The Louisiana Supreme Court ruled that residents who owned an S corporation and limited liability company were entitled to a credit against their Louisiana income tax liability for Texas franchise tax paid by the pass-through entities. In so holding, the Louisiana Supreme Court found that La. R.S. 47:33, which limits the credit for taxes paid to other states to those states that offer a reciprocal credit to that state’s residents for business transacted in Louisiana, was unconstitutional because it was applied to the Texas franchise tax. Further, in noting that the reciprocity requirement discriminates against interstate commerce, the Louisiana Supreme Court also suggested that the limitation on the amount of the credit by the amount of tax that would have been imposed by Louisiana also discriminates against interstate commerce. (Smith v. Robinson, Dkt. No. 2018-0728 (La. 12/05/2018)).
