Bill Text: MI SB0383 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Michigan business tax; credits; amount of qualified film production credit awarded; provide discretion. Amends secs. 113, 409, 455, 457, 459 & 510 of 2007 PA 36 (MCL 208.1113 et seq.).
Spectrum: Slight Partisan Bill (Republican 10-5)
Status: (Passed) 2011-08-24 - Assigned Pa 0077'11 With Immediate Effect [SB0383 Detail]
Download: Michigan-2011-SB0383-Engrossed.html
SB-0383, As Passed House, June 16, 2011
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 383
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
by amending sections 113, 409, 455, 457, 459, and 510 (MCL
208.1113, 208.1409, 208.1455, 208.1457, 208.1459, and 208.1510),
section 113 as amended by 2008 PA 472, sections 409 and 455 as
amended and section 510 as added by 2011 PA 39, section 457 as
added by 2008 PA 86, and section 459 as added by 2008 PA 74.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 113. (1) "Partner" means a partner or member of a
partnership.
(2) "Partnership" means a taxpayer that is required to or has
elected to file as a partnership for federal income tax purposes.
(3) "Person" means an individual, firm, bank, financial
institution, insurance company, limited partnership, limited
liability partnership, copartnership, partnership, joint venture,
association, corporation, subchapter S corporation, limited
liability company, receiver, estate, trust, or any other group or
combination of groups acting as a unit.
(4) "Professional employer organization" means an organization
that provides the management and administration of the human
resources of another entity by contractually assuming substantial
employer rights and responsibilities through a professional
employer agreement that establishes an employer relationship with
the leased officers or employees assigned to the other entity by
doing all of the following:
(a) Maintaining a right of direction and control of employees'
work, although this responsibility may be shared with the other
entity.
(b) Paying wages and employment taxes of the employees out of
its own accounts.
(c) Reporting, collecting, and depositing state and federal
employment taxes for the employees.
(d) Retaining a right to hire and fire employees.
(5) Professional employer organization is not a staffing
company as that term is defined in subsection (6).
(6) "Purchases from other firms" means all of the following:
(a) Inventory acquired during the tax year, including freight,
shipping, delivery, or engineering charges included in the original
contract price for that inventory.
(b) Assets, including the costs of fabrication and
installation, acquired during the tax year of a type that are, or
under the internal revenue code will become, eligible for
depreciation, amortization, or accelerated capital cost recovery
for federal income tax purposes.
(c) To the extent not included in inventory or depreciable
property, materials and supplies, including repair parts and fuel.
(d) For a staffing company, compensation of personnel supplied
to customers of staffing companies. As used in this subdivision:
(i) "Compensation" means that term as defined under section 107
plus all payroll tax and worker's compensation costs.
(ii) "Staffing company" means a taxpayer whose business
activities are included in industry group 736 under the standard
industrial classification code as compiled by the United States
department of labor.
(e) For a person included in major group 15, 16, or 17 under
the standard industrial classification code as compiled by the
United States department of labor that does not qualify for a
credit under section 417, both of the following:
(i) Payments to subcontractors for a construction project under
a contract specific to that project.
(ii) To the extent not deducted under subdivisions (a) and (c),
payments for materials deducted as purchases in determining the
cost of goods sold for the purpose of calculating total income on
the taxpayer's federal income tax return.
(f) For the 2008 tax year and each tax year after 2008, all
film rental or royalty payments paid by a theater owner to a film
distributor, a film producer, or a film distributor and producer.
(g) For a taxpayer licensed under article 25 or 26 of the
occupational code, 1980 PA 299, MCL 339.2501 to 339.2518 and
339.2601 to 339.2637, payments to an independent contractor
licensed under article 25 or 26 of the occupational code, 1980 PA
299, MCL 339.2501 to 339.2518 and 339.2601 to 339.2637.
(h) For a person classified under the 2002 North American
industrial classification system number 484 as compiled by the
United States office of management and budget that does not qualify
for a credit under section 417, payments to subcontractors to
transport freight by motor vehicle under a contract specific to
that freight to be transported by motor vehicle.
(7) "Revenue mile" means the transportation for a
consideration of 1 net ton in weight or 1 passenger the distance of
1 mile.
Sec. 409. (1) For tax years that begin on or after January 1,
2008 and end before January 1, 2013, an eligible taxpayer may claim
a credit against the tax imposed by this act equal to the amount of
capital expenditures in this state on infield renovation,
grandstand and infrastructure upgrades, and any other construction
and upgrades, subject to the following:
(a) For the 2008 through 2010 tax years, the credit shall not
exceed $2,100,000.00 or the taxpayer's tax liability under this
act, whichever is less.
(b) For the 2011 through the 2012 tax years, the credit shall
not exceed $1,580,000.00 or the taxpayer's tax liability under this
act, whichever is less.
(2) Subject to the limitation provided under this subsection,
for tax years that begin on or after December 1, 2012 and end
before January 1, 2017, an eligible taxpayer may claim a credit
against the tax imposed by this act equal to the amount of capital
expenditures in this state on infield renovation, grandstand and
infrastructure upgrades, and any other construction and upgrades.
The credit allowed under this subsection shall not exceed
$1,580,000.00 or the taxpayer's tax liability under this act,
whichever is less.
(3) In addition to the credit allowed under subsection (1),
for the 2009 tax year an eligible taxpayer may claim a credit
against the tax imposed by this act equal to 50% of the amount of
necessary expenditures in this state incurred including any
professional fees, additional police officers, and any traffic
management devices, to ensure traffic and pedestrian safety while
hosting the requisite motorsports events each calendar year. For
the 2010 and 2011 tax years, an eligible taxpayer may claim a
credit against the tax imposed by this act equal to all of the
necessary expenditures in this state incurred including any
professional fees, additional police officers, and any traffic
management devices, to ensure traffic and pedestrian safety while
hosting the requisite motorsports events each calendar year. If the
amount of the credit allowed under this subsection exceeds the tax
liability of the taxpayer for the tax year that excess shall be
refunded.
(4) (3)
To be eligible to claim the credit
allowed under
subsection (1), an eligible taxpayer shall expend at least
$30,000,000.00 on capital expenditures before January 1, 2011. To
be eligible to claim the credit allowed under subsection (2), an
eligible taxpayer shall, in addition to the expenditures required
to claim the credit under subsection (1), expend, at a minimum, an
additional $32,000,000.00 on capital expenditures as follows:
(a) At least $10,000,000.00 after December 31, 2010 and before
January 1, 2013.
(b) Including the amount expended under subdivision (a), a
cumulative total of at least $32,000,000.00 after December 31, 2010
and before January 1, 2016.
(5) (4)
As used in this section:
(a) "Eligible taxpayer" means any of the following:
(i) A person who owns and operates a motorsports entertainment
complex and has at least 2 days of motorsports events each calendar
year which shall be comparable to NASCAR Nextel cup events held in
2007 or their successor events.
(ii) A person who is the lessee and operator of a motorsports
entertainment complex or the lessee of the land on which a
motorsports entertainment complex is located and operates that
motorsports entertainment complex.
(iii) A person who operates and maintains a motorsports
entertainment complex under an operation and management agreement.
(b) "Motorsports entertainment complex" means a closed-course
motorsports facility, and its ancillary grounds and facilities,
that satisfies all of the following:
(i) Has at least 70,000 fixed seats for race patrons.
(ii) Has at least 6 scheduled days of motorsports events each
calendar year.
(iii) Serves food and beverages at the motorsports entertainment
complex during motorsports events each calendar year through
concession outlets, which are staffed by individuals who represent
or are members of 1 or more nonprofit civic or charitable
organizations that directly benefit from the concession outlets'
sales.
(iv) Engages in tourism promotion.
(v) Has permanent exhibitions of motorsports history, events,
or vehicles within the motorsports entertainment complex.
(c) "Motorsports event" means a motorsports race and its
ancillary activities that have been sanctioned by a sanctioning
body.
(d) "Sanctioning body" means the American motorcycle
association (AMA); auto racing club of America (ARCA); championship
auto racing teams (CART); grand American road racing association
(GRAND AM); Indy racing league (IRL); national association for
stock car auto racing (NASCAR); national hot rod association
(NHRA); professional sports car racing (PSR); sports car club of
America (SCCA); United States auto club (USAC); Michigan state
promoters association; or any successor organization or any other
nationally or internationally recognized governing body of
motorsports that establishes an annual schedule of motorsports
events and grants rights to conduct the events, that has
established and administers rules and regulations governing all
participants involved in the events and all persons conducting the
events, and that requires certain liability assurances, including
insurance.
Sec. 455. (1) The Michigan film office, with the concurrence
of the state treasurer, may enter into an agreement with an
eligible production company providing the company with a credit
against the tax imposed by this act as provided under this section.
To qualify for the credit under this section, a company shall meet
all of the following requirements:
(a) Spend at least $50,000.00 in this state for the
development, preproduction, production, or postproduction costs of
a state certified qualified production.
(b) Enter into an agreement as provided in this section.
(c) Receive a postproduction certificate of completion from
the office under subsection (5).
(d) Submit the postproduction certificate of completion issued
by the office under subsection (5) to the department under
subsection (8).
(e) Shall not be delinquent in a tax or other obligation owed
to this state or be owned or under common control of an entity that
is delinquent in a tax or other obligation owed to this state.
(2) For direct production expenditures or qualified personnel
expenditures made after February 29, 2008 and before the effective
date of the amendatory act that added this language, an agreement
under this section may provide for an eligible production company
to claim a tax credit equal to 42% of direct production
expenditures for a state certified qualified production in a core
community, 40% of direct production expenditures for a state
certified qualified production in part of this state other than a
core community, and 30% for qualified personnel expenditures. For
direct production expenditures or qualified personnel expenditures
made on and after the effective date of the amendatory act that
added this language, an agreement under this section may provide
for an eligible production company to claim a tax credit as
determined by the Michigan film office, with the concurrence of the
state treasurer, of up to 42% for each separate direct production
expenditure for a state certified qualified production in a core
community, up to 40% for each separate direct production
expenditure for a state certified qualified production in part of
this state other than a core community, and up to 30% for each
separate qualified personnel expenditure. A taxpayer shall not
claim a credit under this section for any of the following:
(a) A direct expenditure, or qualified personnel expenditure,
for which the company claims a credit under section 459.
(b) A direct expenditure, or qualified personnel expenditure,
for which the company claims a credit under section 367 of the
income tax act of 1967, 1967 PA 281, MCL 206.367.
(c) (b)
A direct expenditure, or qualified
personnel
expenditure, for which another taxpayer claims a credit under this
section, or
a credit under section 459,
or a credit under section
367 of the income tax act of 1967, 1967 PA 281, MCL 206.367.
(3) An eligible production company intending to produce a
qualified production in this state, or that initiated production of
a qualified production after February 29, 2008 and before April 8,
2008, may submit an application to enter into an agreement under
this section to the Michigan film office. Except for a qualified
production for which production was initiated after February 29,
2008 and before April 8, 2008, direct production expenditures and
qualified personnel expenditures incurred prior to approval of an
agreement under this section are not eligible for the credit under
this section. The request shall be submitted in a form prescribed
by the Michigan film office and shall be accompanied by a $100.00
application fee and all of the information and records requested by
the office. An application fee received by the office under this
subsection shall be deposited in the Michigan film promotion fund.
The office shall not process the application until it is complete.
As part of the application, the company shall estimate direct
production expenditures and qualified personnel expenditures for an
identified qualified production. If the office, with the
concurrence of the state treasurer, determines to enter into an
agreement under this section, the agreement shall provide for all
of the following:
(a) A requirement that the eligible production company
commence work in this state on the identified qualified production
within 90 days of the date of the agreement or else the agreement
shall expire. However, upon request submitted by the company based
on good cause, the office may extend the period for commencement of
work in this state for up to an additional 90 days.
(b) A statement identifying the company and the qualified
production that the company intends to produce in whole or in part
in this state.
(c) A unique number assigned to the qualified production by
the office.
(d) A requirement that the qualified production not depict
obscene matter or an obscene performance.
(e) If the qualified production is a long-form narrative film
production, a requirement that the qualified production include an
acknowledgement that the qualified production was filmed in this
state.
(f) A requirement that the company provide the office with the
information and independent certification the office and the
department deem necessary to verify direct production expenditures,
qualified personnel expenditures, and eligibility for the credit
under this section.
(g) If determined to be necessary by the office and the state
treasurer, a provision for addressing expenditures in excess of
those identified in the agreement.
(4) In determining whether to enter into an agreement under
this section, the Michigan film office and the state treasurer
shall consider all of the following:
(a) The potential that in the absence of the credit the
qualified production will be produced in a location other than this
state.
(b) The extent to which the qualified production may have the
effect of promoting this state as a tourist destination.
(c) The extent to which the qualified production may have the
effect of promoting economic development or job creation in this
state.
(d) The extent to which the credit will attract private
investment for the production of qualified productions in this
state.
(e) The record of the eligible production company in
completing commitments to engage in a qualified production.
(5) If the Michigan film office determines that an eligible
production company has complied with the terms of an agreement
entered into under this section, the office shall issue a
postproduction certificate of completion to the company. The
company shall submit a request to the office for a postproduction
certificate of completion on a form prescribed by the office, along
with any information or independent certification the office or the
department deems necessary. The office shall process each request
within 60 days after the request is complete. However, the office
may request additional information or independent certification
before issuing a postproduction certificate of completion and need
not issue the postproduction certificate of completion until
satisfied that direct production expenditures, qualified personnel
expenditures, and eligibility are adequately established. The
additional information requested may include a report of direct
production expenditures and qualified personnel expenditures for
the qualified production audited and certified by an independent
certified public accountant. Each postproduction certificate of
completion shall be signed by the Michigan film commissioner and
shall include the following information:
(a) The name of the eligible production company.
(b) The name of the certified production produced in whole or
in part in this state.
(c) The eligible production company's direct production
expenditures and qualified personnel expenditures for the qualified
production.
(d) The eligible production company's credit amount.
(e) (d)
The date of completion for the qualified
production in
this state.
(f) (e)
The unique number assigned to the
qualified production
project by the Michigan film office under subsection (3).
(g) (f)
The eligible production company's
federal employer
identification number or Michigan treasury number.
(h) (g)
Any independent certification
required by the
department or the Michigan film office.
(6) Information, records, or other data received, prepared,
used, or retained by the Michigan film office under this section
that are submitted by an eligible production company and considered
by the taxpayer and acknowledged by the office as confidential
shall not be subject to the disclosure requirements of the freedom
of information act, 1976 PA 442, MCL 15.231 to 15.246. Information,
records, or other data shall only be considered confidential to the
extent that the information or records describe the commercial and
financial operations or intellectual property of the company, the
information or records have not been publicly disseminated at any
time, and disclosure of the information or records may put the
company at a competitive disadvantage. For purposes of this
subsection, information or records that describe commercial and
financial operations do not include that portion of information or
records that include any expenses that qualify under this section
as qualified personnel expenditures or direct production
expenditures and for which a credit may be claimed.
(7) The Michigan film office shall, on January 15 and July 15
in each year, make available on its website a detailed semiannual
report that includes, at a minimum, all of the following:
(a) The number of applications received for a credit under
this section in the immediately preceding 6 months, including the
name of the eligible production company that submitted the
application and a brief description of the proposed qualified
production, including the locations in this state to be used in the
production and the proposed amount of money to be expended by the
eligible production company to produce the qualified production in
this state.
(b) The number of applications approved during the immediately
preceding 6 months.
(c) The number of postproduction certificates of completion
issued during the immediately preceding 6 months and the total
amount of credits certified under those postproduction certificates
of completion.
(8) An eligible production company shall submit a
postproduction certificate of completion issued under subsection
(5) to the department. The Michigan film office shall forward a
copy of each postproduction certificate of completion issued
pursuant to this subsection to the governor, the president of the
Michigan strategic fund, the chairperson of the senate finance
committee, the chairperson of the house tax policy committee, the
director of the senate fiscal agency, and the director of the house
fiscal agency. If the credit allowed under this section exceeds the
tax liability of the company for the tax year or if the company
claiming the credit does not have a tax liability under this act
for the tax year, the department shall refund the excess or pay the
amount of the credit to the company. The department shall, as soon
as the information is available, annually report to the governor,
the president of the Michigan strategic fund, the chairperson of
the senate finance committee, the chairperson of the house tax
policy committee, the director of the senate fiscal agency, and the
director of the house fiscal agency the total amount of the credits
certified under this section that exceed the taxpayer's tax
liability for the most recent year that tax information is
available and for which returns have cleared and been processed.
The credit under this section shall be claimed after all other
credits under this act.
(9) An eligible production company may assign all or a portion
of a credit under this section to any assignee. An assignee may
subsequently assign a credit or any portion of a credit assigned
under this subsection to 1 or more assignees. A company may claim a
portion of a credit and assign the remaining credit amount. A
credit assignment under this subsection is irrevocable. The credit
assignment under this subsection shall be made on a form prescribed
by the department. The qualified taxpayer shall send a copy of the
completed assignment form to the department in the tax year in
which the assignment is made and shall attach a copy of the form to
the return on which the credit is claimed.
(10) The amount of the credit under this section shall be
reduced by a credit application and redemption fee equal to 0.5% of
the credit claimed, which shall be deducted from the credit
otherwise payable to the taxpayer claiming the credit and be
deposited by the department in the Michigan film promotion fund.
(11) A taxpayer that willfully submits information under this
section that the taxpayer knows to be fraudulent or false shall, in
addition to any other penalties provided by law, be liable for a
civil penalty equal to the amount of the taxpayer's credit under
this section. A penalty collected under this section shall be
deposited in the Michigan film promotion fund.
(12) Not later than March 1 of each year after 2008, the
Michigan film office shall submit to the governor, the president of
the Michigan strategic fund, the chairperson of the senate finance
committee, the chairperson of the house tax policy committee, the
director of the senate fiscal agency, and the director of the house
fiscal agency an annual report concerning the operation and
effectiveness of the credit under this section. The requirements of
section 28(1)(f) of 1941 PA 122, MCL 205.28, do not apply to
disclosure of tax information required by this subsection. The
report shall include all of the following:
(a) A brief assessment of the overall effectiveness of the
credit under this section at attracting qualified productions to
this state during the immediately preceding calendar year.
(b) The number of qualified productions for which the eligible
production company applied for a tax credit under this section
during the immediately preceding year, the names of the qualified
productions produced in this state for which credits were begun or
completed in the immediately preceding year, and the locations in
this state that were used in the production of qualified
productions in the immediately preceding calendar year.
(c) The amount of money spent by each eligible production
company identified in subdivision (b) to produce each qualified
production in this state and a breakdown of all production spending
by all companies classified as goods, services, or salaries and
wages in the immediately preceding calendar year.
(d) The number of below the line crew employed in this state
by eligible production companies that qualified for the credit
under this section in the immediately preceding calendar year, how
many of those persons employed were residents of this state and not
included in qualified personnel expenditures, and the total number
of hours worked on the qualified production for which a credit is
granted.
(e) For requests for postproduction certificates of completion
submitted after January 2, 2011, the number of above the line
personnel employed in this state by the eligible production
companies that qualified for the credit under this section in the
immediately preceding calendar year and how many of those personnel
employed were residents of this state. For purposes of this
subdivision, above the line personnel means personnel who are not
below the line crew.
(f) For requests for postproduction certificates of completion
submitted after January 2, 2011, the number of persons employed in
this state by the eligible production companies that qualified for
the credit under this section in the immediately preceding calendar
year that earned more than $250,000.00 on a qualified production
and how many of those persons were residents of this state.
(g) The value of all tax credit certificates of completion
issued under this section in the immediately preceding calendar
year.
(h) The amount known by the Michigan film office of other
state and local assistance provided to eligible production
companies in addition to the tax credit under this section.
(13) As used in this section:
(a) "Below the line crew" means that term as defined under
section 459.
(b) "Core community" means a qualified local governmental unit
as defined under section 2 of the obsolete property rehabilitation
act, 2000 PA 146, MCL 125.2782.
(c) "Direct production expenditure" means a development,
preproduction, production, or postproduction expenditure made in
this state that is not a qualified personnel expenditure directly
attributable to the production or distribution of a qualified
production that is a transaction subject to taxation in this state,
including, but not limited to, all of the following:
(i) Payments to vendors doing business in this state to
purchase or use tangible personal property in producing or
distributing the qualified production or to purchase services
relating to the production or distribution of the qualified
production, including all of the following:
(A) Expenditures for optioning or purchasing intellectual
property including, but not limited to, books, scripts, music, or
trademarks relating to the development or purchase of a script,
story, scenario, screenplay, or format, including all expenditures
generally associated with the optioning or purchase of intellectual
property, including option money, agent fees, and attorney fees
relating to the transaction, but not including deferrals,
deferments, royalties, profit participation, or recourse or
nonrecourse loans negotiated by the eligible production company to
obtain the rights to the intellectual property.
(B) Production work, production equipment, production
software, development work, postproduction work, postproduction
equipment, postproduction software, set design, set construction,
set operations, props, lighting, wardrobe, makeup, makeup
accessories, photography, sound synchronization, special effects,
visual effects, audio effects, film processing, music, sound
mixing, editing, and related services and materials.
(C) Use of facilities or equipment, use of soundstages or
studios, location fees, and related services and materials.
(D) Catering, food, lodging, and related services and
materials.
(E) Use of vehicles, which may include chartered aircraft
based in this state used for transportation in this state directly
attributable to production of a qualified production, but may not
include the chartering of aircraft for transportation outside of
this state.
(F) Commercial airfare if purchased through a travel agency or
travel company based in this state for travel to and from this
state or within this state directly attributable to production or
distribution of a qualified production.
(G) Insurance coverage or bonding if purchased from an
insurance agent based in this state.
(H) Expenditures for distribution, including, but not limited
to, both of the following:
(I) Preproduction, production, or postproduction costs
relating to the creation of trailers, marketing videos,
commercials, point-of-purchase videos, and content created on film
or digital media, including, but not limited to, the duplication of
films, videos, compact discs, digital video discs, and digital
files or other digital media created for consumer consumption.
(II) Purchase of equipment relating to the duplication or
market distribution of any content created or produced in this
state.
(I) Other expenditures for production of a qualified
production in accordance with generally accepted entertainment
industry practices.
(ii) Payments and compensation, not to exceed $2,000,000.00 for
any 1 employee or contractual or salaried employee who performs
services in this state for the production or distribution of a
qualified production, including all of the following:
(A) Payment of wages, benefits, or fees for talent,
management, or labor.
(B) Payment to a personal services corporation or professional
employer organization for the services of a performing artist or
crew member if the personal services corporation or professional
employer organization is subject to the tax levied under this act
on the portion of the payment qualifying for the tax credit under
this section and the payments received by the performing artist or
crew member that are subject to taxation under the income tax act
of
1967, 1967 PA 281, MCL 206.1 to 206.697, 206.713, and
are
withheld and paid to this state in the amount provided under
section 351 of the income tax act of 1967, 1967 PA 281, MCL
206.351.
(d) "Eligible production company" or "company" means an entity
in the business of producing qualified productions, but does not
include an entity that is more than 30% owned, affiliated, or
controlled by an entity or individual who is in default on a loan
made by this state, a loan guaranteed by this state, or a loan made
or guaranteed by any other state.
(e) "Interactive website" means a website, the production
costs of which exceed $500,000.00 in an annual period and primarily
includes interactive games, end user applications, animation,
simulation, sound, graphics, story lines, or video created or
repurposed for distribution over the internet. Interactive website
does not include a website primarily used for institutional,
private, industrial, retail, or wholesale marketing or promotional
purposes, or which contains obscene matter or an obscene
performance.
(f) "Michigan film office" or "office" means the Michigan film
office created under chapter 2A of the Michigan strategic fund act,
1984 PA 270, MCL 125.2029 to 125.2029g.
(g) "Michigan film promotion fund" means the fund created
under chapter 2A of the Michigan strategic fund act, 1984 PA 270,
MCL 125.2029 to 125.2029g.
(h) "Obscene matter or an obscene performance" means matter
described in 1984 PA 343, MCL 752.361 to 752.374.
(i) "Postproduction expenditure" means a direct expenditure
for editing, Foley recording, automatic dialogue replacement, sound
editing, special or visual effects including computer-generated
imagery or other effects, scoring and music editing, beginning and
end credits, negative cutting, soundtrack production, dubbing,
subtitling, or addition of sound or visual effects. Postproduction
expenditure includes direct expenditures for advertising,
marketing, distribution, or related expenses.
(j) "Qualified personnel expenditure" means an expenditure
made in this state directly attributable to the production or
distribution of a qualified production that is a transaction
subject to taxation in this state and is a payment or compensation
payable to below the line crew for below the line crew members who
were not residents of this state for at least 60 days before
approval of the agreement for the qualified production under
subsection (3), not to exceed $2,000,000.00 for any 1 employee or
contractual or salaried employee who performs service in this state
for the production of a qualified production, including both of the
following:
(i) Payment of wages, benefits, or fees.
(ii) Payment to a personal services corporation or professional
employer organization for the services of a performing artist or
crew member if the personal services corporation or professional
employer organization is subject to the tax levied under this act
on the portion of the payment qualifying for the tax credit under
this section and the payments received by the performing artist or
crew member that are subject to taxation under the income tax act
of
1967, 1967 PA 281, MCL 206.1 to 206.697, 206.713, and
are
withheld and paid to this state in the amount provided under
section 351 of the income tax act of 1967, 1967 PA 281, MCL
206.351.
(k) "State certified qualified production" or "qualified
production" means single media or multimedia entertainment content
created in whole or in part in this state for distribution or
exhibition to the general public in 2 or more states by any means
and media in any digital media format, film, or video tape,
including, but not limited to, a motion picture, a documentary, a
television series, a television miniseries, a television special,
interstitial television programming, long-form television,
interactive television, music videos, interactive games, video
games, commercials, internet programming, an internet video, a
sound recording, a video, digital animation, or an interactive
website. Qualified production also includes any trailer, pilot,
video teaser, or demo created primarily to stimulate the sale,
marketing, promotion, or exploitation of future investment in a
production. Qualified production does not include any of the
following:
(i) A production for which records are required to be
maintained with respect to any performer in the production under 18
USC 2257.
(ii) A production that includes obscene matter or an obscene
performance.
(iii) A production that primarily consists of televised news or
current events.
(iv) A production that primarily consists of a live sporting
event.
(v) A production that primarily consists of political
advertising.
(vi) A radio program.
(vii) A weather show.
(viii) A financial market report.
(ix) A talk show.
(x) A game show.
(xi) A production that primarily markets a product or service
other than a state certified qualified production.
(xii) An awards show or other gala event production.
(xiii) A production with the primary purpose of fund-raising.
(xiv) A production that primarily is for employee training or
in-house corporate advertising or other similar production.
(l) "Sound recording" means a recording of music, poetry, or
spoken-word performance, but does not include the audio portions
spoken and recorded as part of a motion picture, video, theatrical
production, television news coverage, or athletic event.
(m) "State certified qualified production" means a qualified
production for which a postproduction certificate of completion has
been issued by the office under subsection (5).
Sec. 457. (1) Until September 30, 2015, the Michigan film
office, with the concurrence of the state treasurer, may enter into
an agreement with a taxpayer providing the taxpayer with a credit
against the tax imposed by this act for an investment in a
qualified film and digital media infrastructure project, as
provided under this section. To qualify for the credit under this
section, a taxpayer shall meet all of the following requirements:
(a) Before January 1, 2009, invest and expend at least
$100,000.00 for a qualified film and digital media infrastructure
project in this state; after December 31, 2008, invest and expend
at least $250,000.00 for a qualified film and digital media
infrastructure project in this state.
(b) Enter into an agreement as provided in this section.
(c) Receive an investment expenditure certificate from the
office under subsection (5).
(d) Submit the investment expenditure certificate issued by
the office under subsection (5) to the department under subsection
(7).
(e) Shall not be delinquent in a tax or other obligation owed
to this state or be owned or under common control of an entity that
is delinquent in a tax or other obligation owed to this state.
(2)
For Before the effective
date of the amendatory act that
added this language, for investment expenditures made by a taxpayer
for all qualified film and digital media infrastructure projects in
this state, an agreement under this section may provide for the
taxpayer to claim a tax credit equal to 25% of the taxpayer's base
investment. On and after the effective date of the amendatory act
that added this language, for investment expenditures made by a
taxpayer for all qualified film and digital media infrastructure
projects in this state, an agreement under this section may provide
for the taxpayer to claim a tax credit of up to 25% of the
taxpayer's base investment as determined by the Michigan film
office, with the concurrence of the state treasurer. The credit
under this section shall be reduced by any credit claimed by the
taxpayer under section 437 for the same base investment. No more
than $20,000,000.00 in total credits under this section shall be
authorized in a tax year. If all or a portion of a qualified film
and digital media infrastructure project is a facility that may be
used for purposes unrelated to production or postproduction
activities, then the project is eligible for the credit only if the
department determines that the facility will support and be
necessary to secure production or postproduction activity for the
production and postproduction facility and the taxpayer agrees to
both of the following:
(a) The facility will be used as a state of the art production
or postproduction facility or as support and component of the
facility for the useful life of the facility.
(b) A credit will not be claimed under this section until the
facility is complete.
(3) A taxpayer seeking a credit under this section may submit
an application to enter into an agreement under this section to the
Michigan film office. The application shall be submitted in a form
prescribed by the Michigan film office and shall be accompanied by
a $100.00 application fee and all of the information and records
requested by the office. An application fee received by the office
under this subsection shall be deposited in the Michigan film
promotion fund. The office shall not process the application until
it is complete. If the office, with the concurrence of the state
treasurer, determines to enter into an agreement under this
section, the agreement shall provide for all of the following:
(a) A requirement that construction on the qualified film and
digital media infrastructure project commence within 180 days of
the date of the agreement or else the agreement shall expire.
However, upon request submitted by the taxpayer based on good
cause, the office may extend the period for commencement of work
for up to an additional 90 days.
(b) A unique number assigned to the qualified film and digital
media infrastructure project.
(c) A detailed description of the qualified film and digital
media infrastructure project.
(d) A detailed business plan and market analysis for the
qualified film and digital media infrastructure project.
(e) A projected budget for the qualified film and digital
media infrastructure project.
(f) Estimated start date and completion date for the qualified
film and digital media infrastructure project.
(g) A requirement that the taxpayer not file a claim for the
credit under this section until at least 25% of the base investment
in the qualified film and digital media infrastructure project
identified in the agreement has been expended.
(h) A requirement that the taxpayer provide the office with
the information and independent certification the office and the
department deem necessary to verify investment expenditures and
eligibility for the credit under this section.
(i) A requirement that if the cost of tangible assets
described in subsection (11)(a) was paid or accrued in a tax year
beginning after December 31, 2007, the taxpayer shall repay an
amount equal to 25% of the gross proceeds or benefit derived from
the sale or other disposition of the tangible assets minus the
gain, multiplied by the apportionment factor for the taxable year
as prescribed in chapter 3, and plus the loss, multiplied by the
apportionment factor for the taxable year as prescribed in chapter
3 from the sale or other disposition reflected in federal taxable
income and minus the gain from the sale or other disposition added
to the business income tax base in section 201.
(4) In determining whether to enter into an agreement under
this section, the Michigan film office and the state treasurer
shall consider all of the following:
(a) The potential that in the absence of the credit the
qualified film and digital media infrastructure project will be
constructed in a location other than this state.
(b) The extent to which the qualified film and digital media
infrastructure project may have the effect of promoting economic
development or job creation in this state.
(c) The extent to which the credit will attract private
investment for the production of motion pictures, videos,
television programs, and digital media in this state.
(d) The extent to which the credit will encourage the
development of film, video, television, and digital media
production and postproduction facilities in this state.
(5) If the Michigan film office determines that a taxpayer has
complied with the terms of an agreement entered into under this
section, the office shall issue an investment expenditure
certificate to the taxpayer. The taxpayer shall submit a request to
the office for an investment expenditure certificate on a form
prescribed by the office, along with any information or independent
certification the office or the department deems necessary. The
office shall process each request within 60 days after the request
is complete. However, the office may request additional information
or independent certification before issuing an investment
expenditure certificate and need not issue the investment
expenditure certificate until satisfied that investment
expenditures and eligibility are adequately established. The
additional information requested may include a report of
expenditures audited and certified by an independent certified
public accountant. Each investment expenditure certificate shall be
signed by the Michigan film commissioner and shall include the
following information:
(a) The name of the taxpayer.
(b) A description of the qualified film and digital media
infrastructure project.
(c) The taxpayer's eligible investment expenditures for the
qualified film and digital media infrastructure project.
(d) The taxpayer's credit amount.
(e) (d)
The unique number assigned to the
qualified film and
digital media infrastructure project by the office under subsection
(3).
(f) (e)
The taxpayer's federal employer
identification number
or Michigan treasury number.
(g) (f)
Any independent certification
required by the
department or the Michigan film office.
(6) Information, records, or other data received, prepared,
used, or retained by the Michigan film office under this section
that are submitted by an eligible production company and considered
by the taxpayer and acknowledged by the office as confidential
shall not be subject to the disclosure requirements of the freedom
of information act, 1976 PA 442, MCL 15.231 to 15.246. Information,
records, or other data shall only be considered confidential to the
extent that the information or records describe the commercial and
financial operations or intellectual property of the company, the
information or records have not been publicly disseminated at any
time, and disclosure of the information or records may put the
company at a competitive disadvantage.
(7) To claim a credit under this section, a taxpayer shall
submit an investment expenditure certificate issued under
subsection (5) to the department. If the credit allowed under this
section exceeds the amount of taxes owed by the taxpayer under this
act for a tax year, that portion of the credit that exceeds the tax
liability of the taxpayer for the tax year shall not be refunded
but may be carried forward to offset tax liability under this act
in subsequent tax years for a period not to exceed 10 tax years or
until used up, whichever occurs first.
(8) The credit under this section shall be claimed after all
other credits under this act. A taxpayer eligible to claim a credit
under this section may assign all or a portion of a credit under
this section to any assignee. An assignee may subsequently assign a
credit or any portion of a credit assigned under this subsection to
1 or more assignees. A taxpayer may claim a portion of a credit and
assign the remaining credit amount. A credit assignment under this
subsection is irrevocable. The credit assignment under this
subsection shall be made on a form prescribed by the department. A
taxpayer claiming a credit under this section shall send a copy of
the completed assignment form to the department in the tax year in
which the assignment is made and shall attach a copy of the form to
the return on which the credit is claimed.
(9) The amount of the credit under this section shall be
reduced by a credit application and redemption fee equal to 0.5% of
the credit claimed, which shall be deducted from the credit
otherwise payable to the taxpayer claiming the credit and be
deposited by the department in the Michigan film promotion fund.
(10) A taxpayer that willfully submits information under this
section that the taxpayer knows to be fraudulent or false shall, in
addition to any other penalties provided by law, be liable for a
civil penalty equal to the amount of the taxpayer's credit under
this section. A penalty collected under this section shall be
deposited in the Michigan film production promotion fund.
(11) As used in this section:
(a) "Base investment" means the cost, including fabrication
and installation, paid or accrued in the taxable year of tangible
assets of a type that are, or under the internal revenue code will
become, eligible for depreciation, amortization, or accelerated
capital cost recovery for federal income tax purposes, provided
that the assets are physically located in this state for use in a
business activity in this state and are not mobile tangible assets
expended by a person in the development of a qualified film and
digital media infrastructure project. Base investment does not
include a direct production expenditure or qualified personnel
expenditure eligible for a credit under section 455.
(b) "Michigan film office" or "office" means the Michigan film
office created under chapter 2A of the Michigan strategic fund act,
1984 PA 270, MCL 125.2029 to 125.2029g.
(c) "Michigan film promotion fund" means the fund created
under chapter 2A of the Michigan strategic fund act, 1984 PA 270,
MCL 125.2029 to 125.2029g.
(d) "Qualified film and digital media infrastructure project"
means a film, video, television, or digital media production and
postproduction facility located in this state, movable and
immovable property and equipment related to the facility, and any
other facility that is a necessary component of the primary
facility. A qualified film and digital media infrastructure project
does not include a movie theater or other commercial exhibition
facility, a facility used to produce obscene matter or an obscene
performance as described in 1984 PA 343, MCL 752.361 to 752.374, or
a facility used for a production for which records are required to
be maintained with respect to any performer in the production under
18 USC 2257.
Sec. 459. (1) Until September 30, 2015, the Michigan film
office, with the concurrence of the state treasurer, may enter into
an agreement with an eligible production company providing the
company with a credit against the tax imposed by this act for
qualified job training expenditures, as provided under this
section. To qualify for the credit under this section, a company
shall meet all of the following requirements:
(a) Make qualified job training expenditures for a state
certified qualified production.
(b) After completion of the production of the state certified
qualified production in this state, submit to the office an
application in a form determined by the office with information
regarding the qualified job training expenditures, including
employment, salary, and related information required by the office.
(c) Receive a qualified job training expenditures certificate
from the office under subsection (5).
(d) Submit the qualified job training expenditure certificate
issued by the office under subsection (5) to the department under
subsection (7).
(e) Shall not be delinquent in a tax or other obligation owed
to this state or be owned or under common control of an entity that
is delinquent in a tax or other obligation owed to this state.
(2)
For Before the effective
date of the amendatory act that
added this language, for a qualified job training expenditure made
by a company, the company may claim a tax credit equal to 50% of
the qualified job training expenditure. On and after the effective
date of the amendatory act that added this language, for a
qualified job training expenditure made by a company, the company
may claim a tax credit of up to 50% of the qualified job training
expenditure as determined by the Michigan film office, with the
concurrence of the state treasurer. A company shall not claim a
credit under this section for any of the following:
(a) A direct expenditure, or qualified personnel expenditure,
for which the company claims a credit under section 455.
(b) A direct expenditure, or qualified personnel expenditure,
for which the company claims a credit under section 367 of the
income tax act of 1967, 1967 PA 281, MCL 206.367.
(c) A direct expenditure, or qualified personnel expenditure,
for which another taxpayer claims a credit under this section, a
credit under section 455, or a credit under section 367 of the
income tax act of 1967, 1967 PA 281, MCL 206.367.
(3) A taxpayer seeking a credit under this section may submit
an application to enter into an agreement under this section to the
Michigan film office. The application shall be submitted, prior to
making qualified job training expenditures, in a form prescribed by
the Michigan film office and shall be accompanied by a $100.00
application fee and all of the information and records requested by
the office. An application fee received by the office under this
subsection shall be deposited in the Michigan film promotion fund.
The office shall not process the application until it is complete.
If the office, with the concurrence of the state treasurer,
determines to enter into an agreement under this section, the
agreement shall provide for all of the following:
(a) A unique number assigned to the state certified qualified
production for which qualified job training expenditures were
incurred by the company.
(b) A detailed description of the state certified qualified
production and the qualified job training expenditures.
(c) A requirement that the company provide the office with the
information and independent certification the office and the
department deem necessary to verify qualified job training
expenditures and eligibility for the credit under this section.
(4) In determining whether to authorize a credit under this
section, the Michigan film office and the state treasurer shall
consider all of the following:
(a) The extent to which the state certified qualified
production and qualified job training expenditure may have the
effect of promoting economic development or job creation in this
state.
(b) The extent to which the credit may assist in attracting
additional private investment for the production of motion
pictures, videos, television programs, and digital media in this
state.
(c) The extent to which the credit will encourage the
development of film, video, television, and digital media
production and postproduction expertise in this state.
(5) If the Michigan film office determines that a company has
complied with the terms of an agreement entered into under this
section, the office shall issue a qualified job training
expenditure certificate to the company. The company shall submit a
request to the office for a qualified job training expenditure
certificate on a form prescribed by the office, along with any
information or independent certification the office or the
department deems necessary. The office shall process each request
within 60 days after the request is complete. However, the office
may request additional information or independent certification
before issuing a certificate and need not issue the certificate
until satisfied that qualified job training expenditures and
eligibility are adequately established. The additional information
requested may include a report of expenditures audited and
certified by an independent certified public accountant. Each
qualified job training expenditure certificate shall be signed by
the Michigan film commissioner and shall include the following
information:
(a) The name of the taxpayer.
(b) A description of the state certified qualified production
and the qualified job training expenditures.
(c) The amount of the company's qualified job training
expenditures for the state certified qualified production.
(d) The date on which production of the state certified
qualified production began in this state, the date on which
production of the state certified qualified production ended in
this state, the total number of production days in this state, and
the approximate total crew size for the state certified qualified
production.
(e) The company's credit amount.
(f) (e)
The unique number assigned to the
state certified
qualified production by the office under subsection (3).
(g) (f)
The company's federal employer
identification number
or Michigan treasury number.
(h) (g)
Any independent certification
required by the
department or the Michigan film office.
(6) Information, records, or other data received, prepared,
used, or retained by the Michigan film office under this section
that are submitted by an eligible production company and considered
by the taxpayer and acknowledged by the office as confidential
shall not be subject to the disclosure requirements of the freedom
of information act, 1976 PA 442, MCL 15.231 to 15.246. Information,
records, or other data shall only be considered confidential to the
extent that the information or records describe the commercial and
financial operations or intellectual property of the company, the
information or records have not been publicly disseminated at any
time, and disclosure of the information or records may put the
company at a competitive disadvantage.
(7) To claim a credit under this section, a company shall
submit a qualified job training expenditure certificate issued
under subsection (5) to the department. If the credit allowed under
this section exceeds the amount of taxes owed by the company under
this act for a tax year, that portion of the credit that exceeds
the tax liability of the company for the tax year shall not be
refunded but may be carried forward as a credit against tax
liability under this act in subsequent tax years for a period not
to exceed 10 tax years.
(8) The credit under this section shall be claimed after all
other credits under this act. The amount of the credit under this
section shall be reduced by a credit application and redemption fee
equal to 0.5% of the credit claimed, which shall be deducted from
the credit otherwise payable to the taxpayer claiming the credit
and be deposited by the department in the Michigan film promotion
fund.
(9) A taxpayer that willfully submits information under this
section that the taxpayer knows to be fraudulent or false, shall,
in addition to any other penalties provided by law, be liable for a
civil penalty equal to the amount of the taxpayer's credit under
this section. A penalty collected under this section shall be
deposited in the Michigan film production promotion fund.
(10) As used in this section:
(a) "Below the line crew" means persons employed by an
eligible production company for state certified qualified
production expenditures made after production begins and before
production is completed, including, but not limited to, a best boy,
boom operator, camera loader, camera operator, assistant camera
operator, compositor, dialogue editor, film editor, assistant film
editor, focus puller, Foley operator, Foley editor, gaffer, grip,
key grip, lighting crew, lighting board operator, lighting
technician, music editor, sound editor, sound effects editor, sound
mixer, steadicam operator, first assistant camera operator, second
assistant camera operator, digital imaging technician, camera
operator working with a director of photography, electric best boy,
grip best boy, dolly grip, rigging grip, assistant key for makeup,
assistant key for hair, assistant script supervisor, set
construction foreperson, lead set dresser, assistant key for
wardrobe, scenic foreperson, assistant propmaster, assistant audio
mixer, assistant boom person, assistant key for special effects,
and other similar personnel. Below the line crew does not include a
producer, director, writer, actor, or other similar personnel.
(b) "Eligible production company" means that term as defined
in section 455.
(c) "Michigan film office" or "office" means the Michigan film
office created under chapter 2A of the Michigan strategic fund act,
1984 PA 270, MCL 125.2029 to 125.2029g.
(d) "Michigan film promotion fund" means the fund created
under chapter 2A of the Michigan strategic fund act, 1984 PA 270,
MCL 125.2029 to 125.2029g.
(e) "Qualified job training expenditure" means salary and
other expenditures paid by an eligible production company to
provide qualified personnel with on-the-job training as a member of
the below the line crew for a state certified qualified production
that is intended to upgrade or enhance the skills of the qualified
personnel and address deficiencies in skills among residents of
this state as determined by the office.
(f) "Qualified personnel" means a person who has resided in
this state for not less than 12 months, who has legal status for
employment, and who demonstrates sufficient prior experience or
training in the film and digital media industry, as certified by
the Michigan film office. Qualified personnel includes, but is not
limited to, a person who has completed a training program at a
Michigan proprietary school licensed by the department of labor and
economic growth that offers a program of instruction in film and
video production and has been designated with a classification of
instructional programs code of 50 by the department of labor and
economic growth and a person in an advanced crew position that
meets the residency requirements of this subdivision and is hired
and mentored by a key or supervisor. Qualified personnel do not
include a person with fewer than 1 or more than 4 film credits in
the same below the line crew position for which the eligible
production company claimed a credit under this section.
(g) "Qualified personnel expenditure" means that term as
defined under section 455.
(h) "State certified qualified production" means that term as
defined in section 455.
Sec. 510. (1) If a certificate of completion, assignment
certificate, or component completion certificate is issued for a
tax year beginning after December 31, 2011 under section 437 to a
taxpayer or if a certificate of completed rehabilitation,
assignment certificate, or reassignment certificate is issued for a
tax year beginning after December 31, 2011 under section 435 to a
taxpayer, beginning on and after January 1, 2012 the taxpayer may
elect to claim a refundable credit for 90% of the amount of that
certificate. or
any carryforward remaining from that certificate,
whichever
is less. The claim may be filed
before the end of the tax
year, and the department shall pay the refundable credit within 60
days after receiving the claim. A taxpayer claiming a credit under
this section shall forgo the remaining 10% of the credit.
(2) If section 437 or 435 provides that payment of a credit
will be made over a period of years or limits the annual amount of
a payment, a refundable credit may only be claimed under subsection
(1) for the amount payable in the year claimed. A taxpayer may
elect to claim a refundable credit under subsection (1) in each
year that a credit is payable under section 437 or 435.
Notwithstanding the foregoing, a taxpayer may elect under
subsection (1) to claim the balance of a refundable credit awarded
under section 435(20), but the amount of that refund shall be equal
to 86% of the amount of the credit and the taxpayer shall forgo the
remaining 14% of the credit.
(3) Notwithstanding the provisions of section 437(18) and
section 435(9), for tax years ending after December 31, 2011, a
taxpayer may not claim a refundable credit under section 437(18) or
section 435(9) and may only claim a refundable credit under
sections 437 and 435 as provided in subsection (1) or (2).
Enacting section 1. Sections 409, 455, and 510 of the Michigan
business tax act, 2007 PA 36, MCL 208.1409, 208.1455, and 208.1510,
as amended by this amendatory act, are retroactive and effective
May 26, 2011. This provision is curative and is intended to express
the original intent of the legislature concerning the application
of 2011 PA 39.
