Public Act 93-0543
SB785 Enrolled LRB093 02893 SJM 02909 b
AN ACT in relation to taxation.
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 Film
Production Services Tax Credit Act.
Section 5. Purpose. The General Assembly finds that the
Illinois economy is highly vulnerable to other states and
nations that have major financial incentive programs targeted
to the motion picture industry. Because of the incentive
programs of these competitor locations, Illinois must move
aggressively with new business development investment tools
so that Illinois is more competitive in site location
decision-making for film productions. In an increasingly
global economy, Illinois' long-term development will benefit
from rational, strategic use of State resources in support of
film production development and growth. It is the purpose of
this Act to preserve and expand the existing human
infrastructure for the motion picture industry 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 motion picture
industry.
Section 10. Definitions. As used in this Act:
"Accredited production" means a film, video, or
television production that has been certified by the
Department in which the aggregate Illinois labor expenditures
included in the cost of the production, in the period that
ends 12 months after the time principal filming or taping of
the production began, exceed $100,000 for productions of 30
minutes or longer, or $50,000 for productions of less than 30
minutes; but does not include a production that:
(1) is news, current events, or public programming,
or a program that includes weather or market reports;
(2) is a talk show;
(3) is a production in respect of a game,
questionnaire, or contest;
(4) is a sports event or activity;
(5) is a gala presentation or awards show;
(6) is a finished production that solicits funds;
(7) is a production produced by a film production
company if records, as required by 18 U.S.C. 2257, are to
be maintained by that film production company with
respect to any performer portrayed in that single media
or multimedia program; or
(8) is a production produced primarily for
industrial, corporate, or institutional purposes.
"Accredited production certificate" means a certificate
issued by the Department certifying that the production is an
accredited production that meets the guidelines of this Act.
"Applicant" means a taxpayer that is a film production
company that is operating or has operated an accredited
production located within the State of Illinois and that (i)
owns the copyright in the accredited production throughout
the Illinois production period or (ii) has contracted
directly with the owner of the copyright in the accredited
production or a person acting on behalf of the owner to
provide services for the production, where the owner of the
copyright is not an eligible production corporation.
"Credit" means the amount equal to 25% of the Illinois
labor expenditure approved by the Department. The applicant
is deemed to have paid, on its balance due day for the year,
an amount equal to 25% of its qualified Illinois labor
expenditure for the tax year.
"Department" means the Department of Commerce and
Community Affairs.
"Director" means the Director of Commerce and Community
Affairs.
"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) Included in the federal income tax basis of the
property.
(3) Incurred by the applicant for services on or
after January 1, 2004.
(4) Incurred for the production stages of the
accredited production, from the final script stage to the
end of the post-production stage.
(5) Limited to the first $25,000 of wages paid or
incurred to each employee of the production.
(6) Exclusive of the salary or wages paid to or
incurred for the 2 highest paid employees of the
production.
(7) Directly attributable to the accredited
production.
(8) 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.
(9) Paid to persons resident in Illinois at the
time the payments were made.
(10) Paid for services rendered in Illinois.
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:
(a) 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.
(b) Assist applicants pursuant to the provisions of this
Act to promote, foster, and support film production and its
related job creation or retention within the State.
(c) Gather information and conduct inquiries, in the
manner and by the methods as it deems desirable, including,
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, labor organizations, and
the motion picture industry, and are designed to promote and
encourage the training and hiring of Illinois residents who
represent the diversity of the Illinois population.
(d) 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.
(e) 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 production.
(f) 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.
(g) 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
of 25% of the Illinois labor expenditure approved by the
Department under Section 40 of this Act.
Section 25. Application for certification of accredited
production. Any applicant proposing a film or television
production located or planned to be located in Illinois may
request an accredited production certificate by formal
application to the Department.
Section 30. Review of application for accredited
production certificate.
(a) In determining whether to issue an accredited
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's production application includes
a provision setting forth the percentage of minority
workers that the production company plans to employ,
subject to any applicable collective bargaining
agreements with a labor organization to which the
applicant is a signatory, to perform work on the
production. This provision should stress the importance
of hiring the percentage of minorities that is set out in
the application.
(4) The applicant's 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 motion picture 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, or demonstration
that at least one other state or nation is being
considered for the production, or 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 approved by the Department
for the production. The duration of the credit may not exceed
one taxable year.
Section 45. Evaluation of tax credit program. 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.
Section 50. Program terms and conditions. Any documentary
materials or data made available or received by any agent or
employee of the Department are confidential and are not
public records to the extent that the materials or data
consist of commercial or financial information regarding the
operation of the production of the applicant for or recipient
of any tax credit under this Act.
Section 90. Repeal. This Act is repealed 1 year after its
effective date.
Section 905. The Illinois Income Tax Act is amended by
adding Section 213 as follows:
(35 ILCS 5/213 new)
Sec. 213. Film production services credit. For tax years
beginning on or after January 1, 2004, a taxpayer who has
been awarded a tax credit under the Film Production Services
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
Community Affairs under the Film Production Services Tax
Credit Act. 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. The
Department, in cooperation with the Department of Commerce
and Community Affairs, must prescribe rules to enforce and
administer the provisions of this Section. This Section is
exempt from the provisions of Section 250 of this Act.
The credit may not be carried forward or back. In no
event shall a credit under this Section reduce the taxpayer's
liability to less than zero.
Section 999. Effective date. This Act takes effect on
January 1, 2004.