093_SB0785ham001 LRB093 02893 SJM 17171 a 1 AMENDMENT TO SENATE BILL 785 2 AMENDMENT NO. . Amend Senate Bill 785 by replacing 3 everything after the enacting clause with the following: 4 "Section 1. Short title. This Act may be cited as the 5 Film Production Services Tax Credit Act. 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 12 so 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. 19 It shall be the policy of this State to promote and encourage 20 the training and hiring of Illinois residents who represent 21 the diversity of the Illinois population through the creation 22 and implementation of training, education, and recruitment -2- LRB093 02893 SJM 17171 a 1 programs organized in cooperation with Illinois colleges and 2 universities, labor organizations, and the motion picture 3 industry. 4 Section 10. Definitions. As used in this Act: 5 "Accredited production" means a film, video, or 6 television production that has been certified by the 7 Department in which the aggregate Illinois labor expenditures 8 included in the cost of the production, in the period that 9 ends 12 months after the time principal filming or taping of 10 the production began, exceed $100,000 for productions of 30 11 minutes or longer, or $50,000 for productions of less than 30 12 minutes; but does not include a production that: 13 (1) is news, current events, or public programming, 14 or a program that includes weather or market reports; 15 (2) is a talk show; 16 (3) is a production in respect of a game, 17 questionnaire, or contest; 18 (4) is a sports event or activity; 19 (5) is a gala presentation or awards show; 20 (6) is a finished production that solicits funds; 21 (7) is a production produced by a film production 22 company if records, as required by 18 U.S.C. 2257, are to 23 be maintained by that film production company with 24 respect to any performer portrayed in that single media 25 or multimedia program; or 26 (8) is a production produced primarily for 27 industrial, corporate, or institutional purposes. 28 "Accredited production certificate" means a certificate 29 issued by the Department certifying that the production is an 30 accredited production that meets the guidelines of this Act. 31 "Applicant" means a taxpayer that is a film production 32 company that is operating or has operated an accredited 33 production located within the State of Illinois and that (i) -3- LRB093 02893 SJM 17171 a 1 owns the copyright in the accredited production throughout 2 the Illinois production period or (ii) has contracted 3 directly with the owner of the copyright in the accredited 4 production or a person acting on behalf of the owner to 5 provide services for the production, where the owner of the 6 copyright is not an eligible production corporation. 7 "Credit" means the amount equal to 25% of the Illinois 8 labor expenditure approved by the Department. The applicant 9 is deemed to have paid, on its balance due day for the year, 10 an amount equal to 25% of its qualified Illinois Labor 11 expenditure for the tax year. 12 "Department" means the Department of Commerce and 13 Community Affairs. 14 "Director" means the Director of Commerce and Community 15 Affairs. 16 "Illinois labor expenditure" means salary or wages paid 17 to employees of the applicant for services on the accredited 18 production; 19 To qualify as an Illinois labor expenditure, the 20 expenditure must be: 21 (1) Reasonable in the circumstances. 22 (2) Included in the federal income tax basis of the 23 property. 24 (3) Incurred by the applicant for services on or 25 after January 1, 2004. 26 (4) Incurred for the production stages of the 27 accredited production, from the final script stage to the 28 end of the post-production stage. 29 (5) Limited to the first $25,000 of wages paid or 30 incurred to each employee of the production. 31 (6) Exclusive of the salary or wages paid to or 32 incurred for the 2 highest paid employees of the 33 production. 34 (7) Directly attributable to the accredited -4- LRB093 02893 SJM 17171 a 1 production. 2 (8) Paid in the tax year for which the applicant is 3 claiming the credit or no later than 60 days after the 4 end of the tax year. 5 (9) Paid to persons resident in Illinois at the 6 time the payments were made. 7 (10) Paid for services rendered in Illinois. 8 Section 15. Powers of the Department. The Department, in 9 addition to those powers granted under the Civil 10 Administrative Code of Illinois, is granted and has all the 11 powers necessary or convenient to carry out and effectuate 12 the purposes and provisions of this Act, including, but not 13 limited to, power and authority to: 14 (a) Adopt rules deemed necessary and appropriate for the 15 administration of the tax credit program; establish forms for 16 applications, notifications, contracts, or any other 17 agreements; and accept applications at any time during the 18 year. 19 (b) Assist applicants pursuant to the provisions of this 20 Act to promote, foster, and support film production and its 21 related job creation or retention within the State. 22 (c) Gather information and conduct inquiries, in the 23 manner and by the methods as it deems desirable, including, 24 without limitation, gathering information with respect to 25 applicants for the purpose of making any designations or 26 certifications necessary or desirable or to gather 27 information to assist the Department with any recommendation 28 or guidance in the furtherance of the purposes of this Act, 29 including, but not limited to, information as to whether the 30 applicant participated in training, education, and 31 recruitment programs that are organized in cooperation with 32 Illinois colleges and universities, labor organizations, and 33 the motion picture industry, and are designed to promote and -5- LRB093 02893 SJM 17171 a 1 encourage the training and hiring of Illinois residents who 2 represent the diversity of the Illinois population. 3 (d) Provide for sufficient personnel to permit 4 administration, staffing, operation, and related support 5 required to adequately discharge its duties and 6 responsibilities described in this Act from funds as may be 7 appropriated by the General Assembly for the administration 8 of this Act. 9 (e) Require applicants, upon written request, to issue 10 any necessary authorization to the appropriate federal, 11 state, or local authority for the release of information 12 concerning a project being considered under the provisions of 13 this Act, with the information requested to include, but not 14 be limited to, financial reports, returns, or records 15 relating to the applicant or the accredited production. 16 (f) Require that an applicant must at all times keep 17 proper books of record and account in accordance with 18 generally accepted accounting principles consistently 19 applied, with the books, records, or papers related to the 20 accredited production in the custody or control of the 21 taxpayer open for reasonable Department inspection and 22 audits, and including, without limitation, the making of 23 copies of the books, records, or papers, and the inspection 24 or appraisal of any of the assets of the applicant or the 25 accredited production. 26 (g) Take whatever actions are necessary or appropriate 27 to protect the State's interest in the event of bankruptcy, 28 default, foreclosure, or noncompliance with the terms and 29 conditions of financial assistance or participation required 30 under this Act, including the power to sell, dispose, lease, 31 or rent, upon terms and conditions determined by the Director 32 to be appropriate, real or personal property that the 33 Department may receive as a result of these actions. -6- LRB093 02893 SJM 17171 a 1 Section 20. Tax credit awards. Subject to the conditions 2 set forth in this Act, an applicant is entitled to a credit 3 of 25% of the Illinois labor expenditure approved by the 4 Department under Section 40 of this Act. 5 Section 25. Application for certification of accredited 6 production. Any applicant proposing a film or television 7 production located or planned to be located in Illinois may 8 request an accredited production certificate by formal 9 application to the Department. 10 Section 30. Review of application for accredited 11 production certificate. 12 (a) In determining whether to issue an accredited 13 production certificate, the Department must determine that a 14 preponderance of the following conditions exist: 15 (1) The applicant's production intends to make the 16 expenditure in the State required for certification. 17 (2) The applicant's production is economically 18 sound and will benefit the people of the State of 19 Illinois by increasing opportunities for employment and 20 strengthen the economy of Illinois. 21 (3) The applicant's production application includes 22 a provision setting forth the percentage of minority 23 workers that the production company plans to employ, 24 subject to any applicable collective bargaining 25 agreements with a labor organization to which the 26 applicant is a signatory, to perform work on the 27 production. This provision should stress the importance 28 of hiring the percentage of minorities that is set out in 29 the application. 30 (4) The applicant's production application indicates 31 whether the applicant intends to participate in training, 32 education, and recruitment programs that are organized in -7- LRB093 02893 SJM 17171 a 1 cooperation with Illinois colleges and universities, 2 labor organizations, and the motion picture industry and 3 are designed to promote and encourage the training and 4 hiring of Illinois residents who represent the diversity 5 of the Illinois population. 6 (5) That, if not for the credit, the applicant's 7 production would not occur in Illinois, which may be 8 demonstrated by any means including, but not limited to, 9 evidence that the applicant has multi-state or 10 international location options and could reasonably and 11 efficiently locate outside of the State, or demonstration 12 that at least one other state or nation is being 13 considered for the production, or evidence that the 14 receipt of the credit is a major factor in the 15 applicant's decision and that without the credit the 16 applicant likely would not create or retain jobs in 17 Illinois, or demonstration that receiving the credit is 18 essential to the applicant's decision to create or retain 19 new jobs in the State. 20 (6) Awarding the credit will result in an overall 21 positive impact to the State, as determined by the 22 Department using the best available data. 23 (b) If any of the provisions in this Section conflict 24 with any existing collective bargaining agreements, the terms 25 and conditions of those collective bargaining agreements 26 shall control. 27 Section 35. Issuance of Tax Credit Certificate. 28 (a) In order to qualify for a tax credit under this Act, 29 an applicant must file an application, on forms prescribed by 30 the Department, providing information necessary to calculate 31 the tax credit, and any additional information as required by 32 the Department. 33 (b) Upon satisfactory review of the application, the -8- LRB093 02893 SJM 17171 a 1 Department shall issue a Tax Credit Certificate stating the 2 amount of the tax credit to which the applicant is entitled. 3 Section 40. Amount and duration of the credit. The amount 4 of the credit awarded under this Act is based on the amount 5 of the Illinois labor expenditure approved by the Department 6 for the production. The duration of the credit may not exceed 7 one taxable year. 8 Section 45. Evaluation of tax credit program. The 9 Department shall evaluate the tax credit program. The 10 evaluation must include an assessment of the effectiveness of 11 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 16 success of the program, and may make a recommendation to 17 extend, modify, or not extend the program based on this 18 evaluation. 19 Section 50. Program terms and conditions. Any documentary 20 materials or data made available or received by any agent or 21 employee of the Department are confidential and are not 22 public records to the extent that the materials or data 23 consist of commercial or financial information regarding the 24 operation of the production of the applicant for or recipient 25 of any tax credit under this Act. 26 Section 90. Repeal. This Act is repealed 1 year after its 27 effective date. 28 Section 905. The Illinois Income Tax Act is amended by 29 adding Section 213 as follows: -9- LRB093 02893 SJM 17171 a 1 (35 ILCS 5/213 new) 2 Sec. 213. Film production services credit. For tax years 3 beginning on or after January 1, 2004, a taxpayer who has 4 been awarded a tax credit under the Film Production Services 5 Tax Credit Act is entitled to a credit against the taxes 6 imposed under subsections (a) and (b) of Section 201 of this 7 Act in an amount determined by the Department of Commerce and 8 Community Affairs under the Film Production Services Tax 9 Credit Act. If the taxpayer is a partnership or Subchapter S 10 corporation, the credit is allowed to the partners or 11 shareholders in accordance with the determination of income 12 and distributive share of income under Sections 702 and 704 13 and subchapter S of the Internal Revenue Code. The 14 Department, in cooperation with the Department of Commerce 15 and Community Affairs, must prescribe rules to enforce and 16 administer the provisions of this Section. This Section is 17 exempt from the provisions of Section 250 of this Act. 18 The credit may not be carried forward or back. 19 Section 999. Effective date. This Act takes effect upon 20 becoming law.".