State of Illinois
2017 and 2018


Introduced , by Rep. Arthur Turner


New Act
35 ILCS 5/224 new

    Creates the Interactive Digital Media Tax Credit Act. Entitles interactive digital media companies that meet certain requirements to an income tax credit in the amount of 30% of certain expenses incurred by the applicant for an accredited production in a taxable year. Authorizes taxpayers to take the credit beginning in the taxable year in which the company has met the investment requirement. Provides for the transfer of credits. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.

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HB2832LRB100 00367 HLH 10371 b

1    AN ACT concerning revenue.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Interactive 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
9interactive entertainment which is produced for distribution
10in commercial or educational markets, including a computer
11game, video game, simulation or animation, or a production
12intended for Internet or wireless distribution.
13    "Accredited production" means the production of an
14interactive digital media project that has been certified by
15the Department in which the Illinois production spending
16included in the cost of the production exceeds $100,000 per
18    "Accredited production certificate" means a certificate
19issued by the Department certifying that the interactive
20digital media production is an accredited production that meets
21the guidelines of this Act.
22    "Applicant" means a taxpayer that is an interactive digital
23media company that is operating or has operated an accredited



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1production located within the State of Illinois and that (i)
2owns the copyright in the accredited production throughout the
3Illinois production period or (ii) has contracted directly with
4the owner of the copyright in the accredited production or a
5person acting on behalf of the owner to provide services for
6the production if the owner of the copyright is not an eligible
7production corporation.
8    "Credit" means, for an interactive digital media
9accredited production commencing on or after January 1, 2011,
10the amount equal to 30% of the Illinois production spending for
11the taxable year.
12    "Department" means the Department of Commerce and Economic
14    "Director" means the Director of Commerce and Economic
16    "Illinois labor expenditure" means salary or wages paid to
17employees of the applicant for services on the accredited
18production. To qualify as an Illinois labor expenditure, the
19expenditure 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, 2018.
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, 2018.
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
13by the applicant for an accredited production, including,
14without 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 are
23    Illinois residents performing services with respect to the
24    accredited production.
25    "Qualified production facility" means facilities in the
26State in which interactive digital media projects are or are



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1intended to be regularly produced.
2    (b) The Department may adopt rules necessary to implement
3this Act.
4    Section 10. Tax credit awards. Subject to the conditions
5set forth in this Act, an applicant is entitled to a credit
6against the tax imposed under subsections (a) and (b) of
7Section 201 of the Illinois Income Tax Act as approved by the
8Department under Section 25 of this Act.
9    Section 15. Application for certification of accredited
10production. Any applicant proposing an interactive digital
11media production located or planned to be located in Illinois
12may request an accredited production certificate by formal
13application 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
16applicant must file an application, on forms prescribed by the
17Department, providing information necessary to calculate the
18tax credit and any additional information as required by the
20    (b) Upon satisfactory review of the application, the
21Department shall issue a Tax Credit Certificate stating the
22amount of the tax credit to which the applicant is entitled.
23The Tax Credit Certificate shall be effective for expenditures



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1made prior to the date of initial certification and shall be
2valid until the production is completed.
3    Section 25. Amount and duration of the credit. The amount
4of the credit awarded under this Act is based on the amount of
5the Illinois labor expenditure and Illinois production
6spending approved by the Department for the production as set
7forth under Section 5. The credit may be taken beginning with
8the taxable year in which the accredited production company has
9met the investment requirement. For each year in which such
10accredited production company either claims or transfers the
11credit, the accredited production company shall attach a
12schedule to the accredited production company's Illinois
13income tax return.
14    Section 30. Transfer of tax credits.
15    (a) Upon application and granting of an accredited
16production certificate by the Department, an accredited
17production company, or a partner or member that has received a
18distribution under, may elect to transfer, in whole or in part,
19any unused credit amount granted under this Act. An election to
20transfer any unused credit amount must be made no later than 5
21years after the date the credit is awarded, after which period
22the credit expires and may not be used. The Department shall
23notify the Department of Revenue of the election and transfer.
24    (b) An accredited production company that elects to apply a



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1credit amount against taxes remitted is permitted a one-time
2transfer of unused credits to one transferee. An accredited
3production company that elects to apply a credit amount against
4taxes due is permitted a one-time transfer of unused credits to
5no more than 4 transferees, and such transfers must occur in
6the same taxable year.
7    (c) The transferee is subject to the same rights and
8limitations as the accredited production company awarded the
9credit, except that the transferee may not sell or otherwise
10transfer the credit.
11    (d) The Department of Revenue may adopt rules to administer
12this Section.
13    Section 40. The Illinois Income Tax Act is amended by
14adding Section 224 as follows:
15    (35 ILCS 5/224 new)
16    Sec. 224. Interactive Digital Media Tax Credit. For tax
17years beginning on or after January 1, 2018, taxpayers who have
18been awarded a credit under the Interactive Digital Media Tax
19Credit Act are entitled to a credit against the tax imposed
20under subsections (a) and (b) of Section 201 of this Act as
21provided in the Interactive Digital Media Tax Credit Act.
22    The credit may not be carried back. If the amount of the
23credit exceeds the tax liability for the year, the excess may
24be carried forward and applied to the tax liability of the 5



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1taxable years following the excess credit year. The credit
2shall be applied to the earliest year for which there is a tax
3liability. If there are credits from more than one tax year
4that are available to offset a liability, the earlier credit
5shall be applied first. In no event shall a credit under this
6Section reduce the taxpayer's liability to less than zero.
7    This Section is exempt from the provisions of Section 250.
8    Section 99. Effective date. This Act takes effect upon
9becoming law.