Full Text of SB2098 103rd General Assembly
SB2098 103RD GENERAL ASSEMBLY |
| | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 SB2098 Introduced 2/9/2023, by Sen. Javier L. Cervantes SYNOPSIS AS INTRODUCED: |
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Amends the Film
Production Services Tax Credit Act of 2008. Provides that "accredited production" also includes productions in which only post production activities occur in Illinois. Provides that an accredited animated production also includes a production using visual effects (VFX), augmented reality (AR), mixed reality (MR), or virtual reality (VR). Provides for a credit in an amount equal to 10% of the Illinois production spending incurred for the purpose of building a soundstage or digital wall. Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Film
Production Services Tax Credit Act of | 5 | | 2008 is amended by changing Section 10 as follows: | 6 | | (35 ILCS 16/10)
| 7 | | Sec. 10. Definitions. As used in this Act:
| 8 | | "Accredited production" means: (i) for productions | 9 | | commencing before May 1, 2006, a film, video, or television | 10 | | production that
has been certified by the Department in which | 11 | | the aggregate Illinois labor
expenditures
included in the cost | 12 | | of the production, in the period that ends 12 months after
the | 13 | | time principal filming or taping of the production began, | 14 | | exceed $100,000
for productions of 30 minutes or longer, or | 15 | | $50,000 for productions of less
than 30
minutes; and (ii) for | 16 | | productions commencing on or after May 1, 2006, a film, video, | 17 | | or television production that has been certified by the | 18 | | Department in which the Illinois production spending included | 19 | | in the cost of production in the period that ends 12 months | 20 | | after the time principal filming or taping of the production | 21 | | began exceeds $100,000 for productions of 30 minutes or longer | 22 | | or exceeds $50,000 for productions of less than 30 minutes. | 23 | | For productions commencing on or after May 1, 2006 and before |
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| 1 | | July 1, 2023, Illinois production spending includes only | 2 | | spending for the period that ends 12 months after the time | 3 | | principal filming or taping of the production began. On and | 4 | | after July 1, 2023, "accredited production" also includes | 5 | | productions in which only post production activities occur in | 6 | | Illinois. "Accredited production" does not include a | 7 | | production that:
| 8 | | (1) is news, current events, or public programming, or | 9 | | a program that
includes weather or market reports;
| 10 | | (2) is a talk show;
| 11 | | (3) is a production in respect of a game, | 12 | | questionnaire, or contest;
| 13 | | (4) is a sports event or activity;
| 14 | | (5) is a gala presentation or awards show;
| 15 | | (6) is a finished production that solicits funds;
| 16 | | (7) is a production produced by a film production | 17 | | company if records, as
required
by 18
U.S.C. 2257, are to | 18 | | be maintained by that film production company with respect
| 19 | | to any
performer portrayed in that single media or | 20 | | multimedia program; or
| 21 | | (8) is a production produced primarily for industrial, | 22 | | corporate, or
institutional purposes.
| 23 | | "Accredited animated production" means an accredited | 24 | | production in which movement and characters' performances are | 25 | | created using a frame-by-frame technique , visual effects | 26 | | (VFX), augmented reality (AR), mixed reality (MR), or virtual |
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| 1 | | reality (VR) and a significant number of major characters are | 2 | | animated. Motion capture by itself is not an animation | 3 | | technique. | 4 | | "Accredited production certificate" means a certificate | 5 | | issued by the
Department certifying that the production is an | 6 | | accredited production that
meets the guidelines of this Act.
| 7 | | "Applicant" means a taxpayer that is a film production | 8 | | company that is
operating or has operated an accredited | 9 | | production located within the State of
Illinois and that
(i) | 10 | | owns the copyright in the accredited production throughout the
| 11 | | Illinois production period or (ii)
has contracted directly | 12 | | with the owner of the copyright in the
accredited production
| 13 | | or a person acting on behalf of the owner
to provide services | 14 | | for the production, where the owner
of the copyright is not an | 15 | | eligible production corporation.
| 16 | | "Credit" means:
| 17 | | (1) for an accredited production approved by the | 18 | | Department on or before January 1, 2005 and commencing | 19 | | before May 1, 2006, the amount equal to 25% of the Illinois | 20 | | labor
expenditure approved by the Department.
The | 21 | | applicant is deemed to have paid, on its balance due day | 22 | | for the year, an
amount equal to 25% of its qualified | 23 | | Illinois labor expenditure for the tax
year. For Illinois | 24 | | labor expenditures generated by the employment of | 25 | | residents of geographic areas of high poverty or high | 26 | | unemployment, as determined by the Department, in an |
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| 1 | | accredited production commencing before May 1, 2006 and
| 2 | | approved by the Department after January 1, 2005, the | 3 | | applicant shall receive an enhanced credit of 10% in | 4 | | addition to the 25% credit; and | 5 | | (2) for an accredited production commencing on or | 6 | | after May 1, 2006, the amount equal to: | 7 | | (i) 20% of the Illinois production spending for | 8 | | the taxable year; plus | 9 | | (ii) 15% of the Illinois labor expenditures | 10 | | generated by the employment of residents of geographic | 11 | | areas of high poverty or high unemployment, as | 12 | | determined by the Department; and
| 13 | | (3) for an accredited production commencing on or | 14 | | after January 1, 2009, the amount equal to: | 15 | | (i) 30% of the Illinois production spending for | 16 | | the taxable year; plus | 17 | | (ii) 15% of the Illinois labor expenditures | 18 | | generated by the employment of residents of geographic | 19 | | areas of high poverty or high unemployment, as | 20 | | determined by the Department ; and . | 21 | | (4) for an accredited production commencing on or | 22 | | after July 1, 2023, the amount calculated under paragraph | 23 | | (3), plus 10% of the Illinois production spending incurred | 24 | | for the purpose of building a soundstage or digital wall. | 25 | | "Department" means the Department of Commerce and Economic | 26 | | Opportunity.
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| 1 | | "Director" means the Director of Commerce and Economic | 2 | | Opportunity.
| 3 | | "Illinois labor expenditure" means
salary or wages paid to | 4 | | employees of the
applicant for services on the accredited
| 5 | | production.
| 6 | | To qualify as an Illinois labor expenditure, the | 7 | | expenditure must be:
| 8 | | (1) Reasonable in the circumstances.
| 9 | | (2) Included in the federal income tax basis of the | 10 | | property.
| 11 | | (3) Incurred by the applicant for services on or after | 12 | | January 1, 2004.
| 13 | | (4) Incurred for the production stages of the | 14 | | accredited production, from
the final
script stage to the | 15 | | end of the post-production stage.
| 16 | | (5) Limited to the first $25,000 of wages paid or | 17 | | incurred to each
employee of a production commencing | 18 | | before May 1, 2006 and the first $100,000 of wages paid or | 19 | | incurred to each
employee of
a production commencing on or | 20 | | after May 1, 2006 and prior to July 1, 2022. For | 21 | | productions commencing on or after July 1, 2022, limited | 22 | | to the first $500,000 of wages paid or incurred to each | 23 | | nonresident or resident employee of a production company | 24 | | or loan out company that provides in-State services to a | 25 | | production, whether those wages are paid or incurred by | 26 | | the production company, loan out company, or both, subject |
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| 1 | | to withholding payments provided for in Article 7 of the | 2 | | Illinois Income Tax Act. For purposes of calculating | 3 | | Illinois labor expenditures for a television series, the | 4 | | nonresident wage limitations provided under this | 5 | | subparagraph are applied to the entire season.
| 6 | | (6) For a production commencing before May 1, 2006, | 7 | | exclusive of the salary or wages paid to or incurred for | 8 | | the 2 highest
paid
employees of the production.
| 9 | | (7) Directly attributable to the accredited | 10 | | production.
| 11 | | (8) (Blank).
| 12 | | (9) Prior to July 1, 2022, paid to persons resident in | 13 | | Illinois at the time the payments were
made.
For a | 14 | | production commencing on or after July 1, 2022, paid to | 15 | | persons resident in Illinois and nonresidents at the time | 16 | | the payments were made. For purposes of this subparagraph, | 17 | | only wages paid to nonresidents working in the following | 18 | | positions shall be considered Illinois labor expenditures: | 19 | | Writer, Director, Director of Photography, Production | 20 | | Designer, Costume Designer, Production Accountant, VFX | 21 | | Supervisor, Editor, Composer, and Actor, subject to the | 22 | | limitations set forth under this subparagraph. For an | 23 | | accredited Illinois production spending of $25,000,000 or | 24 | | less, no more than 2 nonresident actors' wages shall | 25 | | qualify as an Illinois labor expenditure. For an | 26 | | accredited production with Illinois production spending of |
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| 1 | | more than $25,000,000, no more than 4 nonresident actor's | 2 | | wages shall qualify as Illinois labor expenditures.
| 3 | | (10) Paid for services rendered in Illinois.
| 4 | | "Illinois production spending" means the expenses incurred | 5 | | by the applicant for an accredited production, including, | 6 | | without limitation, all of the following: | 7 | | (1) expenses to purchase, from vendors within | 8 | | Illinois, tangible personal property that is used in the | 9 | | accredited production; | 10 | | (2) expenses to acquire services, from vendors in | 11 | | Illinois, for film production, editing, or processing; and | 12 | | (3) for a production commencing before July 1, 2022, | 13 | | the compensation, not to exceed $100,000 for any one | 14 | | employee, for contractual or salaried employees who are | 15 | | Illinois residents performing services with respect to the | 16 | | accredited production. For a production commencing on or | 17 | | after July 1, 2022, the compensation, not to exceed | 18 | | $500,000 for any one employee, for contractual or salaried | 19 | | employees who are Illinois residents or nonresident | 20 | | employees, subject to the limitations set forth under | 21 | | Section 10 of this Act. | 22 | | "Loan out company" means a personal service corporation or | 23 | | other entity that is under contract with the taxpayer to | 24 | | provide specified individual personnel, such as artists, crew, | 25 | | actors, producers, or directors for the performance of | 26 | | services used directly in a production. "Loan out company" |
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| 1 | | does not include entities contracted with by the taxpayer to | 2 | | provide goods or ancillary contractor services such as | 3 | | catering, construction, trailers, equipment, or | 4 | | transportation. | 5 | | "Qualified production facility" means stage facilities in | 6 | | the State in which television shows and films are or are | 7 | | intended to be regularly produced and that contain at least | 8 | | one sound stage of at least 15,000 square feet.
| 9 | | Rulemaking authority to implement Public Act 95-1006, if | 10 | | any, is conditioned on the rules being adopted in accordance | 11 | | with all provisions of the Illinois Administrative Procedure | 12 | | Act and all rules and procedures of the Joint Committee on | 13 | | Administrative Rules; any purported rule not so adopted, for | 14 | | whatever reason, is unauthorized. | 15 | | (Source: P.A. 102-558, eff. 8-20-21; 102-700, eff. 4-19-22.)
| 16 | | Section 99. Effective date. This Act takes effect upon | 17 | | becoming law.
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