101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB1595

 

Introduced 2/15/2019, by Sen. Elgie R. Sims, Jr.

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/213
35 ILCS 16/10
35 ILCS 16/42

    Amends the Film Production Services Tax Credit Act of 2008. Provides that Illinois labor expenditures include the first $200,000 of out-of-state wages paid or incurred by a production company or loan out corporation, subject to withholding payments, and all resident wages paid or incurred by the production company or loan out corporation. Provides that the credit applies on a permanent basis. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB1595LRB101 08982 HLH 54075 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 Act
11of 2008 is entitled to a credit against the taxes imposed under
12subsections (a) and (b) of Section 201 of this Act in an amount
13determined 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.
23    The Department, in cooperation with the Department of

 

 

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1Commerce and Economic Opportunity, must prescribe rules to
2enforce and administer the provisions of this Section. This
3Section is exempt from the provisions of Section 250 of this
4Act.
5    The credit may not be carried back. If the amount of the
6credit exceeds the tax liability for the year, the excess may
7be carried forward and applied to the tax liability of the 5
8taxable years following the excess credit year. The credit
9shall be applied to the earliest year for which there is a tax
10liability. If there are credits from more than one tax year
11that are available to offset a liability, the earlier credit
12shall be applied first. In no event shall a credit under this
13Section reduce the taxpayer's liability to less than zero.
14    For tax years beginning on or after July 1, 2019, in no
15event shall the credit under this Section be allowed in an
16amount which will reduce the tax to less than zero. If,
17however, the amount of credit allowed under this Section for
18any taxable year reduces the tax to such amount, any amount of
19credit not deductible in such taxable year shall be treated as
20an overpayment of tax to be refunded in accordance with this
21Section, provided however, that no interest shall be paid
22thereon.
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 Sections 10 and 42 as follows:
 

 

 

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

 

 

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1        (6) is a finished production that solicits funds;
2        (7) is a production produced by a film production
3    company if records, as required by 18 U.S.C. 2257, are to
4    be maintained by that film production company with respect
5    to any performer portrayed in that single media or
6    multimedia program; or
7        (8) is a production produced primarily for industrial,
8    corporate, or institutional purposes.
9    "Accredited animated production" means an accredited
10production in which movement and characters' performances are
11created using a frame-by-frame technique and a significant
12number of major characters are animated. Motion capture by
13itself is not an animation technique.
14    "Accredited production certificate" means a certificate
15issued by the Department certifying that the production is an
16accredited production that meets the guidelines of this Act.
17    "Applicant" means a taxpayer that is a film production
18company that is operating or has operated an accredited
19production located within the State of Illinois and that (i)
20owns the copyright in the accredited production throughout the
21Illinois production period or (ii) has contracted directly with
22the owner of the copyright in the accredited production or a
23person acting on behalf of the owner to provide services for
24the production, where the owner of the copyright is not an
25eligible production corporation.
26    "Credit" means:

 

 

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

 

 

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1            (ii) 15% of the Illinois labor expenditures
2        generated by the employment of residents of geographic
3        areas of high poverty or high unemployment, as
4        determined by the Department.
5    "Department" means the Department of Commerce and Economic
6Opportunity.
7    "Director" means the Director of Commerce and Economic
8Opportunity.
9    "Illinois labor expenditure" means salary or wages paid to
10employees of the applicant for services on the accredited
11production;
12    To qualify as an Illinois labor expenditure, the
13expenditure must be:
14        (1) Reasonable in the circumstances.
15        (2) Included in the federal income tax basis of the
16    property.
17        (3) Incurred by the applicant for services on or after
18    January 1, 2004.
19        (4) Incurred for the production stages of the
20    accredited production, from the final script stage to the
21    end of the post-production stage.
22        (5) Limited to the first $25,000 of wages paid or
23    incurred to each employee of a production commencing before
24    May 1, 2006 and the first $100,000 of wages paid or
25    incurred to each employee of a production commencing on or
26    after May 1, 2006 and prior to July 1, 2019. For

 

 

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1    productions commencing on or after July 1, 2019, the first
2    $200,000 of out-of-state wages paid or incurred by the
3    production company and loan out corporations qualify,
4    subject to withholding payments provided for in Article 7
5    of the Illinois Income Tax Act. Additionally, all resident
6    wages paid or incurred by the production company and loan
7    out corporations qualify.
8        (6) For a production commencing before May 1, 2006,
9    exclusive of the salary or wages paid to or incurred for
10    the 2 highest paid employees of the production.
11        (7) Directly attributable to the accredited
12    production.
13        (8) (Blank).
14        (9) Prior to July 1, 2019, paid Paid to persons
15    resident in Illinois at the time the payments were made.
16    For a production company commencing production on or after
17    July 1, 2019, resident and non-resident wages will qualify
18    as an Illinois labor expenditure.
19        (10) Paid for services rendered in Illinois.
20    "Illinois production spending" means the expenses incurred
21by the applicant for an accredited production, including,
22without limitation, all of the following:
23        (1) expenses to purchase, from vendors within
24    Illinois, tangible personal property that is used in the
25    accredited production;
26        (2) expenses to acquire services, from vendors in

 

 

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1    Illinois, for film production, editing, or processing; and
2        (3) before July 1, 2019, the compensation, not to
3    exceed $100,000 for any one employee, for contractual or
4    salaried employees who are Illinois residents performing
5    services with respect to the accredited production.
6    "Qualified production facility" means stage facilities in
7the State in which television shows and films are or are
8intended to be regularly produced and that contain at least one
9sound stage of at least 15,000 square feet.
10    "Loan out company" means a personal service corporation or
11other entity that is under contract with the taxpayer to
12provide specified individual personnel, such as artists, crew,
13actors, producers, or directors for the performance of services
14used directly in a production. "Loan out company" does not
15include entities contracted with by the taxpayer to provide
16goods or ancillary contractor services such as catering,
17construction, trailers, equipment, or transportation.
18    Rulemaking authority to implement this amendatory Act of
19the 95th General Assembly, if any, is conditioned on the rules
20being adopted in accordance with all provisions of the Illinois
21Administrative Procedure Act and all rules and procedures of
22the Joint Committee on Administrative Rules; any purported rule
23not so adopted, for whatever reason, is unauthorized.
24(Source: P.A. 97-796, eff. 7-13-12.)
 
25    (35 ILCS 16/42)

 

 

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1    Sec. 42. Sunset of credits. This Act is exempt from the
2provisions of Section 150 of the Illinois Income Tax Act. The
3application of credits awarded pursuant to this Act shall be
4limited by a reasonable and appropriate sunset date. A taxpayer
5shall not be entitled to take a credit awarded pursuant to this
6Act for tax years beginning on or after 10 years after the
7effective date of this amendatory Act of the 97th General
8Assembly. After the initial 10-year sunset, the General
9Assembly may extend the sunset date by 5-year intervals.
10(Source: P.A. 97-2, eff. 5-6-11; 97-3, eff. 5-6-11.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.