Bill Text: NY A08073 | 2017-2018 | General Assembly | Introduced
Bill Title: Establishes the empire state digital gaming media production credit; provides such credit shall be calculated as a percentage of eligible production costs incurred within this state; provides such credits be allocated on a regional basis; limits credits to an aggregate of fifty million dollars per year.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2018-01-03 - referred to ways and means [A08073 Detail]
Download: New_York-2017-A08073-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 8073 2017-2018 Regular Sessions IN ASSEMBLY May 25, 2017 ___________ Introduced by M. of A. MORELLE -- Multi-Sponsored by -- M. of A. McDO- NALD -- 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 digital gaming media production credit; and providing for the repeal of certain provisions upon expiration 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 44 to read 2 as follows: 3 § 44. Empire state digital gaming media production credit. (a) Allow- 4 ance of credit. (1) A taxpayer which is a digital gaming media 5 production entity engaged in qualified digital gaming media production, 6 or who is a sole proprietor of or a member of a partnership, which is a 7 digital gaming media production entity engaged in qualified digital 8 gaming media production, and is subject to tax under article nine-A or 9 twenty-two of this chapter, shall be allowed a credit against such tax 10 to be computed as provided herein. 11 (2) The amount of the credit shall be the product (or pro rata share 12 of the product, in the case of a member of a partnership or limited 13 liability company) of twenty-five percent and the eligible production 14 costs of one or more qualified digital gaming media productions. 15 (3) Eligible digital gaming media production costs for a qualified 16 digital gaming media production incurred and paid in this state but 17 outside such metropolitan commuter transportation district shall be 18 eligible for a credit of ten percent of such eligible production costs 19 in addition to the credit specified in paragraph two of this subdivi- 20 sion. 21 (4) Eligible production costs shall not include those costs used by 22 the taxpayer or another taxpayer as the basis calculation of any other 23 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. LBD11396-02-7A. 8073 2 1 (b) Allocation of credit. The aggregate amount of tax credits allowed 2 under this section, subdivision fifty-three of section two hundred ten-B 3 and subsection (iii) of section six hundred six of this chapter in any 4 taxable year shall be fifty million dollars. The aggregate amount of 5 credits for any taxable year must be distributed on a regional basis as 6 follows: fifty percent of the aggregate amount of credits shall be 7 available for qualified digital gaming media productions that incur at 8 least sixty percent of eligible production costs for a qualified digital 9 gaming media production in region one; twenty percent of the aggregate 10 amount of credits shall be available for qualified digital gaming media 11 productions that incur at least sixty percent of eligible production 12 costs for a qualified digital gaming media production in region two; and 13 thirty percent of the aggregate amount of credits shall be available for 14 qualified digital gaming media productions that incur at least sixty 15 percent of eligible production costs for a qualified digital gaming 16 media production in region three. If such regional distribution is not 17 fully allocated in any taxable year, the remainder of such credits shall 18 be available for allocation to any region in the subsequent tax year. 19 For the purposes of this section region one shall contain the city of 20 New York; region two shall contain the counties of Westchester, Rock- 21 land, Nassau and Suffolk; and region three shall contain any county not 22 contained in regions one and two. Such credit shall be allocated by the 23 empire state development corporation among taxpayers in order of priori- 24 ty based upon the date of filing an application for allocation of 25 digital gaming media production credit with such office. If the total 26 amount of allocated credits applied for in any particular year exceeds 27 the aggregate amount of tax credits allowed for such year under this 28 section, such excess shall be treated as having been applied for on the 29 first day of the subsequent taxable year. 30 (c) Definitions. As used in this section: 31 (1) "Qualified digital gaming media production" means: (i) a website, 32 the digital media production costs of which are paid or incurred predo- 33 minately in connection with (A) video simulation, animation, text, 34 audio, graphics or similar gaming related property embodied in digital 35 format, and (B) interactive features of digital gaming (e.g., links, 36 message boards, communities or content manipulation); (ii) video or 37 interactive games produced primarily for distribution over the internet, 38 wireless network or successors thereto; (iii) animation, simulation or 39 embedded graphics digital gaming related software intended for commer- 40 cial distribution regardless of medium; and (iv) a digital gaming media 41 production in which qualified digital gaming media production costs 42 equal to or are in excess of seven thousand five hundred dollars if 43 incurred and paid in this state in twelve months preceding the date on 44 which the credit is claimed. Provided, however, if such a production 45 costs are incurred and paid outside the metropolitan commuter transpor- 46 tation district in this state, such production costs shall be equal to 47 or in excess of three thousand seven hundred fifty dollars to be a qual- 48 ified digital gaming media production for purposes of this paragraph. A 49 qualified digital gaming media production does not include a website, 50 video, interactive game or software that is used predominately for: 51 electronic commerce (retail or wholesale purposes other than the sale of 52 video or interactive games), gambling (including activities regulated by 53 a New York gaming agency), exclusive local consumption for entities not 54 accessible by the general public including industrial or other private 55 purposes, and political advocacy purposes.A. 8073 3 1 (2) "Digital gaming media production costs" means any costs for prop- 2 erty used and wages or salaries paid to individuals directly employed 3 for services performed by those individuals directly and predominantly 4 in the creation of a digital gaming media production or productions. 5 Digital gaming media production costs include but shall not be limited 6 to to payments for property used and services performed directly and 7 predominantly in the development (including concept creation), design, 8 production (including concept creation), design, production (including 9 testing), editing (including encoding) and compositing (including the 10 integration of digital files for interaction by end users) of digital 11 gaming media. Digital gaming media production costs shall not include 12 expenses incurred for the distribution, marketing, promotion, or adver- 13 tising content generated by end-users or other costs not directly and 14 predominantly related to the creation, production or modification of 15 digital gaming media. In addition, salaries or other income distribution 16 related to the creation of digital gaming media for any person who 17 serves in the role of chief executive officer, chief financial officer, 18 president, treasurer or similar position shall not be included as 19 digital gaming media production costs. Furthermore, any income or other 20 distribution to any individual who holds an ownership interest in a 21 digital gaming media production entity shall not be included as digital 22 gaming media production costs. 23 (3) "Qualified digital gaming media production costs" means digital 24 gaming media production costs only to the extent such costs are attrib- 25 utable to the use of property or the performance of services by any 26 persons within the state directly and predominantly in the creation, 27 production or modification of digital gaming related media. Such total 28 production costs incurred and paid in this state shall be equal to or 29 exceed seventy-five percent of total cost of an eligible production 30 incurred and paid within and without this state. 31 (d) Cross-references. For application of the credit provided for in 32 this section, see the following provisions of this chapter: 33 (1) Article nine-A: section two hundred ten-B, subdivision fifty- 34 three. 35 (2) Article twenty-two: section six hundred six, subsection (i), para- 36 graph one, subparagraph (B), clause (xliv). 37 (3) Article twenty-two: section six hundred six, subsection (iii). 38 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 39 sion 53 to read as follows: 40 53. Empire state digital gaming media production credit. (a) Allowance 41 of credit. A taxpayer who is eligible pursuant to section forty-four of 42 this chapter shall be allowed a credit to be computed as provided in 43 such section forty-four against the tax imposed by this article. 44 (b) Application of credit. The credit allowed under this subdivision 45 for any taxable year shall not reduce the tax due for such year to less 46 than the amount prescribed in paragraph (d) of subdivision one of 47 section two hundred ten of this article. Provided, however, that if the 48 amount of the credit allowable under this subdivision for any taxable 49 year reduces the tax to such amount, the excess shall be treated as an 50 overpayment of tax to be credited or refunded in accordance with the 51 provisions of section one thousand eighty-six of this chapter, provided, 52 however, no interest shall be paid thereon. 53 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 54 of the tax law is amended by adding a new clause (xliv) to read as 55 follows:A. 8073 4 1 (xliv) Empire state digital Amount of credit 2 gaming media production under subdivision 3 credit under subsection (iii) fifty-three of section 4 two hundred ten-B 5 § 4. Section 606 of the tax law is amended by adding a new subsection 6 (iii) to read as follows: 7 (iii) Empire state digital gaming media production credit. (1) Allow- 8 ance of credit. A taxpayer who is eligible pursuant to section forty- 9 four of this chapter shall be allowed a credit to be computed as 10 provided in such section forty-four against the tax imposed by this 11 article. 12 (2) Application of credit. If the amount of the credit allowable under 13 this subsection for any taxable year exceeds the taxpayer's tax for such 14 year, the excess shall be treated as an overpayment of tax to be credit- 15 ed or refunded as provided in section six hundred eighty-six of this 16 article, provided, however, that no interest shall be paid thereon. 17 § 5. The state commissioner of economic development, after consulting 18 with the state commissioner of taxation and finance, shall promulgate 19 regulations by December 31, 2017 to establish procedures for the allo- 20 cation of tax credits as required by subdivision (a) of section 44 of 21 the tax law. Such rules and regulations shall include provisions 22 describing the application process, the due dates for such applications, 23 the standards which shall be used to evaluate the applications, the 24 documentation that will be provided to taxpayers substantiate to the New 25 York state department of taxation and finance the amount of tax credits 26 allocated to such taxpayers, under what conditions all or a portion of 27 this tax credit may be revoked, and such other provisions as deemed 28 necessary and appropriate. Notwithstanding any other provisions to the 29 contrary in the state administrative procedure act, such rules and regu- 30 lations may be adopted on an emergency basis if necessary to meet such 31 December 31, 2017 deadline. 32 § 6. Subdivision 23 of section 352 of the economic development law, as 33 amended by section 1 of part K of chapter 59 of the laws of 2017, is 34 amended to read as follows: 35 23. "Software development" means the creation of coded computer 36 instructions [or production or post-production of video games, as37defined in subdivision one-a of section six hundred eleven of the gener-38al business law, other than those embedded and used exclusively in39advertising, promotional websites or microsites,] and [also] includes 40 new media as defined by the commissioner in regulations. 41 § 7. The economic development law is amended by adding a new section 42 242 to read as follows: 43 § 242. Reports on the digital gaming industries in New York. 1. The 44 empire state development corporation shall file a report on a biannual 45 basis with the director of the division of the budget and the chair- 46 persons of the assembly ways and means committee and senate finance 47 committee. The report shall be filed no later than thirty days before 48 the mid-point and the end of the state fiscal year. The first report 49 shall cover the calendar half year that begins on January first, two 50 thousand nineteen. Each report must contain the following information 51 for the covered calendar half year: 52 (a) the total dollar amount of credits allocated pursuant to section 53 forty-four of the tax law during the half year, broken down by month; 54 (b) the number of digital gaming projects, which have been allocated 55 tax credits of less than one million dollars per project, and the totalA. 8073 5 1 dollar amount of credits allocated to those projects distributed by 2 region pursuant to subdivision (b) of section forty-four of the tax law; 3 (c) the number of digital gaming projects, which have been allocated 4 tax credits of more than one million dollars, and the total dollar 5 amount of credits allocated to those projects distributed by region 6 pursuant to subdivision (b) of section forty-four of the tax law; 7 (d) a list of each eligible digital gaming project, which has been 8 allocated a tax credit enumerated by region pursuant to subdivision (b) 9 of section forty-four of the tax law, and for each of those projects, 10 (i) the estimated number of employees associated with the project, (ii) 11 the estimated qualifying costs for the projects, (iii) the estimated 12 total costs of the project, (iv) the credit eligible employee hours for 13 each project, and (v) total wages for such credit eligible employee 14 hours for each project; and 15 (e) (i) the name of each taxpayer allocated a tax credit for each 16 project and the county of residence or incorporation of such taxpayer 17 or, if the taxpayer does not reside or is not incorporated in New York, 18 the state of residence or incorporation; however, if the taxpayer claims 19 a tax credit because the taxpayer is a member of a limited liability 20 company, a partner in a partnership or a shareholder in a subchapter S 21 corporation, the name of each limited liability company, partnership or 22 subchapter S corporation earning any of those tax credits must be 23 included in the report instead of information about the taxpayer claim- 24 ing the tax credit, (ii) the amount of tax credit allocated to each 25 taxpayer; provided however, if the taxpayer claims a tax credit because 26 the taxpayer is a member of a limited liability company, a partner in a 27 partnership or a shareholder in a subchapter S corporation, the amount 28 of tax credit earned by each entity must be included in the report 29 instead of information about the taxpayer claiming the tax credit, and 30 (iii) information identifying the project associated with each taxpayer 31 for which a tax credit was claimed under section forty-four of the tax 32 law. 33 2. The empire state development corporation shall file a report on a 34 triennial basis with the director of the division of the budget and the 35 chairpersons of the assembly ways and means committee and senate finance 36 committee. The first report shall be filed no later than March first, 37 two thousand twenty-one. The report must be prepared by an independent 38 third party auditor and include: (a) information regarding the empire 39 state digital gaming production credit program including the efficiency 40 of operations, reliability of financial reporting, compliance with laws 41 and regulations and distribution of assets and funds; (b) an economic 42 impact study prepared by an independent third party of the program with 43 special emphasis on the regional impact by region and the total dollar 44 amount of credits allocated to those projects distributed by region 45 pursuant to subdivision (b) of section forty-four of the tax law; and 46 (c) any other information or statistical information that the commis- 47 sioner of economic development deems to be useful in analyzing the 48 effects of the programs. 49 § 8. This act shall take effect immediately and shall apply to taxable 50 years beginning on January 1, 2018 and before January 1, 2024; provided 51 that sections one through four of this act shall expire and be deemed 52 repealed December 31, 2022.
