102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3944

 

Introduced 1/21/2022, by Sen. Elgie R. Sims, Jr.

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/213
35 ILCS 16/10
35 ILCS 16/46 new
30 ILCS 105/5.970 new

    Amends the Illinois Income Tax Act and the Film Production Services Tax Credit Act of 2008. Provides that, if a film production credit is transferred by the taxpayer, then the transferor taxpayer shall pay to the Department of Commerce and Economic Opportunity a specified percentage of the amount transferred, which shall be deposited into the Illinois Production Workforce Development Fund. Provides that, for productions commencing on or after July 1, 2022, the term "Illinois labor expenditures" includes wages paid to non-residents, subject to certain limitations. Amends the State Finance Act to create the Illinois Production Workforce Development Fund. Effective immediately.


LRB102 24537 HLH 33771 b

 

 

A BILL FOR

 

SB3944LRB102 24537 HLH 33771 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 213 as follows:
 
6    (35 ILCS 5/213)
7    Sec. 213. Film production services credit. For tax years
8beginning on or after January 1, 2004, a taxpayer who has been
9awarded a tax credit under the Film Production Services Tax
10Credit Act or under the Film Production Services Tax Credit
11Act of 2008 is entitled to a credit against the taxes imposed
12under subsections (a) and (b) of Section 201 of this Act in an
13amount determined by the Department of Commerce and Economic
14Opportunity under those Acts. If the taxpayer is a partnership
15or Subchapter S corporation, the credit is allowed to the
16partners or shareholders in accordance with the determination
17of income and distributive share of income under Sections 702
18and 704 and Subchapter S of the Internal Revenue Code.
19    A transfer of this credit may be made by the taxpayer
20earning the credit within one year after the credit is awarded
21in accordance with rules adopted by the Department of Commerce
22and Economic Opportunity. Beginning July 1, 2022, if a credit
23is transferred under this Section by the taxpayer, then the

 

 

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1transferor taxpayer shall pay to the Department of Commerce
2and Economic Opportunity, upon notification of a transfer,
32.5% of the transferred credit amount eligible for
4non-resident wages, as described in Section 10 of the Film
5Production Services Tax Credit Act of 2008, and an additional
60.25% of the total amount of the transferred credit that is not
7calculated on non-resident wages, which shall be deposited
8into the Illinois Production Workforce Development Fund.
9    The Department, in cooperation with the Department of
10Commerce and Economic Opportunity, must prescribe rules to
11enforce and administer the provisions of this Section. This
12Section is exempt from the provisions of Section 250 of this
13Act.
14    The credit may not be carried back. If the amount of the
15credit exceeds the tax liability for the year, the excess may
16be carried forward and applied to the tax liability of the 5
17taxable years following the excess credit year. The credit
18shall be applied to the earliest year for which there is a tax
19liability. If there are credits from more than one tax year
20that are available to offset a liability, the earlier credit
21shall be applied first. In no event shall a credit under this
22Section reduce the taxpayer's liability to less than zero.
23(Source: P.A. 94-171, eff. 7-11-05; 95-720, eff. 5-27-08.)
 
24    Section 10. The Film Production Services Tax Credit Act of
252008 is amended by changing Section 10 and by adding Section 46

 

 

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1as follows:
 
2    (35 ILCS 16/10)
3    Sec. 10. Definitions. As used in this Act:
4    "Accredited production" means: (i) for productions
5commencing before May 1, 2006, a film, video, or television
6production that has been certified by the Department in which
7the aggregate Illinois labor expenditures included in the cost
8of the production, in the period that ends 12 months after the
9time principal filming or taping of the production began,
10exceed $100,000 for productions of 30 minutes or longer, or
11$50,000 for productions of less than 30 minutes; and (ii) for
12productions commencing on or after May 1, 2006, a film, video,
13or television production that has been certified by the
14Department in which the Illinois production spending included
15in the cost of production in the period that ends 12 months
16after the time principal filming or taping of the production
17began exceeds $100,000 for productions of 30 minutes or longer
18or exceeds $50,000 for productions of less than 30 minutes.
19"Accredited production" does not include a production that:
20        (1) is news, current events, or public programming, or
21    a program that includes weather or market reports;
22        (2) is a talk show;
23        (3) is a production in respect of a game,
24    questionnaire, or contest;
25        (4) is a sports event or activity;

 

 

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1        (5) is a gala presentation or awards show;
2        (6) is a finished production that solicits funds;
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
6    to any performer portrayed in that single media or
7    multimedia program; or
8        (8) is a production produced primarily for industrial,
9    corporate, or institutional purposes.
10    "Accredited animated production" means an accredited
11production in which movement and characters' performances are
12created using a frame-by-frame technique and a significant
13number of major characters are animated. Motion capture by
14itself is not an animation technique.
15    "Accredited production certificate" means a certificate
16issued by the Department certifying that the production is an
17accredited production that meets the guidelines of this Act.
18    "Applicant" means a taxpayer that is a film production
19company that is operating or has operated an accredited
20production located within the State of Illinois and that (i)
21owns the copyright in the accredited production throughout the
22Illinois production period or (ii) has contracted directly
23with the owner of the copyright in the accredited production
24or a person acting on behalf of the owner to provide services
25for the production, where the owner of the copyright is not an
26eligible production corporation.

 

 

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1    "Credit" means:
2        (1) for an accredited production approved by the
3    Department on or before January 1, 2005 and commencing
4    before May 1, 2006, the amount equal to 25% of the Illinois
5    labor expenditure approved by the Department. The
6    applicant is deemed to have paid, on its balance due day
7    for the year, an amount equal to 25% of its qualified
8    Illinois labor expenditure for the tax year. For Illinois
9    labor expenditures generated by the employment of
10    residents of geographic areas of high poverty or high
11    unemployment, as determined by the Department, in an
12    accredited production commencing before May 1, 2006 and
13    approved by the Department after January 1, 2005, the
14    applicant shall receive an enhanced credit of 10% in
15    addition to the 25% credit; and
16        (2) for an accredited production commencing on or
17    after May 1, 2006, the amount equal to:
18            (i) 20% of the Illinois production spending for
19        the taxable year; plus
20            (ii) 15% of the Illinois labor expenditures
21        generated by the employment of residents of geographic
22        areas of high poverty or high unemployment, as
23        determined by the Department; and
24        (3) for an accredited production commencing on or
25    after January 1, 2009, the amount equal to:
26            (i) 30% of the Illinois production spending for

 

 

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1        the taxable year; plus
2            (ii) 15% of the Illinois labor expenditures
3        generated by the employment of residents of geographic
4        areas of high poverty or high unemployment, as
5        determined by the Department.
6    "Department" means the Department of Commerce and Economic
7Opportunity.
8    "Director" means the Director of Commerce and Economic
9Opportunity.
10    "Illinois labor expenditure" means salary or wages paid to
11employees of the applicant for services on the accredited
12production.
13    To qualify as an Illinois labor expenditure, the
14expenditure must be:
15        (1) Reasonable in the circumstances.
16        (2) Included in the federal income tax basis of the
17    property.
18        (3) Incurred by the applicant for services on or after
19    January 1, 2004.
20        (4) Incurred for the production stages of the
21    accredited production, from the final script stage to the
22    end of the post-production stage.
23        (5) Limited to the first $25,000 of wages paid or
24    incurred to each employee of a production commencing
25    before May 1, 2006 and the first $100,000 of wages paid or
26    incurred to each employee of a production commencing on or

 

 

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1    after May 1, 2006 and prior to July 1, 2022. For
2    productions commencing on or after July 1, 2022, limited
3    to the first $500,000 of wages paid or incurred to each
4    non-resident or resident employee of a production company
5    or loan out company that provides in-State services to a
6    production, whether those wages are paid or incurred by
7    the production company, loan out company, or both, subject
8    to withholding payments provided for in Article 7 of the
9    Illinois Income Tax Act. For purposes of calculating
10    Illinois labor expenditures for a television series, the
11    non-resident wage limitations provided under this
12    subparagraph are applied to the entire season.
13        (6) For a production commencing before May 1, 2006,
14    exclusive of the salary or wages paid to or incurred for
15    the 2 highest paid employees of the production.
16        (7) Directly attributable to the accredited
17    production.
18        (8) (Blank).
19        (9) Prior to July 1, 2022, paid Paid to persons
20    resident in Illinois at the time the payments were made.
21    For a production commencing on or after July 1, 2022, paid
22    to persons resident in Illinois and non-residents at the
23    time the payments were made. For purposes of this
24    subparagraph, only wages paid to non-residents working in
25    the following positions shall be considered Illinois labor
26    expenditures: Writer, Director, Director of Photography,

 

 

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1    Production Designer, Costume Designer, Production
2    Accountant, VFX Supervisor, Editor, Composer, and Actor,
3    subject to the limitations set forth under this
4    subparagraph. For an accredited Illinois production
5    spending of $25,000,000 or less, no more than 2
6    non-resident actors' wages shall qualify as an Illinois
7    labor expenditure. For an accredited production with
8    Illinois production spending of more than $25,000,000, no
9    more than 4 non-resident actor's wages shall qualify as
10    Illinois labor expenditures.
11        (10) Paid for services rendered in Illinois.
12    "Illinois production spending" means the expenses incurred
13by the applicant for an accredited production, including,
14without limitation, all of the following:
15        (1) expenses to purchase, from vendors within
16    Illinois, tangible personal property that is used in the
17    accredited production;
18        (2) expenses to acquire services, from vendors in
19    Illinois, for film production, editing, or processing; and
20        (3) for a production commencing before July 1, 2022,
21    the compensation, not to exceed $100,000 for any one
22    employee, for contractual or salaried employees who are
23    Illinois residents performing services with respect to the
24    accredited production. For a production commencing on or
25    after July 1, 2022, the compensation, not to exceed
26    $500,000 for any one employee, for contractual or salaried

 

 

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1    employees who are Illinois residents or non-resident
2    employees, subject to the limitations set forth under
3    Section 10 of this Act.
4    "Loan out company" means a personal service corporation or
5other entity that is under contract with the taxpayer to
6provide specified individual personnel, such as artists, crew,
7actors, producers, or directors for the performance of
8services used directly in a production. "Loan out company"
9does not include entities contracted with by the taxpayer to
10provide goods or ancillary contractor services such as
11catering, construction, trailers, equipment, or
12transportation.
13    "Qualified production facility" means stage facilities in
14the State in which television shows and films are or are
15intended to be regularly produced and that contain at least
16one sound stage of at least 15,000 square feet.
17    Rulemaking authority to implement Public Act 95-1006, if
18any, is conditioned on the rules being adopted in accordance
19with all provisions of the Illinois Administrative Procedure
20Act and all rules and procedures of the Joint Committee on
21Administrative Rules; any purported rule not so adopted, for
22whatever reason, is unauthorized.
23(Source: P.A. 102-558, eff. 8-20-21.)
 
24    (35 ILCS 16/46 new)
25    Sec. 46. Illinois Production Workforce Development Fund.

 

 

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1    (a) The Illinois Production Workforce Development Fund is
2created as a special fund in the State Treasury. Beginning
3July 1, 2022, amounts paid to the Department of Commerce and
4Economic Opportunity pursuant to Section 213 of the Illinois
5Income Tax Act shall be deposited into the Fund. The Fund shall
6be used exclusively to provide grants to community-based
7organizations, labor organizations, private and public
8universities, community colleges, and other organizations and
9institutions that may be deemed appropriate by the Department
10to administer workforce training programs that support efforts
11to recruit, hire, promote, retain, develop, and train a
12diverse and inclusive workforce in the film industry.
13    (b) Pursuant to Section 213 of the Illinois Income Tax
14Act, the Fund shall receive deposits in amounts not to exceed
150.25% of the amount of each credit certificate issued that is
16not calculated on out-of-state wages and transferred or
17claimed on an Illinois tax return in the quarter such credit
18was transferred or claimed. In addition, such amount shall
19also include 2.5% of the credit amount calculated on wages
20paid to non-residents that is transferred or claimed on an
21Illinois tax return in the quarter such credit was transferred
22or claimed.
23    (c) At the request of the Department, the State
24Comptroller and the State Treasurer may advance amounts to the
25Fund on an annual basis not to exceed $1,000,000 in any fiscal
26year. The fund from which the moneys are advanced shall be

 

 

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1reimbursed in the same fiscal year for any such advance
2payments as described in this Section. The method of
3reimbursement shall be set forth in rules.
4    (d) Of the appropriated funds in a given fiscal year, 50%
5of the appropriated funds shall be reserved for organizations
6that meet one of the following criteria. The organization is:
7(1) a minority-owned business, as defined by the Business
8Enterprise for Minorities, Women, and Persons with
9Disabilities Act; (2) located in an underserved area, as
10defined by the Economic Development for a Growing Economy Tax
11Credit Act; or (3) on an annual basis, training a cohort of
12program participants where at least 50% of the program
13participants are either a minority person, as defined by the
14Business Enterprise for Minorities, Women, and Persons with
15Disabilities Act, or reside in an underserved area, as defined
16by the Economic Development for a Growing Economy Tax Credit
17Act.
18    (e) The Illinois Production Workforce Development Fund
19shall be administered by the Department. The Department may
20adopt rules necessary to administer the provisions of this
21Section.
22    (f) Notwithstanding any other law to the contrary, the
23Illinois Production Workforce Development Fund is not subject
24to sweeps, administrative charge-backs, or any other fiscal or
25budgetary maneuver that would in any way transfer any amounts
26from the Illinois Production Workforce Development Fund.

 

 

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1    (g) By June 30 of each fiscal year, the Department must
2submit to the General Assembly a report that includes the
3following information: (1) an identification of the
4organizations and institutions that received funding to
5administer workforce training programs during the fiscal year;
6(2) the number of total persons trained and the number of
7persons trained per workforce training program in the fiscal
8year; and (3) in the aggregate, per organization, the number
9of persons identified as a minority person or that reside in an
10underserved area that received training in the fiscal year.
 
11    Section 90. The State Finance Act is amended by adding
12Section 5.970 as follows:
 
13    (30 ILCS 105/5.970 new)
14    Sec. 5.970. The Illinois Production Workforce Development
15Fund.
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.