Bill Text: GA HB1027 | 2011-2012 | Regular Session | Introduced
Bill Title: Revenue and taxation; tax credit for film or video production in Georgia; change certain provisions
Spectrum: Partisan Bill (Republican 6-0)
Status: (Passed) 2012-05-02 - Effective Date [HB1027 Detail]
Download: Georgia-2011-HB1027-Introduced.html
12 HB
1027/AP
House
Bill 1027 (AS PASSED HOUSE AND SENATE)
By:
Representatives Stephens of the
164th,
Parrish of the
156th,
Carter of the
175th,
Hatchett of the
143rd,
and Dollar of the
45th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating
to income taxes, so as to change certain definitions relating to the job tax
credit; to change certain provisions relating to the tax credit for film, video,
or interactive entertainment production in Georgia; to provide for related
matters; to provide for an effective date and applicability; to repeal
conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Chapter
7 of Title 48 of the Official Code of Georgia Annotated, relating to income
taxes, is amended in Code Section 48-7-40.24, relating to conditions for taking
the job tax credit, by adding a new paragraph and revising paragraph (1) of
subsection (a) as follows:
"(.1)
'Affiliate' means the members of a business enterprise's affiliated group within
the meaning of Section 1504(a) of the Internal Revenue Code and also means any
entity, notwithstanding its form of organization, that would otherwise qualify
as a member of such affiliated group.
(1)
'Business enterprise'
or
'taxpayer' means any enterprise or
organization, whether corporation, partnership, limited liability company,
proprietorship, association, trust, business trust, real estate trust, or other
form of
organization,
and its affiliates, which
is
are
registered and authorized to use the federal employment verification system
known as 'E-Verify' or any successor federal employment verification system and
is
are
engaged in or carrying on any business activities within this state, except that
such term shall not include retail businesses."
SECTION
2.
Said
chapter is further amended by revising Code Section 48-7-40.26, relating to a
tax credit for film or video production in Georgia, as follows:
"48-7-40.26.
(a)
This Code section shall be known and may be cited as the 'Georgia Entertainment
Industry Investment Act.'
(b)
As used in this Code section, the term:
(1)
'Affiliates' means those entities that are included in the production company's
or qualified
interactive entertainment production
company's affiliated group as defined in
Section 1504(a) of the Internal Revenue Code and all other entities that are
directly or indirectly owned 50 percent or more by members of the affiliated
group.
(2)
'Base investment' means the aggregate funds actually invested and expended by a
production company
or qualified
interactive entertainment production
company as production expenditures
incurred in this state that are directly used in a state certified production or
productions.
(3)
'Multimarket commercial distribution' means
paid
commercial distribution which extends to markets outside the State of
Georgia.
(4)
'Production company' means a
company, other
than a qualified interactive entertainment production
company, primarily engaged in qualified
production activities which have been approved by the Department of Economic
Development. This term shall not mean or include any form of business owned,
affiliated, or controlled, in whole or in part, by any company or person which
is in default on any tax obligation of the state, or a loan made by the state or
a loan guaranteed by the state.
(5)
'Production expenditures' means preproduction, production, and postproduction
expenditures incurred in this state that are directly used in a qualified
production activity, including without limitation the following: set
construction and operation; wardrobes, make-up, accessories, and related
services; costs associated with photography and sound synchronization,
expenditures
excluding license fees incurred with Georgia companies for sound recordings and
musical compositions, lighting, and
related services and materials; editing and related services; rental of
facilities and equipment; leasing of vehicles; costs of food and lodging;
digital or tape editing, film processing, transfers of film to tape or digital
format, sound mixing, computer graphics services, special effects services, and
animation services; total aggregate payroll; airfare, if purchased through a
Georgia
based
travel agency or travel company; insurance costs and bonding, if purchased
through a Georgia
based
insurance agency; and other direct costs of producing the project in accordance
with generally accepted entertainment industry practices. This term shall not
include postproduction expenditures for
footage shot
outside the State of Georgia,
marketing,
story rights, or
and
distribution,
but shall not affect other qualified story rights. This term includes payments
to a loan-out company by a production company or qualified interactive
entertainment production company that has met its withholding tax obligations as
set out below. The production company or qualified interactive entertainment
production company shall withhold Georgia income tax at the rate of 6 percent on
all payments to loan-out companies for services performed in Georgia. Any
amounts so withheld shall be deemed to have been withheld by the loan-out
company on wages paid to its employees for services performed in Georgia
pursuant to Article 5 of Chapter 7 of this title notwithstanding the exclusion
provided in subparagraph (K) of paragraph (10) of Code Section 48-7-100. The
amounts so withheld shall be allocated to the loan-out company's employees based
on the payments made to the loan-out company's employees for services performed
in Georgia. For purposes of this chapter, loan-out company nonresident
employees performing services in Georgia shall be considered taxable
nonresidents and the loan-out company shall be subject to income taxation in the
taxable year in which the loan-out company's employees perform services in
Georgia, notwithstanding any other provisions in this chapter. Such withholding
liability shall be subject to penalties and interest in the same manner as the
employee withholding taxes imposed by Article 5 of Chapter 7 and the
commissioner shall provide by regulation the manner in which such liability
shall be assessed and
collected.
(6)
'Qualified Georgia promotion' means a qualified promotion of this state approved
by the Department of Economic Development consisting of a:
(A)
Qualified movie production which includes
an
approximately
a
five-second long
static
or animated logo that promotes Georgia
within its
presentation and all promotional trailers
worldwide
in the end
credits before the below-the-line crew
crawl for the life of the project
and which
includes a link to Georgia on the project's web
page;
(B)
Qualified TV production which includes an
imbedded
embedded
five-second long Georgia promotion during each broadcast
half
hour worldwide for the life of the project
and which
includes a link to Georgia on the project's web
page;
(C)
Qualified music video which includes the Georgia logo at the end of each video
and within online promotions; or
(D)
Qualified interactive game which includes a 15 second long Georgia advertisement
in units sold and
imbedded
embedded
in online promotions.
(7)
'Qualified interactive entertainment production company' means a company whose
gross income is less than $100 million that is primarily engaged in qualified
production activities related to interactive entertainment which has been
approved by the Department of Economic Development. This term shall not mean or
include any form of business owned, affiliated, or controlled, in whole or in
part, by any company or person which is in default on any tax obligation of the
state, or a loan made by the state or a loan guaranteed by the
state.
(7)(8)
'Qualified production activities' means the production of new film, video, or
digital projects produced in this state and approved by the Department of
Economic Development,
such
as
including only
the following: feature films, series,
pilots, movies for television,
televised
commercial advertisements, music videos, interactive entertainment or sound
recording projects used in feature films,
series,
pilots, or movies for television. Such activities shall include projects
recorded in this state, in whole or in part, in either short or long form,
animation and music, fixed on a delivery system which includes without
limitation film, videotape, computer disc, laser disc, and any element of the
digital domain, from which the program is viewed or reproduced, and which is
intended for multimarket commercial distribution via theaters,
video on
demand, direct to DVD, digital platforms designed for the distribution of
interactive games, licensing for
exhibition by individual television stations, groups of stations, networks,
advertiser
supported sites, cable television
stations,
or
public broadcasting
stations,
corporations, live venues, the Internet, or any other channel of
exhibition. Such term shall not include
the
production
of television coverage of news and
athletic
events, local
interest programming, instructional videos, corporate videos, or projects not
shot, recorded, or originally created in
Georgia.
(8)(9)
'Resident' means an individual as designated pursuant to paragraph (10) of Code
Section 48-7-1, as amended.
(9)(10)
'State certified production' means a production engaged in qualified production
activities which have been approved by the Department of Economic Development in
accordance with regulations promulgated pursuant to this Code section.
In the
instance of a 'work for hire' in which one production company or qualified
interactive entertainment production company hires another production company or
qualified interactive entertainment production company to produce a project or
contribute elements of a project for pay, the hired company shall be considered
a service provider for the hiring company, and the hiring company shall be
entitled to the film tax credit.
(10)(11)
'Total aggregate payroll' means the total sum expended by a production company
or qualified
interactive entertainment production
company on salaries paid to employees
working within this state in a state certified production or productions. For
purposes of this paragraph:
(A)
With respect to a single employee, the portion of any salary which exceeds
$500,000.00 for a single production shall not be included when calculating total
aggregate payroll; and
(B)
All payments to a single employee and any legal entity in which the employee has
any direct or indirect ownership interest shall be considered as having been
paid to the employee and shall be aggregated regardless of the means of payment
or distribution.
(c)
For any production company
or qualified
interactive entertainment production
company and its affiliates that invest in
a state certified production approved by the Department of Economic Development
and whose average annual total production expenditures in this state did not
exceed $30 million for 2002, 2003, and 2004, there shall be allowed an income
tax credit against the tax imposed under this article. The tax credit under
this subsection shall be allowed if the base investment in this state equals or
exceeds $500,000.00 for qualified production activities and shall be calculated
as follows:
(1)
The production company
or qualified
interactive entertainment production
company shall be allowed a tax credit
equal to 20 percent of the base investment in this state; and
(2)(A)
The production company
or qualified
interactive entertainment production
company shall be allowed an additional tax
credit equal to 10 percent of such base investment if the qualified production
activity includes a qualified Georgia promotion.
In lieu of the
inclusion of the Georgia promotional logo, the production company or qualified
interactive entertainment production company may offer alternative marketing
opportunities to be evaluated by the Georgia Department of Economic Development
to ensure that they offer equal or greater promotional value to the State of
Georgia.
(B)
The Department of Economic Development shall prepare an annual report detailing
the marketing opportunities it has approved under the provisions of subparagraph
(A) of this paragraph. The report shall include, but not be limited
to:
(i)
The goals and strategy behind each marketing opportunity approved pursuant to
the provisions of subparagraph (A) of this paragraph;
(ii)
The names of all production companies approved by the Department of Economic
Development to provide alternative marketing opportunities;
(iii)
The estimated value to the state of each approved alternative marketing
opportunity compared to the estimated value of the Georgia promotional logo;
and
(iv)
The names of all production companies who chose to include the Georgia
promotional logo in their final production instead of offering the state an
alternative marketing proposal.
The
report required under this paragraph shall be completed no later than January 1
of each year and presented to each member of the House Committee on Ways and
Means, the Senate Finance Committee, the Senate Economic Development Committee,
the House Committee on Economic Development and Tourism, and the
Governor.
(d)
For any production company
or qualified
interactive entertainment production
company and its affiliates that invest in
a state certified production approved by the Department of Economic Development
and whose average annual total production expenditures in this state exceeded
$30 million for 2002, 2003, and 2004, there shall be allowed an income tax
credit against the tax imposed under this article. For purposes of this
subsection, the excess base investment in this state is computed by taking the
current year production expenditures in a state certified production and
subtracting the average of the annual total production expenditures for 2002,
2003, and 2004. The tax credit shall be calculated as follows:
(1)
If the excess base investment in this state equals or exceeds $500,000.00, the
production company
or qualified
interactive entertainment production
company and its affiliates shall be
allowed a tax credit of 20 percent of such excess base investment;
and
(2)(A)
The production company
or qualified
interactive entertainment production
company and its affiliates shall be
allowed an additional tax credit equal to 10 percent of the excess base
investment if the qualified production activities include a qualified Georgia
promotion. In
lieu of the inclusion of the Georgia promotional logo, the production company or
qualified interactive entertainment production company may offer marketing
opportunities to be evaluated by the Department of Economic Development to
ensure that they offer equal or greater promotional value to the State of
Georgia.
(B)
The Department of Economic Development shall prepare an annual report detailing
the marketing opportunities it has approved under the provisions of subparagraph
(A) of this paragraph. The report shall include, but not be limited
to:
(i)
The goals and strategy behind each marketing opportunity approved pursuant to
the provisions of subparagraph (A) of this paragraph;
(ii)
The names of all production companies approved by the Department of Economic
Development to provide alternative marketing opportunities;
(iii)
The estimated value to the state of each approved alternative marketing
opportunity compared to the estimated value of the Georgia promotional logo;
and
(iv)
The names of all production companies who chose to include the Georgia
promotional logo in their final production instead of offering the state an
alternative marketing proposal.
The
report required under this paragraph shall be completed no later than January 1
of each year and presented to each member of the House Committee on Ways and
Means, the Senate Finance Committee, the Senate Economic Development Committee,
the House Committee on Economic Development and Tourism, and the
Governor.
(e)(1)
In no event shall the aggregate amount of tax credits allowed under this Code
section for qualified interactive entertainment production companies and
affiliates exceed $25 million. The maximum credit for any qualified interactive
entertainment production company and its affiliates shall be $5
million.
(2)
The commissioner shall allow the tax credits for qualified interactive
entertainment production companies on a first come, first served basis based on
the date the credits are claimed. When the $25 million cap is reached, the tax
credit for qualified interactive entertainment production companies shall
expire.
(e)(f)(1)
Where the amount of such credit or credits exceeds the production company's
or qualified
interactive entertainment production
company's liability for such taxes in a
taxable year, the excess may be taken as a credit against such production
company's or
qualified interactive entertainment production
company's quarterly or monthly payment
under Code Section 48-7-103. Each employee whose employer receives credit
against such production company's
or qualified
interactive entertainment production
company's quarterly or monthly payment
under Code Section 48-7-103 shall receive credit against his or her income tax
liability under Code Section 48-7-20 for the corresponding taxable year for the
full amount which would be credited against such liability prior to the
application of the credit provided for in this subsection. Credits against
quarterly or monthly payments under Code Section 48-7-103 and credits against
liability under Code Section 48-7-20 established by this subsection shall not
constitute income to the production company
or qualified
interactive entertainment production
company.
(2)
If a production company
and its
affiliates, or a
qualified
interactive entertainment production
company and its affiliates, claim the credit authorized under Code Section
48-7-40, 48-7-40.1, 48-7-40.17, or 48-7-40.18, then the production company
and its
affiliates, or the
qualified
interactive entertainment production
company and its affiliates, will only be allowed to claim the credit authorized
under this Code section to the extent that the Georgia resident employees
included in the credit calculation authorized under this Code section and taken
by the production company
and its
affiliates, or the
qualified
interactive entertainment production
company and its affiliates, on such tax return under this Code section have been
permanently excluded from the credit authorized under Code Section 48-7-40,
48-7-40.1, 48-7-40.17, or 48-7-40.18.
(f)(g)
Any tax credits with respect to a state certified production earned by a
production company
or qualified
interactive entertainment production
company and previously claimed but not
used by such production company
or qualified
interactive entertainment production
company against its income tax may be
transferred or sold in whole or in part by such production company
or qualified
interactive entertainment production
company to another Georgia taxpayer,
subject to the following conditions:
(1)
Such production company
or qualified
interactive entertainment production
company may make only a single transfer or
sale of tax credits earned in a taxable year; however, the transfer or sale may
involve one or more transferees;
(2)
Such production company
or qualified
interactive entertainment production
company shall submit to the Department of
Economic Development and to the Department of Revenue a written notification of
any transfer or sale of tax credits within 30 days after the transfer or sale of
such tax credits. The notification shall include such production company's
or qualified
interactive entertainment production
company's tax credit balance prior to
transfer, the credit certificate number, the remaining balance after transfer,
all tax identification numbers for each transferee, the date of transfer, the
amount transferred, and any other information required by the Department of
Economic Development or the Department of Revenue;
(3)
Failure to comply with this subsection shall result in the disallowance of the
tax credit until the production company
or qualified
interactive entertainment production
company is in full
compliance;
(4)
The transfer or sale of this tax credit does not extend the time in which such
tax credit can be used. The carry-forward period for tax credit that is
transferred or sold shall begin on the date on which the tax credit was
originally earned;
(5)
A transferee shall have only such rights to claim and use the tax credit that
were available to such production company
or qualified
interactive entertainment production
company at the time of the transfer,
except for the use of the credit in paragraph (1) of subsection
(e)(f)
of this Code section. To the extent that such production company
or qualified
interactive entertainment production
company did not have rights to claim or
use the tax credit at the time of the transfer, the Department of Revenue shall
either disallow the tax credit claimed by the transferee or recapture the tax
credit from the transferee. The transferee's recourse is against such
production company
or qualified
interactive entertainment production
company; and
(6)
The transferee must acquire the tax credits in this Code section for a minimum
of 60 percent of the amount of the tax credits so transferred.
(g)(h)
The credit granted under this Code section shall be subject to the following
conditions and limitations:
(1)
The credit may be taken beginning with the taxable year in which the production
company or
qualified interactive entertainment production
company has met the investment
requirement. For each year in which such production company
or qualified
interactive entertainment production
company either claims or transfers the
credit, the production company
or qualified
interactive entertainment production
company shall attach a schedule to the
production company's
or qualified
interactive entertainment production
company's Georgia income tax return which
will set forth the following information, as a minimum:
(A)
A description of the qualified production activities, along with the
certification from the Department of Economic Development;
(B)
A detailed listing of the employee names, social security numbers, and Georgia
wages when salaries are included in the base investment;
(C)
The amount of tax credit claimed for the taxable year;
(D)
Any tax credit previously taken by the production company
or qualified
interactive entertainment production
company against Georgia income tax
liabilities or the production company's
or qualified
interactive entertainment production
company's quarterly or monthly payments
under Code Section 48-7-103;
(E)
The amount of tax credit carried over from prior years;
(F)
The amount of tax credit utilized by the production company
or qualified
interactive entertainment production
company in the current taxable year;
and
(G)
The amount of tax credit to be carried over to subsequent tax
years;
(2)
In the initial year in which the production company
or qualified
interactive entertainment production
company claims the credit granted in this
Code section, the production company
or qualified
interactive entertainment production
company shall include in the description
of the qualified production activities required by subparagraph (A) of paragraph
(1) of this subsection information which demonstrates that the activities
included in the base investment or excess base investment equal or exceed
$500,000.00 during such year; and
(3)
In no event shall the amount of the tax credit under this Code section for a
taxable year exceed the production company's
or qualified
interactive entertainment production
company's income tax liability. Any
unused credit amount shall be allowed to be carried forward for five years from
the close of the taxable year in which the investment occurred. No such credit
shall be allowed the production company
or qualified
interactive entertainment production
company against prior years' tax
liability.
(h)(i)
The Department of Economic Development shall determine through the promulgation
of rules and regulations what projects qualify for the tax credits authorized
under this Code section. Certification shall be submitted to the state revenue
commissioner.
(i)(j)
The state revenue commissioner shall promulgate such rules and regulations as
are necessary to implement and administer this Code section.
(j)(k)
Any production company
or qualified
interactive entertainment production
company claiming, transferring, or selling
the tax credit shall be required to reimburse the Department of Revenue for any
department initiated audits relating to the tax credit. This subsection shall
not apply to routine tax audits of a taxpayer which may include the review of
the credit provided in this Code section."
SECTION
3.
(a)
This Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval.
(b) Section 1 of this Act shall be applicable to all tax years beginning on or after January 1, 2012.
(c) Section 2 of this Act shall be applicable to all tax years beginning on or after January 1, 2013.
(b) Section 1 of this Act shall be applicable to all tax years beginning on or after January 1, 2012.
(c) Section 2 of this Act shall be applicable to all tax years beginning on or after January 1, 2013.
SECTION
4.
All
laws and parts of laws in conflict with this Act are repealed.
