Bill Text: MN SF1434 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Film production investment credit authorization
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-03-18 - Referred to Taxes [SF1434 Detail]
Download: Minnesota-2013-SF1434-Introduced.html
1.2relating to taxation; individual income, corporate franchise, sales; providing
1.3a credit for a qualified film production investment; providing an exemption
1.4for qualifying film production purchases;amending Minnesota Statutes 2012,
1.5section 297A.67, by adding a subdivision; proposing coding for new law in
1.6Minnesota Statutes, chapter 290.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. [290.0682] FILM PRODUCTION INVESTMENT CREDIT.
1.9 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Qualifying film production" means a motion picture that is certified by the
1.12commissioner as made wholly in Minnesota.
1.13(c) "Qualified investment" means an amount of cash used to pay qualified production
1.14expenses that is provided by an investor who does not have any financial interest in the
1.15motion picture or the production company responsible for filming the motion picture.
1.16(d) "Motion picture" means a feature-length film, video, digital media project,
1.17television series defined as a season not to exceed 27 episodes, or commercial made in
1.18the state, in whole or in part, for theatrical or television viewing or as a television pilot.
1.19Motion picture shall not include a production featuring news, current events, weather and
1.20financial market reports, talk shows, game shows, sporting events, awards shows, or other
1.21gala events; a production whose sole purpose is fund-raising; a long-form production that
1.22primarily markets a product or service; or a production containing obscene material or
1.23performances.
1.24(e) "Motion picture production company" means a company, including its
1.25subsidiaries, engaged in the business of producing motion pictures, videos, television
2.1series, or commercials intended for a theatrical release or for television viewing. Motion
2.2picture production company shall not mean or include any company that is more than 25
2.3percent owned, affiliated, or controlled by any company or person that is in default on a
2.4loan made by the state or a loan guaranteed by the state.
2.5(f) "Principal photography" means the phase of production during which the
2.6motion picture is actually filmed. Principal photography shall not include preproduction
2.7or postproduction.
2.8(g) "Production expense" or "production cost" means preproduction, production,
2.9and postproduction expenditures directly incurred in the production of a motion picture.
2.10Production expenses or costs shall include wages and salaries paid to individuals
2.11employed in the production of the motion picture; the costs of set construction and
2.12operation, editing and related services, photography, sound synchronization, lighting,
2.13wardrobe, makeup, and accessories; film processing, transfer, sound mixing, special and
2.14visual effects; music; location fees; and the cost of purchase or rental of facilities and
2.15equipment or any other production expense as may be determined by the commissioner to
2.16be a qualified production expense. Production expenses or costs shall not include costs
2.17incurred in marketing or advertising a motion picture; costs related to the transfer of tax
2.18credits; or amounts paid to persons or businesses as a result of their participation in profits
2.19from the exploitation of the production.
2.20 Subd. 2. Credit allowed. (a) A taxpayer engaged in making a motion picture
2.21shall be allowed a credit against the taxes imposed by this chapter for the employment of
2.22persons in Minnesota in connection with the filming or production of one or more motion
2.23pictures in the state within any consecutive 12-month period. The credit shall be equal to
2.2425 percent of the total aggregate payroll paid by a motion picture production company that
2.25constitutes Minnesota source income, when total production costs incurred in the state
2.26equal or exceed $100,000 during the taxable year. For purposes of this subdivision, "total
2.27aggregate payroll" shall not include the salary of any employee whose salary is equal to or
2.28greater than $1,000,000.
2.29(b) A taxpayer shall be allowed an additional credit against the taxes imposed by
2.30this chapter equal to 25 percent of all Minnesota production expenses, not including the
2.31payroll expenses used to claim a credit pursuant to paragraph (a), where the motion picture
2.32is also eligible for a credit pursuant to paragraph (a), and either: (1) Minnesota production
2.33expenses exceed 50 percent of the total production expenses for a motion picture; or (2) at
2.34least 50 percent of the total principal photography days of the film take place in the state.
2.35 Subd. 3. Certification of credits. (a) Before making a qualified investment,
2.36taxpayers must apply to the Department of Revenue for a film production investment
3.1credit certificate. The application must be in the form and made under the procedures
3.2specified by the commissioner. Credit certificates must only be issued for qualifying
3.3investments in qualifying film productions.
3.4(b) Certificates must not be issued for more than $10,000,000 in film production
3.5investment credits per year.
3.6 Subd. 4. Carryover; transfers; refunds. (a) The tax credit shall be taken against
3.7the taxes imposed under this chapter and shall, at the election of the taxpayer, be
3.8refundable to the extent provided for in paragraph (d). Any amount of the tax credit that
3.9exceeds the tax due for a taxable year may be carried forward by the taxpayer to any of
3.10the five subsequent taxable years.
3.11(b) All or any portion of tax credits issued under this subdivision may be transferred,
3.12sold, or assigned to other taxpayers with tax liabilities under this chapter. Any tax credit
3.13that is transferred, sold, or assigned and taken against taxes imposed by this chapter shall
3.14not be refundable to the transferee, buyer, or assignee. A person or corporate taxpayer
3.15must not transfer a credit more than once in a 12-month period. Any amount of the tax
3.16credit that exceeds the tax due for a taxable year may be carried forward by the transferee,
3.17buyer, or assignee to any of the five subsequent taxable years from which a certificate is
3.18initially issued by the Department of Revenue.
3.19(c) An owner, transferee, or assignee desiring to make a transfer, sale, or assignment
3.20allowed under paragraph (b) shall submit to the commissioner a statement that describes
3.21the amount of tax credit for which the transfer, sale, or assignment of tax credit is eligible.
3.22The statement must be in the form and manner prescribed by the commissioner. The
3.23commissioner shall provide to the taxpayer a certificate of eligibility to transfer, sell, or
3.24assign the tax credits. The commissioner shall not issue a certificate to a taxpayer that has an
3.25outstanding tax obligation with the state in connection with any motion picture for any prior
3.26taxable year. A tax credit shall not be transferred, sold, or assigned without a certificate.
3.27(d) At the written election of a taxpayer entitled to a credit under paragraph (a), the
3.28commissioner shall apply the credit against the liability of the taxpayer as determined on its
3.29return, as first reduced by any other available credits, and shall then refund to the taxpayer
3.3090 percent of the balance of the credits. The commissioner may require substantiation of a
3.31taxpayer's claim for a refund under paragraph (a) before payment of the refund. No interest
3.32shall accrue on a refund before the commissioner's receipt of the substantiation request.
3.33 Subd. 5. Limitations. Notwithstanding any other provision of this section,
3.34aggregate salary, and compensation amounts, including all per diems, housing, and other
3.35allowances, paid to, or for the services of, an individual shall not qualify for the credit
3.36under this section to the extent that the amounts exceed $2,000,000.
4.1EFFECTIVE DATE.This section is effective for taxable years beginning after
4.2December 31, 2012.
4.3 Sec. 2. Minnesota Statutes 2012, section 297A.67, is amended by adding a subdivision
4.4to read:
4.5 Subd. 33. Film productions. (a) Sales of tangible personal property to a qualifying
4.6motion picture production company, as defined under section 290.0682, subdivision 1,
4.7paragraph (e), are exempt, provided the qualifying motion picture production company
4.8spends at least $50,000 within the state in connection with the filming or production of
4.9one or more motion pictures in the state within any consecutive 12-month period.
4.10(b) Any motion picture production company that intends to film all, or parts of, a
4.11motion picture in the state and qualifies for the exemption provided by this subdivision
4.12shall provide an estimate of total expenditures to be made in the state in connection with
4.13the filming or production of the motion picture. The estimate of expenditures shall be filed
4.14with the commissioner prior to the commencement of filming in the state and is required
4.15for the issuance of an exemption certificate. Any qualifying motion picture production
4.16company that has been approved that fails to expend $50,000 within a consecutive
4.1712-month period shall be liable for the sales taxes that would have been paid had the
4.18approval not been granted. The sales taxes shall be considered due as of the date that
4.19taxable expenditures were made.
4.20EFFECTIVE DATE.This section is effective for sales and purchases made after
4.21June 30, 2013.
1.3a credit for a qualified film production investment; providing an exemption
1.4for qualifying film production purchases;amending Minnesota Statutes 2012,
1.5section 297A.67, by adding a subdivision; proposing coding for new law in
1.6Minnesota Statutes, chapter 290.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. [290.0682] FILM PRODUCTION INVESTMENT CREDIT.
1.9 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms
1.10have the meanings given.
1.11(b) "Qualifying film production" means a motion picture that is certified by the
1.12commissioner as made wholly in Minnesota.
1.13(c) "Qualified investment" means an amount of cash used to pay qualified production
1.14expenses that is provided by an investor who does not have any financial interest in the
1.15motion picture or the production company responsible for filming the motion picture.
1.16(d) "Motion picture" means a feature-length film, video, digital media project,
1.17television series defined as a season not to exceed 27 episodes, or commercial made in
1.18the state, in whole or in part, for theatrical or television viewing or as a television pilot.
1.19Motion picture shall not include a production featuring news, current events, weather and
1.20financial market reports, talk shows, game shows, sporting events, awards shows, or other
1.21gala events; a production whose sole purpose is fund-raising; a long-form production that
1.22primarily markets a product or service; or a production containing obscene material or
1.23performances.
1.24(e) "Motion picture production company" means a company, including its
1.25subsidiaries, engaged in the business of producing motion pictures, videos, television
2.1series, or commercials intended for a theatrical release or for television viewing. Motion
2.2picture production company shall not mean or include any company that is more than 25
2.3percent owned, affiliated, or controlled by any company or person that is in default on a
2.4loan made by the state or a loan guaranteed by the state.
2.5(f) "Principal photography" means the phase of production during which the
2.6motion picture is actually filmed. Principal photography shall not include preproduction
2.7or postproduction.
2.8(g) "Production expense" or "production cost" means preproduction, production,
2.9and postproduction expenditures directly incurred in the production of a motion picture.
2.10Production expenses or costs shall include wages and salaries paid to individuals
2.11employed in the production of the motion picture; the costs of set construction and
2.12operation, editing and related services, photography, sound synchronization, lighting,
2.13wardrobe, makeup, and accessories; film processing, transfer, sound mixing, special and
2.14visual effects; music; location fees; and the cost of purchase or rental of facilities and
2.15equipment or any other production expense as may be determined by the commissioner to
2.16be a qualified production expense. Production expenses or costs shall not include costs
2.17incurred in marketing or advertising a motion picture; costs related to the transfer of tax
2.18credits; or amounts paid to persons or businesses as a result of their participation in profits
2.19from the exploitation of the production.
2.20 Subd. 2. Credit allowed. (a) A taxpayer engaged in making a motion picture
2.21shall be allowed a credit against the taxes imposed by this chapter for the employment of
2.22persons in Minnesota in connection with the filming or production of one or more motion
2.23pictures in the state within any consecutive 12-month period. The credit shall be equal to
2.2425 percent of the total aggregate payroll paid by a motion picture production company that
2.25constitutes Minnesota source income, when total production costs incurred in the state
2.26equal or exceed $100,000 during the taxable year. For purposes of this subdivision, "total
2.27aggregate payroll" shall not include the salary of any employee whose salary is equal to or
2.28greater than $1,000,000.
2.29(b) A taxpayer shall be allowed an additional credit against the taxes imposed by
2.30this chapter equal to 25 percent of all Minnesota production expenses, not including the
2.31payroll expenses used to claim a credit pursuant to paragraph (a), where the motion picture
2.32is also eligible for a credit pursuant to paragraph (a), and either: (1) Minnesota production
2.33expenses exceed 50 percent of the total production expenses for a motion picture; or (2) at
2.34least 50 percent of the total principal photography days of the film take place in the state.
2.35 Subd. 3. Certification of credits. (a) Before making a qualified investment,
2.36taxpayers must apply to the Department of Revenue for a film production investment
3.1credit certificate. The application must be in the form and made under the procedures
3.2specified by the commissioner. Credit certificates must only be issued for qualifying
3.3investments in qualifying film productions.
3.4(b) Certificates must not be issued for more than $10,000,000 in film production
3.5investment credits per year.
3.6 Subd. 4. Carryover; transfers; refunds. (a) The tax credit shall be taken against
3.7the taxes imposed under this chapter and shall, at the election of the taxpayer, be
3.8refundable to the extent provided for in paragraph (d). Any amount of the tax credit that
3.9exceeds the tax due for a taxable year may be carried forward by the taxpayer to any of
3.10the five subsequent taxable years.
3.11(b) All or any portion of tax credits issued under this subdivision may be transferred,
3.12sold, or assigned to other taxpayers with tax liabilities under this chapter. Any tax credit
3.13that is transferred, sold, or assigned and taken against taxes imposed by this chapter shall
3.14not be refundable to the transferee, buyer, or assignee. A person or corporate taxpayer
3.15must not transfer a credit more than once in a 12-month period. Any amount of the tax
3.16credit that exceeds the tax due for a taxable year may be carried forward by the transferee,
3.17buyer, or assignee to any of the five subsequent taxable years from which a certificate is
3.18initially issued by the Department of Revenue.
3.19(c) An owner, transferee, or assignee desiring to make a transfer, sale, or assignment
3.20allowed under paragraph (b) shall submit to the commissioner a statement that describes
3.21the amount of tax credit for which the transfer, sale, or assignment of tax credit is eligible.
3.22The statement must be in the form and manner prescribed by the commissioner. The
3.23commissioner shall provide to the taxpayer a certificate of eligibility to transfer, sell, or
3.24assign the tax credits. The commissioner shall not issue a certificate to a taxpayer that has an
3.25outstanding tax obligation with the state in connection with any motion picture for any prior
3.26taxable year. A tax credit shall not be transferred, sold, or assigned without a certificate.
3.27(d) At the written election of a taxpayer entitled to a credit under paragraph (a), the
3.28commissioner shall apply the credit against the liability of the taxpayer as determined on its
3.29return, as first reduced by any other available credits, and shall then refund to the taxpayer
3.3090 percent of the balance of the credits. The commissioner may require substantiation of a
3.31taxpayer's claim for a refund under paragraph (a) before payment of the refund. No interest
3.32shall accrue on a refund before the commissioner's receipt of the substantiation request.
3.33 Subd. 5. Limitations. Notwithstanding any other provision of this section,
3.34aggregate salary, and compensation amounts, including all per diems, housing, and other
3.35allowances, paid to, or for the services of, an individual shall not qualify for the credit
3.36under this section to the extent that the amounts exceed $2,000,000.
4.1EFFECTIVE DATE.This section is effective for taxable years beginning after
4.2December 31, 2012.
4.3 Sec. 2. Minnesota Statutes 2012, section 297A.67, is amended by adding a subdivision
4.4to read:
4.5 Subd. 33. Film productions. (a) Sales of tangible personal property to a qualifying
4.6motion picture production company, as defined under section 290.0682, subdivision 1,
4.7paragraph (e), are exempt, provided the qualifying motion picture production company
4.8spends at least $50,000 within the state in connection with the filming or production of
4.9one or more motion pictures in the state within any consecutive 12-month period.
4.10(b) Any motion picture production company that intends to film all, or parts of, a
4.11motion picture in the state and qualifies for the exemption provided by this subdivision
4.12shall provide an estimate of total expenditures to be made in the state in connection with
4.13the filming or production of the motion picture. The estimate of expenditures shall be filed
4.14with the commissioner prior to the commencement of filming in the state and is required
4.15for the issuance of an exemption certificate. Any qualifying motion picture production
4.16company that has been approved that fails to expend $50,000 within a consecutive
4.1712-month period shall be liable for the sales taxes that would have been paid had the
4.18approval not been granted. The sales taxes shall be considered due as of the date that
4.19taxable expenditures were made.
4.20EFFECTIVE DATE.This section is effective for sales and purchases made after
4.21June 30, 2013.
