Bill Text: NH HB234 | 2019 | Regular Session | Introduced


Bill Title: Establishing an exemption from business taxes for media production companies engaged in business in New Hampshire.

Spectrum: Moderate Partisan Bill (Republican 4-1)

Status: (Introduced) 2019-02-27 - Inexpedient to Legislate: Motion Adopted Voice Vote 02/27/2019 House Journal 6 P. 25 [HB234 Detail]

Download: New_Hampshire-2019-HB234-Introduced.html

HB 234-FN - AS INTRODUCED

 

 

2019 SESSION

19-0117

10/05

 

HOUSE BILL 234-FN

 

AN ACT establishing an exemption from business taxes for media production companies engaged in business in New Hampshire.

 

SPONSORS: Rep. Lang, Belk. 4; Rep. Tucker, Coos 5; Rep. Pearl, Merr. 26; Rep. Panasiti, Hills. 22; Sen. French, Dist 7

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill establishes an exemption from  business profits and business enterprise taxes for media production companies producing film, video, television, or digital media in New Hampshire.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-0117

10/05

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT establishing an exemption from business taxes for media production companies engaged in business in New Hampshire.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Purpose and Intent.  The general court intends that this act be liberally construed and applied to promote the following underlying purposes and policies:

I.  The general court recognizes that:

(a)  Media production initiatives in New Hampshire create jobs directly related to said productions.

(b)  The wide range and varying nature of these jobs create significant opportunities in the area of work force development and professional advancement.

(c)  When such productions take place there are significant, additional multiplier economic benefits associated with indirect, ancillary spending activities.

(d) Metrics and statistics exist that document the positive economic impact of earlier media production initiatives in New Hampshire.

(e)  Such productions can have useful, widespread, and lasting cultural impact while showcasing New Hampshire as a desirable tourist destination.

(f)  Media production activities also generate significant intangible benefits that can be of great value, such as enhanced pride in New Hampshire and a more unified sense of community.

II.  The general court therefore declares:

(a)  It is the public policy of the state of New Hampshire to attract and support media production activity for the economic, cultural, and educational benefits associated with such activity.

(b)  This public policy will advance the interests of the state and its citizens by:

(1)  Attracting desirable new jobs in a wide variety of areas.

(2)  Attracting skilled professionals and their families who otherwise would not come to New Hampshire.

(3)  Fostering the development of new industry, careers, and trades that can grow and flourish.

(4)  Contributing to the sciences and arts.

(5)  Increasing tax revenues through numerous ancillary economic activities associated with enhanced media production initiatives.  

(c)  The intent of this act is to achieve this public interest by:

(1)  Making New Hampshire a more attractive place for media production activity to take place.  

(2)  Attracting external companies already engaged in media production to come to New Hampshire.

(3)  Supporting existing New Hampshire enterprises seeking to grow and prosper in this field.

2  New Paragraph; Business Profits Tax; Definition of Media Production Company.  Amend RSA 77-A:1 by inserting after paragraph XXX the following new paragraph:

XXXI.(a)  "Media production company'' means a business organization engaged in the business of producing films, videos, television series, or promotions intended for theatrical release or for television viewing.  Such business organizations shall meet each of the following requirements during the entire taxable year:

(1)  It files with its return for the taxable year an election to be a media production company in accordance with RSA 77-A:5-d or has made such election for a previous taxable year; and

(2)  At least 51 percent of its business activities over the course of the tax year meet the requirements for an active media production company, or, in the case of a subsidiary located in New Hampshire, 51 percent of that subsidiary’s business activities meet the requirements for an active media production company.  The director of film and digital media of the state film office may grant  a waiver to this requirement, upon written request of the media production company, if a case can be made for unique benefits accruing to New Hampshire in select situations.  The director shall notify the commissioner of any such waiver.

(b)  For purposes of this paragraph, the term “media production” means a feature-length film, video, digital media project, television series defined as a season not to exceed 27 episodes, or commercial, or any other recorded, media as defined within the Screen Actors Guild new media contract provisions, made in the state of New Hampshire, in whole or in part, for theatrical or television viewing or as a television pilot.  The term “media production” shall not include a production featuring news, current events, or weather and financial market reports, a talk show or game show, sporting events, an awards show or other gala event, a production whose sole purpose is fundraising, a long-form production that primarily markets a product or service, or a production containing obscene material or performances as defined by law.  

(c)  For purposes of this paragraph, the term “media production” means the conduct of any business activity the primary focus of which is any one or more of the following areas:  

(1)  Videography.

(2)  Film or video editing, both traditional and digital.

(3)  Research and script writing.

(4)  Casting and dramatic rehearsals.

(5)  Necessary logistical or technical requirements associated with professional needs concerning any of the above, to include set construction and manufacture of supporting hardware/software.

(6)  Marketing and promotional endeavors vital to the success of completed media productions.

3  Definition of Business Organization; Media Production Company.  Amend RSA 77-A:1, I to read as follows:

I.  "Business organization" means any enterprise, whether corporation, partnership, limited liability company, proprietorship, association, business trust, real estate trust or other form of organization; organized for gain or profit, carrying on any business activity within the state, except such enterprises as are expressly made exempt from income taxation under the United States Internal Revenue Code as defined in RSA 77-A:1, XX.  Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity, unless specifically authorized by this chapter to be treated otherwise, such as, but not limited to, combined reporting.  Trusts or foundations treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent such owners would be considered a business organization hereunder notwithstanding the existence of the trust or foundation.  The use of consolidated returns as defined in the United States Internal Revenue Code as defined in RSA 77-A:1, XX is not permitted.  Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business organization and shall be excluded from taxation at the entity level if it elects to be treated as a qualified investment company as defined in RSA 77-A:1, XXI [or], if it elects to be treated as a qualified regenerative manufacturing company as defined in RSA 77-A:1, XXX, or if it elects to be treated as a media production company as defined in RSA 77-A:1, XXXI.  A partnership, limited liability company, estate, trust, or foundation except grantor trusts pursuant to section 671 of the United States Internal Revenue Code, "S" corporation, real estate investment trust, or any other such entity, other than an organization electing to be treated as a qualified investment company as defined in RSA 77-A:1, XXI whose net income is reportable by the true owners either directly or indirectly, [or] an organization electing to be treated as a qualified regenerative manufacturing company as defined in RSA 77-A:1, XXX, or an organization electing to be treated as a media production company as defined in RSA 77-A:1, XXXI, shall be subject to tax at the entity level, and no part of such earnings or loss shall be included in the calculation of the gross business profits of the owners of such entity.

4  New Paragraph; Business Profits Tax; Media Production Company; Election and Reporting.  Amend RSA 77-A by inserting after section 5-c the following new section:

77-A:5-d  Election and Reporting for Media Production Companies.

I.  Business organizations shall file an election with the commissioner to be a media production company with respect to any taxable period on a form prescribed by the commissioner at any time on or before the fifteenth day of the third month immediately following the end of such taxable period.  Such an election shall be effective for the taxable period of the media production company for which it is made and for all succeeding taxable periods until such election is terminated as provided in this section.  

II.  The election to be a media production company shall expire for taxable periods beginning after December 31, 2025.  No subsequent election may be made after the expiration of an election, with respect to either the business organization or the active media production business conducted by such business organization or any successor business organization.

III.  Every business organization electing treatment as a media production company shall, with respect to each taxable period, file a report, in accordance with such rules or forms as the commissioner may prescribe, setting forth the following:

(a)  The names, addresses, and federal taxpayer identification numbers of the holders of any equity interests in such qualified media production company.

(b)  The name, address, and federal taxpayer identification number of the manager of such qualified media production company.

(c)  The amount of the income received and expenses incurred by the qualified media production company for the tax period.

(d)  Notwithstanding any other provision of this section, a media production company shall be deemed to have satisfied the reporting requirements of this section if it files with the commissioner a copy of its federal income tax return, as filed with the Internal Revenue Service.

IV.  Such report or copy of the federal income tax return shall be filed at any time on or before 30 days following the filing of the federal income tax return with the Internal Revenue Service.  Any media production company which fails to timely file the report as required by this section shall pay a penalty equal to $100 for each day such report is not filed, unless an extension has been granted by the commissioner.  In no event shall the monetary fine imposed by this paragraph exceed $5,000.  A media production company notified by the department that such report is overdue by more than 50 days shall have 30 days from the date of such notification to file the delinquent report.

V.  The media production company shall be subject to the provisions of RSA 77-A:11 and RSA 77-E:10.  The commissioner is authorized to audit and enforce such provisions with any of the powers granted under this chapter and RSA 77-E.  

VI.  The election provided for in paragraph I may be terminated as follows:

(a)  By revoking said election by consent of the majority of the members, partners, or shareholders of the media production company, or by determination of the manager of the media production company.  Such revocation must be filed with the department on or before the fifteenth day of the third month of the taxable period to be effective for such period.  Any revocation filed after the fifteenth day of the third month of the taxable period shall be effective for the following tax period; or

(b)  Whenever the company ceases to satisfy the requirements for qualification as a media production company as provided in RSA 77-A:1, XXXI.

5  New Paragraph; Business Enterprise Tax; Definition; Media Production Company.  Amend RSA 77-E:1 by inserting after paragraph XI the following new paragraph:

XI-a.  "Media production company” means any business enterprise which is a media production company as that term is defined under RSA 77-A:1, XXXI at all times during the entire taxable year.

6  Business Enterprise; Exemption for Qualified Media Production Company.  Amend RSA 77-E: 1, III to read as follows:

III.  "Business enterprise" means any profit or nonprofit enterprise or organization, whether corporation, partnership, limited liability company, proprietorship, association, trust, foundation, business trust, real estate trust or other form of organization engaged in or carrying on any business activity within this state, except such enterprises as are expressly made exempt from income taxation under section 501(c)(3) of the United States Internal Revenue Code to the extent such enterprise does not engage in any business activity constituting unrelated business activity as defined by section 513 of the United States Internal Revenue Code.  Each business enterprise under this definition shall be subject to the tax imposed under RSA 77-E as a separate entity except that trusts and foundations treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent any such owners would be considered a business enterprise hereunder notwithstanding the existence of the trust or foundation.  The use of consolidated returns as defined in the United States Internal Revenue Code or of combined reporting is not permitted.  Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business enterprise and shall be excluded from taxation at the entity level if it is a qualified investment company as defined in RSA 77-E:1, XIV [or], if it is a qualified regenerative manufacturing company as defined in RSA 77-E:1, XIV-a, or if it is a media production company as defined in RSA 77-E:1, XI-a.

7  Effective Date.  This act shall take effect July 1, 2019.

 

LBAO

19-0117

12/19/18

 

HB 234-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT establishing an exemption from business taxes for media production companies engaged in business in New Hampshire.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

   Expenditures

$0

$0

$0

$0

Funding Source:

  [ X ] General            [ X ] Education            [   ] Highway           [    ] Other

 

 

 

 

 

METHODOLOGY:

This bill establishes a 100 percent exemption from business profits taxes and/ or business enterprises taxes for business organizations electing to be treated as a media production company engaged in business in New Hampshire.  These business organizations need to file an election with the Department of Revenue Administration to be a media production company with respect to any taxable period at any time on or before the fifteenth day of the third month immediately following the end of such taxable period.  This election shall be effective for the taxable period for which it is made and for all succeeding taxable periods until such election is terminated.  If not terminated the elections will expire for taxable periods beginning after December 31. 2025.  Business organizations that have elected to be treated as a media production company are required to file a report with the Department of Revenue Administration for each taxable period.  Failure to file a timely report will result in a $100 a day penalty for each day the report is not filed, to a maximum of $5,000.

 

The Department of Revenue Administration states the decrease in General Fund and Education Trust Fund revenue is indeterminable due to having no means to predict how many current and/ or new taxpayers would utilize the exemption or the amount of business profits tax or business enterprise tax that would be exempted.  The proposed bill will not result in any additional costs that could not be absorbed by the Department.

 

The Department of Business and Economic Affairs states this bill may result in increased inquires from media production companies to the Department, but anticipates it will be able to absorb these increased inquiries with no fiscal impact.

 

AGENCIES CONTACTED:

Department of Revenue Administration and Department of Business and Economic Affairs

 

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