Multiple Agencies in Noncompliance with Tax Incentive Reporting

Multiple agencies are not in compliance with the tax incentive reporting requirements of Act 191 of the 2013 Regular Session, according to an audit released Monday by Legislative Auditor Daryl Purpera.

“As a result, the legislature does not have the information it needs to determine whether the tax incentives have been successful in meeting their intended purposes and whether they have resulted in a positive return on investment the state,” the state auditor’s report said.

Of the 79 tax incentives administered by six agencies that are subject to the reporting requirements of Act 191, only five submitted reports in 2015 and 70 (89%) either did not submit reports or did not comply with all of the reporting requirements in 2014. Act 191 of the 2013 Regular Session requires, in part, that agencies annually report to the Legislature the return on investment for their tax incentives and whether these incentives met their intended purposes.

The agencies are required to submit reports to the Legislature by March 1 of each year. Auditors found that only three of the six agencies submitted tax incentive reports as of March 23, 2015: Department of Education; Department of Environmental Quality; and Department of Culture, Recreation, and Tourism. As a result, the Legislature only received information on five of the 79 tax incentives administered by these agencies. The report noted that the Louisiana Department of Revenue (LDR), Louisiana Economic Development, and the Department of Children and Family Services identified several reasons for the lack of reporting including agency personnel being unfamiliar with the statute and its requirements, and industry analysis not being available until after March 1.

“According to the Tax Exemption Budgets prepared by LDR, the amount of revenue loss from tax incentives claimed in fiscal years 2013 and 2014 for which agencies provided no information or did not comply with reporting requirements totaled approximately $1.1 billion and $1.3 billion, respectively,” the report said.