from the activities of the corporation, depending upon the domicile of the shareholders. Shareholders who are Louisiana residents are required to file a Louisiana individual income tax return to report their portion of the income derived from the activities of the corporation. In general terms, the portion of income that can be excluded is determined by the ratio of the number of issued and outstanding shares of the S corporation’s capital stock owned by Louisiana resident individuals to total number of issues and outstanding shares of capital stock.
   
   Shareholders who are nonresidents of Louisiana may elect to file the individual nonresident and part-year resident return to report their portion of the income derived from the activities of the S corporation or to allow the corporation to pay the tax at the corporate income tax rate on their portion of the income. When electing the second method, the Subchapter S exclusion must not offset the net income to be reported on the corporation income and franchise taxes return.
   
   An S corporation is not exempt from franchise tax. The franchise tax is imposed on an S corporation in the same manner as it is for a C corporation.

2. How are Limited Liability Companies (LLCs) taxed for Louisiana income and franchise tax purposes?

   An LLC is treated and taxed in the same manner for Louisiana income tax purposes as it is treated and taxed for federal income tax purposes. If the LLC is taxed as a corporation for federal income tax purposes, the LLC will be taxed as a corporation for Louisiana income tax purposes. If the LLC is considered a partnership for federal income tax purposes, which is the most common situation, the LLC is treated as a partnership for Louisiana income tax purposes.

   Starting with the 2017 Franchise tax period, an LLC for Louisiana franchise tax purposes is treated and taxed in the same manner that it is treated and taxed for federal income tax purposes. Act 12 of the 2016 First Extraordinary Session extended the imposition of the franchise tax to additional types of entities. A domestic or foreign entity taxed as a corporation pursuant to 26 U.S.C. Subtitle A, Chapter 1, Subchapter C for federal income tax purposes, is now subject to franchise tax if it meets any of the criteria that subject a domestic or foreign corporation to franchise tax, with 2 exceptions:

   1. Any limited liability company qualified and eligible to make an election to be taxed in accordance with the provisions of 26 U.S.C. Subtitle A, Chapter 1, Subchapter S on the first day of the franchise tax period is not subject to franchise tax.
   2. Any other entity that was acquired during the period January 1, 2012 to December 31, 2013, by an entity that was taxed pursuant to 26 U.S.C. Subtitle A, Chapter 1, Subchapter S, is not subject to franchise tax.

   For Franchise tax periods beginning before January 1, 2017, an LLC is not considered to be a corporation for franchise tax purposes, and therefore is not subject to Louisiana franchise tax

3. Who should I contact if I need a letter of good standing?

   A corporation that requires a Letter of Good Standing should contact our Special Collection Unit in the Collection Division.

4. Who should I contact if I do not know the account number for my corporation?

   You can call LDR at 855-307-3893 for instructions to obtain your account number.

5. If my corporation is inactive, do I need to file a corporate income/franchise return?

   Yes. Returns need to be filed until the corporation’s charter is dissolved, liquidated, or withdrawn through the Louisiana Secretary of State.

6. I did not put my corporation state account number on my tax return, and was assessed a negligence penalty--why was that?

   Corporations are required to include their Louisiana corporation income and franchise tax account number on all tax returns. Returns filed without this information must be manually researched and processed, which is administratively costly for LDR. The federal employer identification number (FEIN) is not acceptable.

   Louisiana Revised Statute 47:1604.1 provides that a negligence penalty can be imposed of 10 percent of the deficiency due to the negligence.

   If you believe that the negligence penalty was wrongfully imposed, you may request that the penalty be abated from the Business Tax Enforcement Division by completing Form R-20128, Request for Waiver of Penalty for Delinquency. Your abatement request must include the reason why you believe the negligence penalty should not have been imposed.

7. How do I request an extension to file a Louisiana Corporation Income and Franchise taxes return?

   Corporate taxpayers who need additional time to file their Louisiana corporation income and franchise taxes returns do not need to file for an extension. You will automatically be granted an extension of six months IF you timely requested an extension for federal income tax purposes. No paper or electronic extension form needs to be filed to obtain the automatic extension. You will need to mark the box on Form CIFT-620 indicating that you timely requested an extension for federal income tax purposes in order to receive the extension. This is only an extension to file and NOT an extension of time to pay the tax due. (Answer revised November 6, 2023)

8. Is there a deadline to request an extension to file a Louisiana Corporation Income and Franchise taxes return?

   No. Corporate taxpayers who need additional time to file their Louisiana corporation income and franchise tax returns do not need to file for an extension. You will automatically be granted an extension of six months if you timely requested an extension for federal income tax purposes. (Answer revised November 6, 2023)

9. If an extension to file a corporate income and franchises taxes return is granted, do I still owe late payment penalty and interest on taxes that are paid when the return is filed?

   Yes, the extension only allows for an extension of time to file the tax return. The extension does not allow an extension of time to pay the tax due. To avoid interest and penalty assessments, estimated taxes should be paid on or before the original due date. If you file the return after the extended due date, you will be assessed delinquent filing penalty from the due date of the return.

10. How do I receive a filing extension if I am file a franchise tax only return?

    The extension only applies to Corporation Franchise tax if you are also filing a corporation income tax return. A taxpayer who files a corporation franchise tax return without a corporate income tax return is ineligible for a filing extension pursuant to R.S. 47:612. (New November 6, 2023)

11. When I make an estimated payment by the due date of my Louisiana Corporation Income and Franchise taxes return, am I automatically granted an extension to file?

    No, a payment does not qualify as a request for an extension to file. (Answer revised January 10, 2023)

12. When I make my last estimated payment, does that payment qualify as a request for an extension to file a Louisiana Corporation Income and Franchise taxes return?

    No, a payment does not qualify as a request for an extension to file a Louisiana Corporation Income and Franchise tax return.

13. Can I request an extension to file a Louisiana Corporation Income and Franchise taxes return when I make an EFT payment?

    No, a payment does not qualify as a request for an extension to file a Louisiana Corporation Income and Franchise tax return.

14. How does a corporation close its Louisiana Revenue account number?

    To close a corporation’s Louisiana Revenue account number, the corporation must either dissolve or withdraw its corporate charter with the Louisiana Secretary of State ("SOS"). If the corporation was chartered as a domestic corporation, one that was formed in the state of Louisiana, the corporation must file dissolution papers with the Louisiana Secretary of State’s office to dissolve the corporation’s charter. Some corporations are eligible to file the Simplified Articles of Termination. Please consult an attorney or see SOS website for statutes pertaining to dissolution.

    If the corporation was chartered as a foreign corporation, one that was formed in another state or out of the country, the corporation must file an application with the Louisiana Secretary of State’s office to withdraw the corporation’s charter.

    The Louisiana Secretary of State’s office will notify the Louisiana Department of Revenue that the appropriate paperwork has been filed with their office. That notification will allow the Department of Revenue to close the Louisiana Revenue account number.

15. How does a Louisiana corporation dissolve its charter?

    Domestic corporations, those that were formed in the state of Louisiana, wishing to dissolve their charter must file dissolution papers with the Louisiana Secretary of State’s office. A corporation can choose to dissolve by two different methods: by filing a notarized affidavit of dissolution with the Louisiana Secretary of State, or by filing an application to dissolve, referred to as a long form dissolution. In the case of dissolution by a notarized affidavit, the affidavit must state that the shareholders have agreed to dissolve the corporation, that no outstanding debt is owed by the corporation, and that the corporation does not own any immovable property. A clearance is not issued by the Secretary of State for these types of dissolutions.

    When filing the application for the long form dissolution, the application is sent to the Louisiana Secretary of State’s office. The Louisiana Secretary of State’s office sends notification to the Louisiana Department of Revenue, the Louisiana Workforce Commission’s Department of Employment Security, and in certain cases to the Louisiana Department of Environmental Quality, to inform the agencies that the corporation wishes to dissolve its charter. Each agency reviews the corporation’s file to determine if any unresolved issues exist on the account. If no unresolved issues exist, each agency sends to the Louisiana Secretary of State notification that the corporation’s account is clear. The Louisiana Secretary of State issues a formal clearance to the corporation and notifies it that its charter is dissolved.

16. A foreign corporation wishes to cease operating in Louisiana. How does it close its Louisiana Revenue account number and obtain a clearance?

    A foreign corporation, one that was formed in another state or country, must withdraw its charter by filing an application with the Louisiana Secretary of State. When the withdrawal application is filed, the Louisiana Secretary of State’s office will send a notice to the Louisiana Department of Revenue, the Louisiana Workforce Commission’s Department of Employment Security, and in certain cases, the Louisiana Department of Environmental Quality to determine if any unresolved issues exist on the corporation’s account. The Louisiana Department of Revenue will close the Revenue Account number, and upon reviewing the corporation’s account, will notify the Louisiana Secretary of State of any outstanding liabilities. If no outstanding liabilities exist, the Louisiana Department of Revenue will send a clearance to the Louisiana Secretary of State. The Louisiana Secretary of State must receive clearances from each of the other appropriate agencies before an overall clearance is issued to the corporation.

17. How do I make an extension payment for my Louisiana Corporation Income and Franchise taxes return?

    An electronic payment can be made through tax preparation software that supports the option, through LaTap; or by credit card at Officialpayments.com. If you need to mail in a check or money order, you must use the Extension Payment Voucher, Form CIFT-620Ext-V. This voucher can be printed through the Online Payment Voucher application and mailed to Post Office Box 751, Baton Rouge, LA 70821-0751. (Question & answer revised January 10, 2023)

18. How does Louisiana handle the adjustment made under IRC Section 280C?

    Internal Revenue Code Section 280C requires a taxpayer who elects to claim certain credits that are based on an expense to reduce the federal deduction for the expense by the dollar amount of the credit claimed. Under R.S. 47:287.73(C)(4) Louisiana allows the deduction of any expenses disallowed under IRC Section 280C in calculating Louisiana taxable income for corporations. Therefore the amount of the expense disallowed under IRC Section 280C can be deducted in calculating taxable income for Louisiana.

    For returns filed on or after July 1, 2015, but before June 30, 2018, regardless of the tax year to which it relates, and returns for tax periods beginning during the calendar years of 2015, 2016, and 2017, 72 percent of expenses which would otherwise be deductible under federal law, can be deducted in calculating taxable income for Louisiana.

    A corporation would show this modification to income on Form CIFT-620, on Schedule D and Schedule F as a subtraction. (Question & answer revised June 15, 2021)

19. How can I file an amended return?

    In order to amend the amounts reported for the computation of income or franchise taxes, you must file an amended (corrected) Form CIFT-620. File the amended return as if the original return was not filed and do not make any adjustments for refunds previously received or for payments previously made. This information is already on file and LDR will adjust your account accordingly. Louisiana Revised Statute 47:287.614(C) requires every taxpayer whose federal return is adjusted to furnish a statement disclosing the nature and amounts of such adjustments within 180 days of the final determination of such adjustments from the Internal Revenue Service. This statement should accompany the Louisiana amended return.

    A corrected return for the tax year being amended should be submitted along with an explanation of the change(s) and a copy of the federal amended return, Form 1120X, if one was filed. The return should be clearly marked with an "X" in the "Amended Return" box. Mail an amended return to the following address:

    Louisiana Department of Revenue
    P.O. Box 91011
    Baton Rouge, La 70821-9011

    You also have the option of filing the amended return electronically through the LDR Fed/State e-file program for corporation income and franchise tax returns.

20. Can I amend my Louisiana return electronically even if I filed my original return on paper?

    Yes, you can file an amended return electronically through the LDR Fed/State e-file program. The LDR Corporation E-file program for corporation income and franchise tax returns is available starting with the 2008 tax year.

21. How can I get a copy of my tax return?

    Taxpayers may request copies of any tax return or other previously filed document by completing a Tax Information Disclosure Authorization, Form R-7004. Instructions for the form can be found here.

    As of July 17, 2015, the research fee for copies of tax returns authorized by R.S. 47:1507 are as follows:

    • $15.00 for a copy of any tax return or other document for each year or tax period requested, regardless of whether the requested return or document is located.
    • $25.00 for each certified copy of any return or other document for each year or tax period requested, regardless of whether the requested return or document is located.

    All research fees for copies must be paid when you submit the Tax Information Disclosure Authorization, Form R-7004. Payments can be by check or money order made payable to the Louisiana Department of Revenue. Cash cannot be accepted. Credit card payments can be submitted in Louisiana File Online.

22. Is there an electronic filing mandate for filing a Louisiana Corporation Income and Franchise taxes return?

    Yes. Louisiana Administrative Code 61:III.1503 and 1505 were promulgated to require the electronic filing of the corporation income and franchise tax return (Form CIFT-620). Taxpayers are required to file the return electronically for income (franchise) tax periods beginning:

    • 1/1/2018 (1/1/2019) - if their total assets have an absolute value equal to or greater than $500,000.
    • 1/1/2019 (1/1/2020)- if their total assets have an absolute value equal to or greater than $250,000.

23. Is a homeowners association (HOA) required to file a corporation income and franchise tax return with the State?

    Yes, a homeowners association that is organized as a corporation is subject to Louisiana Corporation Income and Franchise Tax and will need to file Form CIFT-620.

24. Is a homeowners association (HOA) that is a nonprofit required to file a corporation income tax return with the State?

    Yes, a homeowners association that is organized as a corporation, regardless of nonprofit status, is subject to Louisiana Corporation Income and Franchise Tax and will need to file Form CIFT-620. An organization claiming a total or partial exemption under R.S. 47:287.501(A) as an organization described in I.R.C. Sections 501 or 401(a) is required to file an income tax return in the same manner as any other corporation. To claim a partial exemption, the organization must submit a copy of the Internal Revenue Service ruling establishing its exempt status under I.R.C. Sections 501 or 401(a) with its return, report any income subject to federal income tax on its Louisiana return, and include with the return a statement that all income not reported on the Louisiana return is exempt from federal income tax under I.R.C. Sections 501 or 401(a). To claim a total exemption the organization must submit a copy of the Internal Revenue Service ruling establishing its exempt status under I.R.C. Sections 501 or 401(a) with its return and include with its return a statement that none of its income was subject to federal income tax.

25. Is a homeowners association (HOA) that is a nonprofit required to file a corporation franchise tax return with the State?

    Yes, a HOA organized as a corporation is subject to the franchise tax even when is it a nonprofit pursuant to LA R.S. 47:601 and LAC 61:I.308(A)(2) and the HOA is required to file a Form CIFT-620. However, LAC 61:I.308(A)(2) provides the general guidelines for obtaining an exemption from franchise tax. The HOA’s in question will need to obtain a written exemption from the Department concerning franchise tax if they want to be exempt.

26. If a taxpayer is required to register and file a return with the State of Louisiana for purposes of collecting sales tax is the taxpayer also required to file for purposes of income/franchise tax?

    Generally, a taxpayer taxed as an individual must file and pay tax on any Louisiana-sourced income. For taxpayers taxed as corporations, the requirement to file depends upon whether the corporation is a domestic or foreign corporation. If a corporation is a domestic corporation, meaning it is organized under the laws of Louisiana, it is required to file Form CIFT-620, Louisiana Corporation Income and Franchise Tax return, each year unless exempt from both taxes. Dormant Louisiana corporations must file CIFT-620, regardless of whether any assets are owned or any business operations are conducted, until a “Certificate of Dissolution” is issued by the Louisiana Secretary of State.

    If a corporation is a foreign corporation, meaning it is organized under the laws of a state other than Louisiana, and derives income from Louisiana sources, it must file Form CIFT-620 regardless of whether or not there is any tax liability.

    A foreign corporation is subject to the franchise tax if it meets any one of the criteria listed below:

    1. Qualifying to do business in Louisiana or actually doing business within this state; or,
    2. Exercising or continuing the corporate charter within this state; or,
    3. Owning or using any part or all of the corporate capital, plant, or other property in this state whether owned directly or indirectly by or through a partnership, joint venture, or any other business organization of which the foreign corporation or entity is a related party as defined in LA Revised Statute (R.S.) 47:605.1.

    A corporation will be subject to the franchise tax if it meets the above criteria, even if it is not required to pay income tax under federal public law 86-272. Corporation franchise tax for foreign corporations, or other taxable foreign entities, continues to accrue as long as the corporation exercises its charter, does business, or owns or uses any part of its capital or plant in Louisiana, and in the case of a qualified corporation, until a “Certificate of Withdrawal” is issued by the Louisiana Secretary of State.

27. Does a corporation that made the federal election to be taxed in accordance with the provisions of 26 U.S.C. Subtitle A, Chapter 1, Subchapter S have to make the pass-through entity tax election under LA R.S. 47:287.732.2?

    No, the corporation would need to look at the tax implications to decide whether to make the election. Technically an S Corporation is a pass-through entity but Louisiana income tax law does not recognize Subchapter S corporation status. An S corporation is required to file income tax in the same manner as a C corporation. However, in certain instances, all or part of the corporation income can be excluded from Louisiana corporation income tax through the S corporation exclusion of net income. In this instance the income tax is paid by the shareholders and the pass-through entity tax election under LA R.S. 47:287.732.2 does not need to be made.

    Revised Statute 47:287.732.2 allows Subchapter S Corporations, and other flow-through entities taxed as partnerships for federal income tax purposes, to elect to pay Louisiana income tax at the entity level. An individual who is a shareholder, member, or partner of the entity is allowed to exclude the income taxed at the entity level that is included in their federal adjusted gross income. Once the election is made, it is effective for the entire taxable year for which it was made as well as all subsequent taxable years until the election is terminated. To make the Pass-through entity tax election, the entity must make the election on Form R-6980, Tax Election for Pass-Through Entities, and must receive LDR acceptance of the election. See Louisiana Administrative Code (LAC) 61:I.1001 for requirements to make the election and the instructions for the required documentation. The election can be made during the taxable year prior to the taxable year in which the election is first effective, during the taxable year in which the election is first effective, or on or before the 15th day of the fourth month after the close of the taxable year in which the election is first effective. For the 2021 tax year, the deadline to make the election is April 15, 2022. (New question & answer posted on January 3, 2022.)

28. What are the changes made with the passge of the Constitutional Amendment #2 on November 13, 2021, by voters to Corporation Income Tax?

    With the passage of Constitutional Amendment #2, the provisions of Act 396 of the 2021 Regular Session of the Louisiana Legislature became effective. Effective for income tax periods beginning on or after January 1, 2022, Act 396 repealed the federal income tax deduction in exchange for reduced tax rates. The new tax rates are 3.5% on the first $50,000 of net income, 5.5% on the next $100,000 of net income, and 7.5% on the excess over $150,000. (New question & answer posted on January 3, 2022.)

29. With the new tax rates effective for the 2022 tax year, how do I estimate my corporation income tax liability in order to make estimated payments?

    The instructions for the Declaration of Estimated Tax for Corporations has a worksheet that should be used to calculate your estimated tax liability. Form CIFT-620ESi will be posted on LDR’s website on January 18, 2022. Reminder: do not reduce your estimated taxable income by your estimated federal income tax liability. (New question & answer posted on January 3, 2022.)

30. What are the changes made with the passge of the Constitutional Amendment #2 on November 13, 2021, by voters to Corporation Franchise Tax?

    With the passage of Constitutional Amendment #2, some provisions of Act 389 of the 2021 Regular Session of the Louisiana Legislature became effective. Effective for franchise tax periods beginning on or after January 1, 2023, Act 389 reduced the tax rate to a single rate of $2.75 for each $1,000, or major fraction thereof in excess of $300,000 of capital employed in Louisiana. The Act also continued the suspension of the lower tier of the tax ($1.50) through corporation franchise tax periods ending on or before November 30, 2023. (New question & answer posted on January 3, 2022.)