Sen. Toi W. Hutchinson

Filed: 5/11/2012

 

 


 

 


 
09700HB0503sam001LRB097 03320 HLH 69479 a

1
AMENDMENT TO HOUSE BILL 503

2    AMENDMENT NO. ______. Amend House Bill 503 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1. Short title. This Act may be cited as the
5Interactive Digital Media Tax Credit Act.
 
6    Section 5. Definitions; rules.
7    (a) As used in this Act:
8    "Base Illinois production spending" is the average amount
9of expenses incurred by the applicant for all productions in
10calendar years 2009, 2010, and 2011, including, without
11limitation, all of the following:
12        (1) expenses to purchase, from vendors within
13    Illinois, tangible personal property that is used in the
14    accredited production;
15        (2) expenses to acquire services from vendors in
16    Illinois for an accredited production, including services

 

 

09700HB0503sam001- 2 -LRB097 03320 HLH 69479 a

1    for editing and processing; and
2        (3) compensation paid to contractual or salaried
3    employees who are Illinois residents and who perform
4    services with respect to the accredited production, not to
5    exceed $100,000 for any one employee.
6    "Base number of employees" is the average of all full-time
7employees who were employed by an applicant in calendar years
82009, 2010, and 2011.
9    "Interactive digital media project" means: (1) a
10production of interactive entertainment which is produced for
11distribution in commercial or educational markets, including a
12computer game, video game, simulation or animation; or (2) a
13production intended for Internet or wireless distribution.
14    "Accredited production" means the production of an
15interactive digital media project that has been certified by
16the Department in which the Illinois production spending
17included in the cost of the production exceeds $100,000 per
18year.
19    "Accredited production certificate" means a certificate
20issued by the Department certifying that the interactive
21digital media production is an accredited production that meets
22the guidelines of this Act.
23    "Applicant" means a taxpayer that is an interactive digital
24media company that is operating or has operated an accredited
25production located within the State of Illinois and that (i)
26owns the copyright in the accredited production throughout the

 

 

09700HB0503sam001- 3 -LRB097 03320 HLH 69479 a

1Illinois production period or (ii) has contracted directly with
2the owner of the copyright in the accredited production or a
3person acting on behalf of the owner to provide services for
4the production if the owner of the copyright is not an eligible
5production corporation.
6    "Credit" means, for an interactive digital media
7accredited production commencing on or after January 1, 2013:
8        (1) an amount equal to 30% of the Illinois production
9    spending for the taxable year; and
10        (2) an additional amount equal to 5% of the Illinois
11    production spending if the accredited production company
12    is located in a geographic area of high poverty or high
13    unemployment, as determined by the Department.
14    "Department" means the Department of Commerce and Economic
15Opportunity.
16    "Director" means the Director of Commerce and Economic
17Opportunity.
18    "Illinois labor expenditure" means salary or wages paid to
19employees of the applicant for services on the accredited
20production. To qualify as an Illinois labor expenditure, the
21expenditure must be all of the following:
22        (1) Reasonable in the circumstances.
23        (2) Included in the applicant's federal income tax
24    basis.
25        (3) Incurred by the applicant for services performed on
26    or after January 1, 2013.

 

 

09700HB0503sam001- 4 -LRB097 03320 HLH 69479 a

1        (4) Incurred during the production stages of the
2    accredited production.
3        (5) Limited to the first $100,000 of wages paid to or
4    incurred with respect to each new employee of a production
5    commencing on or after January 1, 2013.
6        (6) Directly attributable to the accredited
7    production.
8        (7) Paid in the tax year for which the applicant is
9    claiming the credit or no later than 60 days after the end
10    of the tax year.
11        (8) Paid to persons residing in Illinois at the time
12    the payments were made.
13        (9) Paid for services rendered in Illinois.
14    "Illinois production spending" means the expenses incurred
15by the applicant for an accredited production above the base
16Illinois production spending, including, without limitation,
17all of the following:
18        (1) expenses to purchase, from vendors located in
19    Illinois, tangible personal property that is used in the
20    accredited production;
21        (2) expenses to acquire services from vendors located
22    in Illinois for an accredited production, including
23    services related to editing or processing; and
24        (3) the compensation, not to exceed $100,000 for any
25    one employee, for contractual or salaried employees who are
26    Illinois residents performing services with respect to the

 

 

09700HB0503sam001- 5 -LRB097 03320 HLH 69479 a

1    accredited production.
2    "New employee" means a full-time employee who (i) is first
3employed by an applicant on or after January 1, 2013 and (ii)
4is in excess of, or in addition to, the applicant's base number
5of employees. The term "new employee" does not include:
6        (1) an employee of the eligible employer who performs a
7    job that (i) existed for at least 6 months before the
8    employee was hired and (ii) was previously performed by
9    another employee; and
10        (2) an employee of the eligible employer who was
11    previously employed in Illinois by a related member of the
12    eligible employer and whose employment was shifted to the
13    eligible employer after the eligible employer entered into
14    the agreement; or
15        (3) a child, grandchild, parent, or spouse, other than
16    a spouse who is legally separated from the individual, of
17    any individual who has a direct or indirect ownership
18    interest of at least 5% in the profits, capital, or value
19    of the eligible employer.
20    "Qualified production facility" means a facility in the
21State in which interactive digital media projects are or are
22intended to be regularly produced.
23    (b) The Department may adopt rules necessary to implement
24this Act.
 
25    Section 10. Tax credit awards. Subject to the conditions

 

 

09700HB0503sam001- 6 -LRB097 03320 HLH 69479 a

1set forth in this Act, an applicant is entitled to a credit
2against the tax imposed under subsections (a) and (b) of
3Section 201 of the Illinois Income Tax Act as approved by the
4Department under Section 25 of this Act.
 
5    Section 15. Application for certification of accredited
6production. Any applicant proposing an interactive digital
7media production located or planned to be located in Illinois
8may request an accredited production certificate by formal
9application to the Department.
 
10    Section 20. Issuance of Tax Credit Certificate.
11    (a) In order to qualify for a tax credit under this Act, an
12applicant must file an application, on forms prescribed by the
13Department, providing information necessary to calculate the
14tax credit and any additional information as required by the
15Department.
16    (b) Upon satisfactory review of the application, the
17Department shall issue a Tax Credit Certificate stating the
18amount of the tax credit to which the applicant is entitled.
19The Tax Credit Certificate shall be effective for expenditures
20made prior to the date of initial certification and shall be
21valid until the production is completed.
 
22    Section 25. Amount and duration of the credit. The amount
23of the credit awarded under this Act is based on the amount of

 

 

09700HB0503sam001- 7 -LRB097 03320 HLH 69479 a

1the Illinois labor expenditure and Illinois production
2spending approved by the Department for the production as set
3forth under Section 5. The credit may be taken beginning with
4the taxable year in which the accredited production company has
5met the investment requirement. For each year in which such
6accredited production company either claims or transfers the
7credit, the accredited production company shall attach a
8schedule to the accredited production company's Illinois
9income tax return.
 
10    Section 30. Transfer of tax credits.
11    (a) Upon application and granting of an accredited
12production certificate by the Department, an accredited
13production company, or a partner or member that has received a
14distribution under that certificate, may elect to transfer, in
15whole or in part, any unused credit amount granted under this
16Act. An election to transfer any unused credit amount must be
17made no later than 5 years after the date the credit is
18awarded, after which period the credit expires and may not be
19used. The Department shall notify the Department of Revenue of
20the election and transfer.
21    (b) An accredited production company that elects to apply a
22credit amount against taxes remitted is permitted a one-time
23transfer of unused credits to one transferee. An accredited
24production company that elects to apply a credit amount against
25taxes due is permitted a one-time transfer of unused credits to

 

 

09700HB0503sam001- 8 -LRB097 03320 HLH 69479 a

1no more than 4 transferees, and such transfers must occur in
2the same taxable year.
3    (c) The transferee is subject to the same rights and
4limitations as the accredited production company awarded the
5credit, except that the transferee may not sell or otherwise
6transfer the credit.
7    (d) The Department of Revenue may adopt rules to administer
8this Section.
 
9    Section 35. Interactive Digital Media Tax Credit Report.
10The Department shall submit to the General Assembly, no later
11than July 1, 2017, a report that includes, without limitation:
12        (1) an assessment of the economic impact of the tax
13    credit program created under this Act, including the number
14    of jobs created and retained, and whether the job positions
15    are entry level, management, vendor, or production
16    related;
17        (2) an assessment of the revenue impact of the program,
18    including, but not limited to, the amount of Illinois labor
19    expenditure and Illinois production expenditure brought to
20    Illinois, including the amount of spending and the type of
21    Illinois vendors hired in connection with an accredited
22    production company;
23        (3) in the discretion of the Department, a review of
24    the practices and experiences of other states or nations
25    with similar programs;

 

 

09700HB0503sam001- 9 -LRB097 03320 HLH 69479 a

1        (4) a determination of whether those receiving
2    qualifying Illinois labor expenditure salaries or wages
3    reflect the geographical, racial, ethnic, gender, and
4    income level diversity of the State of Illinois; and
5        (5) an assessment of the overall success of the
6    program.
 
7    Section 60. Repealer. This Act is repealed July 1, 2018.
 
8    Section 65. The Illinois Income Tax Act is amended by
9adding Section 223 as follows:
 
10    (35 ILCS 5/223 new)
11    Sec. 223. Interactive Digital Media Tax Credit. For tax
12years beginning on or after January 1, 2013, taxpayers who have
13been awarded a credit under the Interactive Digital Media Tax
14Credit Act are entitled to a credit against the tax imposed
15under subsections (a) and (b) of Section 201 of this Act as
16provided in the Interactive Digital Media Tax Credit Act.
17    The credit may not be carried back. If the amount of the
18credit exceeds the tax liability for the year, the excess may
19be carried forward and applied to the tax liability of the 5
20taxable years following the excess credit year. The credit
21shall be applied to the earliest year for which there is a tax
22liability. If there are credits from more than one tax year
23that are available to offset a liability, the earlier credit

 

 

09700HB0503sam001- 10 -LRB097 03320 HLH 69479 a

1shall be applied first. In no event shall a credit under this
2Section reduce the taxpayer's liability to less than zero.
3    This Section is exempt from the provisions of Section 250.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".