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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois, | ||||||
3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the Film
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5 | Production Services Tax Credit Act of 2008.
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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 so | ||||||
12 | 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. It | ||||||
19 | shall be the policy of this State to promote and encourage the | ||||||
20 | training and hiring of Illinois residents who represent the | ||||||
21 | diversity of the Illinois population through the creation and | ||||||
22 | implementation of training, education, and recruitment | ||||||
23 | programs organized in cooperation with Illinois colleges and |
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1 | universities, labor organizations, and the motion picture | ||||||
2 | industry.
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3 | Section 10. Definitions. As used in this Act:
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4 | "Accredited production" means: (i) for productions | ||||||
5 | commencing before May 1, 2006, a film, video, or television | ||||||
6 | production that
has been certified by the Department in which | ||||||
7 | the aggregate Illinois labor
expenditures
included in the cost | ||||||
8 | of the production, in the period that ends 12 months after
the | ||||||
9 | time principal filming or taping of the production began, | ||||||
10 | exceed $100,000
for productions of 30 minutes or longer, or | ||||||
11 | $50,000 for productions of less
than 30
minutes; and (ii) for | ||||||
12 | productions commencing on or after May 1, 2006, a film, video, | ||||||
13 | or television production that has been certified by the | ||||||
14 | Department in which the Illinois production spending included | ||||||
15 | in the cost of production in the period that ends 12 months | ||||||
16 | after the time principal filming or taping of the production | ||||||
17 | began exceeds $100,000 for productions of 30 minutes or longer | ||||||
18 | or exceeds $50,000 for productions of less than 30 minutes. | ||||||
19 | "Accredited production" does not include a production that:
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20 | (1) is news, current events, or public programming, or | ||||||
21 | a program that
includes weather or market reports;
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22 | (2) is a talk show;
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23 | (3) is a production in respect of a game, | ||||||
24 | questionnaire, or contest;
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25 | (4) is a sports event or activity;
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1 | (5) is a gala presentation or awards show;
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2 | (6) is a finished production that solicits funds;
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3 | (7) is a production produced by a film production | ||||||
4 | company if records, as
required
by 18
U.S.C. 2257, are to | ||||||
5 | be maintained by that film production company with respect
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6 | to any
performer portrayed in that single media or | ||||||
7 | multimedia program; or
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8 | (8) is a production produced primarily for industrial, | ||||||
9 | corporate, or
institutional purposes.
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10 | "Accredited production certificate" means a certificate | ||||||
11 | issued by the
Department certifying that the production is an | ||||||
12 | accredited production that
meets the guidelines of this Act.
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13 | "Applicant" means a taxpayer that is a film production | ||||||
14 | company that is
operating or has operated an accredited | ||||||
15 | production located within the State of
Illinois and that
(i) | ||||||
16 | owns the copyright in the accredited production throughout the
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17 | Illinois production period or (ii)
has contracted directly with | ||||||
18 | the owner of the copyright in the
accredited production
or a | ||||||
19 | person acting on behalf of the owner
to provide services for | ||||||
20 | the production, where the owner
of the copyright is not an | ||||||
21 | eligible production corporation.
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22 | "Credit" means:
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23 | (1) for an accredited production approved by the | ||||||
24 | Department on or before January 1, 2005 and commencing | ||||||
25 | before May 1, 2006, the amount equal to 25% of the Illinois | ||||||
26 | labor
expenditure approved by the Department.
The |
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1 | applicant is deemed to have paid, on its balance due day | ||||||
2 | for the year, an
amount equal to 25% of its qualified | ||||||
3 | Illinois labor expenditure for the tax
year. For Illinois | ||||||
4 | labor expenditures generated by the employment of | ||||||
5 | residents of geographic areas of high poverty or high | ||||||
6 | unemployment, as determined by the Department, in an | ||||||
7 | accredited production commencing before May 1, 2006 and
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8 | approved by the Department after January 1, 2005, the | ||||||
9 | applicant shall receive an enhanced credit of 10% in | ||||||
10 | addition to the 25% credit; and | ||||||
11 | (2) for an accredited production commencing on or after | ||||||
12 | May 1, 2006, the amount equal to: | ||||||
13 | (i) 20% of the Illinois production spending for the | ||||||
14 | taxable year; plus | ||||||
15 | (ii) 15% of the Illinois labor expenditures | ||||||
16 | generated by the employment of residents of geographic | ||||||
17 | areas of high poverty or high unemployment, as | ||||||
18 | determined by the Department.
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19 | "Department" means the Department of Commerce and Economic | ||||||
20 | Opportunity.
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21 | "Director" means the Director of Commerce and Economic | ||||||
22 | Opportunity.
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23 | "Illinois labor expenditure" means
salary or wages paid to | ||||||
24 | employees of the
applicant for services on the accredited
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25 | production;
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26 | To qualify as an Illinois labor expenditure, the |
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1 | expenditure must be:
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2 | (1) Reasonable in the circumstances.
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3 | (2) Included in the federal income tax basis of the | ||||||
4 | property.
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5 | (3) Incurred by the applicant for services on or after | ||||||
6 | January 1, 2004.
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7 | (4) Incurred for the production stages of the | ||||||
8 | accredited production, from
the final
script stage to the | ||||||
9 | end of the post-production stage.
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10 | (5) Limited to the first $25,000 of wages paid or | ||||||
11 | incurred to each
employee of a production commencing before | ||||||
12 | May 1, 2006 and the first $100,000 of wages paid or | ||||||
13 | incurred to each
employee of
a production commencing on or | ||||||
14 | after May 1, 2006.
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15 | (6) For a production commencing before May 1, 2006, | ||||||
16 | exclusive of the salary or wages paid to or incurred for | ||||||
17 | the 2 highest
paid
employees of the production.
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18 | (7) Directly attributable to the accredited | ||||||
19 | production.
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20 | (8) Paid in the tax year
for which the applicant is | ||||||
21 | claiming the credit
or no later than 60 days after the end | ||||||
22 | of the tax
year.
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23 | (9) Paid to persons resident in Illinois at the time | ||||||
24 | the payments were
made.
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25 | (10) Paid for services rendered in Illinois.
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26 | "Illinois production spending" means the expenses incurred |
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1 | by the applicant for an accredited production, including, | ||||||
2 | without limitation, all of the following: | ||||||
3 | (1) expenses to purchase, from vendors within | ||||||
4 | Illinois, tangible personal property that is used in the | ||||||
5 | accredited production; | ||||||
6 | (2) expenses to acquire services, from vendors in | ||||||
7 | Illinois, for film production, editing, or processing; and | ||||||
8 | (3) the compensation, not to exceed $100,000 for any | ||||||
9 | one employee, for contractual or salaried employees who are | ||||||
10 | Illinois residents performing services with respect to the | ||||||
11 | accredited production. | ||||||
12 | "Qualified production facility" means stage facilities in | ||||||
13 | the State in which television shows and films are or are | ||||||
14 | intended to be regularly produced and that contain at least one | ||||||
15 | sound stage of at least 15,000 square feet.
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16 | Section 15. Powers of the Department. The Department, in | ||||||
17 | addition to those
powers granted under the Civil Administrative | ||||||
18 | Code of Illinois, is granted and
has all the powers necessary | ||||||
19 | or convenient to carry out and effectuate the
purposes and | ||||||
20 | provisions of this Act, including, but not limited to, power | ||||||
21 | and
authority to:
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22 | (a) Adopt rules deemed necessary and appropriate for the | ||||||
23 | administration of
the tax credit program; establish forms for | ||||||
24 | applications, notifications,
contracts, or any other | ||||||
25 | agreements; and accept applications at any time during
the |
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1 | year.
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2 | (b) Assist applicants pursuant to the provisions of this | ||||||
3 | Act
to promote, foster, and
support film production and its | ||||||
4 | related job creation or retention within the
State.
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5 | (c) Gather information and conduct inquiries, in the manner | ||||||
6 | and by the
methods as it deems desirable, including any | ||||||
7 | information required for the Department to comply with Section | ||||||
8 | 45 and, without limitation, gathering
information with respect | ||||||
9 | to applicants for the purpose of making any
designations or | ||||||
10 | certifications necessary or desirable or to gather information
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11 | to assist the Department with any recommendation or guidance in | ||||||
12 | the furtherance
of the purposes of this Act, including, but not | ||||||
13 | limited to, information as to
whether the applicant | ||||||
14 | participated in training, education, and recruitment
programs | ||||||
15 | that are organized in cooperation with Illinois colleges and
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16 | universities, labor organizations, and the motion picture | ||||||
17 | industry, and are
designed to promote and encourage the | ||||||
18 | training and hiring of Illinois residents
who represent the | ||||||
19 | diversity of the Illinois population.
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20 | (d) Provide for sufficient personnel to permit | ||||||
21 | administration, staffing,
operation, and related support | ||||||
22 | required to adequately discharge its duties and
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23 | responsibilities described in this Act from funds as may be | ||||||
24 | appropriated by the
General Assembly for the administration of | ||||||
25 | this Act.
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26 | (e) Require applicants, upon written request, to issue any |
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1 | necessary
authorization to the appropriate federal, state, or | ||||||
2 | local authority for the
release of information concerning a | ||||||
3 | project being considered under the
provisions of this Act, with | ||||||
4 | the information requested to include, but not be
limited to, | ||||||
5 | financial reports, returns, or records relating to the
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6 | applicant or the accredited production.
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7 | (f) Require that an applicant must at all times keep proper | ||||||
8 | books of record
and account in accordance with generally | ||||||
9 | accepted accounting principles
consistently applied, with the | ||||||
10 | books, records, or papers related to the
accredited production | ||||||
11 | in the custody or control of the taxpayer open for
reasonable
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12 | Department inspection and audits, and including, without | ||||||
13 | limitation, the making
of copies of the books, records, or | ||||||
14 | papers, and the inspection or appraisal of
any of the
assets of | ||||||
15 | the applicant or the accredited production.
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16 | (g) Take whatever actions are necessary or appropriate to | ||||||
17 | protect the
State's interest in the event of bankruptcy, | ||||||
18 | default, foreclosure, or
noncompliance with the terms and | ||||||
19 | conditions of financial assistance or
participation required | ||||||
20 | under this Act, including the power to sell, dispose,
lease, or | ||||||
21 | rent, upon terms and conditions determined by the Director to | ||||||
22 | be
appropriate, real or personal property that the Department | ||||||
23 | may receive as a
result of these actions.
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24 | Section 20. Tax credit awards. Subject to the conditions | ||||||
25 | set forth in this Act, an applicant is entitled to a credit as |
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1 | approved by the Department under Section 40 of this Act.
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2 | Section 25. Application for certification of accredited | ||||||
3 | production.
Any applicant proposing a film or television | ||||||
4 | production located or
planned to be located in Illinois may | ||||||
5 | request an accredited production
certificate
by formal | ||||||
6 | application to the Department.
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7 | Section 30. Review of application for accredited | ||||||
8 | production certificate.
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9 | (a) In
determining whether to issue an accredited | ||||||
10 | production certificate,
the Department must determine that a | ||||||
11 | preponderance of the following conditions
exist:
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12 | (1) The applicant's production intends to make the | ||||||
13 | expenditure in the
State required for certification.
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14 | (2) The applicant's production is economically sound | ||||||
15 | and will benefit the
people of the State of Illinois by | ||||||
16 | increasing opportunities for employment and
strengthen the | ||||||
17 | economy of Illinois.
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18 | (3) The applicant has filed a diversity plan with the | ||||||
19 | Department outlining specific goals (i) for hiring | ||||||
20 | minority persons and females, as defined in the Business | ||||||
21 | Enterprise for Minorities, Females, and Persons with | ||||||
22 | Disabilities Act, and (ii) for using vendors receiving | ||||||
23 | certification under the Business Enterprise for | ||||||
24 | Minorities, Females, and Persons with Disabilities Act; |
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1 | the Department has approved the plan as meeting the | ||||||
2 | requirements established by the Department; and the | ||||||
3 | Department has verified that the applicant has met or made | ||||||
4 | good-faith efforts in achieving those goals. The | ||||||
5 | Department must adopt any rules that are necessary to | ||||||
6 | ensure compliance with the provisions of this item (3) and | ||||||
7 | that are necessary to require that the applicant's plan | ||||||
8 | reflects the diversity of this State.
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9 | (4) The applicant's production application
indicates | ||||||
10 | whether the applicant intends to participate in training, | ||||||
11 | education,
and
recruitment programs that are organized in | ||||||
12 | cooperation with Illinois colleges
and
universities,
labor | ||||||
13 | organizations, and the motion picture industry and are | ||||||
14 | designed to
promote
and
encourage the training and hiring | ||||||
15 | of Illinois residents who represent the
diversity of the
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16 | Illinois population.
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17 | (5) That, if not for the credit, the applicant's | ||||||
18 | production would not
occur in
Illinois, which may be | ||||||
19 | demonstrated by any means including, but not limited to,
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20 | evidence that the applicant has multi-state or | ||||||
21 | international location options
and could reasonably and | ||||||
22 | efficiently locate outside of the State, or
demonstration | ||||||
23 | that at least one other state or nation is being considered | ||||||
24 | for
the production, or evidence that the receipt of the | ||||||
25 | credit is a major factor in
the
applicant's decision and | ||||||
26 | that without the credit the applicant likely would
not |
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1 | create or retain jobs in Illinois, or demonstration that | ||||||
2 | receiving the
credit is essential to the applicant's | ||||||
3 | decision to create or retain new jobs in
the State.
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4 | (6) Awarding the credit will result in an overall | ||||||
5 | positive impact
to the State, as determined by the | ||||||
6 | Department using the best available
data.
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7 | (b) If any of the provisions in this Section conflict with | ||||||
8 | any existing
collective
bargaining agreements, the terms and | ||||||
9 | conditions of those collective bargaining
agreements shall | ||||||
10 | control.
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11 | Section 35. Issuance of Tax Credit Certificate.
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12 | (a) In order to qualify for a tax credit under this Act, an | ||||||
13 | applicant must
file an application, on forms prescribed by the | ||||||
14 | Department, providing
information necessary to calculate the | ||||||
15 | tax credit, and any additional
information as required by the | ||||||
16 | Department.
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17 | (b) Upon satisfactory review of the application, the | ||||||
18 | Department shall issue a
Tax Credit Certificate stating the | ||||||
19 | amount of the tax credit to which the
applicant is entitled.
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20 | Section 40. Amount and duration of the credit. The amount | ||||||
21 | of the credit awarded under this Act is based on the amount of | ||||||
22 | the Illinois labor expenditure and Illinois production | ||||||
23 | spending approved by the Department for the production as set | ||||||
24 | forth under Section 10. The duration of the credit may not |
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1 | exceed one taxable year.
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2 | Section 43. Training programs for skills in critical | ||||||
3 | demand. To accomplish the purposes of this Act, the Department | ||||||
4 | may use the training programs provided for Illinois under | ||||||
5 | Section 605-800 of the Department of Commerce and Economic | ||||||
6 | Opportunity Law of the Civil Administrative Code of Illinois.
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7 | Section 45. Evaluation of tax credit program; reports to | ||||||
8 | the General Assembly. | ||||||
9 | (a) The Department shall evaluate the tax credit program. | ||||||
10 | The evaluation must include an assessment of the effectiveness | ||||||
11 | of the program in creating and retaining new jobs in Illinois | ||||||
12 | and of the revenue impact of the program, and may include a | ||||||
13 | review of the practices and experiences of other states or | ||||||
14 | nations with similar programs. Upon completion of this | ||||||
15 | evaluation, the Department shall determine the overall success | ||||||
16 | of the program, and may make a recommendation to extend, | ||||||
17 | modify, or not extend the program based on this evaluation. | ||||||
18 | (b) At the end of each fiscal quarter, the Department must | ||||||
19 | submit to the General Assembly a report that includes, without | ||||||
20 | limitation, the following information: | ||||||
21 | (1) the economic impact of the tax credit program,
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22 | including the number of jobs created and retained, | ||||||
23 | including whether the job positions are entry level, | ||||||
24 | management, talent-related, vendor-related, or |
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1 | production-related; | ||||||
2 | (2) the amount of film production spending brought to
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3 | Illinois, including the amount of spending and type of | ||||||
4 | Illinois vendors hired in connection with an accredited | ||||||
5 | production; and | ||||||
6 | (3) an overall picture of whether the human
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7 | infrastructure of the motion picture industry in Illinois | ||||||
8 | reflects the geographical, racial and ethnic, gender, and | ||||||
9 | income-level diversity of the State of Illinois.
| ||||||
10 | (c) At the end of each fiscal year, the Department must
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11 | submit to the General Assembly a report that includes, without | ||||||
12 | limitation, the following information: | ||||||
13 | (1) an identification of each vendor that provided
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14 | goods or services that were included in an accredited | ||||||
15 | production's Illinois production spending; | ||||||
16 | (2) the amount paid to each identified vendor by the
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17 | accredited production; | ||||||
18 | (3) for each identified vendor, a statement as to
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19 | whether the vendor is a minority owned business or a female | ||||||
20 | owned business, as defined under Section 2 of the Business | ||||||
21 | Enterprise for Minorities, Females, and Persons with | ||||||
22 | Disabilities Act; and | ||||||
23 | (4) a description of any steps taken by the
Department | ||||||
24 | to encourage accredited productions to use vendors who are | ||||||
25 | a minority owned business or a female owned business. |
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1 | Section 50. Program terms and conditions.
Any documentary | ||||||
2 | materials or data made available or received by
any agent or | ||||||
3 | employee of the
Department are confidential and are not public | ||||||
4 | records to the extent that the
materials or data consist of | ||||||
5 | commercial or financial information
regarding the operation of | ||||||
6 | the production of the applicant for or
recipient of any tax | ||||||
7 | credit under this Act.
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8 | Section 90. Continuation of prior law. This Act replaces | ||||||
9 | and is intended to be a continuation of the Film
Production | ||||||
10 | Services Tax Credit Act, which was repealed on January 1, 2008. | ||||||
11 | Section 95. Repeal. This Act is repealed on January 1, | ||||||
12 | 2009.
| ||||||
13 | Section 905. The Illinois Income Tax Act is amended by | ||||||
14 | changing Section 213 as follows:
| ||||||
15 | (35 ILCS 5/213)
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16 | Sec. 213. Film production services credit. For tax years | ||||||
17 | beginning on or
after January 1, 2004, a taxpayer who has been | ||||||
18 | awarded a tax credit under the
Film Production Services Tax | ||||||
19 | Credit Act or under the Film Production Services Tax Credit Act | ||||||
20 | of 2008 is entitled to a credit against the
taxes imposed under | ||||||
21 | subsections (a) and (b) of Section 201 of this Act in an
amount | ||||||
22 | determined by the Department of Commerce and Economic |
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| |||||||
1 | Opportunity under those Acts the
Film Production Services Tax | ||||||
2 | Credit Act . If the taxpayer is a partnership or
Subchapter S | ||||||
3 | corporation, the credit is allowed to the partners or | ||||||
4 | shareholders
in accordance with the determination of income and | ||||||
5 | distributive share of income
under Sections 702 and 704 and | ||||||
6 | Subchapter S of the Internal Revenue Code. | ||||||
7 | A transfer of this credit may be made by the taxpayer | ||||||
8 | earning the credit within one year after the credit is awarded | ||||||
9 | in accordance with rules adopted by the Department of Commerce | ||||||
10 | and Economic Opportunity.
| ||||||
11 | The
Department, in cooperation with the Department of | ||||||
12 | Commerce and Economic Opportunity, must prescribe rules to | ||||||
13 | enforce and administer the provisions of this
Section. This | ||||||
14 | Section is exempt from the provisions of Section 250 of this
| ||||||
15 | Act.
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16 | The credit may not be carried back. If the amount of the | ||||||
17 | credit exceeds the tax liability for the year, the
excess may | ||||||
18 | be carried forward and applied to the tax liability of the 5 | ||||||
19 | taxable
years following the excess credit year. The credit
| ||||||
20 | shall be applied to the earliest year for which there is a tax | ||||||
21 | liability. If
there are credits from more than one tax year | ||||||
22 | that are available to offset a
liability, the earlier credit | ||||||
23 | shall be applied first. In no event shall a credit
under this | ||||||
24 | Section reduce the taxpayer's
liability to less than
zero.
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25 | (Source: P.A. 93-543, eff. 1-1-04; 94-171, eff. 7-11-05.)
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26 | Section 999. Effective date. This Act takes effect upon |
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| |||||||
1 | becoming law.
|