Full Text of SB0707 99th General Assembly
SB0707sam001 99TH GENERAL ASSEMBLY | Sen. Dan Kotowski Filed: 3/16/2015
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| 1 | | AMENDMENT TO SENATE BILL 707
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 707 by replacing | 3 | | everything after the enacting clause with the following:
| 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 | | "Base Illinois production spending" is the average amount | 9 | | of expenses incurred by the applicant for all productions in | 10 | | calendar years 2012, 2013, and 2014, including, without | 11 | | limitation, all of the following: | 12 | | (1) expenses to purchase, from vendors within | 13 | | Illinois, tangible personal property that is used in the | 14 | | accredited production; | 15 | | (2) expenses to acquire services from vendors in | 16 | | Illinois for an accredited production, including services |
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| 1 | | for editing and processing; and | 2 | | (3) compensation paid to vendors for contractual or | 3 | | salaried employees of the vendor who are Illinois residents | 4 | | and who perform services with respect to the accredited | 5 | | production, not to exceed $100,000 for any one employee. | 6 | | "Base number of employees" is the average of all full-time | 7 | | employees who were employed by an applicant in calendar years | 8 | | 2012, 2013, and 2014. | 9 | | "Interactive digital media project" means: (1) a | 10 | | production of interactive entertainment which is produced for | 11 | | distribution in commercial or educational markets, including | 12 | | computer games, video games, and simulation or animation; or | 13 | | (2) a production intended for Internet or wireless | 14 | | distribution. | 15 | | "Accredited production" means the production of an | 16 | | interactive digital media project that has been certified by | 17 | | the Department in which the Illinois production spending | 18 | | included in the cost of the production exceeds $100,000 per | 19 | | year. | 20 | | "Accredited production certificate" means a certificate | 21 | | issued by the Department certifying that the interactive | 22 | | digital media production is an accredited production that meets | 23 | | the guidelines of this Act. | 24 | | "Applicant" means a taxpayer that is an interactive digital | 25 | | media company that is operating or has operated an accredited | 26 | | production located within the State of Illinois and that (i) |
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| 1 | | owns the copyright in the accredited production throughout the | 2 | | Illinois production period or (ii) has contracted directly with | 3 | | the owner of the copyright in the accredited production or a | 4 | | person acting on behalf of the owner to provide services for | 5 | | the production if the owner of the copyright is not an eligible | 6 | | production corporation. | 7 | | "Credit" means, for an interactive digital media | 8 | | accredited production commencing on or after January 1, 2014: | 9 | | (1) an amount equal to 30% of the (i) Illinois | 10 | | production spending and (ii) Illinois labor expenditure | 11 | | for the taxable year; and | 12 | | (2) an additional amount equal to 5% of the Illinois | 13 | | production spending if the accredited production company | 14 | | is located in a geographic area of high poverty or high | 15 | | unemployment, as determined by the Department. | 16 | | "Department" means the Department of Commerce and Economic | 17 | | Opportunity. | 18 | | "Director" means the Director of Commerce and Economic | 19 | | Opportunity. | 20 | | "Illinois labor expenditure" means salary or wages paid to | 21 | | employees of the applicant for services on the accredited | 22 | | production. To qualify as an Illinois labor expenditure, the | 23 | | expenditure must be all of the following: | 24 | | (1) reasonable in the circumstances; | 25 | | (2) included in the applicant's federal income tax | 26 | | basis; |
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| 1 | | (3) incurred by the applicant for services performed on | 2 | | or after January 1, 2016; | 3 | | (4) incurred during the production stages of the | 4 | | accredited production; | 5 | | (5) limited to the first $100,000 of wages paid to or | 6 | | incurred with respect to each new employee of a production | 7 | | commencing on or after January 1, 2016; | 8 | | (6) directly attributable to the accredited | 9 | | production; | 10 | | (7) paid in the tax year for which the applicant is | 11 | | claiming the credit or no later than 60 days after the end | 12 | | of the tax year; | 13 | | (8) paid to persons residing in Illinois at the time | 14 | | the payments were made; and | 15 | | (9) paid for services rendered in Illinois. | 16 | | "Illinois production spending" means the expenses incurred | 17 | | by the applicant for an accredited production above the base | 18 | | Illinois production spending, including, without limitation, | 19 | | all of the following: | 20 | | (1) expenses to purchase, from vendors located in | 21 | | Illinois, tangible personal property that is used in the | 22 | | accredited production; | 23 | | (2) expenses to acquire services from vendors located | 24 | | in Illinois for an accredited production, including | 25 | | services related to editing or processing; and | 26 | | (3) the compensation paid by a vendor, not to exceed |
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| 1 | | $100,000 for any one employee, for contractual or salaried | 2 | | employees of the vendor who are Illinois residents | 3 | | performing services with respect to the accredited | 4 | | production. | 5 | | "New employee" means a full-time employee who (i) is first | 6 | | employed by an applicant on or after January 1, 2016 and (ii) | 7 | | is in excess of, or in addition to, the applicant's base number | 8 | | of employees. The term "new employee" does not include: | 9 | | (1) an employee of the eligible employer who performs a | 10 | | job that (i) existed for at least 6 months before the | 11 | | employee was hired and (ii) was previously performed by | 12 | | another employee; and | 13 | | (2) an employee of the eligible employer who was | 14 | | previously employed in Illinois by a related member of the | 15 | | eligible employer and whose employment was shifted to the | 16 | | eligible employer after the eligible employer entered into | 17 | | the agreement; or | 18 | | (3) a child, grandchild, parent, or spouse, other than | 19 | | a spouse who is legally separated from the individual, of | 20 | | any individual who has a direct or indirect ownership | 21 | | interest of at least 5% in the profits, capital, or value | 22 | | of the eligible employer. | 23 | | "Qualified production facility" means a facility in the | 24 | | State in which interactive digital media projects are or are | 25 | | intended to be regularly produced. | 26 | | (b) The Department may adopt rules necessary to implement |
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| 1 | | this Act. | 2 | | Section 10. Tax credit awards. Subject to the conditions | 3 | | set forth in this Act, an applicant is entitled to a credit | 4 | | against the tax imposed under subsections (a) and (b) of | 5 | | Section 201 of the Illinois Income Tax Act as approved by the | 6 | | Department under Section 25 of this Act. | 7 | | Section 15. Application for certification of accredited | 8 | | production. Any applicant proposing an interactive digital | 9 | | media production located or planned to be located in Illinois | 10 | | may request an accredited production certificate by formal | 11 | | application to the Department. | 12 | | Section 20. Issuance of tax credit certificate. | 13 | | (a) In order to qualify for a tax credit under this Act, an | 14 | | applicant must file an application, on forms prescribed by the | 15 | | Department, providing information necessary to calculate the | 16 | | tax credit and any additional information as required by the | 17 | | Department. | 18 | | (b) Upon satisfactory review of the application, the | 19 | | Department shall issue a tax credit certificate stating the | 20 | | amount of the tax credit to which the applicant is entitled. | 21 | | The tax credit certificate shall be effective for expenditures | 22 | | made prior to the date of initial certification and shall be | 23 | | valid until the production is completed. |
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| 1 | | Section 25. Amount and duration of the credit. The amount | 2 | | of the credit awarded under this Act is based on the amount of | 3 | | the Illinois labor expenditure and Illinois production | 4 | | spending approved by the Department for the production as set | 5 | | forth under Section 5. The credit may be taken beginning with | 6 | | the taxable year in which the accredited production company has | 7 | | met the investment requirement. For each year in which such | 8 | | accredited production company either claims or transfers the | 9 | | credit, the accredited production company shall attach a | 10 | | schedule to the accredited production company's Illinois | 11 | | income tax return. | 12 | | Section 30. Transfer of tax credits. | 13 | | (a) Upon application and granting of an accredited | 14 | | production certificate by the Department, an accredited | 15 | | production company, or a partner or member that has received a | 16 | | distribution under that certificate, may elect to transfer, in | 17 | | whole or in part, any unused credit amount granted under this | 18 | | Act. An election to transfer any unused credit amount must be | 19 | | made no later than 5 years after the date the credit is | 20 | | awarded, after which period the credit expires and may not be | 21 | | used. The Department shall notify the Department of Revenue of | 22 | | the election and transfer. | 23 | | (b) An accredited production company that elects to apply a | 24 | | credit amount against taxes remitted is permitted a one-time |
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| 1 | | transfer of unused credits to one transferee. An accredited | 2 | | production company that elects to apply a credit amount against | 3 | | taxes due is permitted a one-time transfer of unused credits to | 4 | | no more than 4 transferees, and such transfers must occur in | 5 | | the same taxable year. | 6 | | (c) The transferee is subject to the same rights and | 7 | | limitations as the accredited production company awarded the | 8 | | credit, except that the transferee may not sell or otherwise | 9 | | transfer the credit. | 10 | | (d) The Department of Revenue may adopt rules to administer | 11 | | this Section. | 12 | | Section 35. Interactive Digital Media Tax Credit Report.
| 13 | | The Department shall submit to the General Assembly, no later | 14 | | than July 1, 2020, a report that includes, without limitation: | 15 | | (1) an assessment of the economic impact of the tax | 16 | | credit program created under this Act, including the number | 17 | | of jobs created and retained, and whether the job positions | 18 | | are entry level, management, vendor, or production | 19 | | related; | 20 | | (2) an assessment of the revenue impact of the program, | 21 | | including, but not limited to, the amount of Illinois labor | 22 | | expenditure and Illinois production expenditure brought to | 23 | | Illinois, including the amount of spending and the type of | 24 | | Illinois vendors hired in connection with an accredited | 25 | | production company; |
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| 1 | | (3) in the discretion of the Department, a review of | 2 | | the practices and experiences of other states or nations | 3 | | with similar programs; | 4 | | (4) a determination of whether those receiving | 5 | | qualifying Illinois labor expenditure salaries or wages | 6 | | reflect the geographical, racial, ethnic, gender, and | 7 | | income level diversity of the State of Illinois; and | 8 | | (5) an assessment of the overall success of the | 9 | | program. | 10 | | Section 60. Repealer. This Act is repealed July 1, 2021. | 11 | | Section 90. The Illinois Income Tax Act is amended by | 12 | | adding Section 224 as follows: | 13 | | (35 ILCS 5/224 new) | 14 | | Sec. 224. Interactive Digital Media Tax Credit. For tax | 15 | | years beginning on or after January 1, 2016, taxpayers who have | 16 | | been awarded a credit under the Interactive Digital Media Tax | 17 | | Credit Act are entitled to a credit against the tax imposed | 18 | | under subsections (a) and (b) of Section 201 of this Act as | 19 | | provided in the Interactive Digital Media Tax Credit Act. | 20 | | The credit may not be carried back. If the amount of the | 21 | | credit exceeds the tax liability for the year, the
excess may | 22 | | be carried forward and applied to the tax liability of the 5 | 23 | | taxable
years following the excess credit year. The credit
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| 1 | | shall be applied to the earliest year for which there is a tax | 2 | | liability. If
there are credits from more than one tax year | 3 | | that are available to offset a
liability, the earlier credit | 4 | | shall be applied first. In no event shall a credit
under this | 5 | | Section reduce the taxpayer's
liability to less than
zero.
| 6 | | Section 99. Effective date. This Act takes effect upon | 7 | | becoming law.".
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