Illinois General Assembly - Full Text of SB0785
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Full Text of SB0785  93rd General Assembly

SB0785ham001 93rd General Assembly



                                     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.".