Illinois General Assembly - Full Text of Public Act 095-0720
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Public Act 095-0720


 

Public Act 0720 95TH GENERAL ASSEMBLY



 


 
Public Act 095-0720
 
HB2482 Enrolled LRB095 00879 BDD 20881 b

    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 Film
Production Services Tax Credit Act of 2008.
 
    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: (i) for productions
commencing before May 1, 2006, 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; and (ii) for
productions commencing on or after May 1, 2006, a film, video,
or television production that has been certified by the
Department in which the Illinois production spending included
in the cost of production in the period that ends 12 months
after the time principal filming or taping of the production
began exceeds $100,000 for productions of 30 minutes or longer
or exceeds $50,000 for productions of less than 30 minutes.
"Accredited production" 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:
        (1) for an accredited production approved by the
    Department on or before January 1, 2005 and commencing
    before May 1, 2006, 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. For Illinois
    labor expenditures generated by the employment of
    residents of geographic areas of high poverty or high
    unemployment, as determined by the Department, in an
    accredited production commencing before May 1, 2006 and
    approved by the Department after January 1, 2005, the
    applicant shall receive an enhanced credit of 10% in
    addition to the 25% credit; and
        (2) for an accredited production commencing on or after
    May 1, 2006, the amount equal to:
            (i) 20% of the Illinois production spending for the
        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) 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 a production commencing before
    May 1, 2006 and the first $100,000 of wages paid or
    incurred to each employee of a production commencing on or
    after May 1, 2006.
        (6) For a production commencing before May 1, 2006,
    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.
    "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 film production, editing, or processing; and
        (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 television shows and films are or are
intended to be regularly produced and that contain at least one
sound stage of at least 15,000 square feet.
 
    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 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, 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 as
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 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 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 and Illinois production
spending approved by the Department for the production as set
forth under Section 10. The duration of the credit may not
exceed one taxable year.
 
    Section 43. 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 45. 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 film production spending brought to
    Illinois, including the amount of spending and type of
    Illinois vendors hired in connection with an accredited
    production; and
        (3) an overall picture of whether the human
    infrastructure of the motion picture 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 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 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. Continuation of prior law. This Act replaces
and is intended to be a continuation of the Film Production
Services Tax Credit Act, which was repealed on January 1, 2008.
 
    Section 95. Repeal. This Act is repealed on January 1,
2009.
 
    Section 905. The Illinois Income Tax Act is amended by
changing Section 213 as follows:
 
    (35 ILCS 5/213)
    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 or under the Film Production Services Tax Credit Act
of 2008 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 those Acts 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.
    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.
    The Department, in cooperation with the Department of
Commerce and Economic Opportunity, 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 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 shall a credit under this
Section reduce the taxpayer's liability to less than zero.
(Source: P.A. 93-543, eff. 1-1-04; 94-171, eff. 7-11-05.)
 
    Section 999. Effective date. This Act takes effect upon
becoming law.

Effective Date: 5/27/2008