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1 | AN ACT concerning revenue. | |||||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois, | |||||||||||||||||||||
3 | represented in the General Assembly: | |||||||||||||||||||||
4 | Section 1. Short title. This Act may be cited as the | |||||||||||||||||||||
5 | Interactive Digital Media Tax Credit Act. | |||||||||||||||||||||
6 | Section 5. Definitions; rules. | |||||||||||||||||||||
7 | (a) As used in this Act: | |||||||||||||||||||||
8 | "Interactive digital media project" means a production of | |||||||||||||||||||||
9 | interactive entertainment which is produced for distribution | |||||||||||||||||||||
10 | in commercial or educational markets, including a computer | |||||||||||||||||||||
11 | game, video game, simulation or animation, or a production | |||||||||||||||||||||
12 | intended for Internet or wireless distribution. | |||||||||||||||||||||
13 | "Accredited production" means the production of an | |||||||||||||||||||||
14 | interactive digital media project that has been certified by | |||||||||||||||||||||
15 | the Department in which the Illinois production spending | |||||||||||||||||||||
16 | included in the cost of the production exceeds $100,000 per | |||||||||||||||||||||
17 | year. | |||||||||||||||||||||
18 | "Accredited production certificate" means a certificate | |||||||||||||||||||||
19 | issued by the Department certifying that the interactive | |||||||||||||||||||||
20 | digital media production is an accredited production that | |||||||||||||||||||||
21 | meets the guidelines of this Act. | |||||||||||||||||||||
22 | "Applicant" means a taxpayer that is an interactive | |||||||||||||||||||||
23 | digital media company that is operating or has operated an |
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1 | accredited production located within the State of Illinois and | ||||||
2 | that (i) owns the copyright in the accredited production | ||||||
3 | throughout the Illinois production period or (ii) has | ||||||
4 | contracted directly with the owner of the copyright in the | ||||||
5 | accredited production or a person acting on behalf of the | ||||||
6 | owner to provide services for the production if the owner of | ||||||
7 | the copyright is not an eligible production corporation. | ||||||
8 | "Credit" means, for an interactive digital media | ||||||
9 | accredited production commencing on or after January 1, 2025, | ||||||
10 | the amount equal to 30% of the Illinois production spending | ||||||
11 | for the taxable year. | ||||||
12 | "Department" means the Department of Commerce and Economic | ||||||
13 | Opportunity. | ||||||
14 | "Director" means the Director of Commerce and Economic | ||||||
15 | Opportunity. | ||||||
16 | "Illinois labor expenditure" means salary or wages paid to | ||||||
17 | employees of the applicant for services on the accredited | ||||||
18 | production. To qualify as an Illinois labor expenditure, the | ||||||
19 | expenditure must be all of the following: | ||||||
20 | (1) Reasonable in the circumstances. | ||||||
21 | (2) Included in the federal income tax basis of the | ||||||
22 | property. | ||||||
23 | (3) Incurred by the applicant for services on or after | ||||||
24 | January 1, 2023. | ||||||
25 | (4) Incurred for the production stages of the | ||||||
26 | accredited production. |
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1 | (5) Limited to the first $100,000 of wages paid or | ||||||
2 | incurred to each employee of a production commencing on or | ||||||
3 | after January 1, 2025. | ||||||
4 | (6) Directly attributable to the accredited | ||||||
5 | production. | ||||||
6 | (7) Paid in the tax year for which the applicant is | ||||||
7 | claiming the credit or no later than 60 days after the end | ||||||
8 | of the tax year. | ||||||
9 | (8) Paid to persons resident in Illinois at the time | ||||||
10 | the payments were made. | ||||||
11 | (9) Paid for services rendered in Illinois. | ||||||
12 | "Illinois production spending" means the expenses incurred | ||||||
13 | by the applicant for an accredited production, including, | ||||||
14 | without limitation, all of the following: | ||||||
15 | (1) expenses to purchase, from vendors within | ||||||
16 | Illinois, tangible personal property that is used in the | ||||||
17 | accredited production; | ||||||
18 | (2) expenses to acquire services, from vendors in | ||||||
19 | Illinois, for an accredited production, editing, or | ||||||
20 | processing; and | ||||||
21 | (3) the compensation, not to exceed $100,000 for any | ||||||
22 | one employee, for contractual or salaried employees who | ||||||
23 | are Illinois residents performing services with respect to | ||||||
24 | the accredited production. | ||||||
25 | "Qualified production facility" means facilities in the | ||||||
26 | State in which interactive digital media projects are or are |
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1 | intended to be regularly produced. | ||||||
2 | (b) The Department may adopt rules necessary to implement | ||||||
3 | this Act. | ||||||
4 | Section 10. Tax credit awards. Subject to the conditions | ||||||
5 | set forth in this Act, an applicant is entitled to a credit | ||||||
6 | against the tax imposed under subsections (a) and (b) of | ||||||
7 | Section 201 of the Illinois Income Tax Act as approved by the | ||||||
8 | Department under Section 25 of this Act. | ||||||
9 | Section 15. Application for certification of accredited | ||||||
10 | production. Any applicant proposing an interactive digital | ||||||
11 | media production located or planned to be located in Illinois | ||||||
12 | may request an accredited production certificate by formal | ||||||
13 | application to the Department. | ||||||
14 | Section 20. Issuance of Tax Credit Certificate. | ||||||
15 | (a) In order to qualify for a tax credit under this Act, an | ||||||
16 | applicant must file an application, on forms prescribed by the | ||||||
17 | Department, providing information necessary to calculate the | ||||||
18 | tax credit and any additional information as required by the | ||||||
19 | Department. | ||||||
20 | (b) Upon satisfactory review of the application, the | ||||||
21 | Department shall issue a Tax Credit Certificate stating the | ||||||
22 | amount of the tax credit to which the applicant is entitled. | ||||||
23 | The Tax Credit Certificate shall be effective for expenditures |
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1 | made prior to the date of initial certification and shall be | ||||||
2 | valid until the production is completed. | ||||||
3 | Section 25. Amount and duration of the credit. The amount | ||||||
4 | of the credit awarded under this Act is based on the amount of | ||||||
5 | the Illinois labor expenditure and Illinois production | ||||||
6 | spending approved by the Department for the production as set | ||||||
7 | forth under Section 5. The credit may be taken beginning with | ||||||
8 | the taxable year in which the accredited production company | ||||||
9 | has met the investment requirement. For each year in which | ||||||
10 | such accredited production company either claims or transfers | ||||||
11 | the credit, the accredited production company shall attach a | ||||||
12 | schedule to the accredited production company's Illinois | ||||||
13 | income tax return. | ||||||
14 | Section 30. Transfer of tax credits. | ||||||
15 | (a) Upon application and granting of an accredited | ||||||
16 | production certificate by the Department, an accredited | ||||||
17 | production company, or a partner or member that has received a | ||||||
18 | distribution under, may elect to transfer, in whole or in | ||||||
19 | part, any unused credit amount granted under this Act. An | ||||||
20 | election to transfer any unused credit amount must be made no | ||||||
21 | later than 5 years after the date the credit is awarded, after | ||||||
22 | which period the credit expires and may not be used. The | ||||||
23 | Department shall notify the Department of Revenue of the | ||||||
24 | election and transfer. |
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1 | (b) An accredited production company that elects to apply | ||||||
2 | a credit amount against taxes remitted is permitted a one-time | ||||||
3 | transfer of unused credits to one transferee. An accredited | ||||||
4 | production company that elects to apply a credit amount | ||||||
5 | against taxes due is permitted a one-time transfer of unused | ||||||
6 | credits to no more than 4 transferees, and such transfers must | ||||||
7 | occur in the same taxable year. | ||||||
8 | (c) The transferee is subject to the same rights and | ||||||
9 | limitations as the accredited production company awarded the | ||||||
10 | credit, except that the transferee may not sell or otherwise | ||||||
11 | transfer the credit. | ||||||
12 | (d) The Department of Revenue may adopt rules to | ||||||
13 | administer this Section. | ||||||
14 | Section 40. The Illinois Income Tax Act is amended by | ||||||
15 | adding Section 241 as follows: | ||||||
16 | (35 ILCS 5/241 new) | ||||||
17 | Sec. 241. Interactive Digital Media Tax Credit. For tax | ||||||
18 | years beginning on or after January 1, 2025, taxpayers who | ||||||
19 | have been awarded a credit under the Interactive Digital Media | ||||||
20 | Tax Credit Act are entitled to a credit against the tax imposed | ||||||
21 | under subsections (a) and (b) of Section 201 of this Act as | ||||||
22 | provided in the Interactive Digital Media Tax Credit Act. | ||||||
23 | The credit may not be carried back. If the amount of the | ||||||
24 | credit exceeds the tax liability for the year, the excess may |
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1 | be carried forward and applied to the tax liability of the 5 | ||||||
2 | taxable years following the excess credit year. The credit | ||||||
3 | shall be applied to the earliest year for which there is a tax | ||||||
4 | liability. If there are credits from more than one tax year | ||||||
5 | that are available to offset a liability, the earlier credit | ||||||
6 | shall be applied first. In no event shall a credit under this | ||||||
7 | Section reduce the taxpayer's liability to less than zero. | ||||||
8 | This Section is exempt from the provisions of Section 250. | ||||||
9 | Section 99. Effective date. This Act takes effect upon | ||||||
10 | becoming law. |