Bill Text: NY A10694 | 2021-2022 | General Assembly | Introduced
Bill Title: Provides a production tax credit for certain electronic sporting events ("Esports") for taxpayers who incur at least $250,000 in production expenses with respect to such events; provides for the repeal of certain provisions upon expiration thereof.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2022-09-09 - referred to ways and means [A10694 Detail]
Download: New_York-2021-A10694-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 10694 IN ASSEMBLY September 9, 2022 ___________ Introduced by COMMITTEE ON RULES -- (at request of M. of A. Magnarelli) -- read once and referred to the Committee on Ways and Means AN ACT to amend the tax law, the economic development law and the state finance law, in relation to providing a production tax credit for electronic sporting events; 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 45-a to read 2 as follows: 3 § 45-a. Electronic sporting event production credit. (a) Allowance of 4 credit. (1) A taxpayer that is subject to tax under article nine-A or 5 twenty-two of this chapter that is a production entity engaged in 6 production of electronic sporting events, or who is a sole proprietor of 7 or a member of a partnership, that is a qualified production entity 8 engaged in production of electronic sporting events, that incurs at 9 least two hundred fifty thousand dollars of qualified production costs 10 with respect to an electronic sports production, shall be allowed a 11 credit against such tax to be computed as provided herein for taxable 12 years beginning on or after January first, two thousand twenty-three and 13 before January first, two thousand twenty-eight. 14 (2) The amount of the credit shall be the product (or pro rata share 15 of the product, in the case of a taxpayer who is a partner in a partner- 16 ship, member of a limited liability company or shareholder in a subchap- 17 ter S corporation) of twenty-five percent and the qualified production 18 costs of one or more electronic sporting events. Such credit shall be 19 computed based on all of the production costs incurred with respect to a 20 completed electronic sporting event, regardless of whether such costs 21 were incurred prior to the taxable year in which the electronic sporting 22 event is completed. With respect to an electronic sports television 23 series, the entire season of episodes of such series shall be considered 24 one event. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD16126-01-2A. 10694 2 1 (3) The amount of credit allowed under this section shall not exceed 2 twenty million dollars with respect to any one electronic sporting 3 event. 4 (b) Definitions. As used in this section: 5 (1) "Electronic sporting event" or "Esports event" means a scheduled 6 form of organized multiplayer video game competition, particularly 7 between professional players, individually or as teams, organized by an 8 amateur, collegiate, or professional organization, institution, or asso- 9 ciation for live or tape-delayed broadcast. Esports event does not 10 include: (i) news or current affairs program, interview or talk program, 11 network promos, i.e., commercials promoting television series or movies, 12 "how-to" (i.e., instructional) commercial or program, commercial or 13 program consisting entirely of stock footage, trailers promoting theat- 14 rical films, sporting event or sporting program, game show, award cere- 15 mony, daytime drama (i.e., daytime "soap opera"), or "reality" program, 16 or (ii) a production for which records are required under section 2257 17 of title 18, United States code, to be maintained with respect to any 18 performer in such production (reporting of books, commercials, etc. with 19 respect to sexually explicit conduct). 20 (2) "Production costs" means any costs incurred for property used and 21 services performed directly and predominantly in the production of an 22 Esports event in New York, including but not limited to any wages or 23 salaries required to be withheld by the production company pursuant to 24 section six hundred seventy-one of this chapter and any other compen- 25 sation paid to an employee or contractor of the production company for 26 work performed in New York, including any per diem, stipend, or living 27 allowance; the costs of any permits, licenses and insurance necessary 28 for the production of the Esports event; the cost of any rentals or 29 leases of equipment or facilities necessary for the production of the 30 Esports event; and similar expenses paid or incurred in the course of 31 the production, provided that with respect to any tangible property with 32 a purchase price of twenty-five thousand dollars or more, the amount to 33 be included shall be the purchase price of such property less the fair 34 market value of such property on the date the production is completed. 35 Production costs shall not include compensation in excess of one million 36 dollars paid to any one specific individual. Salaries or other income 37 distribution related to production of an Esports event for any person 38 who serves in the role of chief executive officer, chief financial offi- 39 cer, president, treasurer or similar position shall not be included if 40 the production entity has more than ten employees. Salaries or other 41 income to a person serving in such a role for the production entity 42 shall also not be included if the person was employed by a related 43 person of the production entity within sixty months of the date the 44 production entity applied for the tax credit certificate described in 45 subdivision (c) of this section. For purposes of the preceding sentence, 46 a related person shall have the same meaning as the term "related 47 person" in section four hundred sixty-five of the internal revenue code. 48 Up to twenty million dollars in production costs per production shall be 49 used in the calculation of this credit. Production costs shall not 50 include those costs used by the taxpayer or another taxpayer as the 51 basis calculation of any other tax credit allowed under this chapter. 52 (3) "Qualified production costs" means production costs only to the 53 extent such costs are attributable to the use of property or the 54 performance of services by any persons within the state directly and 55 predominantly in the production of an Esports event. Such total 56 production costs incurred and paid in this state shall be equal to orA. 10694 3 1 exceed seventy-five percent of total cost of an eligible production 2 incurred and paid within and without this state. 3 (4) "Production entity" means a corporation, partnership, limited 4 partnership or other entity or individual engaged in the production of 5 Esports events. 6 (5) "Video game" means electronic or computerized game software that 7 users manipulate through interactive devices to generate images on a 8 display screen. 9 (c) To be eligible for the Esports production credit, the taxpayer 10 shall have been issued a certificate of tax credit by the department of 11 economic development, which certificate shall set forth the amount of 12 the credit that may be claimed and the taxable year in which it shall be 13 claimed. The taxpayer shall be allowed to claim only the amount listed 14 on the certificate of tax credit for that taxable year. In order to 15 properly administer this credit, the department shall be allowed to 16 exchange information with the department of economic development about 17 the taxpayers claiming this credit, including information about the tax 18 credits claimed. A taxpayer that is a partner in a partnership, member 19 of a limited liability company or shareholder in a subchapter S corpo- 20 ration that has received a certificate of tax credit shall be allowed 21 its pro rata share of the credit earned by the partnership, limited 22 liability company or subchapter S corporation. The taxpayer shall claim 23 the tax credit in the taxable year that begins in the year for which it 24 is allocated credit under this section. 25 (d) Cross-references. For application of the credit provided for in 26 this section, see the following provisions of this chapter: 27 (1) Article nine-A: section two hundred ten-B, subdivision 28 fifty-five-a. 29 (2) Article twenty-two: section six hundred six, subsection (i), para- 30 graph one, subparagraph (B), clause (xlx). 31 (3) Article twenty-two: section six hundred six, subsection (ooo). 32 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 33 sion 55-a to read as follows: 34 55-a. Electronic sporting event production credit. (a) Allowance of 35 credit. A taxpayer who is eligible pursuant to section forty-five-a of 36 this chapter shall be allowed a credit to be computed as provided in 37 such section forty-five-a against the tax imposed by this article. 38 (b) Application of credit. The credit allowed under this subdivision 39 for any taxable year shall not reduce the tax due for such year to less 40 than the amount prescribed in paragraph (d) of subdivision one of 41 section two hundred ten of this article. Provided, however, that if the 42 amount of the credit allowable under this subdivision for any taxable 43 year reduces the tax to such amount, the excess shall be treated as an 44 overpayment of tax to be credited or refunded in accordance with the 45 provisions of section one thousand eighty-six of this chapter, provided, 46 however, no interest shall be paid thereon. 47 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 48 of the tax law is amended by adding a new clause (xlx) to read as 49 follows: 50 (xlx) Electronic sporting Amount of credit under 51 event production credit subdivision fifty-five-a of 52 under subsection (ooo) section two hundred ten-B 53 § 4. Section 606 of the tax law is amended by adding a new subsection 54 (ooo) to read as follows:A. 10694 4 1 (ooo) Electronic sporting event production credit. (1) Allowance of 2 credit. A taxpayer who is eligible pursuant to section forty-five-a of 3 this chapter shall be allowed a credit to be computed as provided in 4 such section forty-five-a against the tax imposed by this article. 5 (2) Application of credit. If the amount of the credit allowable under 6 this subsection for any taxable year exceeds the taxpayer's tax for such 7 year, the excess shall be treated as an overpayment of tax to be credit- 8 ed or refunded as provided in section six hundred eighty-six of this 9 article, provided, however, that no interest shall be paid thereon. 10 (3) With regard to certificates of tax credit issued, the commissioner 11 of economic development shall reduce by one-half of one percent the 12 amount of credit allowed to a taxpayer and this reduced amount shall be 13 reported on a certificate of tax credit issued pursuant to this section 14 and the regulations promulgated by the commissioner of economic develop- 15 ment to implement this credit program. 16 (4) By January thirty-first of each year, the commissioner of economic 17 development shall report to the comptroller the total amount of such 18 reductions of tax credit during the immediately preceding calendar year. 19 On or before March thirty-first of each year, the comptroller shall 20 transfer without appropriations from the general fund to the Esports 21 training and development fund established under section ninety-seven- 22 bbbbb of the state finance law an amount equal to the total amount of 23 such reductions reported by the commissioner of economic development for 24 the immediately preceding calendar year. 25 § 5. The economic development law is amended by adding a new section 26 242-a to read as follows: 27 § 242-a. Reports on electronic sporting events in New York. 1. The 28 empire state development corporation shall file a report on a biannual 29 basis with the director of the division of the budget and the chair- 30 persons of the assembly ways and means committee and senate finance 31 committee. The report shall be filed no later than thirty days before 32 the mid-point and the end of the state fiscal year. The first report 33 shall cover the calendar half year that begins on January first, two 34 thousand twenty-four. Each report must contain the following information 35 for the covered calendar half year: 36 (a) the total dollar amount of credits allocated pursuant to section 37 forty-five-a of the tax law during the half year, broken down by month; 38 (b) the number of Esports events, which have been allocated tax cred- 39 its of less than one million dollars per event, and the total dollar 40 amount of credits allocated to those events; 41 (c) the number of Esports events, which have been allocated tax cred- 42 its of more than one million dollars, and the total dollar amount of 43 credits allocated to those events; 44 (d) a list of each eligible Esports production entity, which has been 45 allocated a tax credit enumerated pursuant to section forty-five-a of 46 the tax law, and for each of those productions, (i) the estimated number 47 of employees associated with the production, (ii) the estimated qualify- 48 ing costs for the production, (iii) the estimated total costs of the 49 production, (iv) the credit eligible employee hours for each production, 50 and (v) total wages for such credit eligible employee hours for each 51 production; and 52 (e) (i) the name of each taxpayer allocated a tax credit for each 53 project and the county of residence or incorporation of such taxpayer 54 or, if the taxpayer does not reside or is not incorporated in New York, 55 the state of residence or incorporation; however, if the taxpayer claims 56 a tax credit because the taxpayer is a member of a limited liabilityA. 10694 5 1 company, a partner in a partnership or a shareholder in a subchapter S 2 corporation, the name of each limited liability company, partnership or 3 subchapter S corporation earning any of those tax credits must be 4 included in the report instead of information about the taxpayer claim- 5 ing the tax credit, (ii) the amount of tax credit allocated to each 6 taxpayer; provided however, if the taxpayer claims a tax credit because 7 the taxpayer is a member of a limited liability company, a partner in a 8 partnership or a shareholder in a subchapter S corporation, the amount 9 of tax credit earned by each entity must be included in the report 10 instead of information about the taxpayer claiming the tax credit, and 11 (iii) information identifying the project associated with each taxpayer 12 for which a tax credit was claimed under section forty-five-a of the tax 13 law. 14 2. The empire state development corporation shall file a report on a 15 triennial basis with the director of the division of the budget and the 16 chairpersons of the assembly ways and means committee and senate finance 17 committee. The first report shall be filed no later than March first, 18 two thousand twenty-five. The report must be prepared by an independent 19 third party auditor and include: (a) information regarding the Esports 20 production credit program including the efficiency of operations, reli- 21 ability of financial reporting, compliance with laws and regulations and 22 distribution of assets and funds; (b) an economic impact study prepared 23 by an independent third party of the program with special emphasis on 24 the regional impact by region and the total dollar amount of credits 25 allocated to those projects distributed by region pursuant to subdivi- 26 sion (b) of section forty-five-a of the tax law; and (c) any other 27 information or statistical information that the commissioner of economic 28 development deems to be useful in analyzing the effects of the programs. 29 § 6. The state finance law is amended by adding a new section 97-bbbbb 30 to read as follows: 31 § 97-bbbbb. Electronic sports training and development fund. 1. There 32 is hereby established in the joint custody of the commissioner of taxa- 33 tion and finance and the comptroller, a special fund to be known as the 34 electronic sports training and development fund or the "Esports training 35 and development fund". 36 2. Such fund shall consist of the funds transferred by the comptroller 37 to the fund from the general fund without appropriation, as determined 38 under subsection (ooo) of section six hundred six of the tax law. Noth- 39 ing contained herein shall prevent the state from receiving grants, 40 gifts, or bequests for the fund and depositing them into the fund 41 according to law. 42 3. Monies in the fund shall be expended only for job creation and 43 training programs approved by the commissioner of economic development 44 that support efforts to recruit, hire, promote, retain, develop and 45 train a diverse and inclusive workforce as production company employees 46 in the electronic sporting event industry within the state of New York 47 including, but not limited to, those programs that promote development 48 in economically distressed areas of the state. The commissioner of 49 economic development shall promulgate regulations that set forth rele- 50 vant definitions, minimum standards, and criteria for such fund and 51 eligible training programs. 52 4. Monies shall be payable from the fund on the audit and warrant of 53 the comptroller on vouchers approved and certified by the commissioner 54 of economic development. 55 § 7. This act shall take effect immediately and shall apply to taxable 56 years beginning on January 1, 2023 and before January 1, 2029; providedA. 10694 6 1 that sections one through four of this act shall expire and be deemed 2 repealed December 31, 2028.