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) 2019-03-08 - 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.
                                                                   LBD10113-01-9

        A. 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  seven
     8  million  in  tax  credits  to  all eligible production companies and the
     9  amount of the credit shall be the product (or  pro  rata  share  of  the
    10  product,  in the case of a member of a partnership) of twenty percent of
    11  the qualified production costs paid or incurred in the production  of  a
    12  qualified  commercial, provided that the qualified production costs paid
    13  or incurred are attributable to the use  of  tangible  property  or  the
    14  performance of services within the state in the production of such qual-
    15  ified  commercial.  To  be  eligible for said credit the total qualified
    16  production costs of a qualified production company must  be  greater  in
    17  the  aggregate  during the current calendar year than the average of the
    18  three previous years for which the credit was applied. Provided,  howev-
    19  er,  that  until  a qualified production company has established a three
    20  year history, the credit will be based on either the  previous  year  or
    21  the  average  of  the two previous years, whichever period is longer for
    22  the qualified production company seeking the credit.  If  the  qualified
    23  production company has never applied for the growth credit, the previous
    24  year's  data will be used to create a benchmark. The tax credit shall be
    25  applied only to the amount of the total qualified  production  costs  of
    26  the  current  calendar  year  that  are greater than the total amount of
    27  production costs of the appropriate measurement period as  described  in
    28  this  subparagraph.  The  tax  credit  must  be  distributed to eligible
    29  production companies on a pro rata basis,  provided,  however,  that  no
    30  such  qualified production company shall receive more than three hundred
    31  thousand dollars annually for such credit. The credit shall  be  allowed
    32  for  the  taxable year in which the production of such qualified commer-
    33  cial 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  outside

        A. 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 [exceeding
    15  one 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 of

        A. 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.
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