Bill Text: NY A02670 | 2017-2018 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Establishes the empire state music production credit and the empire state digital gaming media production credit; defines terms.
Spectrum: Partisan Bill (Democrat 18-0)
Status: (Introduced - Dead) 2018-01-03 - referred to ways and means [A02670 Detail]
Download: New_York-2017-A02670-Introduced.html
Bill Title: Establishes the empire state music production credit and the empire state digital gaming media production credit; defines terms.
Spectrum: Partisan Bill (Democrat 18-0)
Status: (Introduced - Dead) 2018-01-03 - referred to ways and means [A02670 Detail]
Download: New_York-2017-A02670-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2670 2017-2018 Regular Sessions IN ASSEMBLY January 20, 2017 ___________ Introduced by M. of A. LENTOL -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law and the economic development law, in relation to the creation of the empire state music production credit and the empire state digital gaming media production credit; to repeal subdivision 11 of section 352 of the economic development law relating thereto; and providing for the repeal of certain provisions upon expi- ration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The tax law is amended by adding a new section 43 to read 2 as follows: 3 § 43. Empire state music production credit. (a) Allowance of credit. 4 (1) A taxpayer which is a music production entity engaged in qualified 5 music production, or who is a sole proprietor of or a member of a part- 6 nership, which is a music production entity engaged in qualified music 7 production, and is subject to tax under article nine-A or twenty-two of 8 this chapter, shall be allowed a credit against such tax to be computed 9 as provided herein. 10 (2) The amount of the credit shall be the product (or pro rata share 11 of the product, in the case of a member of a partnership or limited 12 liability company) of twenty-five percent and the eligible production 13 costs of one or more qualified music productions. 14 (3) Eligible production costs for a qualified music production 15 incurred and paid in this state but outside such metropolitan commuter 16 transportation district shall be eligible for a credit of ten percent of 17 such eligible production costs in addition to the credit specified in 18 paragraph two of this subdivision. 19 (4) Eligible production costs shall not include those costs used by 20 the taxpayer or another taxpayer as the basis calculation of any other 21 tax credit allowed under this chapter or allowed in any other state. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03921-01-7A. 2670 2 1 (b) Allocation of credit. The aggregate amount of tax credits allowed 2 under this section, subdivision fifty-two of section two hundred ten-B 3 and subsection (hhh) of section six hundred six of this chapter in any 4 taxable year shall be twenty-five million dollars. The aggregate amount 5 of credits for any taxable year shall be distributed on a regional basis 6 as follows: fifty percent of the aggregate amount of credits shall be 7 available for qualified music productions that incur at least sixty 8 percent of eligible production costs for a qualified music production in 9 region one; twenty percent of the aggregate amount of credits shall be 10 available for qualified music productions that incur at least sixty 11 percent of eligible production costs for a qualified music production in 12 region two; and thirty percent of the aggregate amount of credits shall 13 be available for qualified music productions that incur at least sixty 14 percent of eligible production costs for a qualified music production in 15 region three. If such regional distribution is not fully allocated in 16 any taxable year, the remainder of such credits shall be available for 17 allocation to any region in the subsequent tax year. For the purposes 18 of this section region one shall contain the city of New York; region 19 two shall contain the counties of Westchester, Rockland, Nassau and 20 Suffolk; and region three shall contain any county not contained in 21 regions one and two. Such credit shall be allocated by the empire state 22 development corporation among taxpayers in order of priority based upon 23 the date of filing an application for allocation of music production 24 credits with such office. If the total amount of allocated credits 25 applied for in any particular year exceeds the aggregate amount of tax 26 credits allowed for such year under this section, such excess shall be 27 treated as having been applied for on the first day of the subsequent 28 taxable year. 29 (c) Definitions. As used in this section: 30 (1) "Music production" means the creation of a sound recording and any 31 related music video, either of which is intended for commercial release. 32 A "music production" does not include recordings that are primarily 33 spoken word or wildlife or nature sounds, or produced for instructional 34 use or advertising or promotional purposes. 35 (2) "Qualified music production" is a music production in which eligi- 36 ble production costs equal to or are in excess of seven thousand five 37 hundred dollars if incurred and paid in this state in the twelve months 38 preceding the date on which the credit is claimed. Provided, however, if 39 such production costs are incurred and paid outside the metropolitan 40 commuter transportation district in this state, such production costs 41 shall be equal to or in excess of three thousand seven hundred fifty 42 dollars to be a qualified music production for the purposes of this 43 paragraph. 44 (3) (A) "Eligible production costs for a qualified music production" 45 are costs incurred and paid in this state for tangible property and 46 services used in the production of qualified music production, as deter- 47 mined by the department of economic development, including, but not 48 limited to: (i) studio rental fees and related costs, (ii) instrument 49 and equipment rental fees, (iii) production session fees for musicians, 50 programmers, engineers, and technicians and (iv) mixing and mastering 51 services. 52 (B) Eligible production costs shall not include: (i) costs for tangi- 53 ble property or services used or performed outside of this state, (ii) 54 performance fees for featured artists or featured guest artists receiv- 55 ing royalties or advances on royalties or special performance fees 56 (other than those that would normally be collected by a performingA. 2670 3 1 rights organization) pursuant to an agreement directly with the producer 2 or employer, (iii) salaries or related compensation for producers or 3 songwriters, (iv) composer, artist or producer residual royalties or 4 advances, (v) licensing fees for samples, (vi) interpolations or other 5 music clearance costs, (vii) mastering or post-production expenditures 6 for projects that were not principally tracked and recorded in this 7 state, (viii) any costs associated with manufacturing, duplication, 8 packaging, distribution, promotion, marketing or touring not specif- 9 ically outlined in this subparagraph, or (ix) local transportation 10 expenditures directly related to music production and provided at or to 11 the site of such music production. With respect to the production of a 12 music video, eligible production costs are those defined in paragraph 13 two of subdivision (b) of section twenty-four of this article. Such 14 total production costs incurred and paid in this state shall be equal to 15 or exceed seventy-five percent of total cost of an eligible production 16 incurred and paid within and without this state. 17 (d) Cross-references. For applications of the credit provided for in 18 this section, see the following provisions of this chapter: 19 (1) Article nine-A: section two hundred ten-B, subdivision fifty-two. 20 (2) Article twenty-two: section six hundred six, subsection (i), para- 21 graph one, subparagraph (B), clause (xliii). 22 (3) Article twenty-two: section six hundred six, subsection (hhh). 23 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 24 sion 52 to read as follows: 25 52. Empire state music production credit. (a) Allowance of credit. A 26 taxpayer who is eligible pursuant to section forty-three of this chapter 27 shall be allowed a credit to be computed as provided in such section 28 forty-three against the tax imposed by this article. 29 (b) Application of credit. The credit allowed under this subdivision 30 for any taxable year shall not reduce the tax due for such year to less 31 than the amount prescribed in paragraph (d) of subdivision one of 32 section two hundred ten of this article. Provided, however, that if the 33 amount of the credit allowable under this subdivision for any taxable 34 year reduces the tax to such amount, the excess shall be treated as an 35 overpayment of tax to be credited or refunded in accordance with the 36 provisions of section one thousand eighty-six of this chapter, provided, 37 however, no interest shall be paid thereon. 38 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 39 of the tax law is amended by adding a new clause (xliii) to read as 40 follows: 41 (xliii) Empire state music Amount of credit 42 production credit under under subdivision 43 subsection (hhh) fifty-two of section two hundred 44 ten-B 45 § 4. Section 606 of the tax law is amended by adding a new subsection 46 (hhh) to read as follows: 47 (hhh) Empire state music production credit. (1) Allowance of credit. A 48 taxpayer who is eligible pursuant to section forty-three of this chapter 49 shall be allowed a credit to be computed as provided in such section 50 forty-three against the tax imposed by this article. 51 (2) Application of credit. If the amount of the credit allowable under 52 this subsection for any taxable year exceeds the taxpayer's tax for such 53 year, the excess shall be treated as an overpayment of tax to be credit-A. 2670 4 1 ed or refunded as provided in section six hundred eighty-six of this 2 article, provided, however, that no interest shall be paid thereon. 3 § 5. The tax law is amended by adding a new section 44 to read as 4 follows: 5 § 44. Empire state digital gaming media production credit. (a) Allow- 6 ance of credit. (1) A taxpayer which is a digital gaming media 7 production entity engaged in qualified digital gaming media production, 8 or who is a sole proprietor of or a member of a partnership, which is a 9 digital gaming media production entity engaged in qualified digital 10 gaming media production, and is subject to tax under article nine-A or 11 twenty-two of this chapter, shall be allowed a credit against such tax 12 to be computed as provided herein. 13 (2) The amount of the credit shall be the product (or pro rata share 14 of the product, in the case of a member of a partnership or limited 15 liability company) of twenty-five percent and the eligible production 16 costs of one or more qualified digital gaming media productions. 17 (3) Eligible digital gaming media production costs for a qualified 18 digital gaming media production incurred and paid in this state but 19 outside such metropolitan commuter transportation district shall be 20 eligible for a credit of ten percent of such eligible production costs 21 in addition to the credit specified in paragraph two of this subdivi- 22 sion. 23 (4) Eligible production costs shall not include those costs used by 24 the taxpayer or another taxpayer as the basis calculation of any other 25 tax credit allowed under this chapter or allowed in any other state. 26 (b) Allocation of credit. The aggregate amount of tax credits allowed 27 under this section, subdivision fifty-three of section two hundred ten-B 28 and subsection (iii) of section six hundred six of this chapter in any 29 taxable year shall be twenty-five million dollars. The aggregate amount 30 of credits for any taxable year must be distributed on a regional basis 31 as follows: fifty percent of the aggregate amount of credits shall be 32 available for qualified digital gaming media productions that incur at 33 least sixty percent of eligible production costs for a qualified digital 34 gaming media production in region one; twenty percent of the aggregate 35 amount of credits shall be available for qualified digital gaming media 36 productions that incur at least sixty percent of eligible production 37 costs for a qualified digital gaming media production in region two; and 38 thirty percent of the aggregate amount of credits shall be available for 39 qualified digital gaming media productions that incur at least sixty 40 percent of eligible production costs for a qualified digital gaming 41 media production in region three. If such regional distribution is not 42 fully allocated in any taxable year, the remainder of such credits shall 43 be available for allocation to any region in the subsequent tax year. 44 For the purposes of this section region one shall contain the city of 45 New York; region two shall contain the counties of Westchester, Rock- 46 land, Nassau and Suffolk; and region three shall contain any county not 47 contained in regions one and two. Such credit shall be allocated by the 48 empire state development corporation among taxpayers in order of priori- 49 ty based upon the date of filing an application for allocation of 50 digital gaming media production credit with such office. If the total 51 amount of allocated credits applied for in any particular year exceeds 52 the aggregate amount of tax credits allowed for such year under this 53 section, such excess shall be treated as having been applied for on the 54 first day of the subsequent taxable year. 55 (c) Definitions. As used in this section:A. 2670 5 1 (1) "Qualified digital gaming media production" means: (i) a website, 2 the digital media production costs of which are paid or incurred predo- 3 minately in connection with (A) video simulation, animation, text, 4 audio, graphics or similar gaming related property embodied in digital 5 format, and (B) interactive features of digital gaming (e.g., links, 6 message boards, communities or content manipulation); (ii) video or 7 interactive games produced primarily for distribution over the internet, 8 wireless network or successors thereto; (iii) animation, simulation or 9 embedded graphics digital gaming related software intended for commer- 10 cial distribution regardless of medium; and (iv) a digital gaming media 11 production in which qualified digital gaming media production costs 12 equal to or are in excess of seven thousand five hundred dollars if 13 incurred and paid in this state in twelve months preceding the date on 14 which the credit is claimed. Provided, however, if such a production 15 costs are incurred and paid outside the metropolitan commuter transpor- 16 tation district in this state, such production costs shall be equal to 17 or in excess of three thousand seven hundred fifty dollars to be a qual- 18 ified digital gaming media production for purposes of this paragraph. A 19 qualified digital gaming media production does not include a website, 20 video, interactive game or software that is used predominately for: 21 electronic commerce (retail or wholesale purposes other than the sale of 22 video or interactive games), gambling (including activities regulated by 23 a New York gaming agency), exclusive local consumption for entities not 24 accessible by the general public including industrial or other private 25 purposes, and political advocacy purposes. 26 (2) "Digital gaming media production costs" means any costs for prop- 27 erty used and wages or salaries paid to individuals directly employed 28 for services performed by those individuals directly and predominately 29 in the creation of a digital gaming media production or productions. 30 Digital gaming media production costs include but shall not be limited 31 to to payments for property used and services performed directly and 32 predominately in the development (including concept creation), design, 33 production (including concept creation), design, production (including 34 testing), editing (including encoding) and compositing (including the 35 integration of digital files for interaction by end users) of digital 36 gaming media. Digital gaming media production costs shall not include 37 expenses incurred for the distribution, marketing, promotion, or adver- 38 tising content generated by end-users or other costs not directly and 39 predominately related to the creation, production or modification of 40 digital gaming media. In addition, salaries or other income distribution 41 related to the creation of digital gaming media for any person who 42 serves in the role of chief executive officer, chief financial officer, 43 president, treasurer or similar position shall not be included as 44 digital gaming media production costs. Furthermore, any income or other 45 distribution to any individual who holds an ownership interest in a 46 digital gaming media production entity shall not be included as digital 47 gaming media production costs. 48 (3) "Qualified digital gaming media production costs" means digital 49 gaming media production costs only to the extent such costs are attrib- 50 utable to the use of property or the performance of services by any 51 persons within the state directly and predominantly in the creation, 52 production or modification of digital gaming related media. Such total 53 production costs incurred and paid in this state shall be equal to or 54 exceed seventy-five percent of total cost of an eligible production 55 incurred and paid within and without this state.A. 2670 6 1 (d) Cross-references. For application of the credit provided for in 2 this section, see the following provisions of this chapter: 3 (1) Article nine-A: section two hundred ten-B, subdivision fifty- 4 three. 5 (2) Article twenty-two: section six hundred six, subsection (i), para- 6 graph one, subparagraph (B), clause (xliv). 7 (3) Article twenty-two: section six hundred six, subsection (iii). 8 § 6. Section 210-B of the tax law is amended by adding a new subdivi- 9 sion 53 to read as follows: 10 53. Empire state digital gaming media production credit. (a) Allowance 11 of credit. A taxpayer who is eligible pursuant to section forty-four of 12 this chapter shall be allowed a credit to be computed as provided in 13 such section forty-four against the tax imposed by this article. 14 (b) Application of credit. The credit allowed under this subdivision 15 for any taxable year shall not reduce the tax due for such year to less 16 than the amount prescribed in paragraph (d) of subdivision one of 17 section two hundred ten of this article. Provided, however, that if the 18 amount of the credit allowable under this subdivision for any taxable 19 year reduces the tax to such amount, the excess shall be treated as an 20 overpayment of tax to be credited or refunded in accordance with the 21 provisions of section one thousand eighty-six of this chapter, provided, 22 however, no interest shall be paid thereon. 23 § 7. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 24 of the tax law is amended by adding a new clause (xliv) to read as 25 follows: 26 (xliv) Empire state digital Amount of credit 27 gaming media production under subdivision 28 credit under subsection (iii) fifty-three of section 29 two hundred ten-B 30 § 8. Section 606 of the tax law is amended by adding a new subsection 31 (iii) to read as follows: 32 (iii) Empire state digital gaming media production credit. (1) Allow- 33 ance of credit. A taxpayer who is eligible pursuant to section forty- 34 four of this chapter shall be allowed a credit to be computed as 35 provided in such section forty-four against the tax imposed by this 36 article. 37 (2) Application of credit. If the amount of the credit allowable under 38 this subsection for any taxable year exceeds the taxpayer's tax for such 39 year, the excess shall be treated as an overpayment of tax to be credit- 40 ed or refunded as provided in section six hundred eighty-six of this 41 article, provided, however, that no interest shall be paid thereon. 42 § 9. The state commissioner of economic development, after consulting 43 with the state commissioner of taxation and finance, shall promulgate 44 regulations by December 31, 2017 to establish procedures for the allo- 45 cation of tax credits as required by subdivision (a) of section 43 and 46 subdivision (a) of section 44 of the tax law. Such rules and regulations 47 shall include provisions describing the application process, the due 48 dates for such applications, the standards which shall be used to evalu- 49 ate the applications, the documentation that will be provided to taxpay- 50 ers substantiate to the New York state department of taxation and 51 finance the amount of tax credits allocated to such taxpayers, under 52 what conditions all or a portion of this tax credit may be revoked, and 53 such other provisions as deemed necessary and appropriate. Notwithstand- 54 ing any other provisions to the contrary in the state administrativeA. 2670 7 1 procedure act, such rules and regulations may be adopted on an emergency 2 basis if necessary to meet such December 31, 2017 deadline. 3 § 10. Subdivision 11 of section 352 of the economic development law is 4 REPEALED. 5 § 11. Subdivisions 1, 3 and 5 of section 353 of the economic develop- 6 ment law, as amended by section 2 of part K of chapter 59 of the laws of 7 2015, are amended to read as follows: 8 1. To be a participant in the excelsior jobs program, a business enti- 9 ty shall operate in New York state predominantly: 10 (a) as a financial services data center or a financial services back 11 office operation; 12 (b) in manufacturing; 13 (c) in software development and new media; 14 (d) in scientific research and development; 15 (e) in agriculture; 16 (f) in the creation or expansion of back office operations in the 17 state; 18 (g) in a distribution center; 19 (h) in an industry with significant potential for private-sector 20 economic growth and development in this state as established by the 21 commissioner in regulations promulgated pursuant to this article. In 22 promulgating such regulations the commissioner shall include job and 23 investment criteria; or 24 (i) as an entertainment company[; or25(j) in music production]. 26 3. For the purposes of this article, in order to participate in the 27 excelsior jobs program, a business entity operating predominantly in 28 manufacturing must create at least ten net new jobs; a business entity 29 operating predominately in agriculture must create at least five net new 30 jobs; a business entity operating predominantly as a financial service 31 data center or financial services customer back office operation must 32 create at least fifty net new jobs; a business entity operating predomi- 33 nantly in scientific research and development must create at least five 34 net new jobs; a business entity operating predominantly in software 35 development must create at least five net new jobs; a business entity 36 creating or expanding back office operations must create at least fifty 37 net new jobs; [a business entity operating predominately in music38production must create at least five net new jobs;] a business entity 39 operating predominantly as an entertainment company must create or 40 obtain at least one hundred net new jobs; or a business entity operating 41 predominantly as a distribution center in the state must create at least 42 seventy-five net new jobs, notwithstanding subdivision five of this 43 section; or a business entity must be a regionally significant project 44 as defined in this article; or 45 5. A not-for-profit business entity, a business entity whose primary 46 function is the provision of services including personal services, busi- 47 ness services, or the provision of utilities, and a business entity 48 engaged predominantly in the retail or entertainment industry, other 49 than a business operating as an entertainment company as defined in this 50 article [and other than a business entity engaged in music production], 51 and a company engaged in the generation or distribution of electricity, 52 the distribution of natural gas, or the production of steam associated 53 with the generation of electricity are not eligible to receive the tax 54 credit described in this article.A. 2670 8 1 § 12. Subdivision 21 of section 352 of the economic development law, 2 as amended by section 1 of part K of chapter 59 of the laws of 2015, is 3 amended to read as follows: 4 21. "Software development" means the creation of coded computer 5 instructions [or production or post-production of video games, as6defined in subdivision one-a of section six hundred eleven of the gener-7al business law, other than those embedded and used exclusively in8advertising, promotional websites or microsites,] and [also] includes 9 new media as defined by the commissioner in regulations. 10 § 13. The economic development law is amended by adding a new section 11 242 to read as follows: 12 § 242. Reports on the music and digital gaming industries in New York. 13 1. The empire state development corporation shall file a report on a 14 biannual basis with the director of the division of the budget and the 15 chairpersons of the assembly ways and means committee and senate finance 16 committee. The report shall be filed no later than thirty days before 17 the mid-point and the end of the state fiscal year. The first report 18 shall cover the calendar half year that begins on January first, two 19 thousand nineteen. Each report must contain the following information 20 for the covered calendar half year: 21 (a) the total dollar amount of credits allocated pursuant to sections 22 forty-three and forty-four of the tax law during the half year, broken 23 down by month; 24 (b) the number of music and digital gaming projects, which have been 25 allocated tax credits of less than one million dollars per project, and 26 the total dollar amount of credits allocated to those projects distrib- 27 uted by region pursuant to subdivision (b) of sections forty-three and 28 forty-four of the tax law; 29 (c) the number of music and digital gaming projects, which have been 30 allocated tax credits of more than one million dollars, and the total 31 dollar amount of credits allocated to those projects distributed by 32 region pursuant to subdivision (b) of sections forty-three and forty- 33 four of the tax law; 34 (d) a list of each eligible music and digital gaming project, which 35 has been allocated a tax credit enumerated by region pursuant to subdi- 36 vision (b) of sections forty-three and forty-four of the tax law, and 37 for each of those projects, (i) the estimated number of employees asso- 38 ciated with the project, (ii) the estimated qualifying costs for the 39 projects, (iii) the estimated total costs of the project, (iv) the cred- 40 it eligible employee hours for each project, and (v) total wages for 41 such credit eligible employee hours for each project; and 42 (e) (i) the name of each taxpayer allocated a tax credit for each 43 project and the county of residence or incorporation of such taxpayer 44 or, if the taxpayer does not reside or is not incorporated in New York, 45 the state of residence or incorporation; however, if the taxpayer claims 46 a tax credit because the taxpayer is a member of a limited liability 47 company, a partner in a partnership or a shareholder in a subchapter S 48 corporation, the name of each limited liability company, partnership or 49 subchapter S corporation earning any of those tax credits must be 50 included in the report instead of information about the taxpayer claim- 51 ing the tax credit, (ii) the amount of tax credit allocated to each 52 taxpayer; provided however, if the taxpayer claims a tax credit because 53 the taxpayer is a member of a limited liability company, a partner in a 54 partnership or a shareholder in a subchapter S corporation, the amount 55 of tax credit earned by each entity must be included in the report 56 instead of information about the taxpayer claiming the tax credit, andA. 2670 9 1 (iii) information identifying the project associated with each taxpayer 2 for which a tax credit was claimed under section forty-three or forty- 3 four of the tax law. 4 2. The empire state development corporation shall file a report on a 5 triennial basis with the director of the division of the budget and the 6 chairpersons of the assembly ways and means committee and senate finance 7 committee. The first report shall be filed no later than March first, 8 two thousand twenty-one. The report must be prepared by an independent 9 third party auditor and include: (a) information regarding the empire 10 state music production credit and the empire state digital gaming 11 production credit programs including the efficiency of operations, reli- 12 ability of financial reporting, compliance with laws and regulations and 13 distribution of assets and funds; (b) and economic impact study prepared 14 by an independent third party of the program with special emphasis on 15 the regional impact by region and the total dollar amount of credits 16 allocated to those projects distributed by region pursuant to subdivi- 17 sion (b) of sections forty-three and forty-four of the tax law; and (c) 18 any other information or statistical information that the commissioner 19 of economic development deems to be useful in analyzing the effects of 20 the programs. 21 § 14. This act shall take effect immediately and shall apply to taxa- 22 ble years beginning on January 1, 2018 and before January 1, 2021; 23 provided that sections one through eight of this act shall expire and be 24 deemed repealed December 31, 2020.
