Bill Text: IN SB0107 | 2013 | Regular Session | Introduced
Bill Title: Media production expenditure tax credit.
Sponsorship: Bipartisan Bill
Status: (Introduced - Dead) 2013-01-22 - Senator Schneider added as second author [SB0107 Detail]
Download: Indiana-2013-SB0107-Introduced.html
Citations Affected: IC 6-3.1-32.5.
Synopsis: Media production expenditure tax credit. Reestablishes the
media production expenditure tax credit (which expired in 2012), with
certain changes. Provides a refundable tax credit to taxpayers that make
qualified production expenditures in Indiana. Provides that the tax
credit may be granted only if qualified production expenditures are at
least $50,000. Provides that in the case of a taxpayer that claims the tax
credit for qualified production expenditures of less than $6,000,000,
the amount of the credit equals a percentage of the taxpayer's qualified
production expenditures. Specifies that the percentage is: (1) 40%, in
the case of qualified production expenditures paid to an individual or
entity located in an economically distressed municipality or county; or
(2) 35%, in the case of other qualified production expenditures.
Provides that in the case of a taxpayer that claims the tax credit for
qualified production expenditures of at least $6,000,000: (1) the
amount of the credit equals the taxpayer's qualified production
expenditures multiplied by a percentage (not more than 15%)
determined by the Indiana economic development corporation (IEDC);
and (2) the taxpayer must, before incurring or making the qualified
production expenditures, apply to the IEDC for approval of the tax
credit. Provides that the maximum amount of media production
expenditure tax credits that may be allowed during a state fiscal year
for all taxpayers is $2,500,000.
Effective: January 1, 2014.
January 7, 2013, read first time and referred to Committee on Tax and Fiscal Policy.
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A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Chapter 32.5. Media Production Expenditure Tax Credit
Sec. 1. As used in this chapter, "corporation" refers to the Indiana economic development corporation.
Sec. 2. As used in this chapter, "department" refers to the department of state revenue.
Sec. 3. As used in this chapter, "pass through entity" means:
(1) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2);
(2) a partnership;
(3) a limited liability company; or
(4) a limited liability partnership.
Sec. 4. As used in this chapter, "qualified applicant" means a person, corporation, partnership, limited liability partnership, limited liability company, or other entity that is engaged in the
business of making qualified media productions in Indiana.
Sec. 5. (a) As used in this chapter, "qualified media production"
refers to the following:
(1) Any of the following that is produced for any combination
of theatrical or television viewing or as a television pilot:
(A) A feature length film, including a short feature, an
independent or studio production, or a documentary.
(B) A television series, program, or feature.
(2) A digital media production that is intended for reasonable
commercial exploitation.
(3) An audio recording or a music video.
(4) An advertising message broadcast on radio or television.
(5) A media production concerning:
(A) training; or
(B) external marketing or communications.
(b) The term includes preproduction, production, and
postproduction work.
(c) The term does not include a production in any medium that
is obscene (under the standard set forth in IC 35-49-2-1) or
television coverage of news or athletic events.
Sec. 6. (a) As used in this chapter, "qualified production
expenditure" means any of the following expenses incurred in
Indiana or expenditures in Indiana made in the direct production
of a qualified media production in Indiana:
(1) The payment of wages, salaries, and benefits to Indiana
residents.
(2) Acquisition costs for a story or scenario used in the
qualified media production.
(3) Acquisition costs for locations, sets, wardrobes, and
accessories.
(4) Expenditures for materials used to make sets, wardrobes,
and accessories.
(5) Expenditures for photography, sound synchronization,
lighting, and related services.
(6) Expenditures for editing and related services.
(7) Facility and equipment rentals.
(8) Food and lodging.
(9) Legal services, if purchased from an attorney licensed to
practice law in Indiana.
(10) Any other production expenditure for which taxes are
assessed or imposed by the state.
(b) The term does not include expenditures for payments of
wages, salaries, or benefits to an individual who is a director, a
producer, a screenwriter, or an actor (excluding extras), unless the
individual is a resident of Indiana.
Sec. 7. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 6-5.5 (the financial institutions tax); and
(3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
chapter.
Sec. 8. As used in this chapter, "taxpayer" means an individual
or entity that has any state tax liability.
Sec. 9. (a) Subject to subsection (b), a qualified applicant that:
(1) incurs or makes qualified production expenditures of at
least fifty thousand dollars ($50,000); and
(2) satisfies the requirements of this chapter;
may claim a refundable tax credit as provided in this chapter.
(b) The maximum amount of tax credits that may be allowed
under this chapter during a state fiscal year for all taxpayers is two
million five hundred thousand dollars ($2,500,000).
Sec. 10. This section applies to a taxpayer that claims qualified
production expenditures of less than six million dollars
($6,000,000) in a taxable year for purposes of the tax credit under
this chapter. Subject to section 9(b) of this chapter, the amount of
the tax credit to which a taxpayer is entitled under this chapter
equals the product of:
(1) a percentage equal to:
(A) forty percent (40%), in the case of qualified production
expenditures paid to an individual or entity located in a
municipality or county:
(i) in which twenty-five percent (25%) of the households
are below the poverty level as established by the most
recent United States decennial census; or
(ii) that has an average rate of unemployment for the
most recent eighteen (18) month period for which data is
available that is at least one and one-half (1 1/2) times
the average statewide rate of unemployment for the
same eighteen (18) month period; or
(B) thirty-five percent (35%), in the case of qualified
production expenditures that are not described in clause
(A); multiplied by
(2) the amount of the taxpayer's qualified production expenditures in the taxable year.
Sec. 11. (a) This section applies to a taxpayer that claims qualified production expenditures of at least six million dollars ($6,000,000) in a taxable year for purposes of the tax credit under this chapter.
(b) Subject to section 9(b) of this chapter and the corporation's approval of a tax credit for the taxpayer under section 13 of this chapter, a taxpayer may claim a tax credit under this chapter that equals the product of:
(1) the percentage determined by the corporation under section 13 of this chapter; multiplied by
(2) the amount of the taxpayer's qualified production expenditures in the taxable year.
Sec. 12. (a) To receive the tax credit provided by this chapter, a taxpayer must claim the tax credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department all information that the department determines is necessary for the calculation of the credit provided under this chapter.
(b) In the case of a taxpayer that claims a tax credit under section 11 of this chapter, the taxpayer must also file with the taxpayer's annual state tax return or returns a copy of the agreement entered into by the corporation and the taxpayer under section 13 of this chapter for the tax credit.
Sec. 13. (a) A taxpayer that proposes to claim a tax credit under section 11 of this chapter must, before incurring or making the qualified production expenditures, apply to the corporation for approval of the tax credit.
(b) After receiving an application under subsection (a), the corporation may enter into an agreement with the applicant for a tax credit under section 11 of this chapter if the corporation determines that:
(1) the applicant's proposed qualified media production:
(A) is economically viable; and
(B) will increase economic growth and job creation in Indiana; and
(2) the applicant's proposed qualified media production and qualified production expenditures otherwise satisfy the requirements of this chapter.
(c) If the corporation and an applicant enter into an agreement under this section, the agreement must specify the following:
(1) The percentage to be used under section 11(b)(1) of this chapter in determining the amount of the tax credit. The percentage may not be more than fifteen percent (15%).
(2) Any requirements or restrictions that the applicant must satisfy before the applicant may claim the tax credit.
Sec. 14. If the amount of the tax credit provided under this chapter to a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer is entitled to a refund of the excess.
Sec. 15. If a pass through entity is entitled to a tax credit under this chapter but does not have state tax liability against which the tax credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a tax credit equal to:
(1) the tax credit determined for the pass through entity for the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive income to which the shareholder, partner, or member is entitled.
Sec. 16. A taxpayer may not sell, assign, convey, or otherwise transfer a tax credit provided under this chapter.
Sec. 17. Notwithstanding any other provision, including any reciprocity agreements entered into by the state, a taxpayer that is a corporation or a nonresident person and that claims a tax credit under this chapter (or any successor in interest in any part of the taxpayer) must file an Indiana income tax return for at least the first five (5) years that the taxpayer has income from the qualified media production for which the tax credit was granted. Notwithstanding the income apportionment provisions of IC 6-3 and any rules adopted by the department of state revenue, in the case of a corporation or a nonresident person (or any successor in interest in any part of the corporation or nonresident person), the part of the income from the qualified media production that for purposes of taxation under IC 6-3 is considered to be derived from sources within Indiana is equal to:
(1) the income of the corporation or nonresident person (or the successor in interest in any part of the corporation or nonresident person) from the qualified media production; multiplied by
(2) a percentage equal to:
(A) the amount of qualified production expenditures for which the tax credit was granted for the qualified media production; divided by
(B) the total production expenditures for the qualified media production.
Sec. 18. (a) If a taxpayer (or any successor in interest in any part of the taxpayer) fails to satisfy any condition of this chapter or any condition in an agreement under section 13 of this chapter, or fails to file tax returns as required by section 17 of this chapter, the corporation may:
(1) disallow the use of all or a part of any unused tax credit granted to the taxpayer (or any successor in interest in any part of the taxpayer) under this chapter;
(2) recapture all or a part of the tax credit under this chapter that has been applied to the state tax liability of the taxpayer (or any successor in interest in any part of the taxpayer); or
(3) both disallow the tax credit under subdivision (1) and recapture the tax credit under subdivision (2).
(b) A taxpayer may not receive a credit under this chapter unless the taxpayer:
(1) consents that the taxpayer (and any successor in interest in any part of the taxpayer) will be subject to the jurisdiction of Indiana courts;
(2) consents that service of process in accordance with the Indiana Rules of Trial Procedure is proper service and subjects the taxpayer (and any successor in interest in any part of the taxpayer) to the jurisdiction of Indiana courts; and
(3) consents that any civil action related to the provisions of this chapter and in which the taxpayer (or any successor in interest in any part of the taxpayer) is a party will be heard in an Indiana court.
Sec. 19. A tax credit may not be awarded under this chapter for a taxable year ending after December 31, 2016.
(b) This SECTION expires January 1, 2017.
