Section 528.20  Definitions

 

The following definitions are applicable to this Part:

 

"Above-the-Line-Salaries" or "ATL Salaries" means all salary, wages, fees, fringe benefits paid for services such as those of a producer, executive producer, coproducer, director, screenwriter, lead cast, supporting cast, day players, and other services of job positions performed by personnel of the production that are associated with the creative or financial control of a production and customarily considered as above the line services in the film and television industry.

 

"Accredited Production" means:

 

for productions commencing before May 1, 2006, a film, video, commercial, or television production that has been certified by the Department in which the aggregate Illinois labor expenditures included in the cost of the production exceed $100,000 for productions of 30 minutes or longer, or $50,000 for productions of less than 30 minutes;

 

for productions commencing on or after May 1, 2006, a film, video, commercial, or television production that has been certified by the Department in which the aggregate Illinois production spending included in the cost of the production exceeds $100,000 for productions of 30 minutes or longer, or $50,000 for productions of less than 30 minutes.

 

"Accredited Production" does not include a production that:

 

is news, current events, or public programming, or a program that includes weather or market reports;

 

is a talk show produced for local or regional markets;

 

is a sports event or live activity;

 

is a gala presentation or awards show;

 

is a finished production that solicits funds;

 

is a production produced by a film production company if records, as required by 18 U.S.C. 2257, are to be maintained by that film production company with respect to any performer portrayed in that single media or multimedia program; or

 

is a production produced primarily for industrial, corporate, or institutional purposes. (Section 10 of the Act)

 

"Accredited Production Certificate" means a certificate issued by the Department certifying that the production is an accredited production that meets the guidelines of the Act.  (Section 10 of the Act)

 

"Act" means the Film Production Services Tax Credit Act [35 ILCS 16].

 

"Applicant" means a taxpayer that is a film production company or a taxpayer working in association with a film production company that is operating or has operated an accredited production located within the State of Illinois and that:

 

owns the copyright in the accredited production throughout the Illinois production period; or

 

has contracted directly with the owner of the copyright in the accredited production or a person acting on behalf of the owner to provide services for the accredited production, when the owner of the copyright is not an eligible production corporation.  (Section 10 of the Act)

 

"Below-the-Line-Salaries" or "BTL Salaries" means salary, wages, fees, fringe benefits paid for services performed by a person in a position that is off camera and who provides technical services during the physical production of a film. "Below-the-Line-Salaries" does not include a person who is a producer, executive producer, coproducer, director, screenwriter, lead cast, supporting cast, day players, and other services of job positions performed by personnel of the production that are associated with the creative or financial control of a production and customarily considered as above the line services in the film and television industry.

 

"Business Owned by a Person with a Disability" means a business concern that is at least 51% owned by one or more persons with a disability and the management and daily business operation of which are controlled by one or more of the persons with disabilities who own it.  A not-for-profit agency for persons with disabilities that is exempt from taxation under section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability". [30 ILCS 575/2(A)(4.1)]

 

"Commencement or Start of Principal Filming or Taping" means the date on which filming, taping, or photographing of principal actors or action of an accredited production commences. In the case of an animated production, the commencement or start of filming or taping is the date on which the creation of artwork to be used in actual frames of the film begins.

 

"Commercial Domicile" means the principal place from which the trade or business of a person is directed or managed.

 

"Credit" or "Tax Credit" means, for an accredited production commencing on or after January 1, 2009, the amount equal to:

 

30% of the Illinois production spending for the taxable year; plus

 

15% of the Illinois labor expenditures generated by the employment of residents of geographic areas of high unemployment determined by census tracts where the unemployment rate is at least 150% of the State's annual average.

 

"Department" means the Illinois Department of Commerce and Economic Opportunity.

 

"Director" means the Director of the Department.

 

"Diversity Data or Information" means data pertaining to gender, race, ethnicity and of all employees of the applicant. 

 

"Diversity Plan" means a written document through which the applicant assures the Department that minorities and females will have equal opportunities in recruitment, selection, appointment, promotion, training, and related employment areas in the accredited production. The diversity plan must also describe the manner in which the applicant plans on hiring vendors certified by the Business Enterprise Council under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575] with respect to the accredited production.  The diversity plan must also detail the manner in which the applicant proposes to achieve its goals to ensure employment of protected classes to achieve a diverse workforce, rather than merely to assure nondiscrimination. 

 

"Economic Impact Data" means data pertaining to the types of jobs (production, talent and vendor) created and retained in Illinois, as well as the total amount an applicant spends in Illinois on the accredited production.

 

"Employee of the Applicant" or "Employee", for accredited productions commencing on or after May 1, 2006, means only an individual who is an employee of the applicant for purposes of employment taxes imposed under subtitle C of the Internal Revenue Code (26 U.S.C. subtitle C).

 

"Entry Level Positions" means the lowest level of a hierarchy in a production, including untrained or unskilled labor working on a production, such as a production assistant.

 

"Illinois Labor Expenditure" means salary or wages paid to employees of the applicant for services on the accredited production.  To qualify as an Illinois labor expenditure, the expenditure must be:

 

reasonable in the circumstances;

 

included in the federal income tax basis of the property.  For purposes of this provision, an expenditure that is immediately expensed as an advertising cost under Treasury Regulations section 1.162-1(a) (26 CFR 1.162-1(a)) or as a qualified film, television or commercial production cost under section 181 of the Internal Revenue Code (26 U.S.C. 181) shall be treated as included in the federal income tax basis of the accredited production if the expenditure would be required to be capitalized under section 263A of the Internal Revenue Code (26 U.S.C. 263A) if that section applied to the accredited production;

 

incurred by the applicant for services on or after January 1, 2004;

 

incurred for the production stages of the accredited production, from the final script stage to the end of the post-production stage;

 

limited to the first $25,000 of wages paid or incurred to each employee of an accredited production commencing before May 1, 2006 and the first $100,000 of wages paid or incurred to each employee of an accredited production commencing on or after May 1, 2006 and prior to July 1, 2022. For productions commencing on or after July 1, 2022, limited to the first $500,000 of wages paid or incurred to each nonresident or resident employee of a production company or loan out company that provides in-State services to a production, whether those wages are paid or incurred by the production company, loan out company, or both, subject to withholding payments provided for in Article 7 of the Illinois Income Tax Act. For purposes of calculating Illinois labor expenditures for a television series, the nonresident wage limitations provided under this subparagraph are applied to the entire season;

 

for an accredited production commencing before May 1, 2006, exclusive of Illinois gross wages and benefits paid to or incurred for the 2 highest paid employees of the accredited production;

 

directly attributable to the accredited production;

 

Prior to July 1, 2022, paid to persons residing in Illinois at the time the payments were made.  For a production commencing on or after July 1, 2022, paid to persons resident in Illinois and nonresidents at the time the payments were made. For purposes of this subparagraph, only wages paid to nonresidents working in the following positions shall be considered Illinois labor expenditures: Writer, Director, Director of Photography, Production Designer, Costume Designer, Production Accountant, VFX Supervisor, Editor, Composer, and Actor, subject to the limitations set forth under this subparagraph. For an accredited Illinois production spending $25,000,000 or less, no more than 2 nonresident actors' wages shall qualify as an Illinois labor expenditure. For an accredited production with Illinois production spending of more than $25,000,000, no more than 4 nonresident actor's wages shall qualify as Illinois labor expenditures;

 

paid for services rendered in Illinois;  (Section 10 of the Act)

 

for accredited productions commencing after January 1, 2025, expenses for below-the-line-salaries paid to a related party shall be limited to the fair market value as established through comparable transactions between other unrelated parties for substantially similar services considering the geographic market and other pertinent variables; and

 

"Illinois Production Spending" means the expenses incurred by the applicant that are reasonable under the circumstances and directly attributable to the accredited production, including, without limitation, all of the following:

 

expenses to purchase, from vendors within Illinois, tangible personal property that is used in the accredited production in Illinois;

 

expenses to acquire services, from vendors in Illinois, for film production and post-production (which includes editing and processing) in Illinois;

 

for a production commencing before July 1, 2022, compensation, not to exceed $100,000 for any one employee of the applicant, for contractual or salaried employees who are Illinois residents performing services with respect to the accredited production in Illinois. (Section 10 of the Act) For a production commencing on or after July 1, 2022, the compensation, not to exceed $500,000 for any one employee, for contractual or salaried employees who are Illinois residents or nonresident employees, subject to the limitations set forth under Section 10 of the Act; and

 

for goods and services such as studio and equipment rental, and visual effects packages for accredited productions commencing after January 1, 2025, production spending is limited to fair market value as established through comparable transactions between unrelated parties for substantially similar goods and services considering the geographic market and other pertinent variables. For goods and services provided by a related party, production spending is limited to fair market value as established through the related party's historical dealings with unrelated parties, or established by comparable transactions between other unrelated parties for substantially similar goods and services considering the geographic market and other pertinent variables.

 

"Illinois Production Spending" does not include any monetary prize or the cost of any non-monetary prize awarded pursuant to a production in respect of a game, questionnaire, or contest.

 

"Illinois Resident" means an individual who is domiciled in this State during the accredited production.  Except in a case in which the applicant has actual knowledge, as shown in its books and records, that an individual is not an Illinois resident, the possession by an individual of a driver's license or other identification issued by this State prior to the commencement of work by the individual on the accredited production shall be sufficient proof that the individual is an Illinois resident and the address on the license or identification shall be deemed correct.

 

"Jobs Created and Retained" shall be measured in full-time equivalent jobs.  In the case of a person hired as an "extra", each person hired for each day shall be deemed a full-time equivalent job for that day, based on the film industry standard equivalency of a "hire", which is a per day, per person standard.  In other words, when the film industry hires an "extra" it considers each "extra" position to be a one day job that was created to fill a particular position for a particular purpose for a particular time.

 

"Loan Out Company" means a personal service corporation or other entity that is under contract with the taxpayer to provide specified individual personnel, such as artists, crew, actors, producers, or directors for the performance of services used directly in a production, but does not include entities contracted with by the taxpayer to provide goods or ancillary contractor services such as catering, construction, trailers, equipment, or transportation. (Section 10 of the Act)

 

"Management Position" means anyone in a supervisory or managerial position who has control over other employees who report to that individual.  Management roles include, but are not limited to, coordinators, directors, managers, supervisors, producers, masters and department heads.

 

"Minority" means a person who is a citizen or lawful permanent resident of the United States and who is: 

 

American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment);

 

Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam);

 

Black or African American (a person having origins in any of the black racial groups of Africa);

 

Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race); or

 

Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).  [30 ILCS 575/2(A)(1)].

 

"Minority Owned Business" means a business concern:

 

that is at least 51% owned by one or more minority persons; or

 

in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and

 

the management and daily business operations of which are controlled by one or more of the minority individuals who own it.  [30 ILCS 575/2(A)(3)]. 

 

"Personal Service Corporation" means a corporation the principal activity of which is the performance of personal services and such services are substantially performed by employee-owners.

 

''Production Staff and Crew" means office and production staff, including, but not limited to, accountants, coordinators, secretaries, camera, casting, construction, costume, electric, grip, location, hair, make-up, props, swing gang, set decorating, sound, and transportation.

 

"Post-Production" means editing or processing of original content employing traditional, emerging or new editing or processing techniques used for picture, sound and music editorial, rerecording and mixing, visual effects, graphic design, original scoring, animation, and musical composition.

 

"Post-Production Staff and Crew" means post-production staff, including, but not limited to, film editor, post-production supervisor, colorist, visual effects producer, visual effects creative director, visual effects supervisor, visual effects editor, compositor, rotoscope artists, matte painter, sound designer, dialogue editor, sound editor, re-recording mixer, music supervisor, composer, foley artist, mixer, and music editor.

 

"Related Party Transaction" means a transaction between parties deemed to be related by common ownership or control according to generally accepted accounting standards, ("GAAS") and generally accepted accounting principles ("GAAP").

 

"State" means the State of Illinois.

 

"Talent Related Positions" means any speaking, background or extra roles that appear in front of the camera.  Talent refers to on screen performers holding these positions.

 

"Tax Credit Certificate" means the tax credit certificate issued by the Department to the applicant certifying that it has complied with all statutory requirements of the Act and this Part and that it is entitled to a credit under the Act.

 

"Taxpayer" means any person defined by, and subject to, the tax imposed by the Illinois Income Tax Act [35 ILCS 5/1501(a)(18) and (a)(24)].

 

"Treasury Regulations" means the rules of the U.S. Internal Revenue Service published at Title 26 of the Code of Federal Regulations.

 

"Vendor in Illinois".  Expenditures for purchases of tangible personal property or services from a vendor in Illinois shall mean:

 

Purchases of tangible personal property for use in Illinois on an accredited production from a person who is registered under the Illinois Retailers' Occupation Tax Act (ROTA) [35 ILCS 120].  A copy of the purchase receipt showing that the purchase was made at an Illinois location and that Illinois Retailers' Occupation Tax was paid shall be sufficient proof that the purchase was made from a vendor in Illinois.  For tangible personal property ordered by mail, telephone or internet, a copy of the seller's ROTA registration certificate, along with a receipt showing that Illinois Use Tax was collected by the vendor, shall be sufficient proof that the purchase was made from a vendor in Illinois.  Documentation that shows that Illinois Use Tax was collected by the vendor, but either does not show an Illinois address for the sale or is not accompanied by a ROTA registration certificate, shall not be sufficient proof that the purchase was made from a vendor in Illinois. 

 

The lease or rental of real property located in Illinois for use in an accredited production, including hotels or other lodging for employees working on the accredited production. 

 

The lease or rental of an automobile (as defined in the Illinois Automobile Renting Occupation and Use Tax Act [35 ILCS 155]) for use in an accredited production on which the rentor collects the Illinois Automobile Renting Occupation and Use Tax from the rentee.

 

The lease or rental of other tangible personal property for use in an accredited production if the owner of the property has paid Illinois Use Tax on the property.  A copy of the invoice or receipt for the lease or rental showing an Illinois address for the lessor, and showing that no other state's sales tax is collected from the lessee, shall be sufficient proof that the transaction was with a vendor in Illinois.

 

The purchase of financial services (including insurance and the borrowing of funds) from a lender or insurer whose commercial domicile is in this State.  

 

The purchase of other services with respect to an accredited production from an Illinois resident or from a person whose commercial domicile is in this State.  For purposes of this provision only, the commercial domicile of a person is their business address (as shown in the records of the applicant) in this State.

 

A vendor in Illinois that is a corporation, limited partnership, limited liability company, or limited liability partnership must register and remain an entity in good standing with the Illinois Secretary of State, Department of Business Services, throughout the duration of the production.

 

"Vendor Related Positions" means jobs obtained or created through a subcontractor, which includes but is not limited to security, janitorial, printing, florist, dry cleaners, and limousine services.

 

"Wages" means all compensation paid for services rendered by an employee in connection with an accredited production, including health, life, and disability insurance premiums, FICA taxes, pension contributions, expense reimbursement, and accrued vacation and sick pay.

 

"Woman" means a person who is a citizen or lawful permanent resident of the United States and who is of the female gender. [30 ILCS 575/2(A)(2)]

 

"Women Owned Business" means a business concern:

 

that is at least 51% owned by one or more women; or

 

in the case of a corporation, at least 51% of the stock in which is owned by one or more women; and

 

the management and daily business operations of which are controlled by one or more of the women who own it. [30 ILCS 575/2(A)(4)]

 

(Source:  Amended at 48 Ill. Reg. 15829, effective October 24, 2024)

 

Section 528.30  Eligibility Determination

 

Applicants must satisfy all of the following criteria in order to be eligible for a credit:

 

a)         Ownership of Copyright in Accredited Production

 

1)         The applicant must own the copyright in the accredited production throughout the Illinois production period; or

 

2)         The applicant has contracted directly with the owner of the copyright in the accredited production, or a person acting on behalf of the owner, to provide services for the production, where the owner, of the copyright is not an eligible production corporation. (Section 10 of the Act)

 

b)         Aggregate Illinois Production Spending – Accredited Productions Commencing on or After May 1, 2006

In order to qualify for a credit under the Act, the applicant must incur, in the 12-month period after the commencement of principal filming or taping of the production, Illinois production spending that exceeds the following amounts from pre-production through post-production:

 

1)         $100,000 for productions of 30 minutes or longer;

 

2)         $50,000 for productions of less than 30 minutes.

 

c)         Diversity Plan

The applicant must submit a diversity plan that meets the criteria set forth in Section 528.20 of this Part.

 

d)        Competitive Need for Credit

The applicant must file a written statement or other documentation evidencing that the receipt of the credit is essential to the decision to operate the accredited production in Illinois.  The documentation must show that the applicant has multi-state or international location options and could reasonably locate outside the State, or can demonstrate that at least one other state or nation is being considered for the accredited production, or other documentation showing that the receipt of the credit is a major factor in the applicant's decision to locate the accredited production in Illinois.

 

e)         Training Programs

In order to qualify for a credit, the applicant must advise the Department whether it intends to participate in training, education, and recruitment programs, if available, that are organized in cooperation with Illinois colleges and universities, labor organizations, and the motion picture industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population.  (Section 30(a)(4) of the Act)

 

(Source:  Amended at 37 Ill. Reg. 12010, effective July 12, 2013)

 

Section 528.40  Application Process and Requirements

 

The Department will accept and evaluate applications from eligible applicants in accordance with the following provisions:

 

a)         An applicant proposing a film, television or commercial production planned to be located in the State shall submit its application at least 24 hours prior to the start of principal filming or taping.

 

b)         Written applications will be required and must be submitted on the standard application form provided by the Department.  Applications shall be submitted to the Department's office stated on the application.  The applicant must provide the following information:

 

1)         Legal name, address, and telephone number of applicant.

 

2)         Name, title, and telephone number of primary contact person.

 

3)         Type of business entity:

 

A)        Individual or Sole Proprietorship

 

B)        Partnership

 

C)        Corporation

 

D)        Subchapter S Corporation

 

E)        Limited Liability Company

 

F)         Other (applicant will provide description).

 

4)         Date of incorporation or formation.

 

5)         Federal Employer Identification Number (FEIN) or Tax Identification Number (TIN).

 

6)         Production title.

 

7)         Type of production – a description stating that the production is one of the following:

 

A)        Feature film

 

B)        Television program

 

C)        Commercial

 

D)        Other (applicant will provide description).

 

8)         Length of production.

 

9)         Date principal filming or taping begins in Illinois.

 

10)        Estimated number of shoot days in Illinois.

 

11)        Estimated total budget of production.

 

12)        Estimated total Illinois labor expenditure.

 

13)        Estimated total budget of post-production.

 

14)        Estimated number of Illinois residents to be hired to work on the production.

 

15)        A diversity plan.

 

16)        Documentation evidencing applicant's intention to participate in training, education and recruitment programs, if available, offered by Illinois colleges, universities, labor organizations and the motion picture industry that are designed to promote training and hiring of Illinois residents who represent the diversity of the Illinois population. 

 

17)        A written statement evidencing that the receipt of the credit is essential to the decision to operate the accredited production in Illinois.

 

18)        A story line or log line.

 

19)        Certification that the applicant will provide detailed vendor cost documentation for post-production services, including, but not limited to, a listing of all Illinois resident post-production staff and crew who worked on the production and their respective wages and fringe benefits, and payments made to sub-vendors domiciled in Illinois, if post-production spending represents more than 50% of qualifying Illinois spending.  Only Illinois resident wages and fringe benefits (up to $100,000 per resident) and payments made to Illinois domiciled sub-vendors are qualified.

 

20)        Certification that the applicant is and will remain in good standing with applicable State authorities, is not currently operating under or subject to any cease and desist order or subject to any informal or formal regulatory action, and, to the best of the applicant's knowledge, is not currently the subject of any investigation by any State or federal regulatory, law enforcement or legal authority.  Should the applicant become the subject of an investigation by any State or federal regulatory, law enforcement or legal authority, the applicant shall promptly notify the Department of that investigation.  The applicant acknowledges that, should it become delinquent in its good standing status with any applicable State authority or if it later becomes subject to a cease and desist order or memorandum of understanding, or is found in violation pursuant to any regulatory action or any court action or proceeding before any administrative agency, the Department is authorized to deny the applicant's request for a tax credit certificate.

 

c)         The applicant is responsible for the accuracy of all data, information, and documentation included in the application.  Once submitted, applications shall become the property of the Department.

 

d)        Upon written request, the applicants shall issue any necessary authorization to the appropriate federal, State or local authority for the release of information concerning a production being considered under this Part, including but not limited to financial reports, and records relating to the applicant or the accredited production for which the credit is requested.

 

e)         In the case of a television series or any other production intended to be shown in two or more episodes, the applicant may elect to treat each episode as a separate production or to treat two or more episodes as a single production for all purposes of the Act.  A single application may be filed for two or more productions, provided that the application clearly describes each separate production.  For example, the application may state that each episode shall be treated as a separate production or that all episodes filmed or intended to be shown during a specific period of time will be treated as a single production.

 

(Source:  Amended at 45 Ill. Reg. 5342, effective April 12, 2021)

 

Section 528.50  Evaluation of Application

 

a)         Prior to substantive evaluation of an application for a credit, the Department shall review all applications to determine that all required information and documentation has been provided.  Applicants will be notified, in writing, of any application deficiencies and will be allowed 30 days to correct the deficiencies through submission of additional documentation.  The Department has the discretion to extend the cure period in extenuating circumstances, provided the applicant submits a written request outlining the circumstances for which it needs an extension.

 

b)         In evaluating applications, the Department shall determine a preponderance of the following requirements and conditions:

 

1)         The applicant will meet the requisite aggregate Illinois labor expenditure or Illinois production spending requirement in accordance with the provisions of Section 528.20 of this Part;

 

2)         The extent to which the applicant's diversity plan contains specific goals in meeting the diversity plan requirement to employ Illinois residents representing the diversity of the Illinois population subject to any applicable collective bargaining agreements to which the applicant is a signatory to perform work on the production;

 

3)         The extent to which the applicant intends to participate in training, education and recruitment programs, if available, that are organized in cooperation with Illinois colleges and universities, labor organizations, and the motion picture industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population;

 

4)         The applicant's demonstration that the credit is essential to its decision to locate the production in Illinois; and

 

5)         Awarding the credit will result in an overall positive impact to the State.

 

(Source:  Amended at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.60  Approval/Denial of Applications

 

a)         The Department reserves the right to make inquiries, to conduct studies in the manner and by the methods it deems necessary, and to review information with respect to the application.  The Department also reserves the right to request information from the applicant that is necessary to calculate the amount of the tax credit.

 

b)         The Department reserves the right to reject any application that does not comply with the statutory requirements of the Act and this Part.  Upon receipt of an application, the Department shall review the application for completeness and approve or deny it within 60 days after the date of receipt.  Applications are subject to final approval by the Director of the Department.

 

c)         Applicants shall be notified in writing as to the Department's evaluation of all completed applications.  If the Department denies an application for the credit, it will specify the reasons for denial in writing and allow the applicant 30 days to amend and re-submit its application for further evaluation.

 

(Source:  Amended at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.62  Economic Impact Data

 

The applicant or its representative shall use its best efforts in submitting its economic information to the Department related to the following:

 

a)         Jobs Created and Retained.  This information shall document the number of jobs created and retained for production, talent and vendor type jobs.  Additionally, with respect to the production type of jobs, the applicant must use its best efforts to supply information disclosing the number of production type jobs created and/or  retained and whether the production type jobs were entry, management or skilled labor.

 

b)         Production Costs.  This information shall document the amount of production costs in various industries in Illinois.  Industry production costs include, but are not limited to, vendor expenditures for catering, dry cleaning, janitorial services, maid services, security, transportation, etc.

 

(Source:  Amended at 37 Ill. Reg. 12010, effective July 12, 2013)

 

Section 528.63  Diversity Impact Data

 

The applicant or its representative shall make its best efforts in submitting its diversity information to the Department related to gender and ethnicity of all employees hired and the business ownership status of vendors hired. This information shall include job creation number for:

 

a)         Production and post-production staff and crew;

 

b)         Entry level positions;

 

c)         Management positions;

 

d)         Talent related positions; and

 

e)         Vendors (ownership status, i.e., businesses owned by minorities, females and persons with disabilities).

 

(Source:  Amended at 45 Ill. Reg. 5342, effective April 12, 2021)

 

Section 528.65  Accredited Production Certificate

 

a)         Upon approval of an application, the Department will issue an accredited production certificate certifying that the production is an accredited production that meets the statutory requirements of the Act as well as the corresponding administrative rules within this Part.  When the Department issues an accredited production certificate, this certificate does not automatically entitle the applicant to a tax credit.  Rather, the tax credit is only awarded after an accredited production has been completed, the applicant submits its request for tax credit certificate, and the applicant successfully demonstrates to the Department that it has complied with its diversity plan or that it has made good-faith efforts to comply with its diversity plan.

 

b)         The accredited production must commence no later than one year following the issuance of the accredited production certificate. The Department has the discretion to extend the one-year period in extenuating circumstances, provided the applicant submits a written request outlining the circumstances for which it needs an extension.

 

(Source:  Amended at 47 Ill. Reg. 3693, effective March 1, 2023)

 

Section 528.70  Request for Tax Credit Certificate

 

The applicant may request a tax credit certificate from the Department certifying the actual amount of the credit awarded to the applicant at any time following the completion of the accredited production, but in no event later than two years following the completion of the production.  In a case in which a single application was filed for two or more productions, a single tax credit certificate may, at the request of the applicant, be issued for more than one production. The tax credit will be issued upon the Department's verification that all costs submitted qualify as the applicant's Illinois production spending and verification that the applicant has met or made good-faith efforts in achieving the goals of the diversity plan (see Section 528.20) included with its application. 

 

a)         If an accredited production is not completed prior to the close of the applicant's taxable year, at the election of the applicant, a tax credit certificate dated as of the last day of the taxable year may be used for:

 

1)         Illinois labor expenditures incurred during that taxable year or within 60 days after the close of that taxable year; or

 

2)         Illinois production spending (see Section 10 of the Act) incurred during that taxable year.

 

b)         In the case of an accredited production commencing on or after May 1, 2006 in which some Illinois production spending is incurred in a taxable year of the applicant and some is incurred after the close of that taxable year:

 

1)         The applicant may request a single tax credit certificate for all Illinois production spending incurred; or

 

2)         The applicant may submit a separate request for a tax credit certificate for each taxable year in which Illinois production spending is incurred. 

 

c)         With each request for a tax credit certificate filed on or after January 18, 2007, the applicant shall provide:

 

1)         An itemized statement of the Illinois labor expenditures or Illinois production spending for which the credit is claimed and of Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment for which additional credit is claimed;

 

2)         Copies of the books and records of the applicant for the accredited production, showing the Illinois labor expenditures or Illinois production spending for which the credit is claimed, all documentation necessary to support its computation, and detailed vendor cost documentation for post-production services, including but not limited to, a listing of all Illinois resident post-production staff and crew who worked on the production and their respective wages and fringe benefits, and payments made to sub-vendors domiciled in Illinois, if post-production spending represents more than 50% of qualifying Illinois spending.  Only Illinois resident wages and fringe benefits (up to $500,000 per resident) and payments made to Illinois domiciled sub-vendors are qualified;

 

3)         An attestation by a licensed certified public accountant (CPA), in the form prescribed by the Department, that the computations are supported by the copies of the books, records and other documents of the applicant that are attached to the request and that the licensed CPA has examined the books, records and other documents according to procedures agreed upon by the Department.  An examination of the books, records or other documents must be performed by the licensed CPA quarterly or at the conclusion of production if production lasted less than a quarter.  The attestation and examination must be performed by a licensed CPA:

 

A)        who is qualified and independent of the applicant under the professional standards established by the American Institute of Certified Public Accountants, specifically the Statements on Standards of Attestation Engagements at AT Sec. 101 (Attest Engagements) and AT Sec. 201 (Agree-Upon Procedures Engagements); and

 

B)        whose engagement to provide the attestation was approved by the Department before work on the engagement was commenced; and

 

d)         With each request for a tax credit filed after January 1, 2025, the applicant shall provide all items listed in subsection (c) of this Section, and:

 

1)         Disclosure of all related party transactions including:

 

A)        The name of the related party,

 

B)        The nature of the relationship between the related party and the accredited production,

 

C)        The nature of the transaction, and

 

D)        The amount of the transaction; and

 

2)         A sworn affidavit by the applicant that, to the best of the affiant's knowledge, information, and belief all accounts, documents, records, and other information provided to the CPA and Department were true and correct and that all related party transactions were accurately reported in accordance with this Section.

 

(Source:  Amended at 48 Ill. Reg. 15829, effective October 24, 2024)

 

Section 528.71  Approval/Denial of Tax Credit Certificate Request

 

a)         When the applicant submits its request for a tax credit certificate, the Department will review and verify the applicant's final diversity hiring numbers for crew, vendors and talent to determine whether it met the goals outlined in its diversity plan before issuing the tax credit certificate. 

 

b)         In the event the applicant fails to meet the goals of its diversity plan, the applicant must then demonstrate it made good-faith efforts in attempting to achieve its diversity goals in order for the tax credit certificate request to be approved.  Good-faith efforts that the Department will consider include, but are not limited to, documentation demonstrating that the applicant communicated (written correspondence, phone call, email, meetings) with minority, female, and disabled vendors and applicable unions, as well as talent and workforce agencies/entities.  The applicant may also submit any other documentation demonstrating its good-faith attempts to the Department for consideration.  If appropriate documentation is unavailable, then, within the Department's discretion, the applicant may be permitted to submit an affidavit attesting to its good-faith efforts.

 

(Source:  Added at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.75  Amount and Duration of Tax Credit

 

For accredited productions commencing on or after January 1, 2009, eligible applicants will be awarded a credit equal to 30% of the Illinois production spending approved by the Department plus 15% of Illinois labor expenditures approved by the Department for employees who earn more than $1,000 on the production and live in geographic areas of high poverty or high unemployment in Illinois. (Section 10 of the Act)

 

(Source:  Amended at 37 Ill. Reg. 12010, effective July 12, 2013)

 

Section 528.80  Interim and Final Film Tax Credit Certifications (Repealed)

 

(Source:  Repealed at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.85  Transfer of Tax Credit

 

a)         A transfer of the credit may be made by the applicant earning the credit within one year after the credit is awarded in accordance with rules adopted by the Department of Commerce and Economic Opportunity. Beginning July 1, 2023, credits transferred under this Section are subject to a transfer fee pursuant to Section 528.85(e)(2). (Section 213 of the Illinois Income Tax Act)

 

b)         For purposes of this provision, a tax credit is earned on the date that the tax credit certificate is issued under Section 528.70.

 

c)         Tax credits earned by an applicant in a taxable year ending prior to July 11, 2005 may not be transferred.

 

d)         For purposes of this Section, a tax credit earned by a partnership or subchapter S corporation shall be treated as having been earned by its partners in the amounts determined under 86 Ill. Adm. Code 100.2185(c).

 

e)         Transfer of a tax credit shall be made as follows:

 

1)         The applicant earning the credit shall request the transfer from the Department, in writing, identifying the transferees (name, tax identification number, mailing address) and the amount to be transferred to each transferee, and the applicant shall return the tax credit certificate to the Department, together with its transfer request.  The applicant is allowed to transfer or allocate a single credit to no more than 10 transferees.

 

2)         Beginning July 1, 2023 the transferor shall pay to the Department, upon notification of a transfer, a fee equal to 2.5% of the transferred credit amount eligible for nonresident wages, as described in Section 10 of the Film Production Services Tax Credit Act of 2008, and an additional fee of 0.25% of the total amount of the transferred credit that is not calculated on nonresident wages, which shall be deposited into the Illinois Production Workforce Development Fund.

 

3)         A request for transfer may be submitted with the applicant's request for the tax credit certificate under Section 528.70.  The Department may issue the requested certificates of transfer in lieu of the tax credit certificate.

 

4)         If the transfer request is made within one year of issuance and meets the requirements of this Section, the Department shall issue a certificate of transfer to each transferee, identifying the original tax credit certificate and stating the amount of the credit transferred.

 

5)         If the applicant earning the credit transfers less than the full amount of the credit, the Department shall issue a certificate of transfer to the applicant identifying the original tax credit certificate and stating the amount of tax credit retained by the applicant.

 

6)         If the person transferring the credit is a partner or shareholder in a partnership or subchapter S corporation that earned the credit, that person shall submit to the Department, either the original tax credit certificate or copies of the tax credit certificates and copies of the Schedule K-1-P received by that person from the partnership or subchapter S corporation stating that person's share of the credit.

 

(Source:  Amended at 47 Ill. Reg. 3693, effective March 1, 2023)

 

Section 528.86  Illinois Production Workforce Development Fund

 

a)         The Illinois Production Workforce Development Fund is created as a special fund in the State Treasury. Beginning July 1, 2022, amounts paid to the Department of Commerce and Economic Opportunity pursuant to Section 213 of the Illinois Income Tax Act shall be deposited into the Fund. The Fund shall be used exclusively to provide grants to community-based organizations, labor organizations, private and public universities, community colleges, and other organizations and institutions that may be deemed appropriate by the Department to administer workforce training programs that support efforts to recruit, hire, promote, retain, develop, and train a diverse and inclusive workforce in the film industry.

 

b)         Beginning July 1, 2023 credits transferred under Section 528.85 are subject to a transfer fee pursuant to 528.85(e)(2) which shall be deposited into the Illinois Production Workforce Development Fund.

 

c)         The Department may request that the State Comptroller and the State Treasurer advance amounts to the Fund on an annual basis not to exceed $1,000,000 in any fiscal year. The Department shall reimburse the fund from which the moneys are advanced in the same fiscal year for any such advance payments via statutory transfer.

 

d)         Of the appropriated funds in a given fiscal year, 50% of the appropriated funds shall be reserved for organizations that meet one of the following criteria. The organization is:

 

1)         a minority-owned business, as defined by the Business Enterprise for Minorities, Women, and Persons with Disabilities Act;

 

2)         located in an underserved area, as defined by the Economic Development for a Growing Economy Tax Credit Act; or

 

3)         on an annual basis, training a cohort of program participants where at least 50% of the program participants are either a minority person, as defined by the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, or reside in an underserved area, as defined by the Economic Development for a Growing Economy Tax Credit Act.

 

(Source:  Added at 47 Ill. Reg. 3693, effective March 1, 2023)

 

Section 528.90  Non-Compliance Provisions (Repealed)

 

(Source:  Repealed at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.100  Books and Records

 

The applicant must at all times keep proper books of record  and accounts  in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the accredited production in the custody or control of the taxpayer open for reasonable Department inspection and audits, and including, without limitation, the making of copies of the books, records, or papers, and the inspection or appraisal of any of the assets of the applicant or the accredited production. (Section 15(f) of the Act)

 

(Source:  Amended at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.110  Data for Reports to the General Assembly

 

a)         In determining whether the film tax credit program is effective in creating jobs in Illinois, the Department is responsible for determining the overall success of the program.  Correspondingly, on a quarterly basis, the Department is required to advise the Illinois General Assembly of the film tax credit program's economic impact with respect to the types of jobs created, the amount and type of expenditures made in Illinois, and whether the human infrastructure of the motion picture industry reflects the diversity of the State.  Each report to the General Assembly will provide an overall view of the Illinois film industry with respect to the jobs created and expenditures made for the requisite quarter.  In order to satisfy this requirement, each applicant will be required to use its best efforts in submitting information pertaining to the following.

 

1)         Types of jobs created:

 

A)        Number of entry level positions;

 

B)        Number of management related positions;

 

C)        Number of talent positions;

 

D)        Number of production staff and crew; and

 

E)        Number of vendor related positions.

 

2)         Illinois expenditures: The amount of expenditures attributable to:

 

A)        Labor;

 

B)        Vendors; and

 

C)        Other Illinois productions spending.

 

3)         Data or documentation submitted to the Department in connection with the achievement of, or good-faith efforts to achieve, the goals outlined in the diversity plan.

 

b)         At the end of each fiscal year, the Department must submit to the General Assembly a report that includes, without limitation, the following information:

 

1)         an identification of each material vendor that provided goods or services that were included in an accredited production's Illinois production spending;

 

2)         the amount paid to each identified material vendor by the accredited production;

 

3)         for each identified material vendor, a statement as to whether the vendor is a minority owned business or a female owned business, as defined under Section 2 of the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, which the Department will determine by comparing the vendors it has identified as providing goods or services that were included in an accredited production's Illinois production spending with the database of minority owned businesses and female owned businesses maintained by the Department of Central Management Services; and

 

4)         a description of any steps taken by the Department to encourage accredited productions to use vendors who are a minority owned business or a female owned business. (Section 45(c) of the Act)

 

(Source:  Added at 31 Ill. Reg. 2253, effective January 18, 2007)

 

Section 528.120  Confidentiality of Documents and Data

 

The Department will not permit public inspection or copying of any material that is or would be confidential under State law, specifically including the exemptions set forth in the Freedom of Information Act [5 ILCS 140].  If an applicant submits information it considers to be of a confidential nature as part of its application or request for a tax credit certificate, such information shall be marked or labeled "CONFIDENTIAL" in capital letters.  The applicant shall also submit a statement briefly setting forth the grounds on which the information should be treated as confidential.  The Department, based on the propriety nature of the material and privacy of the applicant's confidential information, shall not disclose the materials to the public.

 

(Source:  Added at 31 Ill. Reg. 2253, effective January 18, 2007)