The Industrial Tax Exemption Program (ITEP) is a key tax incentive for manufacturers looking to expand or build facilities in Louisiana. The property tax exemption is authorized in the Constitution and is administered by the Louisiana Department of Economic Development (LED). Historically, exemption contracts were approved at the state level and manufacturers enjoyed ten years of 100% property tax exemption on eligible capital expenditures. In 2016, Gov. John Bel Edwards issued two Executive Orders that upended the program by making local approval of the exemption a prerequisite to LED application and consideration, and reducing the number of years and percentage of exemption on eligible capital expenditures.
In early 2018, LED proposed revisions to reinstate much of the old ITE program. Manufacturers once again enjoy ten years of exemption, but only as to 80% of property tax liability. Additionally, LED regained initial approval authority, with local governmental entities having a short window for an “up or down” vote on any LED-approved project. This allows for a more efficient process as applications will receive automatic approval if the local governmental entities take no action within the specified time.
The last few weeks have been significant for ITEP: the Board of Commerce and Industry approved the first batch of exemption contracts under the new rules at its August 29th meeting. And, on September 19th, the Louisiana Tax Commission approved new rules regarding reporting exempt property, including manufacturing establishments with ITEP contracts. Parish assessors are now required to classify ITEP property on their tax rolls and report the start/end date of any exemption contract, the fair market value and assessed value of exempt property, the exemption percentage and value of the exemption contract, and the amount of property tax subject to exemption. Finally, LED has gone completely digital, and ITEP applications must now be submitted online through the Fastlane system.