Bill Text: NY A07126 | 2023-2024 | General Assembly | Amended

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Bill Title: Amends the eligibility criteria for game development companies by changing the yearly timeframe structure, lowering the dollar threshold per production, removing the in-state cost incurred threshold to accurately fit current digital gaming industry models, increasing the amount of the tax credit and extending the time in which to claim the credit.

Spectrum: Slight Partisan Bill (Democrat 9-3)

Status: (Introduced) 2024-01-17 - print number 7126a [A07126 Detail]

Download: New_York-2023-A07126-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         7126--A

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                      May 11, 2023
                                       ___________

        Introduced by M. of A. McDONALD -- read once and referred to the Commit-
          tee  on  Ways  and  Means  -- recommitted to the Committee on Ways and
          Means in  accordance  with  Assembly  Rule  3,  sec.  2  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee

        AN ACT to amend the tax law, in relation to the eligibility criteria for
          the digital gaming tax credit

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Paragraph 1 of subdivision (a) and subdivision (b) and  (c)
     2  of  section 45 of the tax law, as added by section 1 of part OO of chap-
     3  ter 59 of the laws of 2022, are amended to read as follows:
     4    (1) A taxpayer which is  a  digital  gaming  media  production  entity
     5  engaged  in  qualified digital gaming media production, or who is a sole
     6  proprietor of or a member of a partnership, which is  a  digital  gaming
     7  media  production  entity  engaged  in  qualified  digital  gaming media
     8  production, and is subject to tax under article nine-A or twenty-two  of
     9  this  chapter, shall be allowed a credit against such tax to be computed
    10  as provided herein for taxable  years  beginning  on  or  after  January
    11  first,  two thousand twenty-three and before January first, two thousand
    12  [twenty-eight] thirty.
    13    (b) Allocation of credit. The aggregate amount of tax credits  allowed
    14  under  this section, subdivision fifty-five of section two hundred ten-B
    15  and subsection (nnn) of section six hundred six of this chapter  in  any
    16  taxable  year  shall  be [five] one hundred million dollars. Such credit
    17  shall be allocated by the department of economic development in order of
    18  priority based upon the date of filing an application for allocation  of
    19  digital  gaming  media  production credit with such office. An applicant
    20  shall submit an annual application which  shall  include  all  qualified
    21  digital  gaming  media  productions  for  the taxable year along with an
    22  estimate of the digital gaming media production costs.  The  application

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11262-02-4
        A. 7126--A                          2

     1  can  be  submitted no earlier than ninety days prior to the first day of
     2  the applicable taxable year. If the total amount  of  allocated  credits
     3  applied  for  in any particular year exceeds the aggregate amount of tax
     4  credits  allowed  for such year under this section, such excess shall be
     5  treated as having been applied for on the first day  of  the  subsequent
     6  taxable year.
     7    (c) Definitions. As used in this section:
     8    (1)  "Qualified digital gaming media production" means: (i) a website,
     9  the digital media production costs of which are paid or incurred  predo-
    10  minately  in  connection  with  (A)  video  simulation, animation, text,
    11  audio, graphics or similar gaming related property embodied  in  digital
    12  format,  and  (B)  interactive  features of digital gaming (e.g., links,
    13  message boards, communities or  content  manipulation);  (ii)  video  or
    14  interactive games produced primarily for distribution over the internet,
    15  wireless  network or successors thereto; and (iii) animation, simulation
    16  or embedded  graphics  digital  gaming  related  software  intended  for
    17  commercial  distribution  regardless  of medium; provided, however, that
    18  the qualified digital game development media  productions  described  in
    19  subparagraphs  (i)  through  (iii)  of  this paragraph must have digital
    20  media production costs equal to or in  excess  of  [one  hundred]  fifty
    21  thousand  dollars  per  production.  A  qualified  digital  gaming media
    22  production does not include a website, video, interactive game or  soft-
    23  ware  that  is  used  predominately  for: electronic commerce (retail or
    24  wholesale purposes other than the  sale  of  video  interactive  games),
    25  gambling  (including  activities regulated by a New York gaming agency),
    26  or political advocacy purposes.
    27    (2) "Digital gaming media production costs" means any costs for  wages
    28  [or  salaries]  paid  to  individuals,  [other  than actors or writers,]
    29  directly employed for services performed by those  individuals  directly
    30  [and predominantly] in the creation of a digital gaming media production
    31  or  productions.  [Up to one hundred thousand dollars in wages and sala-
    32  ries paid to such employees, other than  actors  and  writers,  directly
    33  employed  shall  be  used  in  the  calculation of this credit.] Digital
    34  gaming media production costs  include  but  shall  not  be  limited  to
    35  payments  for  services  performed  directly  [and predominantly] in the
    36  development (including concept creation), [design,] production  (includ-
    37  ing  concept  creation), design, production (including testing), editing
    38  (including encoding)  and  compositing  (including  the  integration  of
    39  digital  files  for  interaction  by end users) of digital gaming media.
    40  Digital  gaming  media  production  costs  shall  not  include  expenses
    41  incurred  for  the  distribution,  marketing,  promotion, or advertising
    42  content generated by end users, other costs not directly  [and  predomi-
    43  nantly]  related  to the creation, production or modification of digital
    44  gaming media or costs used by the taxpayer as a basis of the calculation
    45  of any other tax credit allowed under this chapter. In addition,  [sala-
    46  ries  or  other  income  distribution]  wages related to the creation of
    47  digital gaming media for any person who predominately serves in a corpo-
    48  rate capacity in the role of chief executive  officer,  chief  financial
    49  officer,  president,  treasurer or similar corporate position and who is
    50  not directly engaged in services related to the creation  of  a  digital
    51  gaming  media production or productions shall not be included as digital
    52  gaming media production costs if the  digital  gaming  media  production
    53  entity  has  more  then  ten employees. [Salaries or other income] Wages
    54  paid to a person serving in such a role for  the  digital  gaming  media
    55  production  entity shall also not be included if the person was employed
    56  by a related person of the digital gaming media production entity within
        A. 7126--A                          3

     1  sixty months of the date the  digital  gaming  media  production  entity
     2  applied  for  the tax credit certificate described in subdivision (d) of
     3  this section. For purposes of the preceding sentence, a  related  person
     4  shall have the same meaning as the term "related person" in section four
     5  hundred  sixty-five  of  the  internal  revenue  code. [Furthermore, any
     6  income or other distribution to any individual including, but not limit-
     7  ed to, licensing or royalty fees, who holds an ownership interest  in  a
     8  digital  gaming  media production entity, whether or not such individual
     9  is serving in the role of chief executive officer, chief financial offi-
    10  cer, president, treasurer or similar position for such an entity,  shall
    11  not  be  included  as  digital gaming media production costs. Up to four
    12  million dollars in qualified digital gaming media production  costs  per
    13  production  shall  be  used  in the calculation of this credit.] Digital
    14  gaming media production costs shall not include those costs used by  the
    15  taxpayer  or  another taxpayer as the basis calculation of any other tax
    16  credit allowed under this chapter.
    17    (3) "Qualified digital gaming media production  costs"  means  digital
    18  gaming  media production costs only to the extent such costs are attrib-
    19  utable to the use of property or the  performance  of  services  by  any
    20  persons  within  the state directly [and predominantly] in the creation,
    21  production or modification of digital gaming related media. [Such  total
    22  production  costs  incurred  and paid in this state shall be equal to or
    23  exceed seventy-five percent of total  cost  of  an  eligible  production
    24  incurred and paid within and without this state.]
    25    (4)  "Digital  gaming  media  production  entity" means a corporation,
    26  partnership, limited partnership or other entity or  individual  engaged
    27  in qualified digital game development media production.
    28    §  2. Paragraph (a) of subdivision 55 of section 210-b of the tax law,
    29  as added by section 2 of part OO of chapter 59 of the laws of  2022,  is
    30  amended to read as follows:
    31    (a)  Allowance  of  credit.  A  taxpayer  who  is eligible pursuant to
    32  section forty-five of this chapter shall  be  allowed  a  credit  to  be
    33  computed  as provided in such section forty-five against the tax imposed
    34  by this article. [Under no circumstances may a single  taxpayer  receive
    35  more  than  one million five hundred thousand dollars in tax credits per
    36  year.]
    37    § 3. Paragraph 1 of subsection (nnn) of section 606 of the tax law, as
    38  added by section 4 of part OO of chapter 59 of  the  laws  of  2022,  is
    39  amended to read as follows:
    40    (1)  Allowance  of  credit.  A  taxpayer  who  is eligible pursuant to
    41  section forty-five of this chapter shall  be  allowed  a  credit  to  be
    42  computed  as provided in such section forty-five against the tax imposed
    43  by this article. [Under no circumstances may a single  taxpayer  receive
    44  more  than  one million five hundred thousand dollars in tax credits per
    45  year.]
    46    § 4. This act shall take effect immediately and shall apply to taxable
    47  years beginning on and after January 1, 2023 and before January 1, 2030.