Quality Start Louisiana

Businesses

You've given them the sun and the moon. Now give them the stars.

FAQs for Businesses

Q. Where is my refund for the School Readiness Tax Credit?
A. Please contact the Louisiana Department of Revenue for refund status at 225-219-0102 (individual) or 225-219-7462 (business) or visit http://revenue.louisiana.gov/sections/individual/school_readiness.aspx

Q. How do I file for the School Readiness Tax Credit?
A. You must contact your tax preparer or the Louisiana Department of Revenue for information on filing taxes.

Q. What are the School Readiness Tax Credits (SRTC) for Businesses and Employers?
A. The SRTCs are a package of refundable state tax credits designed to support quality child care. Some of these state tax credits are available to businesses and are NOT dependent on whether the business owes state income or corporate franchise taxes. Furthermore, the credits are available for both for-profit and non-profit businesses. There are two types of SRTCs available to businesses/employers: 1) a refundable state tax credit based on a percentage of the “eligible expenses” incurred in support of child care centers participating in Quality Start, and 2) a refundable state tax credit for donations made to child care resource and referral agencies.

Q. What is Louisiana’s Quality Start?
A. Quality Start is a voluntary star rating system for licensed child care centers designed to increase the quality of child care and early learning for all children throughout Louisiana. Both Class A and Class B licensed centers may choose to participate and can earn up to five stars based on meeting standards for quality.

Q. What are the “eligible expenses?”
A. Eligible Expenses are:

1. The construction, renovation, expansion, or major repair of an eligible child care facility, or for the purchase of equipment for such facility, or for the maintenance and operation thereof, not to exceed $50,000 in expenses per tax year; and/or

2. Payments made to an eligible child care facility for child care services to support employees, not to exceed $5,000 per child per tax year; and/or

3. The purchase of child care slots at eligible child care facilities actually provided or reserved for children of employees, not to exceed $50,000 per tax year.

In addition, businesses may receive a dollar for dollar refundable tax credit for up to $5,000 for donations made to child care resource and referral agencies.

Q. How are the percentages of the eligible expenses determined?
A. The amount of the tax credit is tied to the quality rating of the child care center as follows:

Quality Rating of Child Care Facility

Percentage of Eligible Expenses

Five Star

20%

Four Star

15%

Three Star

10%

Two Star

5%

One Star or not participating in Quality Start

0

Example: A local area restaurant owner decides to donate $10,000 to help a neighborhood child care center with 3 stars renovate a play area. In this scenario, the restaurant owner would earn a $1,000 refundable state tax credit (10% of $10,000).

Q. Can my business take advantage of all three of the definitions of “eligible expenses?”
A. Yes, the “eligible expenses” are cumulative so your business can donate up to $50,000 for renovations, purchase up to $50,000 in child care slots for your employees, and subsidize child care for as many employees as you wish (up to $5,000 per child).

Example: A local area restaurant owner decides to donate $10,000 to help a neighborhood child care center with 3 stars renovate a play area. In addition, this same owner provides a $3,000 per child subsidy to 10 of his employees who can use these funds at the child care center of their choice. (For ease of illustration, we will assume all 10 employees chose to put their child at a 3 star center.) Also, the owner pre-purchases 10 child care slots at the 3 star center across the street from his restaurant at a total annual cost of $40,000. Therefore, the total eligible expenses are: $10,000 + $30,000 + $40,000 = $80,000. As all of these efforts took place at a 3 star center, the owner would receive a refundable state tax credit of $8,000 (10% of $80,000). Note that if this owner also decided to donate $5,000 to a Child Care Resource and Referral agency, then his credit would increase to $13,000 ($8,000 +$5,000) as this component of the SRTC is dollar for dollar up to $5,000 per Resource and Referral agency.

Q. How can my business receive a refundable state tax credit for donations to Child Care Resource and Referral Agencies?
A. Businesses can receive a dollar for dollar refundable tax credit for up to $5,000 for donations to Child Care Resource and Referral Agencies. These are private agencies that contract with the Department of Education to provide important information and services to parents and child care providers. The Louisiana Department of Education has contracted with the following agencies to be the Child Care Resource and Referral agencies.

Region

Resource & Referral Agency

Executive Director

Local Phone Toll Free Phone

Web site

New Orleans

Agenda for Children

Antony Recasner

504-586-8509

www.agendaforchildren.org

Baton Rouge

VOA/Partnerships in Child Care

Karen Powell

225-926-8005

www.voagbr.org

Covington

Agenda for Children

Antony Recasner

504-586-8509

www.agendaforchildren.org

Thibodaux

Agenda for Children

Antony Recasner

985-446-8330

www.agendaforchildren.org

Lafayette

Success by 5 Alliance

Paula Granger

337-521-7208

http://www.lpssonline.com/site5819.php

Calcasieu

Calcasieu Child Care R&R

Sheryl Piper

337-217-4212

 

Lake Charles

VOA/Partnerships in Child Care

Angell Floyd

337-704-2838

www.excellenceforchildren.com

Alexandria

NSU Child and Family Network

Nancy Alexander

318-677-3150

CFN.NSULA.edu or www.NSU-CFN.org

Shreveport

NSU Child and Family Network

Nancy Alexander

318-677-3150

CFN.NSULA.edu or www.NSU-CFN.org

Monroe

Children’s Coalition for NE Louisiana/Child Care Connections

Maureen Gallagher

318-323-8775

www.childrenscoalition.org

Q. Can my business donate to more than one Resource and Referral Agency?
A. Yes, businesses may claim a refundable tax credit for up to a maximum of $5,000 in grants to one or more Child Care Resource and Referral agencies. Remember, this credit is dollar for dollar and is not subject to the percentages listed above. The maximum amount of contribution can certainly exceed $5,000 but the SRTC tax credit maximum is $5,000.

Q. Which businesses are eligible to receive these tax credits?
A. All businesses are eligible. A business is defined as any for-profit or not-for-profit entity and includes sole proprietors (so long as the individual is not acting in his/her personal capacity), partnerships, limited liability corporations and corporations. However, as it does not include any individual operating in their personal capacity, the SRTC is not available to individuals who make donations, as described above.

Q. A not-for-profit business can receive these credits as well?
A. Yes, non-profits will need to register as a business with the Department of Revenue and receive a Louisiana tax ID number. Many non-profits will already be registered and have a state tax ID number because it is needed for withholding purposes for their employees. If for some reason a non-profit does not have a state tax ID number, please go to the Louisiana Department of Revenue website for more information. To claim the tax credits, the non-profit will file a corporate income tax return claiming zeros for income (unless they have unrelated business taxable income) and claiming the refundable tax credits which will generate a refund.

Q. What is a tax credit, and how is it different from a tax deduction?
A. A tax credit reduces the taxes paid, dollar-for-dollar. A tax deduction lowers taxable income.

Q. What is a refundable tax credit?
A. A refundable tax credit is one that is available to a taxpayer even if they do not owe any taxes. Refundable tax credits first reduce the amount of taxes you owe by the amount of the credits. If the credits exceed your business’ tax burden, then you will receive a check for the difference. For example, if your business earns $20,000 in SRTCs and it owes $25,000 in state taxes, its state tax bill will be reduced to $5,000. However, if the business owed $15,000 in state taxes, it will no longer owe those taxes and your business will receive a check for $5,000. If you have a non-profit business and it does not owe any taxes, it will receive the full value of the SRTCs, in this example, a check for $20,000.

Q. How can I see how many stars a child care center has?
A. You can search for all of the child care centers with one star and above here.

Q. Where in the law does the SRTC for businesses exist? (What is the citation for the SRTC law?)
A. You can find the law at La. Rev. Stat. § 47: 6102 and 6107-08. These can be accessed via the Web at: http://www.legis.state.la.us/lss/lss.asp?doc=453231, http://www.legis.state.la.us/lss/lss.asp?doc=453236 and http://www.legis.state.la.us/lss/lss.asp?doc=453237

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