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.
                                                                   LBD16126-01-2

        A. 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  or

        A. 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:

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     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  liability

        A. 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;  provided

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     1  that  sections  one  through four of this act shall expire and be deemed
     2  repealed December 31, 2028.
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