HB2299 96TH GENERAL ASSEMBLY

LRB096 10460 JDS 20632 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB2299

Introduced 2/18/2009, by Rep. Kenneth Dunkin

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/218 new

Creates the Theater Production Tax Credit Act and amends the Illinois Income Tax Act. Sets forth procedures and criteria for the Department of Commerce and Economic Opportunity to award a tax credit to accredited theater productions. Bases the amount of the credit on the amount of the Illinois labor expenditure and marketing spending in support of the Illinois performances approved by the Department. Requires the Department to submit an annual report concerning the credit program. Provides that the Theater Production Tax Credit Act is repealed on January 1, 2011. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Theater Production Tax Credit Act.

Section 5. Purpose. The Illinois economy depends heavily on the commercial for-profit theater industry and the pre-Broadway and long-run shows that come to Illinois. Due to competition from other prominent theater cities in attracting and prolonging successful pre-Broadway and long-run shows, Illinois must move aggressively with new business development investment tools so that Illinois is more competitive in site location decision making for show producers. In an increasingly global economy, Illinois' long term development will benefit from rational, strategic use of State resources in support of pre-Broadway theater and long run show development and growth. It is the purpose of this Act to preserve and expand the existing human infrastructure for the presentation of live theater in Illinois. It shall be the policy of this State to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population through the creation and implementation of training, education, and recruitment programs organized in cooperation with Illinois colleges and universities, labor organizations, and the commercial for-profit theater industry.

Section 10. Definitions. As used in this Act:

"Accredited theater production" means a for-profit live stage presentation in theaters with a seating capacity of over 1200 seats within the State of Illinois that is either (i) a pre-Broadway production or (ii) a long-run production for which the aggregate Illinois labor and marketing expenditures exceed $100,000.

A "pre-Broadway production" means a live stage production that is mounted and performed in an Illinois theater, with a presentation scheduled for Broadway's Theater District in New York City within 12 months after the Illinois presentation

A "long-run production" means a live stage production that is performed in an Illinois theater for longer than 8 weeks, with at least 6 performances per week.

"Accredited theater production certificate" means a certificate issued by the Department certifying that the production is an accredited theater production that meets the guidelines of this Act.

"Applicant" means a taxpayer that is a theatre producer, owner, operator, or presenter that is presenting or has presented a stage presentation located within the State of Illinois and that (i) owns the theatrical rights of the stage presentation for the Illinois production period or (ii) has contracted directly with the owner of the theatrical rights or a person acting on behalf of the owner to provide performances of the production.

"Credit" means, for an accredited theater production approved by the Department:

(i) 20% of the Illinois marketing and labor spending for each taxable year; plus

(ii) 15% of the Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment, as determined by the Department.

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

"Director" means the Director of Commerce and Economic Opportunity.

"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:

(1) Reasonable in the circumstances.

(2) Incurred by the applicant for services on or after January 1, 2008.

(3) Incurred for the production stages of the accredited production, from the final script stage to the end of the post-production stage.

(4) Limited to the first $100,000 of wages paid or incurred to each employee of a production commencing on or after May 1, 2008.

(5) Exclusive of the salary or wages paid to or incurred for the 2 highest paid employees of the production.

(6) Directly attributable to the accredited production.

(7) Paid in the tax year for which the applicant is claiming the credit or no later than 60 days after the end of the tax year.

(8) Paid to persons resident in Illinois at the time the payments were made.

(9) Paid for services rendered in Illinois.

"Illinois production spending" means the expenses incurred by the applicant for an accredited production, including, without limitation, all of the following:

(1) Expenses to purchase, from vendors within Illinois, tangible personal property that is used in the accredited production.

(2) Expenses to acquire services, from vendors in Illinois for a stage presentation.

(3) The compensation, not to exceed $100,000 for any one employee, for contractual or salaried employees who are Illinois residents performing services with respect to the accredited production.

"Qualified production facility" means stage facilities in the State in which live theatrical shows are or are intended to be regularly produced and that contain at least one stage and a seating capacity of over 1200 seats.

Section 15. Powers of the Department. The Department, in addition to those powers granted under the Civil Administrative Code of Illinois, is granted and has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this Act, including, but not limited to, power and authority to:

(1) Adopt rules deemed necessary and appropriate for the administration of the tax credit program; establish forms for applications, notifications, contracts, or any other agreements; and accept applications at any time during the year.

(2) Assist applicants pursuant to the provisions of this Act to promote, foster, and support theater development and production and its related job creation or retention within the State.

(3) Gather information and conduct inquiries, in the manner and by the methods as it deems desirable, including any information required for the Department to comply with Section 45 and, without limitation, gathering information with respect to applicants for the purpose of making any designations or certifications necessary or desirable or to gather information to assist the Department with any recommendation or guidance in the furtherance of the purposes of this Act, including, but not limited to, information as to whether the applicant participated in training, education, and recruitment programs that are organized in cooperation with Illinois colleges and universities and labor organizations, and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population.

(4) Provide for sufficient personnel to permit administration, staffing, operation, and related support required to adequately discharge its duties and responsibilities described in this Act from funds as may be appropriated by the General Assembly for the administration of this Act.

(5) Require applicants, upon written request, to issue any necessary authorization to the appropriate federal, State, or local authority for the release of information concerning a project being considered under the provisions of this Act, with the information requested to include, but not be limited to, financial reports, returns, or records relating to the applicant or the accredited theater production.

(6) Require that an applicant must at all times keep proper books of record and account 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.

(7) Take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance or participation required under this Act, including the power to sell, dispose, lease, or rent, upon terms and conditions determined by the Director to be appropriate, real or personal property that the Department may receive as a result of these actions.

Section 20. Tax credit awards. Subject to the conditions set forth in this Act, an applicant is entitled to a credit as approved by the Department under Section 40 of this Act.

Section 25. Application for certification of accredited production. Any applicant proposing an accredited theater production located or planned to be located in Illinois may request an accredited theater production certificate by formal application to the Department.

Section 30. Review of application for accredited theater production certificate.

(a) In determining whether to issue an accredited theater production certificate, the Department must determine that a preponderance of the following conditions exist:

(1) The applicant's production intends to make the expenditure in the State required for certification.

(2) The applicant's production is economically sound and will benefit the people of the State of Illinois by increasing opportunities for employment and strengthen the economy of Illinois.

(3) The applicant has filed a diversity plan with the Department outlining specific goals (i) for hiring minority persons and females, as defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, and (ii) for using vendors receiving certification under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act; the Department has approved the plan as meeting the requirements established by the Department; and the Department has verified that the applicant has met or made good faith efforts in achieving those goals. The Department must adopt any rules that are necessary to ensure compliance with the provisions of this item (3) and that are necessary to require that the applicant's plan reflects the diversity of this State.

(4) The applicant's theater production application indicates whether the applicant intends to participate in training, education, and recruitment programs that are organized in cooperation with Illinois colleges and universities, labor organizations, and the commercial for-profit theater industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population.

(5) That, if not for the credit, the applicant's production would not occur in Illinois, which may be demonstrated by any means including, but not limited to, evidence that the applicant has multi-state or international location options and could reasonably and efficiently locate outside of the State, demonstration that at least one other state or nation is being considered for the production, evidence that the receipt of the credit is a major factor in the applicant's decision and that without the credit the applicant likely would not create or retain jobs in Illinois, or demonstration that receiving the credit is essential to the applicant's decision to create or retain new jobs in the State.

(6) Awarding the credit will result in an overall positive impact to the State, as determined by the Department using the best available data.

(b) If any of the provisions in this Section conflict with any existing collective bargaining agreements, the terms and conditions of those collective bargaining agreements shall control.

Section 35. Issuance of Tax Credit Certificate.

(a) In order to qualify for a tax credit under this Act, an applicant must file an application, on forms prescribed by the Department, providing information necessary to calculate the tax credit, and any additional information as required by the Department.

(b) Upon satisfactory review of the application, the Department shall issue a Tax Credit Certificate stating the amount of the tax credit to which the applicant is entitled.

Section 40. Amount and duration of the credit. The amount of the credit awarded under this Act is based on the amount of the Illinois labor expenditure and marketing spending in support of the Illinois performances approved by the Department for the accredited theater production as set forth under Section 10. The duration of the credit may not exceed one taxable year.

Section 45. Training programs for skills in critical demand. To accomplish the purposes of this Act, the Department may use the training programs provided for Illinois under Section 605-800 of the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois.

Section 50. Evaluation of tax credit program; reports to the General Assembly.

(a) The Department shall evaluate the tax credit program. The evaluation must include an assessment of the effectiveness of the program in creating and retaining new jobs in Illinois and of the revenue impact of the program, and may include a review of the practices and experiences of other states or nations with similar programs. Upon completion of this evaluation, the Department shall determine the overall success of the program, and may make a recommendation to extend, modify, or not extend the program based on this evaluation.

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

(1) the economic impact of the tax credit program, including the number of jobs created and retained, including whether the job positions are entry level, management, talent related, vendor related, or production related;

(2) the amount of accredited theater production spending brought to Illinois, including the amount of spending and type of Illinois vendors hired in connection with an accredited theater production; and

(3) an overall picture of whether the human infrastructure of the commercial for-profit theater industry in Illinois reflects the geographical, racial and ethnic, gender, and income level diversity of the State of Illinois.

(c) 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 vendor that provided goods or services that were included in an accredited production's Illinois production spending;

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

(3) for each identified 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; 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 55. Repeal. This Act is repealed on January 1, 2011.

Section 900. The Illinois Income Tax Act is amended by adding Section 218 as follows:

(35 ILCS 5/218 new)

Sec. 218. Live theater production credit.

(a) For tax years beginning on or after January 1, 2009, a taxpayer who has been awarded a tax credit under the Theater Production Tax Credit Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of this Act in an amount determined by the Department of Commerce and Economic Opportunity under that Act.

(b) If the taxpayer is a partnership or Subchapter S corporation, the credit is allowed to the partners or shareholders in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code.

(c) A transfer of this credit may be made by the taxpayer earning the credit within one year after the credit is awarded in accordance with rules adopted by the Department of Commerce and Economic Opportunity.

(d) The Department of Revenue, in cooperation with the Department of Commerce and Economic Opportunity, must prescribe rules to enforce and administer the provisions of this Section.

(e) This Section is exempt from the provisions of Section 250 of this Act.

(f) The credit may not be carried back. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, the earlier credit shall be applied first. In no event, may a credit under this Section reduce the taxpayer's liability to less than zero.

Section 999. Effective date. This Act takes effect upon becoming law.