Bill Text: NY S02966 | 2019-2020 | General Assembly | Introduced
Bill Title: Establishes the empire state music production credit and the empire state digital gaming media production credit; defines terms.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS [S02966 Detail]
Download: New_York-2019-S02966-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2966 2019-2020 Regular Sessions IN SENATE January 31, 2019 ___________ Introduced by Sen. BENJAMIN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law and the economic development law, in relation to the creation of the empire state music production credit and the empire state digital gaming media production credit; to repeal subdivision 13 of section 352 of the economic development law relating thereto; and providing for the repeal of certain provisions upon expi- ration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The tax law is amended by adding a new section 44 to read 2 as follows: 3 § 44. Empire state music production credit. (a) Allowance of credit. 4 (1) A taxpayer which is a music production entity engaged in qualified 5 music production, or who is a sole proprietor of or a member of a part- 6 nership, which is a music production entity engaged in qualified music 7 production, and is subject to tax under article nine-A or twenty-two of 8 this chapter, shall be allowed a credit against such tax to be computed 9 as provided herein. 10 (2) The amount of the credit shall be the product (or pro rata share 11 of the product, in the case of a member of a partnership or limited 12 liability company) of twenty-five percent and the eligible production 13 costs of one or more qualified music productions. 14 (3) Eligible production costs for a qualified music production 15 incurred and paid in this state but outside such metropolitan commuter 16 transportation district shall be eligible for a credit of ten percent of 17 such eligible production costs in addition to the credit specified in 18 paragraph two of this subdivision. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD04548-01-9S. 2966 2 1 (4) Eligible production costs shall not include those costs used by 2 the taxpayer or another taxpayer as the basis calculation of any other 3 tax credit allowed under this chapter or allowed in any other state. 4 (b) Allocation of credit. The aggregate amount of tax credits allowed 5 under this section, subdivision fifty-three of section two hundred ten-B 6 and subsection (jjj) of section six hundred six of this chapter in any 7 taxable year shall be fifty million dollars. The aggregate amount of 8 credits for any taxable year shall be distributed on a regional basis as 9 follows: fifty percent of the aggregate amount of credits shall be 10 available for qualified music productions that incur at least sixty 11 percent of eligible production costs for a qualified music production in 12 region one; twenty percent of the aggregate amount of credits shall be 13 available for qualified music productions that incur at least sixty 14 percent of eligible production costs for a qualified music production in 15 region two; and thirty percent of the aggregate amount of credits shall 16 be available for qualified music productions that incur at least sixty 17 percent of eligible production costs for a qualified music production in 18 region three. If such regional distribution is not fully allocated in 19 any taxable year, the remainder of such credits shall be available for 20 allocation to any region in the subsequent tax year. For the purposes 21 of this section region one shall contain the city of New York; region 22 two shall contain the counties of Westchester, Rockland, Nassau and 23 Suffolk; and region three shall contain any county not contained in 24 regions one and two. Such credit shall be allocated by the empire state 25 development corporation among taxpayers in order of priority based upon 26 the date of filing an application for allocation of music production 27 credits with such office. If the total amount of allocated credits 28 applied for in any particular year exceeds the aggregate amount of tax 29 credits allowed for such year under this section, such excess shall be 30 treated as having been applied for on the first day of the subsequent 31 taxable year. 32 (c) Definitions. As used in this section: 33 (1) "Music production" means the creation of a sound recording and any 34 related music video, either of which is intended for commercial release. 35 A "music production" does not include recordings that are primarily 36 spoken word or wildlife or nature sounds, or produced for instructional 37 use or advertising or promotional purposes. 38 (2) "Qualified music production" is a music production in which eligi- 39 ble production costs equal to or are in excess of seven thousand five 40 hundred dollars if incurred and paid in this state in the twelve months 41 preceding the date on which the credit is claimed. Provided, however, if 42 such production costs are incurred and paid outside the metropolitan 43 commuter transportation district in this state, such production costs 44 shall be equal to or in excess of three thousand seven hundred fifty 45 dollars to be a qualified music production for the purposes of this 46 paragraph. 47 (3) (A) "Eligible production costs for a qualified music production" 48 are costs incurred and paid in this state for tangible property and 49 services used in the production of qualified music production, as deter- 50 mined by the department of economic development, including, but not 51 limited to: (i) studio rental fees and related costs, (ii) instrument 52 and equipment rental fees, (iii) production session fees for musicians, 53 programmers, engineers, and technicians and (iv) mixing and mastering 54 services. 55 (B) Eligible production costs shall not include: (i) costs for tangi- 56 ble property or services used or performed outside of this state, (ii)S. 2966 3 1 performance fees for featured artists or featured guest artists receiv- 2 ing royalties or advances on royalties or special performance fees 3 (other than those that would normally be collected by a performing 4 rights organization) pursuant to an agreement directly with the producer 5 or employer, (iii) salaries or related compensation for producers or 6 songwriters, (iv) composer, artist or producer residual royalties or 7 advances, (v) licensing fees for samples, (vi) interpolations or other 8 music clearance costs, (vii) mastering or post-production expenditures 9 for projects that were not principally tracked and recorded in this 10 state, (viii) any costs associated with manufacturing, duplication, 11 packaging, distribution, promotion, marketing or touring not specif- 12 ically outlined in this subparagraph, or (ix) local transportation 13 expenditures directly related to music production and provided at or to 14 the site of such music production. With respect to the production of a 15 music video, eligible production costs are those defined in paragraph 16 two of subdivision (b) of section twenty-four of this article. Such 17 total production costs incurred and paid in this state shall be equal to 18 or exceed seventy-five percent of total cost of an eligible production 19 incurred and paid within and without this state. 20 (d) Cross-references. For applications of the credit provided for in 21 this section, see the following provisions of this chapter: 22 (1) Article nine-A: section two hundred ten-B, subdivision fifty- 23 three. 24 (2) Article twenty-two: section six hundred six, subsection (i), para- 25 graph one, subparagraph (B), clause (xliv). 26 (3) Article twenty-two: section six hundred six, subsection (jjj). 27 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 28 sion 53 to read as follows: 29 53. Empire state music production credit. (a) Allowance of credit. A 30 taxpayer who is eligible pursuant to section forty-four of this chapter 31 shall be allowed a credit to be computed as provided in such section 32 forty-four against the tax imposed by this article. 33 (b) Application of credit. The credit allowed under this subdivision 34 for any taxable year shall not reduce the tax due for such year to less 35 than the amount prescribed in paragraph (d) of subdivision one of 36 section two hundred ten of this article. Provided, however, that if the 37 amount of the credit allowable under this subdivision for any taxable 38 year reduces the tax to such amount, the excess shall be treated as an 39 overpayment of tax to be credited or refunded in accordance with the 40 provisions of section one thousand eighty-six of this chapter, provided, 41 however, no interest shall be paid thereon. 42 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 43 of the tax law is amended by adding a new clause (xliv) to read as 44 follows: 45 (xliv) Empire state music Amount of credit under 46 production credit under subdivision fifty-three 47 subsection (jjj) of section two hundred ten-B 48 § 4. Section 606 of the tax law is amended by adding a new subsection 49 (jjj) to read as follows: 50 (jjj) Empire state music production credit. (1) Allowance of credit. A 51 taxpayer who is eligible pursuant to section forty-four of this chapter 52 shall be allowed a credit to be computed as provided in such section 53 forty-four against the tax imposed by this article.S. 2966 4 1 (2) Application of credit. If the amount of the credit allowable under 2 this subsection for any taxable year exceeds the taxpayer's tax for such 3 year, the excess shall be treated as an overpayment of tax to be credit- 4 ed or refunded as provided in section six hundred eighty-six of this 5 article, provided, however, that no interest shall be paid thereon. 6 § 5. The tax law is amended by adding a new section 45 to read as 7 follows: 8 § 45. Empire state digital gaming media production credit. (a) Allow- 9 ance of credit. (1) A taxpayer which is a digital gaming media 10 production entity engaged in qualified digital gaming media production, 11 or who is a sole proprietor of or a member of a partnership, which is a 12 digital gaming media production entity engaged in qualified digital 13 gaming media production, and is subject to tax under article nine-A or 14 twenty-two of this chapter, shall be allowed a credit against such tax 15 to be computed as provided herein. 16 (2) The amount of the credit shall be the product (or pro rata share 17 of the product, in the case of a member of a partnership or limited 18 liability company) of twenty-five percent and the eligible production 19 costs of one or more qualified digital gaming media productions. 20 (3) Eligible digital gaming media production costs for a qualified 21 digital gaming media production incurred and paid in this state but 22 outside such metropolitan commuter transportation district shall be 23 eligible for a credit of ten percent of such eligible production costs 24 in addition to the credit specified in paragraph two of this subdivi- 25 sion. 26 (4) Eligible production costs shall not include those costs used by 27 the taxpayer or another taxpayer as the basis calculation of any other 28 tax credit allowed under this chapter or allowed in any other state. 29 (b) Allocation of credit. The aggregate amount of tax credits allowed 30 under this section, subdivision fifty-four of section two hundred ten-B 31 and subsection (kkk) of section six hundred six of this chapter in any 32 taxable year shall be fifty million dollars. The aggregate amount of 33 credits for any taxable year must be distributed on a regional basis as 34 follows: fifty percent of the aggregate amount of credits shall be 35 available for qualified digital gaming media productions that incur at 36 least sixty percent of eligible production costs for a qualified digital 37 gaming media production in region one; twenty percent of the aggregate 38 amount of credits shall be available for qualified digital gaming media 39 productions that incur at least sixty percent of eligible production 40 costs for a qualified digital gaming media production in region two; and 41 thirty percent of the aggregate amount of credits shall be available for 42 qualified digital gaming media productions that incur at least sixty 43 percent of eligible production costs for a qualified digital gaming 44 media production in region three. If such regional distribution is not 45 fully allocated in any taxable year, the remainder of such credits shall 46 be available for allocation to any region in the subsequent tax year. 47 For the purposes of this section region one shall contain the city of 48 New York; region two shall contain the counties of Westchester, Rock- 49 land, Nassau and Suffolk; and region three shall contain any county not 50 contained in regions one and two. Such credit shall be allocated by the 51 empire state development corporation among taxpayers in order of priori- 52 ty based upon the date of filing an application for allocation of 53 digital gaming media production credit with such office. If the total 54 amount of allocated credits applied for in any particular year exceeds 55 the aggregate amount of tax credits allowed for such year under thisS. 2966 5 1 section, such excess shall be treated as having been applied for on the 2 first day of the subsequent taxable year. 3 (c) Definitions. As used in this section: 4 (1) "Qualified digital gaming media production" means: (i) a website, 5 the digital media production costs of which are paid or incurred predo- 6 minately in connection with (A) video simulation, animation, text, 7 audio, graphics or similar gaming related property embodied in digital 8 format, and (B) interactive features of digital gaming (e.g., links, 9 message boards, communities or content manipulation); (ii) video or 10 interactive games produced primarily for distribution over the internet, 11 wireless network or successors thereto; (iii) animation, simulation or 12 embedded graphics digital gaming related software intended for commer- 13 cial distribution regardless of medium; and (iv) a digital gaming media 14 production in which qualified digital gaming media production costs 15 equal to or are in excess of seven thousand five hundred dollars if 16 incurred and paid in this state in twelve months preceding the date on 17 which the credit is claimed. Provided, however, if such a production 18 costs are incurred and paid outside the metropolitan commuter transpor- 19 tation district in this state, such production costs shall be equal to 20 or in excess of three thousand seven hundred fifty dollars to be a qual- 21 ified digital gaming media production for purposes of this paragraph. A 22 qualified digital gaming media production does not include a website, 23 video, interactive game or software that is used predominately for: 24 electronic commerce (retail or wholesale purposes other than the sale of 25 video or interactive games), gambling (including activities regulated by 26 a New York gaming agency), exclusive local consumption for entities not 27 accessible by the general public including industrial or other private 28 purposes, and political advocacy purposes. 29 (2) "Digital gaming media production costs" means any costs for prop- 30 erty used and wages or salaries paid to individuals directly employed 31 for services performed by those individuals directly and predominately 32 in the creation of a digital gaming media production or productions. 33 Digital gaming media production costs include but shall not be limited 34 to to payments for property used and services performed directly and 35 predominately in the development (including concept creation), design, 36 production (including concept creation), design, production (including 37 testing), editing (including encoding) and compositing (including the 38 integration of digital files for interaction by end users) of digital 39 gaming media. Digital gaming media production costs shall not include 40 expenses incurred for the distribution, marketing, promotion, or adver- 41 tising content generated by end-users or other costs not directly and 42 predominately related to the creation, production or modification of 43 digital gaming media. In addition, salaries or other income distribution 44 related to the creation of digital gaming media for any person who 45 serves in the role of chief executive officer, chief financial officer, 46 president, treasurer or similar position shall not be included as 47 digital gaming media production costs. Furthermore, any income or other 48 distribution to any individual who holds an ownership interest in a 49 digital gaming media production entity shall not be included as digital 50 gaming media production costs. 51 (3) "Qualified digital gaming media production costs" means digital 52 gaming media production costs only to the extent such costs are attrib- 53 utable to the use of property or the performance of services by any 54 persons within the state directly and predominantly in the creation, 55 production or modification of digital gaming related media. Such total 56 production costs incurred and paid in this state shall be equal to orS. 2966 6 1 exceed seventy-five percent of total cost of an eligible production 2 incurred and paid within and without this state. 3 (d) Cross-references. For application of the credit provided for in 4 this section, see the following provisions of this chapter: 5 (1) Article nine-A: section two hundred ten-B, subdivision fifty-four. 6 (2) Article twenty-two: section six hundred six, subsection (i), para- 7 graph one, subparagraph (B), clause (xlv). 8 (3) Article twenty-two: section six hundred six, subsection (kkk). 9 § 6. Section 210-B of the tax law is amended by adding a new subdivi- 10 sion 54 to read as follows: 11 54. Empire state digital gaming media production credit. (a) Allowance 12 of credit. A taxpayer who is eligible pursuant to section forty-five of 13 this chapter shall be allowed a credit to be computed as provided in 14 such section forty-five against the tax imposed by this article. 15 (b) Application of credit. The credit allowed under this subdivision 16 for any taxable year shall not reduce the tax due for such year to less 17 than the amount prescribed in paragraph (d) of subdivision one of 18 section two hundred ten of this article. Provided, however, that if the 19 amount of the credit allowable under this subdivision for any taxable 20 year reduces the tax to such amount, the excess shall be treated as an 21 overpayment of tax to be credited or refunded in accordance with the 22 provisions of section one thousand eighty-six of this chapter, provided, 23 however, no interest shall be paid thereon. 24 § 7. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 25 of the tax law is amended by adding a new clause (xlv) to read as 26 follows: 27 (xlv) Empire state digital Amount of credit 28 gaming media production under subdivision 29 credit under subsection (kkk) fifty-four of section 30 two hundred ten-B 31 § 8. Section 606 of the tax law is amended by adding a new subsection 32 (kkk) to read as follows: 33 (kkk) Empire state digital gaming media production credit. (1) Allow- 34 ance of credit. A taxpayer who is eligible pursuant to section forty- 35 five of this chapter shall be allowed a credit to be computed as 36 provided in such section forty-five against the tax imposed by this 37 article. 38 (2) Application of credit. If the amount of the credit allowable under 39 this subsection for any taxable year exceeds the taxpayer's tax for such 40 year, the excess shall be treated as an overpayment of tax to be credit- 41 ed or refunded as provided in section six hundred eighty-six of this 42 article, provided, however, that no interest shall be paid thereon. 43 § 9. The state commissioner of economic development, after consulting 44 with the state commissioner of taxation and finance, shall promulgate 45 regulations by December 31, 2019 to establish procedures for the allo- 46 cation of tax credits as required by subdivision (a) of section 44 and 47 subdivision (a) of section 45 of the tax law. Such rules and regulations 48 shall include provisions describing the application process, the due 49 dates for such applications, the standards which shall be used to evalu- 50 ate the applications, the documentation that will be provided to taxpay- 51 ers substantiate to the New York state department of taxation and 52 finance the amount of tax credits allocated to such taxpayers, under 53 what conditions all or a portion of this tax credit may be revoked, and 54 such other provisions as deemed necessary and appropriate. Notwithstand- 55 ing any other provisions to the contrary in the state administrativeS. 2966 7 1 procedure act, such rules and regulations may be adopted on an emergency 2 basis if necessary to meet such December 31, 2019 deadline. 3 § 10. Subdivision 13 of section 352 of the economic development law is 4 REPEALED. 5 § 11. Subdivisions 1, 3 and 5 of section 353 of the economic develop- 6 ment law, subdivisions 1 and 3 as amended by section 2 of part K of 7 chapter 59 of the laws of 2017, subdivision 3 as separately amended by 8 section 2 of part ZZ of chapter 59 of the laws of 2017 and subdivision 5 9 as amended by section 2 of part K of chapter 59 of the laws of 2015, are 10 amended to read as follows: 11 1. To be a participant in the excelsior jobs program, a business enti- 12 ty shall operate in New York state predominantly: 13 (a) as a financial services data center or a financial services back 14 office operation; 15 (b) in manufacturing; 16 (c) in software development and new media; 17 (d) in scientific research and development; 18 (e) in agriculture; 19 (f) in the creation or expansion of back office operations in the 20 state; 21 (g) in a distribution center; 22 (h) in an industry with significant potential for private-sector 23 economic growth and development in this state as established by the 24 commissioner in regulations promulgated pursuant to this article. In 25 promulgating such regulations the commissioner shall include job and 26 investment criteria; 27 (i) as an entertainment company; or 28 (j) [in music production; or29(k)] as a life sciences company. 30 3. For the purposes of this article, in order to participate in the 31 excelsior jobs program, a business entity operating predominantly in 32 manufacturing must create at least five net new jobs; a business entity 33 operating predominately in agriculture must create at least five net new 34 jobs; a business entity operating predominantly as a financial service 35 data center or financial services customer back office operation must 36 create at least twenty-five net new jobs; a business entity operating 37 predominantly in scientific research and development must create at 38 least five net new jobs; a business entity operating predominantly in 39 software development must create at least five net new jobs; a business 40 entity creating or expanding back office operations must create at least 41 twenty-five net new jobs; [a business entity operating predominately in42music production must create at least five net new jobs;] a business 43 entity operating predominantly as an entertainment company must create 44 or obtain at least one hundred net new jobs; or a business entity oper- 45 ating predominantly as a distribution center in the state must create at 46 least fifty net new jobs, notwithstanding subdivision five of this 47 section; or a business entity operating predominately as a life sciences 48 company must create at least five net new jobs; or a business entity 49 must be a regionally significant project as defined in this article; or 50 5. A not-for-profit business entity, a business entity whose primary 51 function is the provision of services including personal services, busi- 52 ness services, or the provision of utilities, and a business entity 53 engaged predominantly in the retail or entertainment industry, other 54 than a business operating as an entertainment company as defined in this 55 article [and other than a business entity engaged in music production], 56 and a company engaged in the generation or distribution of electricity,S. 2966 8 1 the distribution of natural gas, or the production of steam associated 2 with the generation of electricity are not eligible to receive the tax 3 credit described in this article. 4 § 12. Subdivision 23 of section 352 of the economic development law, 5 as amended by section 1 of part K of chapter 59 of the laws of 2017, is 6 amended to read as follows: 7 23. "Software development" means the creation of coded computer 8 instructions [or production or post-production of video games, as9defined in subdivision one-a of section six hundred eleven of the gener-10al business law, other than those embedded and used exclusively in11advertising, promotional websites or microsites,] and [also] includes 12 new media as defined by the commissioner in regulations. 13 § 13. The economic development law is amended by adding a new section 14 243 to read as follows: 15 § 243. Reports on the music and digital gaming industries in New York. 16 1. The empire state development corporation shall file a report on a 17 biannual basis with the director of the division of the budget and the 18 chairpersons of the assembly ways and means committee and senate finance 19 committee. The report shall be filed no later than thirty days before 20 the mid-point and the end of the state fiscal year. The first report 21 shall cover the calendar half year that begins on January first, two 22 thousand twenty-one. Each report must contain the following information 23 for the covered calendar half year: 24 (a) the total dollar amount of credits allocated pursuant to sections 25 forty-four and forty-five of the tax law during the half year, broken 26 down by month; 27 (b) the number of music and digital gaming projects, which have been 28 allocated tax credits of less than one million dollars per project, and 29 the total dollar amount of credits allocated to those projects distrib- 30 uted by region pursuant to subdivision (b) of sections forty-four and 31 forty-five of the tax law; 32 (c) the number of music and digital gaming projects, which have been 33 allocated tax credits of more than one million dollars, and the total 34 dollar amount of credits allocated to those projects distributed by 35 region pursuant to subdivision (b) of sections forty-four and forty-five 36 of the tax law; 37 (d) a list of each eligible music and digital gaming project, which 38 has been allocated a tax credit enumerated by region pursuant to subdi- 39 vision (b) of sections forty-four and forty-five of the tax law, and for 40 each of those projects, (i) the estimated number of employees associated 41 with the project, (ii) the estimated qualifying costs for the projects, 42 (iii) the estimated total costs of the project, (iv) the credit eligible 43 employee hours for each project, and (v) total wages for such credit 44 eligible employee hours for each project; and 45 (e) (i) the name of each taxpayer allocated a tax credit for each 46 project and the county of residence or incorporation of such taxpayer 47 or, if the taxpayer does not reside or is not incorporated in New York, 48 the state of residence or incorporation; however, if the taxpayer claims 49 a tax credit because the taxpayer is a member of a limited liability 50 company, a partner in a partnership or a shareholder in a subchapter S 51 corporation, the name of each limited liability company, partnership or 52 subchapter S corporation earning any of those tax credits must be 53 included in the report instead of information about the taxpayer claim- 54 ing the tax credit, (ii) the amount of tax credit allocated to each 55 taxpayer; provided however, if the taxpayer claims a tax credit because 56 the taxpayer is a member of a limited liability company, a partner in aS. 2966 9 1 partnership or a shareholder in a subchapter S corporation, the amount 2 of tax credit earned by each entity must be included in the report 3 instead of information about the taxpayer claiming the tax credit, and 4 (iii) information identifying the project associated with each taxpayer 5 for which a tax credit was claimed under section forty-four or forty- 6 five of the tax law. 7 2. The empire state development corporation shall file a report on a 8 triennial basis with the director of the division of the budget and the 9 chairpersons of the assembly ways and means committee and senate finance 10 committee. The first report shall be filed no later than March first, 11 two thousand twenty-three. The report must be prepared by an independent 12 third party auditor and include: (a) information regarding the empire 13 state music production credit and the empire state digital gaming 14 production credit programs including the efficiency of operations, reli- 15 ability of financial reporting, compliance with laws and regulations and 16 distribution of assets and funds; (b) and economic impact study prepared 17 by an independent third party of the program with special emphasis on 18 the regional impact by region and the total dollar amount of credits 19 allocated to those projects distributed by region pursuant to subdivi- 20 sion (b) of sections forty-four and forty-five of the tax law; and (c) 21 any other information or statistical information that the commissioner 22 of economic development deems to be useful in analyzing the effects of 23 the programs. 24 § 14. This act shall take effect immediately and shall apply to taxa- 25 ble years beginning on January 1, 2020 and before January 1, 2025; 26 provided that sections one through eight of this act shall expire and be 27 deemed repealed December 31, 2024.
