Full Text of SB1595 101st General Assembly
SB1595 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 SB1595 Introduced 2/15/2019, by Sen. Elgie R. Sims, Jr. SYNOPSIS AS INTRODUCED: |
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35 ILCS 5/213 |
| 35 ILCS 16/10 | | 35 ILCS 16/42 | |
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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 |
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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 Illinois Income Tax Act is amended by | 5 | | changing Section 213 as follows:
| 6 | | (35 ILCS 5/213)
| 7 | | Sec. 213. Film production services credit. For tax years | 8 | | beginning on or
after January 1, 2004, a taxpayer who has been | 9 | | awarded a tax credit under the
Film Production Services Tax | 10 | | Credit Act or under the Film Production Services Tax Credit Act | 11 | | of 2008 is entitled to a credit against the
taxes imposed under | 12 | | subsections (a) and (b) of Section 201 of this Act in an
amount | 13 | | determined by the Department of Commerce and Economic | 14 | | Opportunity under those Acts. If the taxpayer is a partnership | 15 | | or
Subchapter S corporation, the credit is allowed to the | 16 | | partners or shareholders
in accordance with the determination | 17 | | of income and distributive share of income
under Sections 702 | 18 | | and 704 and Subchapter S of the Internal Revenue Code. | 19 | | A transfer of this credit may be made by the taxpayer | 20 | | earning the credit within one year after the credit is awarded | 21 | | in accordance with rules adopted by the Department of Commerce | 22 | | and Economic Opportunity.
| 23 | | The
Department, in cooperation with the Department of |
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| 1 | | Commerce and Economic Opportunity, must prescribe rules to | 2 | | enforce and administer the provisions of this
Section. This | 3 | | Section is exempt from the provisions of Section 250 of this
| 4 | | Act.
| 5 | | The credit may not be carried back. If the amount of the | 6 | | credit exceeds the tax liability for the year, the
excess may | 7 | | be carried forward and applied to the tax liability of the 5 | 8 | | taxable
years following the excess credit year. The credit
| 9 | | shall be applied to the earliest year for which there is a tax | 10 | | liability. If
there are credits from more than one tax year | 11 | | that are available to offset a
liability, the earlier credit | 12 | | shall be applied first. In no event shall a credit
under this | 13 | | Section reduce the taxpayer's
liability to less than
zero.
| 14 | | For tax years beginning on or after July 1, 2019, in no | 15 | | event shall the credit under this Section be allowed in an | 16 | | amount which will reduce the tax to less than zero. If, | 17 | | however, the amount of credit allowed under this Section for | 18 | | any taxable year reduces the tax to such amount, any amount of | 19 | | credit not deductible in such taxable year shall be treated as | 20 | | an overpayment of tax to be refunded in accordance with this | 21 | | Section, provided however, that no interest shall be paid | 22 | | thereon. | 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 | 25 | | 2008 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 | 4 | | commencing before May 1, 2006, a film, video, or television | 5 | | production that
has been certified by the Department in which | 6 | | the aggregate Illinois labor
expenditures
included in the cost | 7 | | of the production, in the period that ends 12 months after
the | 8 | | time principal filming or taping of the production began, | 9 | | exceed $100,000
for productions of 30 minutes or longer, or | 10 | | $50,000 for productions of less
than 30
minutes; and (ii) for | 11 | | productions commencing on or after May 1, 2006, a film, video, | 12 | | or television production that has been certified by the | 13 | | Department in which the Illinois production spending included | 14 | | in the cost of production in the period that ends 12 months | 15 | | after the time principal filming or taping of the production | 16 | | began exceeds $100,000 for productions of 30 minutes or longer | 17 | | or 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 | 10 | | production in which movement and characters' performances are | 11 | | created using a frame-by-frame technique and a significant | 12 | | number of major characters are animated. Motion capture by | 13 | | itself is not an animation technique. | 14 | | "Accredited production certificate" means a certificate | 15 | | issued by the
Department certifying that the production is an | 16 | | accredited production that
meets the guidelines of this Act.
| 17 | | "Applicant" means a taxpayer that is a film production | 18 | | company that is
operating or has operated an accredited | 19 | | production located within the State of
Illinois and that
(i) | 20 | | owns the copyright in the accredited production throughout the
| 21 | | Illinois production period or (ii)
has contracted directly with | 22 | | the owner of the copyright in the
accredited production
or a | 23 | | person acting on behalf of the owner
to provide services for | 24 | | the production, where the owner
of the copyright is not an | 25 | | eligible 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 | 6 | | Opportunity.
| 7 | | "Director" means the Director of Commerce and Economic | 8 | | Opportunity.
| 9 | | "Illinois labor expenditure" means
salary or wages paid to | 10 | | employees of the
applicant for services on the accredited
| 11 | | production;
| 12 | | To qualify as an Illinois labor expenditure, the | 13 | | expenditure 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 | 21 | | by the applicant for an accredited production, including, | 22 | | without 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 | 7 | | the State in which television shows and films are or are | 8 | | intended to be regularly produced and that contain at least one | 9 | | sound stage of at least 15,000 square feet.
| 10 | | "Loan out company" means a personal service corporation or | 11 | | other entity that is under contract with the taxpayer to | 12 | | provide specified individual personnel, such as artists, crew, | 13 | | actors, producers, or directors for the performance of services | 14 | | used directly in a production. "Loan out company" does not | 15 | | include entities contracted with by the taxpayer to provide | 16 | | goods or ancillary contractor services such as catering, | 17 | | construction, trailers, equipment, or transportation. | 18 | | Rulemaking authority to implement this amendatory Act of | 19 | | the 95th General Assembly, if any, is conditioned on the rules | 20 | | being adopted in accordance with all provisions of the Illinois | 21 | | Administrative Procedure Act and all rules and procedures of | 22 | | the Joint Committee on Administrative Rules; any purported rule | 23 | | not 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 | 2 | | provisions of Section 150 of the Illinois Income Tax Act. The | 3 | | application of credits awarded pursuant to this Act shall be | 4 | | limited by a reasonable and appropriate sunset date. A taxpayer | 5 | | shall not be entitled to take a credit awarded pursuant to this | 6 | | Act for tax years beginning on or after 10 years after the | 7 | | effective date of this amendatory Act of the 97th General | 8 | | Assembly. After the initial 10-year sunset, the General | 9 | | Assembly 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 | 12 | | becoming law.
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