Illinois General Assembly - Full Text of SB2181
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Full Text of SB2181  102nd General Assembly

SB2181 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2181

 

Introduced 2/26/2021, by Sen. Elgie R. Sims, Jr.

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/213
35 ILCS 16/10
35 ILCS 16/43

    Amends the Film Production Services Tax Credit Act of 2008. Provides that certain non-resident wages qualify as Illinois labor expenditures. Creates the Illinois Production Workforce Development Fund to be funded with a fee imposed on the transfer of film production services credits. Provides that the Fund shall be used exclusively to provide grants to community-based organizations, labor organizations, private and public universities, community colleges, and other organizations and institutions as deemed appropriated by the Department of Commerce and Economic Opportunity to administer workforce training programs that support efforts to recruit, hire, promote, retain, develop, and train a diverse and inclusive workforce in the film industry. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.


LRB102 15402 HLH 20765 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2181LRB102 15402 HLH 20765 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 3. 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
11Act of 2008 is entitled to a credit against the taxes imposed
12under subsections (a) and (b) of Section 201 of this Act in an
13amount determined 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. Beginning July 1, 2021, if a credit
23is transferred under this Section by the taxpayer, then the

 

 

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1transferor taxpayer shall pay to the Department, upon
2notification of a transfer, 2.5% of the transferred credit
3amount eligible for out-of-state wages, as described in
4Section 10 of the Film Production Services Tax Credit Act of
52008, and an additional 0.25% of the total amount of the
6transferred credit that is not calculated on out-of-state
7wages, which shall be deposited into the Illinois Production
8Workforce Development Fund.
9    The Department, in cooperation with the Department of
10Commerce and Economic Opportunity, must prescribe rules to
11enforce and administer the provisions of this Section. This
12Section is exempt from the provisions of Section 250 of this
13Act.
14    The credit may not be carried back. If the amount of the
15credit exceeds the tax liability for the year, the excess may
16be carried forward and applied to the tax liability of the 5
17taxable years following the excess credit year. The credit
18shall be applied to the earliest year for which there is a tax
19liability. If there are credits from more than one tax year
20that are available to offset a liability, the earlier credit
21shall be applied first. In no event shall a credit under this
22Section reduce the taxpayer's liability to less than zero.
23(Source: P.A. 94-171, eff. 7-11-05; 95-720, eff. 5-27-08.)
 
24    Section 5. The Film Production Services Tax Credit Act of
252008 is amended by changing Sections 10 and 43 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
22with the owner of the copyright in the accredited production
23or a person acting on behalf of the owner to provide services
24for the 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
16    after May 1, 2006, the amount equal to:
17            (i) 20% of the Illinois production spending for
18        the 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
24    after January 1, 2009, the amount equal to:
25            (i) 30% of the Illinois production spending for
26        the 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
24    before 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, 2021. For

 

 

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1    productions commencing on or after July 1, 2021, the first
2    $500,000 of out-of-state wages of each non-resident paid
3    or incurred by the production company and loan out
4    corporations qualify, subject to withholding payments
5    provided for in Article 7 of the Illinois Income Tax Act.
6    Additionally, all resident wages paid or incurred by the
7    production company qualify. For purposes of calculating
8    Illinois labor expenditures for a television series, the
9    non-resident wage limitations are applied to the entire
10    season.
11        (6) For a production commencing before May 1, 2006,
12    exclusive of the salary or wages paid to or incurred for
13    the 2 highest paid employees of the production.
14        (7) Directly attributable to the accredited
15    production.
16        (8) (Blank).
17        (9) Prior to July 1, 2021, paid Paid to persons
18    resident in Illinois at the time the payments were made.
19    For a production company commencing production on or after
20    July 1, 2021, resident and non-resident wages will qualify
21    as an Illinois labor expenditure. Notwithstanding the
22    foregoing, only wages paid to non-residents working in the
23    following positions shall be qualified Illinois labor
24    expenditures: Writers, Director, Director of Photography,
25    Production Designer, Costume Designer, Production
26    Accountant, VFX Supervisor, Editor, Composer. For a film

 

 

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1    with Illinois production spending of $25,000,000 or less,
2    a television production or video, no more than 2
3    non-resident actors' wages shall qualify as an Illinois
4    labor expenditure. For a film with Illinois production
5    spending of more than $25,000,000 no more than 4
6    non-resident actors' wages shall qualify as Illinois labor
7    expenditures.
8        (10) Paid for services rendered in Illinois.
9    "Illinois production spending" means the expenses incurred
10by the applicant for an accredited production, including,
11without limitation, 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 film production, editing, or processing; and
17        (3) before July 1, 2021, the compensation, not to
18    exceed $100,000 for any one employee, for contractual or
19    salaried employees who are Illinois residents performing
20    services with respect to the accredited production. After
21    July 1, 2021 resident wages and non-resident wages
22    described above are Illinois Labor Expenditures.
23    "Loan out company" means a personal service corporation or
24other entity that is under contract with the taxpayer to
25provide specified individual personnel, such as artists, crew,
26actors, producers, or directors for the performance of

 

 

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1services used directly in a production. "Loan out company"
2does not include entities contracted with by the taxpayer to
3provide goods or ancillary contractor services such as
4catering, construction, trailers, equipment, or
5transportation.
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
9one sound stage of at least 15,000 square feet.
10    Rulemaking authority to implement Public Act 95-1006 this
11amendatory Act of the 95th General Assembly, if any, is
12conditioned on the rules being adopted in accordance with all
13provisions of the Illinois Administrative Procedure Act and
14all rules and procedures of the Joint Committee on
15Administrative Rules; any purported rule not so adopted, for
16whatever reason, is unauthorized.
17(Source: P.A. 97-796, eff. 7-13-12; revised 7-18-19.)
 
18    (35 ILCS 16/43)
19    Sec. 43. Training programs for skills in critical demand.
20    (a) To accomplish the purposes of this Act, the Department
21may use the training programs provided for Illinois under
22Section 605-800 of the Department of Commerce and Economic
23Opportunity Law of the Civil Administrative Code of Illinois.
24    (b) The Illinois Production Workforce Development Fund is
25created as a special fund in the State Treasury. Beginning

 

 

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1July 1, 2021, amounts paid to the Department of Commerce and
2Economic Opportunity under Section 213 of the Illinois Income
3Tax Act, a film production services credit shall be deposited
4into the Fund. The Fund shall be used exclusively to provide
5grants to community-based organizations, labor organizations,
6private and public universities, community colleges, and other
7organizations and institutions as deemed appropriated by the
8Department to administer workforce training programs that
9support efforts to recruit, hire, promote, retain, develop,
10and train a diverse and inclusive workforce in the film
11industry.
12    Pursuant to Section 213 of the Illinois Income Tax Act,
13the Fund shall receive deposits in amounts not to exceed 0.25%
14of the amount of each credit certificate issued that is not
15calculated on out-of-state wages and transferred or claimed on
16an Illinois tax return in the quarter such credit was
17transferred or claimed, however, in addition to the foregoing,
18such amount shall also include 2.5% of the credit amount
19calculated on wages paid to non-residents that is transferred
20or claimed on an Illinois tax return in the quarter such credit
21was transferred or claimed.
22    At the request of the Department, the State Comptroller
23and the State Treasurer may advance amounts to the Fund on an
24annual basis not to exceed $1,000,000 in any fiscal year. The
25fund from which the moneys are advanced shall be reimbursed in
26the same fiscal year for any such advance payments as

 

 

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1described in this subsection. The method of reimbursement
2shall be set forth in rules.
3    Of the appropriated funds in a given fiscal year, 50% of
4the appropriated funds shall be reserved for organizations
5that meet one of the following criteria. The organization is:
6(1) a minority-owned business as defined by the Business
7Enterprise for Minorities, Women, and Persons with
8Disabilities Act; (2) located in an underserved area as
9defined by the Economic Development for a Growing Economy Tax
10Credit Act; or (3) on an annual basis, training a cohort of
11program participants where at least 50% of the program
12participants are either a minority person as defined by the
13Business Enterprise for Minorities, Women, and Persons with
14Disabilities Act or reside in an underserved area as defined
15by the Economic Development for a Growing Economy Tax Credit
16Act.
17    The Illinois Production Workforce Development Fund shall
18be administered by the Department. The Department may adopt
19rules necessary to administer the provisions of this Section.
20    Notwithstanding any other law to the contrary, the
21Illinois Production Workforce Development Fund is not subject
22to sweeps, administrative charge-backs, or any other fiscal or
23budgetary maneuver that would in any way transfer any amounts
24from the Illinois Production Workforce Development Fund.
25    (c) By June 30 of each fiscal year, the Department must
26submit to the General Assembly a report that includes the

 

 

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1following information:
2        (1) an identification of the organizations and
3    institutions that received funding to administer workforce
4    training programs during the fiscal year;
5        (2) the number of total persons trained and the number
6    of persons trained per workforce training program in the
7    fiscal year; and
8        (3) in the aggregate, per organization, the number of
9    persons identified as a minority person or that reside in
10    an underserved area that received training in the fiscal
11    year.
12(Source: P.A. 95-720, eff. 5-27-08.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.