97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB0005

 

Introduced 1/27/2011, by Sen. Dan Kotowski

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/221 new

    Creates the Live Theater Production Tax Credit Act. Provides that certain taxpayers who are theater producers, owners, licensees, or operators, or who otherwise present live stage presentations within the State, are entitled to a credit against their income tax liability equal to a percentage of their Illinois production spending and Illinois labor expenditures. Provides that eligibility for the credit is determined by the Department of Commerce and Economic Opportunity. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Live
5Theater Production Tax Credit Act.
 
6    Section 5. Purpose. The Illinois economy depends heavily on
7the commercial for-profit live theater industry and the
8pre-Broadway and long-run shows that are presented in Illinois.
9As a result of intense competition from other prominent theater
10cities in the United States and abroad in attracting
11pre-Broadway and long-run shows, Illinois must move
12aggressively with new business development investment tools so
13that Illinois is more competitive in site location decision
14making for show producers. In an increasingly global economy,
15Illinois' long term development will benefit from the rational,
16strategic use of State resources in support of pre-Broadway
17live theater and long run show development and growth. It is
18the purpose of this Act to preserve and expand the existing
19work force used in live theater and enhance the marketing of
20the presentation of live theater in Illinois. It shall be the
21policy of this State to promote and encourage the training and
22hiring of Illinois residents who represent the diversity of the
23Illinois population through the creation and implementation of

 

 

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1training, education, and recruitment programs organized in
2cooperation with Illinois colleges and universities, labor
3organizations, and the commercial for-profit live theater
4industry.
 
5    Section 10. Definitions. As used in this Act:
6    "Accredited theater production" means a for-profit live
7stage presentation in a qualified production facility, as
8defined in this Section, that is either (i) a pre-Broadway
9production or (ii) a long-run production for which the
10aggregate Illinois labor and marketing expenditures exceed
11$100,000.
12    "Pre-Broadway production" means a live stage production
13that, in its original or adaptive version, is performed in a
14qualified production facility having a presentation scheduled
15for Broadway's Theater District in New York City within 12
16months after its Illinois presentation.
17    "Long-run production" means a live stage production that is
18performed in a qualified production facility for longer than 8
19weeks, with at least 6 performances per week, and includes a
20production that spans the end of one tax year and the
21commencement of a new tax year that, in combination, meets the
22criteria set forth in this definition making it a long-run
23production eligible for a theater tax credit award in each tax
24year or portion thereof.
25    "Accredited theater production certificate" means a

 

 

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1certificate issued by the Department certifying that the
2production is an accredited theater production that meets the
3guidelines of this Act.
4    "Applicant" means a taxpayer that is a theater producer,
5owner, licensee, operator, or presenter that is presenting or
6has presented a live stage presentation located within the
7State of Illinois who:
8        (1) owns or licenses the theatrical rights of the stage
9    presentation for the Illinois production period; or
10        (2) has contracted or will contract directly with the
11    owner or licensee of the theatrical rights or a person
12    acting on behalf of the owner or licensee to provide live
13    performances of the production.
14    An applicant that directly or indirectly owns, controls, or
15operates multiple qualified production facilities shall be
16presumed to be and considered for the purposes of this Act to
17be a single applicant; provided, however, that as to each of
18the applicant's qualified production facilities, the applicant
19shall be eligible to separately and contemporaneously (i) apply
20for and obtain accredited theater production certificates,
21(ii) stage accredited theater productions, and (iii) apply for
22and receive a tax credit award certificate for each of
23applicant's accredited theater productions performed at each
24of the applicant's qualified production facilities.
25    "Department" means the Department of Commerce and Economic
26Opportunity.

 

 

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1    "Director" means the Director of the Department.
2    "Illinois labor expenditure" means gross salary or wages
3including, but not limited to, taxes, benefits, and any other
4consideration incurred or paid to non-talent employees of the
5applicant for services rendered to and on behalf of the
6accredited theater production. To qualify as an Illinois labor
7expenditure, the expenditure must be:
8        (1) incurred or paid by the applicant on or after the
9    effective date of the Act for services related to any
10    portion of an accredited theater production from its
11    pre-production stages, including, but not limited to, the
12    writing of the script, casting, hiring of service
13    providers, purchases from vendors, marketing, advertising,
14    public relations, load in, rehearsals, performances, other
15    accredited theater production related activities, and load
16    out;
17        (2) directly attributable to the accredited theater
18    production;
19        (3) limited to the first $100,000 of wages incurred or
20    paid to each employee of an accredited theater production
21    in each tax year;
22        (4) included in the federal income tax basis of the
23    property;
24        (5) paid in the tax year for which the applicant is
25    claiming the tax credit award, or no later than 60 days
26    after the end of the tax year;

 

 

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1        (6) paid to persons residing in Illinois at the time
2    payments were made; and
3        (7) reasonable in the circumstances.
4    "Illinois production spending" means any and all expenses
5directly or indirectly incurred relating to an accredited
6theater production presented in any qualified production
7facility of the applicant, including, but not limited to,
8expenditures for:
9        (1) national marketing, public relations, and the
10    creation and placement of print, electronic, television,
11    billboard, and other forms of advertising; and
12        (2) the construction and fabrication of scenic
13    materials and elements; provided, however, that the
14    maximum amount of expenditures attributable to the
15    construction and fabrication of scenic materials and
16    elements eligible for a tax credit award shall not exceed
17    $500,000 per applicant per production in any single tax
18    year.
19    "Qualified production facility" means a facility located
20in the State in which live theatrical productions are, or are
21intended to be, exclusively presented that contains at least
22one stage, a seating capacity of 1,200 or more seats, and
23dressing rooms, storage areas, and other ancillary amenities
24necessary for the accredited theater production.
25    "Tax credit award" means the issuance to a taxpayer by the
26Department of a tax credit award in conformance with Sections

 

 

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140 and 45 of this Act.
2    "Tax year" means a calendar year for the period January 1
3to and including December 31.
 
4    Section 15. Powers of the Department. The Department, in
5addition to those powers granted under the Civil Administrative
6Code of Illinois, is granted and has all the powers necessary
7or convenient to carry out and effectuate the purposes and
8provisions of this Act, including, but not limited to, the
9power and authority to:
10        (1) adopt rules deemed necessary and appropriate for
11    the administration of the Tax Credit Award program;
12    establish forms for applications, notifications,
13    contracts, or any other agreements; and accept
14    applications at any time during the year;
15        (2) assist applicants pursuant to the provisions of
16    this Act to promote, foster, and support live theater
17    development and production and its related job creation or
18    retention within the State;
19        (3) gather information and conduct inquiries, in the
20    manner and by the methods set forth in this Act, required
21    for the Department to comply with Section 40 and, without
22    limitation, obtain information with respect to applicants
23    for the purpose of making any designations or
24    certifications necessary or desirable to assist the
25    Department with any recommendation or guidance in the

 

 

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1    furtherance of the purposes of this Act and relating to
2    applicants' participation in training, education, and
3    recruitment programs that are organized in cooperation
4    with Illinois colleges and universities or labor
5    organizations designed to promote and encourage the
6    training and hiring of Illinois residents who represent the
7    diversity of the Illinois population;
8        (4) provide for sufficient personnel to permit
9    administrative, staffing, operating, and related support
10    required to adequately discharge its duties and
11    responsibilities described in this Act from funds as may be
12    appropriated by the General Assembly for the
13    administration of this Act; and
14        (5) require that the applicant at all times keep proper
15    books and records of accounts relating to the tax credit
16    award, in accordance with generally accepted accounting
17    principles consistently applied, and make, upon reasonable
18    written request by the Department, those books and records
19    available for reasonable Department inspection and audit
20    during the applicant's normal business hours. Any
21    documents or data made available to or received from the
22    applicant by any agent, employee, officer, or service
23    provider to the Department shall be deemed confidential and
24    shall not constitute public records to the extent that the
25    documents or data consist of commercial or financial
26    information regarding the operation by the applicant of any

 

 

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1    theater or any accredited theater production, or any
2    recipient of any tax credit award under this Act.
 
3    Section 20. Tax credit award. Subject to the conditions set
4forth in this Act, an applicant is entitled to a tax credit
5award as approved by the Department for qualifying Illinois
6labor expenditures and Illinois production spending for each
7tax year in which the applicant is awarded an accredited
8theater production certificate issued by the Department.
 
9    Section 25. Application for certification of accredited
10theater production. Any applicant proposing an accredited
11theater production located or planned to be located in Illinois
12may request an accredited theater production certificate by
13application to the Department.
 
14    Section 30. Review of application for accredited theater
15production certificate.
16    (a) The Department shall issue an accredited theater
17production certificate to an applicant if it finds that by a
18preponderance the following conditions exist:
19        (1) the applicant intends to make the expenditure in
20    the State required for certification of the accredited
21    theater production;
22        (2) the applicant's accredited theater production is
23    economically sound and will benefit the people of the State

 

 

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1    of Illinois by increasing opportunities for employment and
2    will strengthen the economy of Illinois;
3        (3) the following requirements related to the
4    implementation of a diversity plan have been met: (i) the
5    applicant has filed with the Department a diversity plan
6    outlining specific goals for hiring Illinois labor
7    expenditure eligible minority persons and females, as
8    defined in the Business Enterprise for Minorities,
9    Females, and Persons with Disabilities Act, and for using
10    vendors receiving certification under the Business
11    Enterprise for Minorities, Females, and Persons with
12    Disabilities Act; (ii) the Department has approved the plan
13    as meeting the requirements established by the Department
14    and verified that the applicant has met or made good faith
15    efforts in achieving those goals; and (iii) the Department
16    has adopted any rules that are necessary to ensure
17    compliance with the provisions set forth in this paragraph
18    and necessary to require that the applicant's plan reflects
19    the diversity of the population of this State;
20        (4) the applicant's accredited theater production
21    application indicates whether the applicant intends to
22    participate in training, education, and recruitment
23    programs that are organized in cooperation with Illinois
24    colleges and universities, labor organizations, and the
25    holders of accredited theater production certificates and
26    are designed to promote and encourage the training and

 

 

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1    hiring of Illinois residents who represent the diversity of
2    the Illinois;
3        (5) that, if not for the tax credit award, the
4    applicant's accredited theater production would not occur
5    in Illinois, which may be demonstrated by any means,
6    including, but not limited to, evidence that: (i) the
7    applicant, presenter, owner, or licensee of the production
8    rights has other state or international location options at
9    which to present the production and could reasonably and
10    efficiently locate outside of the State, (ii) at least one
11    other state or nation could be considered for the
12    production, (iii) the receipt of the tax award credit is a
13    major factor in the decision of the applicant, presenter,
14    production owner or licensee as to where the production
15    will be presented and that without the tax credit award the
16    applicant likely would not create or retain jobs in
17    Illinois, or (iv) receipt of the tax credit award is
18    essential to the applicant's decision to create or retain
19    new jobs in the State; and
20        (6) the tax credit award 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 with
24any existing collective bargaining agreements, the terms and
25conditions of those collective bargaining agreements shall
26control.

 

 

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1    (c) The Department shall act expeditiously regarding
2approval of applications for accredited theater production
3certificates so as to accommodate the pre-production work,
4booking, commencement of ticket sales, determination of
5performance dates, load in, and other matters relating to the
6live theater productions for which approval is sought.
 
7    Section 35. Training programs for skills in critical
8demand. To accomplish the purposes of this Act, the Department
9may use the training programs provided under Section 605-800 of
10the Department of Commerce and Economic Opportunity Law of the
11Civil Administrative Code of Illinois.
 
12    Section 40. Issuance of Tax Credit Award Certificate.
13    (a) In order to qualify for a tax credit award under this
14Act, an applicant must file an application for each accredited
15theater production at each of the applicant's qualified
16production facilities, on forms prescribed by the Department,
17providing information necessary to calculate the tax credit
18award and any additional information as reasonably required by
19the Department.
20    (b) Upon satisfactory review of the application, the
21Department shall issue a tax credit award certificate stating
22the amount of the tax credit award to which the applicant is
23entitled for that tax year and shall contemporaneously notify
24the applicant and Illinois Department of Revenue in accordance

 

 

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1with Section 221 of the Illinois Income Tax Act, as amended.
 
2    Section 45. Amount and payment of the tax credit award. The
3tax credit award shall be calculated each tax year based upon
4the filing by the applicant on forms prescribed by the
5Department containing information regarding qualifying and
6quantified Illinois labor expenditures, as defined in Section
710, net of the limitation in that Section, and Illinois
8production spending, as defined in Section 10, net of the
9limitation in that Section. From the amount calculated, the
10applicant shall be entitled to receive a tax credit award of:
11        (1) 20% of the Illinois labor expenditures and Illinois
12    production spending for each tax year; plus
13        (2) 15% of the Illinois labor expenditures generated by
14    the employment of Illinois residents in geographic areas of
15    high poverty or high unemployment in each tax year, as
16    determined by the Department.
17    Following the Department's determination of the tax credit
18award, the Department shall issue the tax credit award to the
19applicant.
 
20    Section 50. Live theater tax credit award program
21evaluation and reports.
22    (a) The Department's live theater tax credit award
23evaluation must include:
24        (i) an assessment of the effectiveness of the program

 

 

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1    in creating and retaining new jobs in Illinois;
2        (ii) an assessment of the revenue impact of the
3    program,
4        (iii) in the discretion of the Department, a review of
5    the practices and experiences of other states or nations
6    with similar programs; and
7        (iv) an assessment of the overall success of the
8    program. The Department may make a recommendation to
9    extend, modify, or not extend the program based on the
10    evaluation.
11    (b) At the end of each fiscal quarter, the Department shall
12submit to the General Assembly a report that includes, without
13limitation:
14        (i) an assessment of the economic impact of the
15    program, including the number of jobs created and retained,
16    and whether the job positions are entry level, management,
17    vendor, or production related;
18        (ii) the amount of accredited theater production
19    spending brought to Illinois, including the amount of
20    spending and type of Illinois vendors hired in connection
21    with an accredited theater production; and
22        (iii) a determination of whether those receiving
23    qualifying Illinois labor expenditure salaries or wages
24    reflect the geographical, racial and ethnic, gender, and
25    income level diversity of the State of Illinois.
26    (c) At the end of each fiscal year, the Department shall

 

 

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1submit to the General Assembly a report that includes, without
2limitation:
3        (i) the identification of each vendor that provided
4    goods or services that were included in an accredited
5    theater production's Illinois production spending;
6        (ii) a statement of the amount paid to each identified
7    vendor by the accredited theater production and whether the
8    vendor is a minority or female owned business as defined in
9    Section 2 of the Business Enterprise for Minorities,
10    Females and Persons with Disability Act; and
11        (iii) a description of the steps taken by the
12    Department to encourage accredited theater productions to
13    use vendors who are minority or female owned businesses.
 
14    Section 55. Program terms and conditions. Any documentary
15materials or data made available or received from an applicant
16by any agent or employee of the Department are confidential and
17are not public records to the extent that the materials or data
18consist of commercial or financial information regarding the
19operation of or the production of the applicant or recipient of
20any tax credit award under this Act.
 
21    Section 80. The Illinois Income Tax Act is amended by
22adding Section 221 as follows:
 
23    (35 ILCS 5/221 new)

 

 

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1    Sec. 221. Live theater production credit.
2    (a) For tax years beginning on or after January 1, 2012, a
3taxpayer who has received a tax credit award under the Live
4Theater Production Tax Credit Act is entitled to a credit
5against the taxes imposed under subsections (a) and (b) of
6Section 201 of this Act in an amount determined under that Act
7by the Department of Commerce and Economic Opportunity.
8    (b) If the taxpayer is a partnership, limited liability
9partnership, limited liability company, or Subchapter S
10corporation, the tax credit award is allowed to the partners,
11unit holders, or shareholders in accordance with the
12determination of income and distributive share of income under
13Sections 702 and 704 and Subchapter S of the Internal Revenue
14Code.
15    (c) A sale, assignment, or transfer of the tax credit award
16may be made by the taxpayer earning the credit within one year
17after the credit is awarded in accordance with rules adopted by
18the Department of Commerce and Economic Opportunity.
19    (d) The Department of Revenue, in cooperation with the
20Department of Commerce and Economic Opportunity, shall adopt
21rules to enforce and administer the provisions of this Section.
22    (e) This Section is exempt from the provisions of Section
23250 of this Act.
24    (f) The tax credit award may not be carried back. If the
25amount of the credit exceeds the tax liability for the year,
26the excess may be carried forward and applied to the tax

 

 

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1liability of the 3 tax years following the excess credit year.
2The tax credit award shall be applied to the earliest year for
3which there is a tax liability. If there are credits from more
4than one tax year that are available to offset liability, the
5earlier credit shall be applied first. In no event may a credit
6under this Section reduce the taxpayer's liability to less than
7zero.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.