Bill Text: NY A06518 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to the empire state commercial production credit; eliminates the growth credit; increases the downstate credit from three to four million dollars and increases the percentage of qualified production costs paid from five to twenty percent for calculation of the credit; and increases the percentage of qualified production costs paid from five to thirty percent for calculation of the upstate credit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-01-08 - referred to ways and means [A06518 Detail]
Download: New_York-2019-A06518-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 6518 2019-2020 Regular Sessions IN ASSEMBLY March 8, 2019 ___________ Introduced by M. of A. LENTOL -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, in relation to the empire state commercial production credit The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 28 of the tax law, as added by section 2 of part V 2 of chapter 62 of the laws of 2006, paragraph 1 of subdivision (a) as 3 amended by chapter 518 of the laws of 2018, paragraph 2 of subdivision 4 (a) as amended by chapter 300 of the laws of 2007, subparagraph (i) of 5 paragraph 2 of subdivision (a) as amended by section 2 of part I of 6 chapter 59 of the laws of 2012, subparagraph (iii) of paragraph 2 of 7 subdivision (a) as amended by section 2 of part O of chapter 59 of the 8 laws of 2014, paragraph 3 of subdivision (a) as amended by section 45 of 9 part A of chapter 59 of the laws of 2014, paragraph 4 of subdivision (a) 10 as separately amended by section 45 of part A and section 6 of part S of 11 chapter 59 of the laws of 2014, paragraph 2 of subdivision (b) as 12 amended by chapter 448 of the laws of 2009, subdivision (c) as added and 13 subdivision (d) as relettered by section 2 of part J of chapter 59 of 14 the laws of 2015, is amended to read as follows: 15 § 28. Empire state commercial production credit. (a) Allowance of 16 credit. (1) A taxpayer which is a qualified commercial production compa- 17 ny, or which is a sole proprietor of a qualified commercial production 18 company, and which is subject to tax under article nine-A or twenty-two 19 of this chapter, shall be allowed a credit against such tax, pursuant to 20 the provisions referenced in subdivision (c) of this section, to be 21 computed as provided in this section. Provided, however, to be eligible 22 for such credit, at least seventy-five percent of the production costs 23 (excluding post production costs) paid or incurred directly and predomi- 24 nantly in the actual filming or recording of the qualified commercial 25 must be costs incurred in New York state. The tax credit allowed pursu- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10113-01-9A. 6518 2 1 ant to this section shall apply to taxable years beginning before Janu- 2 ary first, two thousand twenty-four. 3 (2) The state has annually seven million dollars in total tax credits 4 to disburse to all eligible commercial production companies. The seven 5 million dollars in total tax credits shall be allocated according to 6 subparagraphs (i)[,] and (ii) [and (iii)] of this paragraph: 7 (i) [The state annually will disburse one million of the total seven8million in tax credits to all eligible production companies and the9amount of the credit shall be the product (or pro rata share of the10product, in the case of a member of a partnership) of twenty percent of11the qualified production costs paid or incurred in the production of a12qualified commercial, provided that the qualified production costs paid13or incurred are attributable to the use of tangible property or the14performance of services within the state in the production of such qual-15ified commercial. To be eligible for said credit the total qualified16production costs of a qualified production company must be greater in17the aggregate during the current calendar year than the average of the18three previous years for which the credit was applied. Provided, howev-19er, that until a qualified production company has established a three20year history, the credit will be based on either the previous year or21the average of the two previous years, whichever period is longer for22the qualified production company seeking the credit. If the qualified23production company has never applied for the growth credit, the previous24year's data will be used to create a benchmark. The tax credit shall be25applied only to the amount of the total qualified production costs of26the current calendar year that are greater than the total amount of27production costs of the appropriate measurement period as described in28this subparagraph. The tax credit must be distributed to eligible29production companies on a pro rata basis, provided, however, that no30such qualified production company shall receive more than three hundred31thousand dollars annually for such credit. The credit shall be allowed32for the taxable year in which the production of such qualified commer-33cial is completed.34(ii)] The state annually will disburse [three] four million of the 35 total seven million in tax credits to all eligible production companies 36 who film or record qualified commercials within the metropolitan commu- 37 ter transportation district as defined in section twelve hundred sixty- 38 two of the public authorities law. The amount of the credit shall be the 39 product (or pro rata share of the product, in the case of a member of a 40 partnership) of [five] twenty percent of the qualified production costs 41 paid or incurred in the production of a qualified commercial, provided 42 that the qualified production costs paid or incurred are attributable to 43 the use of tangible property or the performance of services within the 44 state in the production of such qualified commercial. To be eligible for 45 said credit the total qualified production costs of a qualified 46 production company must be greater than five hundred thousand dollars in 47 the aggregate during the calendar year. Such credit will be applied to 48 qualified production costs exceeding five hundred thousand dollars in a 49 calendar year. 50 [(iii)] (ii) The state annually will disburse three million of the 51 total seven million in tax credits to all eligible production companies 52 who film or record a qualified commercial outside of the metropolitan 53 commuter transportation district as defined in section twelve hundred 54 sixty-two of the public authorities law; provided, however, that if, 55 after July thirty-first the state reviews all applications from eligible 56 production companies who film or record a qualified commercial outsideA. 6518 3 1 of the metropolitan commuter district for a given year, tax credits 2 remain unallocated under this subparagraph, those credits shall be 3 allotted to the credits set forth in subparagraph (i) of this paragraph 4 for use consistent with the purposes of such subparagraph. The amount of 5 the credit shall be the product (or pro rata share of the product, in 6 the case of a member of a partnership) of [five] thirty percent of the 7 qualified production costs paid or incurred in the production of a qual- 8 ified commercial, provided that the qualified production costs paid or 9 incurred are attributable to the use of tangible property or the 10 performance of services within the state in the production of such qual- 11 ified commercial. To be eligible for said credit the total qualified 12 production costs of a qualified production company must be greater than 13 one hundred thousand dollars in the aggregate during the calendar year. 14 Such credit will be applied to all qualified production costs [exceeding15one hundred thousand dollars] in a calendar year. 16 (3) No qualified production costs used by a taxpayer either as the 17 basis for the allowance of the credit provided for under this section or 18 used in the calculation of the credit provided for under this section 19 shall be used by such taxpayer to claim any other credit allowed pursu- 20 ant to this chapter. 21 (4) Notwithstanding any provisions of this section to the contrary, a 22 corporation or partnership, which otherwise qualifies as a qualified 23 commercial production company, and is similar in operation and in owner- 24 ship to a business entity or entities taxable, or previously taxable, 25 under section one hundred eighty-three or one hundred eighty-four or 26 former section one hundred eighty-five of article nine; article nine-A 27 or thirty-three of this chapter or which would have been subject to tax 28 under article twenty-three of this chapter (as such article was in 29 effect on January first, nineteen hundred eighty) or which would have 30 been subject to tax under article thirty-two of this chapter (as such 31 article was in effect on December thirty-first, two thousand fourteen) 32 or the income or losses of which is or was includable under article 33 twenty-two of this chapter shall not be deemed a new or separate busi- 34 ness, and therefore shall not be eligible for empire state commercial 35 production benefits, if it was not formed for a valid business purpose, 36 as such term is defined in clause (D) of subparagraph one of paragraph 37 (o) of subdivision nine of section two hundred eight of this chapter and 38 was formed solely to gain empire state commercial production credit 39 benefits. 40 (b) Definitions. As used in this section, the following terms shall 41 have the following meanings: 42 (1) "Qualified production costs" means production costs only to the 43 extent such costs are attributable to the use of tangible property or 44 the performance of services within the state directly and predominantly 45 in the production (including pre-production and post-production) of a 46 qualified commercial. 47 (2) "Production costs" means any costs for tangible property used and 48 services performed directly and predominantly in the production (includ- 49 ing pre-production and post-production) of a qualified commercial. 50 "Production costs" shall not include (i) costs for a story, script or 51 scenario to be used for a qualified commercial and (ii) wages or sala- 52 ries or other compensation for writers, directors, including music 53 directors, producers and performers (other than background actors with 54 no scripted lines who are employed by a qualified company and musi- 55 cians). "Production costs" generally include technical and crew 56 production costs, such as expenditures for commercial production facili-A. 6518 4 1 ties and/or location costs, or any part thereof, film, audiotape, vide- 2 otape or digital medium, props, makeup, wardrobe, commercial processing, 3 camera, sound recording, scoring, set construction, lighting, shooting, 4 editing and meals. For purposes of this section, "post production costs" 5 include the production of original content for a qualified commercial 6 employing techniques traditionally used in post-production for visual 7 effects, graphic design, animation, and musical composition. However, 8 where the commercial consists in its entirety of techniques such as 9 visual effects, graphic design, or animation, such costs incurred in the 10 production of the commercial, when occurring in New York, shall be 11 deemed qualified production costs for the purposes of this section. 12 Provided further, however, that "post production costs" shall not 13 include the editing of previously produced content for a qualified 14 commercial. 15 (3) "Qualified commercial" means an advertisement of any length that 16 is recorded on film, audiotape, videotape or digital medium in New York 17 for multi-market distribution by way of radio, television networks, 18 cable, satellite [or], motion picture theaters, internet or downloaded 19 application (app). "Qualified commercial" shall not include (i) news or 20 current affairs program, interview or talk program, network promos, 21 i.e., commercials promoting television series or movies, "how-to" (i.e., 22 instructional) commercial or program, commercial or program consisting 23 entirely of stock footage, trailers promoting theatrical films, sporting 24 event or sporting program, game show, award ceremony, daytime drama 25 (i.e., daytime "soap opera"), or "reality" program, or (ii) a production 26 for which records are required under section 2257 of title 18, United 27 States code, to be maintained with respect to any performer in such 28 production (reporting of books, commercials, etc. with respect to sexu- 29 ally explicit conduct). 30 (4) "Qualified commercial production company" is a corporation, part- 31 nership, limited partnership, or other entity or individual which or who 32 is principally engaged in the production of a qualified commercial and 33 controls the production of the qualified commercial and is not the 34 distributor, or the contracting entity for production of such 35 commercial, nor is a variable interest entity of such distributor or 36 contracting entity. 37 (c) The department of economic development shall submit, on or before 38 December first of each year, to the governor, the director of the divi- 39 sion of the budget, the temporary president of the senate, and the 40 speaker of the assembly an annual report including, but not limited to, 41 the following information regarding the previous calendar year: 42 (1) the total dollar amount of credits allocated, the name and address 43 of each qualified commercial production company allocated credits under 44 this section, the total amount of credits allocated to each qualified 45 commercial production company, the total amount of qualified production 46 costs and production costs for each qualified commercial production 47 company, and the estimated number of employees, credit-eligible man 48 hours, and credit-eligible wages associated with each qualified commer- 49 cial production company allocated credits under this section; 50 (2) for qualified commercial production companies that were allocated 51 credit pursuant to subparagraph [(ii)] (i) of paragraph two of subdivi- 52 sion (a) of this section: the name and address of each qualified commer- 53 cial production company, the total dollar amount of credits allocated, 54 the total amount of credits allocated to each qualified commercial 55 production company, total qualified production costs and production 56 costs for each qualified production company, and the estimated number ofA. 6518 5 1 employees, credit-eligible man hours, and credit-eligible wages associ- 2 ated with each qualified commercial production company that filmed or 3 recorded a qualified commercial within the district; 4 (3) for qualified commercial production companies that were allocated 5 credit pursuant to subparagraph [(iii)] (ii) of paragraph two of subdi- 6 vision (a) of this section: the name and address of each qualified 7 commercial production company, the total dollar amount of credits allo- 8 cated, the total amount of credits allocated to each qualified commer- 9 cial production company, total qualified production costs and production 10 costs for each qualified production company, and the estimated number of 11 employees, credit-eligible man hours, and credit-eligible wages associ- 12 ated with each qualified commercial production company that filmed or 13 recorded a qualified commercial outside the district; and 14 (4) the amount of credits reallocated to all eligible qualified 15 commercial production companies pursuant to subparagraph [(iii)] (ii) of 16 paragraph two of subdivision (a) of this section. 17 (5) The report may also include any recommendations for changes in the 18 calculation or administration of the credit, recommendations regarding 19 continuing modification or repeal of this credit, and any other informa- 20 tion regarding this credit as may be useful and appropriate. 21 (d) Cross-references. For application of the credit provided for in 22 this section, see the following provision of this chapter: 23 (1) article 9-A: section 210-B: subdivision 23. 24 (2) article 22: section 606: subsection (jj). 25 § 2. This act shall take effect immediately.