Louisiana tax law provides for a credit against income tax and franchise tax for ad valorem taxes paid to political subdivisions in Louisiana on inventory held by manufacturers, distributors and retailers.

Louisiana Revised Statue 47:6006 allows for a dollar-for-dollar credit to be applied on a business's state income and franchise tax return for ad valorem taxes paid to a Louisiana parish or city on merchandise inventory.

The local hospitality industry should be aware that it could take advantage of this credit, as numerous tourism-driven businesses maintain souvenir or gift shop inventories.  Many in this industry don't typically consider themselves retailers and have not taken full advantage of this credit.

While it is always prudent to maintain controls over inventory to prevent unreasonably high levels, businesses should manage their inventory levels with the knowledge that ad valorem taxes paid on the value of their inventory can be returned to them when they apply this credit to their income taxes.

S-corporations, partnerships and LLCs can take advantage of this credit as well, because it passes through to the owners for these entities to be applied against personal income taxes.

Call Jim Tonglet at 504/ 486-7275 for more information on how you can take advantage of this credit.