103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2098

 

Introduced 2/9/2023, by Sen. Javier L. Cervantes

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 16/10

    Amends the Film Production Services Tax Credit Act of 2008. Provides that "accredited production" also includes productions in which only post production activities occur in Illinois. Provides that an accredited animated production also includes a production using visual effects (VFX), augmented reality (AR), mixed reality (MR), or virtual reality (VR). Provides for a credit in an amount equal to 10% of the Illinois production spending incurred for the purpose of building a soundstage or digital wall. Effective immediately.


LRB103 29088 HLH 55474 b

 

 

A BILL FOR

 

SB2098LRB103 29088 HLH 55474 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 5. The Film Production Services Tax Credit Act of
52008 is amended by changing Section 10 as follows:
 
6    (35 ILCS 16/10)
7    Sec. 10. Definitions. As used in this Act:
8    "Accredited production" means: (i) for productions
9commencing before May 1, 2006, a film, video, or television
10production that has been certified by the Department in which
11the aggregate Illinois labor expenditures included in the cost
12of the production, in the period that ends 12 months after the
13time principal filming or taping of the production began,
14exceed $100,000 for productions of 30 minutes or longer, or
15$50,000 for productions of less than 30 minutes; and (ii) for
16productions commencing on or after May 1, 2006, a film, video,
17or television production that has been certified by the
18Department in which the Illinois production spending included
19in the cost of production in the period that ends 12 months
20after the time principal filming or taping of the production
21began exceeds $100,000 for productions of 30 minutes or longer
22or exceeds $50,000 for productions of less than 30 minutes.
23For productions commencing on or after May 1, 2006 and before

 

 

SB2098- 2 -LRB103 29088 HLH 55474 b

1July 1, 2023, Illinois production spending includes only
2spending for the period that ends 12 months after the time
3principal filming or taping of the production began. On and
4after July 1, 2023, "accredited production" also includes
5productions in which only post production activities occur in
6Illinois. "Accredited production" does not include a
7production that:
8        (1) is news, current events, or public programming, or
9    a program that includes weather or market reports;
10        (2) is a talk show;
11        (3) is a production in respect of a game,
12    questionnaire, or contest;
13        (4) is a sports event or activity;
14        (5) is a gala presentation or awards show;
15        (6) is a finished production that solicits funds;
16        (7) is a production produced by a film production
17    company if records, as required by 18 U.S.C. 2257, are to
18    be maintained by that film production company with respect
19    to any performer portrayed in that single media or
20    multimedia program; or
21        (8) is a production produced primarily for industrial,
22    corporate, or institutional purposes.
23    "Accredited animated production" means an accredited
24production in which movement and characters' performances are
25created using a frame-by-frame technique, visual effects
26(VFX), augmented reality (AR), mixed reality (MR), or virtual

 

 

SB2098- 3 -LRB103 29088 HLH 55474 b

1reality (VR) and a significant number of major characters are
2animated. Motion capture by itself is not an animation
3technique.
4    "Accredited production certificate" means a certificate
5issued by the Department certifying that the production is an
6accredited production that meets the guidelines of this Act.
7    "Applicant" means a taxpayer that is a film production
8company that is operating or has operated an accredited
9production located within the State of Illinois and that (i)
10owns the copyright in the accredited production throughout the
11Illinois production period or (ii) has contracted directly
12with the owner of the copyright in the accredited production
13or a person acting on behalf of the owner to provide services
14for the production, where the owner of the copyright is not an
15eligible production corporation.
16    "Credit" means:
17        (1) for an accredited production approved by the
18    Department on or before January 1, 2005 and commencing
19    before May 1, 2006, the amount equal to 25% of the Illinois
20    labor expenditure approved by the Department. The
21    applicant is deemed to have paid, on its balance due day
22    for the year, an amount equal to 25% of its qualified
23    Illinois labor expenditure for the tax year. For Illinois
24    labor expenditures generated by the employment of
25    residents of geographic areas of high poverty or high
26    unemployment, as determined by the Department, in an

 

 

SB2098- 4 -LRB103 29088 HLH 55474 b

1    accredited production commencing before May 1, 2006 and
2    approved by the Department after January 1, 2005, the
3    applicant shall receive an enhanced credit of 10% in
4    addition to the 25% credit; and
5        (2) for an accredited production commencing on or
6    after May 1, 2006, the amount equal to:
7            (i) 20% of the Illinois production spending for
8        the taxable year; plus
9            (ii) 15% of the Illinois labor expenditures
10        generated by the employment of residents of geographic
11        areas of high poverty or high unemployment, as
12        determined by the Department; and
13        (3) for an accredited production commencing on or
14    after January 1, 2009, the amount equal to:
15            (i) 30% of the Illinois production spending for
16        the taxable year; plus
17            (ii) 15% of the Illinois labor expenditures
18        generated by the employment of residents of geographic
19        areas of high poverty or high unemployment, as
20        determined by the Department; and .
21        (4) for an accredited production commencing on or
22    after July 1, 2023, the amount calculated under paragraph
23    (3), plus 10% of the Illinois production spending incurred
24    for the purpose of building a soundstage or digital wall.
25    "Department" means the Department of Commerce and Economic
26Opportunity.

 

 

SB2098- 5 -LRB103 29088 HLH 55474 b

1    "Director" means the Director of Commerce and Economic
2Opportunity.
3    "Illinois labor expenditure" means salary or wages paid to
4employees of the applicant for services on the accredited
5production.
6    To qualify as an Illinois labor expenditure, the
7expenditure must be:
8        (1) Reasonable in the circumstances.
9        (2) Included in the federal income tax basis of the
10    property.
11        (3) Incurred by the applicant for services on or after
12    January 1, 2004.
13        (4) Incurred for the production stages of the
14    accredited production, from the final script stage to the
15    end of the post-production stage.
16        (5) Limited to the first $25,000 of wages paid or
17    incurred to each employee of a production commencing
18    before May 1, 2006 and the first $100,000 of wages paid or
19    incurred to each employee of a production commencing on or
20    after May 1, 2006 and prior to July 1, 2022. For
21    productions commencing on or after July 1, 2022, limited
22    to the first $500,000 of wages paid or incurred to each
23    nonresident or resident employee of a production company
24    or loan out company that provides in-State services to a
25    production, whether those wages are paid or incurred by
26    the production company, loan out company, or both, subject

 

 

SB2098- 6 -LRB103 29088 HLH 55474 b

1    to withholding payments provided for in Article 7 of the
2    Illinois Income Tax Act. For purposes of calculating
3    Illinois labor expenditures for a television series, the
4    nonresident wage limitations provided under this
5    subparagraph are applied to the entire season.
6        (6) For a production commencing before May 1, 2006,
7    exclusive of the salary or wages paid to or incurred for
8    the 2 highest paid employees of the production.
9        (7) Directly attributable to the accredited
10    production.
11        (8) (Blank).
12        (9) Prior to July 1, 2022, paid to persons resident in
13    Illinois at the time the payments were made. For a
14    production commencing on or after July 1, 2022, paid to
15    persons resident in Illinois and nonresidents at the time
16    the payments were made. For purposes of this subparagraph,
17    only wages paid to nonresidents working in the following
18    positions shall be considered Illinois labor expenditures:
19    Writer, Director, Director of Photography, Production
20    Designer, Costume Designer, Production Accountant, VFX
21    Supervisor, Editor, Composer, and Actor, subject to the
22    limitations set forth under this subparagraph. For an
23    accredited Illinois production spending of $25,000,000 or
24    less, no more than 2 nonresident actors' wages shall
25    qualify as an Illinois labor expenditure. For an
26    accredited production with Illinois production spending of

 

 

SB2098- 7 -LRB103 29088 HLH 55474 b

1    more than $25,000,000, no more than 4 nonresident actor's
2    wages shall qualify as Illinois labor expenditures.
3        (10) Paid for services rendered in Illinois.
4    "Illinois production spending" means the expenses incurred
5by the applicant for an accredited production, including,
6without limitation, all of the following:
7        (1) expenses to purchase, from vendors within
8    Illinois, tangible personal property that is used in the
9    accredited production;
10        (2) expenses to acquire services, from vendors in
11    Illinois, for film production, editing, or processing; and
12        (3) for a production commencing before July 1, 2022,
13    the compensation, not to exceed $100,000 for any one
14    employee, for contractual or salaried employees who are
15    Illinois residents performing services with respect to the
16    accredited production. For a production commencing on or
17    after July 1, 2022, the compensation, not to exceed
18    $500,000 for any one employee, for contractual or salaried
19    employees who are Illinois residents or nonresident
20    employees, subject to the limitations set forth under
21    Section 10 of this Act.
22    "Loan out company" means a personal service corporation or
23other entity that is under contract with the taxpayer to
24provide specified individual personnel, such as artists, crew,
25actors, producers, or directors for the performance of
26services used directly in a production. "Loan out company"

 

 

SB2098- 8 -LRB103 29088 HLH 55474 b

1does not include entities contracted with by the taxpayer to
2provide goods or ancillary contractor services such as
3catering, construction, trailers, equipment, or
4transportation.
5    "Qualified production facility" means stage facilities in
6the State in which television shows and films are or are
7intended to be regularly produced and that contain at least
8one sound stage of at least 15,000 square feet.
9    Rulemaking authority to implement Public Act 95-1006, if
10any, is conditioned on the rules being adopted in accordance
11with all provisions of the Illinois Administrative Procedure
12Act and all rules and procedures of the Joint Committee on
13Administrative Rules; any purported rule not so adopted, for
14whatever reason, is unauthorized.
15(Source: P.A. 102-558, eff. 8-20-21; 102-700, eff. 4-19-22.)
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.