093_SB0785enr SB785 Enrolled LRB093 02893 SJM 02909 b 1 AN ACT in relation to taxation. 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 Film 5 Production Services Tax Credit Act. 6 Section 5. Purpose. The General Assembly finds that the 7 Illinois economy is highly vulnerable to other states and 8 nations that have major financial incentive programs targeted 9 to the motion picture industry. Because of the incentive 10 programs of these competitor locations, Illinois must move 11 aggressively with new business development investment tools 12 so that Illinois is more competitive in site location 13 decision-making for film productions. In an increasingly 14 global economy, Illinois' long-term development will benefit 15 from rational, strategic use of State resources in support of 16 film production development and growth. It is the purpose of 17 this Act to preserve and expand the existing human 18 infrastructure for the motion picture industry in Illinois. 19 It shall be the policy of this State to promote and encourage 20 the training and hiring of Illinois residents who represent 21 the diversity of the Illinois population through the creation 22 and implementation of training, education, and recruitment 23 programs organized in cooperation with Illinois colleges and 24 universities, labor organizations, and the motion picture 25 industry. 26 Section 10. Definitions. As used in this Act: 27 "Accredited production" means a film, video, or 28 television production that has been certified by the 29 Department in which the aggregate Illinois labor expenditures 30 included in the cost of the production, in the period that SB785 Enrolled -2- LRB093 02893 SJM 02909 b 1 ends 12 months after the time principal filming or taping of 2 the production began, exceed $100,000 for productions of 30 3 minutes or longer, or $50,000 for productions of less than 30 4 minutes; but does not include a production that: 5 (1) is news, current events, or public programming, 6 or a program that includes weather or market reports; 7 (2) is a talk show; 8 (3) is a production in respect of a game, 9 questionnaire, or contest; 10 (4) is a sports event or activity; 11 (5) is a gala presentation or awards show; 12 (6) is a finished production that solicits funds; 13 (7) is a production produced by a film production 14 company if records, as required by 18 U.S.C. 2257, are to 15 be maintained by that film production company with 16 respect to any performer portrayed in that single media 17 or multimedia program; or 18 (8) is a production produced primarily for 19 industrial, corporate, or institutional purposes. 20 "Accredited production certificate" means a certificate 21 issued by the Department certifying that the production is an 22 accredited production that meets the guidelines of this Act. 23 "Applicant" means a taxpayer that is a film production 24 company that is operating or has operated an accredited 25 production located within the State of Illinois and that (i) 26 owns the copyright in the accredited production throughout 27 the Illinois production period or (ii) has contracted 28 directly with the owner of the copyright in the accredited 29 production or a person acting on behalf of the owner to 30 provide services for the production, where the owner of the 31 copyright is not an eligible production corporation. 32 "Credit" means the amount equal to 25% of the Illinois 33 labor expenditure approved by the Department. The applicant 34 is deemed to have paid, on its balance due day for the year, SB785 Enrolled -3- LRB093 02893 SJM 02909 b 1 an amount equal to 25% of its qualified Illinois labor 2 expenditure for the tax year. 3 "Department" means the Department of Commerce and 4 Community Affairs. 5 "Director" means the Director of Commerce and Community 6 Affairs. 7 "Illinois labor expenditure" means salary or wages paid 8 to employees of the applicant for services on the accredited 9 production; 10 To qualify as an Illinois labor expenditure, the 11 expenditure must be: 12 (1) Reasonable in the circumstances. 13 (2) Included in the federal income tax basis of the 14 property. 15 (3) Incurred by the applicant for services on or 16 after January 1, 2004. 17 (4) Incurred for the production stages of the 18 accredited production, from the final script stage to the 19 end of the post-production stage. 20 (5) Limited to the first $25,000 of wages paid or 21 incurred to each employee of the production. 22 (6) Exclusive of the salary or wages paid to or 23 incurred for the 2 highest paid employees of the 24 production. 25 (7) Directly attributable to the accredited 26 production. 27 (8) Paid in the tax year for which the applicant is 28 claiming the credit or no later than 60 days after the 29 end of the tax year. 30 (9) Paid to persons resident in Illinois at the 31 time the payments were made. 32 (10) Paid for services rendered in Illinois. 33 Section 15. Powers of the Department. The Department, in SB785 Enrolled -4- LRB093 02893 SJM 02909 b 1 addition to those powers granted under the Civil 2 Administrative Code of Illinois, is granted and has all the 3 powers necessary or convenient to carry out and effectuate 4 the purposes and provisions of this Act, including, but not 5 limited to, power and authority to: 6 (a) Adopt rules deemed necessary and appropriate for the 7 administration of the tax credit program; establish forms for 8 applications, notifications, contracts, or any other 9 agreements; and accept applications at any time during the 10 year. 11 (b) Assist applicants pursuant to the provisions of this 12 Act to promote, foster, and support film production and its 13 related job creation or retention within the State. 14 (c) Gather information and conduct inquiries, in the 15 manner and by the methods as it deems desirable, including, 16 without limitation, gathering information with respect to 17 applicants for the purpose of making any designations or 18 certifications necessary or desirable or to gather 19 information to assist the Department with any recommendation 20 or guidance in the furtherance of the purposes of this Act, 21 including, but not limited to, information as to whether the 22 applicant participated in training, education, and 23 recruitment programs that are organized in cooperation with 24 Illinois colleges and universities, labor organizations, and 25 the motion picture industry, and are designed to promote and 26 encourage the training and hiring of Illinois residents who 27 represent the diversity of the Illinois population. 28 (d) Provide for sufficient personnel to permit 29 administration, staffing, operation, and related support 30 required to adequately discharge its duties and 31 responsibilities described in this Act from funds as may be 32 appropriated by the General Assembly for the administration 33 of this Act. 34 (e) Require applicants, upon written request, to issue SB785 Enrolled -5- LRB093 02893 SJM 02909 b 1 any necessary authorization to the appropriate federal, 2 state, or local authority for the release of information 3 concerning a project being considered under the provisions of 4 this Act, with the information requested to include, but not 5 be limited to, financial reports, returns, or records 6 relating to the applicant or the accredited production. 7 (f) Require that an applicant must at all times keep 8 proper books of record and account in accordance with 9 generally accepted accounting principles consistently 10 applied, with the books, records, or papers related to the 11 accredited production in the custody or control of the 12 taxpayer open for reasonable Department inspection and 13 audits, and including, without limitation, the making of 14 copies of the books, records, or papers, and the inspection 15 or appraisal of any of the assets of the applicant or the 16 accredited production. 17 (g) Take whatever actions are necessary or appropriate 18 to protect the State's interest in the event of bankruptcy, 19 default, foreclosure, or noncompliance with the terms and 20 conditions of financial assistance or participation required 21 under this Act, including the power to sell, dispose, lease, 22 or rent, upon terms and conditions determined by the Director 23 to be appropriate, real or personal property that the 24 Department may receive as a result of these actions. 25 Section 20. Tax credit awards. Subject to the conditions 26 set forth in this Act, an applicant is entitled to a credit 27 of 25% of the Illinois labor expenditure approved by the 28 Department under Section 40 of this Act. 29 Section 25. Application for certification of accredited 30 production. Any applicant proposing a film or television 31 production located or planned to be located in Illinois may 32 request an accredited production certificate by formal SB785 Enrolled -6- LRB093 02893 SJM 02909 b 1 application to the Department. 2 Section 30. Review of application for accredited 3 production certificate. 4 (a) In determining whether to issue an accredited 5 production certificate, the Department must determine that a 6 preponderance of the following conditions exist: 7 (1) The applicant's production intends to make the 8 expenditure in the State required for certification. 9 (2) The applicant's production is economically 10 sound and will benefit the people of the State of 11 Illinois by increasing opportunities for employment and 12 strengthen the economy of Illinois. 13 (3) The applicant's production application includes 14 a provision setting forth the percentage of minority 15 workers that the production company plans to employ, 16 subject to any applicable collective bargaining 17 agreements with a labor organization to which the 18 applicant is a signatory, to perform work on the 19 production. This provision should stress the importance 20 of hiring the percentage of minorities that is set out in 21 the application. 22 (4) The applicant's production application indicates 23 whether the applicant intends to participate in training, 24 education, and recruitment programs that are organized in 25 cooperation with Illinois colleges and universities, 26 labor organizations, and the motion picture industry and 27 are designed to promote and encourage the training and 28 hiring of Illinois residents who represent the diversity 29 of the Illinois population. 30 (5) That, if not for the credit, the applicant's 31 production would not occur in Illinois, which may be 32 demonstrated by any means including, but not limited to, 33 evidence that the applicant has multi-state or SB785 Enrolled -7- LRB093 02893 SJM 02909 b 1 international location options and could reasonably and 2 efficiently locate outside of the State, or demonstration 3 that at least one other state or nation is being 4 considered for the production, or evidence that the 5 receipt of the credit is a major factor in the 6 applicant's decision and that without the credit the 7 applicant likely would not create or retain jobs in 8 Illinois, or demonstration that receiving the credit is 9 essential to the applicant's decision to create or retain 10 new jobs in the State. 11 (6) Awarding the credit will result in an overall 12 positive impact to the State, as determined by the 13 Department using the best available data. 14 (b) If any of the provisions in this Section conflict 15 with any existing collective bargaining agreements, the terms 16 and conditions of those collective bargaining agreements 17 shall control. 18 Section 35. Issuance of Tax Credit Certificate. 19 (a) In order to qualify for a tax credit under this Act, 20 an applicant must file an application, on forms prescribed by 21 the Department, providing information necessary to calculate 22 the tax credit, and any additional information as required by 23 the Department. 24 (b) Upon satisfactory review of the application, the 25 Department shall issue a Tax Credit Certificate stating the 26 amount of the tax credit to which the applicant is entitled. 27 Section 40. Amount and duration of the credit. The amount 28 of the credit awarded under this Act is based on the amount 29 of the Illinois labor expenditure approved by the Department 30 for the production. The duration of the credit may not exceed 31 one taxable year. SB785 Enrolled -8- LRB093 02893 SJM 02909 b 1 Section 45. Evaluation of tax credit program. The 2 Department shall evaluate the tax credit program. The 3 evaluation must include an assessment of the effectiveness of 4 the program in creating and retaining new jobs in Illinois 5 and of the revenue impact of the program, and may include a 6 review of the practices and experiences of other states or 7 nations with similar programs. Upon completion of this 8 evaluation, the Department shall determine the overall 9 success of the program, and may make a recommendation to 10 extend, modify, or not extend the program based on this 11 evaluation. 12 Section 50. Program terms and conditions. Any documentary 13 materials or data made available or received by any agent or 14 employee of the Department are confidential and are not 15 public records to the extent that the materials or data 16 consist of commercial or financial information regarding the 17 operation of the production of the applicant for or recipient 18 of any tax credit under this Act. 19 Section 90. Repeal. This Act is repealed 1 year after its 20 effective date. 21 Section 905. The Illinois Income Tax Act is amended by 22 adding Section 213 as follows: 23 (35 ILCS 5/213 new) 24 Sec. 213. Film production services credit. For tax years 25 beginning on or after January 1, 2004, a taxpayer who has 26 been awarded a tax credit under the Film Production Services 27 Tax Credit Act is entitled to a credit against the taxes 28 imposed under subsections (a) and (b) of Section 201 of this 29 Act in an amount determined by the Department of Commerce and 30 Community Affairs under the Film Production Services Tax SB785 Enrolled -9- LRB093 02893 SJM 02909 b 1 Credit Act. If the taxpayer is a partnership or Subchapter S 2 corporation, the credit is allowed to the partners or 3 shareholders in accordance with the determination of income 4 and distributive share of income under Sections 702 and 704 5 and Subchapter S of the Internal Revenue Code. The 6 Department, in cooperation with the Department of Commerce 7 and Community Affairs, must prescribe rules to enforce and 8 administer the provisions of this Section. This Section is 9 exempt from the provisions of Section 250 of this Act. 10 The credit may not be carried forward or back. In no 11 event shall a credit under this Section reduce the taxpayer's 12 liability to less than zero. 13 Section 999. Effective date. This Act takes effect on 14 January 1, 2004.