Bill Text: OH SB331 | 2011-2012 | 129th General Assembly | Engrossed

Ohio Senate Bill 331 (Prior Session Legislation)

Bill Title: To increase the maximum total amount of tax credits allowed per year for completion of motion pictures certified as tax credit-eligible productions.

Spectrum: Moderate Partisan Bill (Republican 14-3)

Status: (Engrossed - Dead) 2012-05-03 - Passed 3rd Consideration House [SB331 Detail]

Download: Ohio-2011-SB331-Engrossed.html

As Passed by the Senate

129th General Assembly

Regular Session

2011-2012

S. B. No. 331

Senator Patton

Cosponsors: Senators LaRose, Schaffer, Beagle, Bacon, Balderson, Eklund, Hite, Hughes, Jones, Kearney, Manning, Obhof, Oelslager, Schiavoni, Turner, Widener

A BILL

To amend section 122.85 of the Revised Code to

increase the maximum total amount of tax credits

allowed per year for completion of motion pictures

certified as tax credit-eligible productions.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 122.85 of the Revised Code be amended	5
to read as follows:	6

Sec. 122.85. (A) As used in this section and in sections	7
5733.59 and 5747.66 of the Revised Code:	8

(1) "Tax credit-eligible production" means a motion picture	9
production certified by the director of development under division	10
(B) of this section as qualifying the motion picture company for a	11
tax credit under section 5733.59 or 5747.66 of the Revised Code.	12

(2) "Certificate owner" means a motion picture company to	13
which a tax credit certificate is issued.	14

(3) "Motion picture company" means an individual,	15
corporation, partnership, limited liability company, or other form	16
of business association producing a motion picture.	17

(4) "Eligible production expenditures" means expenditures	18
made after June 30, 2009, for goods or services purchased and	19
consumed in this state by a motion picture company directly for	20
the production of a tax credit-eligible production.	21

"Eligible production expenditures" includes, but is not	22
limited to, expenditures for resident and nonresident cast and	23
crew wages, accommodations, costs of set construction and	24
operations, editing and related services, photography, sound	25
synchronization, lighting, wardrobe, makeup and accessories, film	26
processing, transfer, sound mixing, special and visual effects,	27
music, location fees, and the purchase or rental of facilities and	28
equipment.	29

(5) "Motion picture" means entertainment content created in	30
whole or in part within this state for distribution or exhibition	31
to the general public, including, but not limited to,	32
feature-length films; documentaries; long-form, specials,	33
miniseries, series, and interstitial television programming;	34
interactive web sites; sound recordings; videos; music videos;	35
interactive television; interactive games; ~~videogames~~video games;	36
commercials; any format of digital media; and any trailer, pilot,	37
video teaser, or demo created primarily to stimulate the sale,	38
marketing, promotion, or exploitation of future investment in	39
either a product or a motion picture by any means and media in any	40
digital media format, film, or videotape, provided the motion	41
picture qualifies as a motion picture. "Motion picture" does not	42
include any television program created primarily as news, weather,	43
or financial market reports, a production featuring current events	44
or sporting events, an awards show or other gala event, a	45
production whose sole purpose is fundraising, a long-form	46
production that primarily markets a product or service or in-house	47
corporate advertising or other similar productions, a production	48
for purposes of political advocacy, or any production for which	49
records are required to be maintained under 18 U.S.C. 2257 with	50
respect to sexually explicit content.	51

(B) For the purpose of encouraging and developing a strong	52
film industry in this state, the director of development may	53
certify a motion picture produced by a motion picture company as a	54
tax credit-eligible production. In the case of a television	55
series, the director may certify the production of each episode of	56
the series as a separate tax credit-eligible production. A motion	57
picture company shall apply for certification of a motion picture	58
as a tax credit-eligible production on a form and in the manner	59
prescribed by the director. Each application shall include the	60
following information:	61

(1) The name and telephone number of the motion picture	62
production company;	63

(2) The name and telephone number of the company's contact	64
person;	65

(3) A list of the first preproduction date through the last	66
production date in Ohio;	67

(4) The Ohio production office address and telephone number;

(5) The total production budget of the motion picture;

(6) The total budgeted eligible production expenditures and	70
the percentage that amount is of the total production budget of	71
the motion picture;	72

(7) The total percentage of the motion picture being shot in	73
Ohio;	74

(8) The level of employment of cast and crew who reside in	75
Ohio;	76

(9) A synopsis of the script;

(10) The shooting script;

(11) A creative elements list that includes the names of the	79
principal cast and crew and the producer and director;	80

(12) Documentation of financial ability to undertake and	81
complete the motion picture;	82

(13) Estimated value of the tax credit based upon total	83
budgeted eligible production expenditures;	84

(14) Any other information considered necessary by the	85
director.	86

Within ninety days after certification of a motion picture as	87
a tax credit-eligible production, and any time thereafter upon the	88
director's request, the motion picture company shall present to	89
the director of development sufficient evidence of reviewable	90
progress. If the motion picture company fails to present	91
sufficient evidence, the director of development may rescind the	92
certification. Upon rescission, the director shall notify the	93
applicant that the certification has been rescinded. Nothing in	94
this section prohibits an applicant whose tax credit-eligible	95
production certification has been rescinded from submitting a	96
subsequent application for certification.	97

(C)(1) A motion picture company whose motion picture has been	98
certified as a tax credit-eligible production may apply to the	99
director of development on or after July 1, 2009, for a refundable	100
credit against the tax imposed by section 5733.06 or 5747.02 of	101
the Revised Code. The director in consultation with the tax	102
commissioner shall prescribe the form and manner of the	103
application and the information or documentation required to be	104
submitted with the application.	105

The credit is determined as follows:

106

(a) If the total budgeted eligible production expenditures	107
stated in the application submitted under division (B) of this	108
section or the actual eligible production expenditures as finally	109
determined under division (D) of this section, whichever is least,	110
is less than or equal to three hundred thousand dollars, no credit	111
is allowed;	112

(b) If the total budgeted eligible production expenditures	113
stated in the application submitted under division (B) of this	114
section or the actual eligible production expenditures as finally	115
determined under division (D) of this section, whichever is least,	116
is greater than three hundred thousand dollars, the credit equals	117
the sum of the following, subject to the limitation in division	118
(C)(4) of this section:	119

(i) Twenty-five per cent of the least of such budgeted or	120
actual eligible expenditure amounts excluding budgeted or actual	121
eligible expenditures for resident cast and crew wages;	122

(ii) Thirty-five per cent of budgeted or actual eligible	123
expenditures for resident cast and crew wages.	124

(2) Except as provided in division (C)(4) of this section, if	125
the director of development approves a motion picture company's	126
application for a credit, the director shall issue a tax credit	127
certificate to the company. The director in consultation with the	128
tax commissioner shall prescribe the form and manner of issuing	129
certificates. The director shall assign a unique identifying	130
number to each tax credit certificate and shall record the	131
certificate in a register devised and maintained by the director	132
for that purpose. The certificate shall state the amount of the	133
eligible production expenditures on which the credit is based and	134
the amount of the credit. Upon the issuance of a certificate, the	135
director shall certify to the tax commissioner the name of the	136
applicant, the amount of eligible production expenditures shown on	137
the certificate, and any other information required by the rules	138
adopted to administer this section.	139

(3) The amount of eligible production expenditures for which	140
a tax credit may be claimed is subject to inspection and	141
examination by the tax commissioner or employees of the	142
commissioner under section 5703.19 of the Revised Code and any	143
other applicable law. Once the eligible production expenditures	144
are finally determined under section 5703.19 of the Revised Code	145
and division (D) of this section, the credit amount is not subject	146
to adjustment unless the director determines an error was	147
committed in the computation of the credit amount.	148

(4) No tax credit certificate may be issued before the	149
completion of the tax credit-eligible production. ~~For the fiscal~~	150
~~biennium beginning July 1, 2009, and ending June 30, 2011, not~~	151
~~more than thirty million dollars of tax credit may be allowed, of~~	152
~~which not more than ten million dollars of tax credit may be~~	153
~~allowed in the first year of the biennium. In succeeding fiscal~~	154
~~biennia, not~~Not more than ~~twenty~~forty million dollars of tax	155
credit may be allowed per fiscal biennium beginning on or after	156
July 1, 2011, and not more than ~~ten~~twenty million dollars may be	157
allowed in the first year of the biennium. At any time, not more	158
than five million dollars of tax credit may be allowed per tax	159
credit-eligible production.	160

(D) A motion picture company whose motion picture has been	161
certified as a tax credit-eligible production shall engage, at the	162
company's expense, an independent certified public accountant to	163
examine the company's production expenditures to identify the	164
expenditures that qualify as eligible production expenditures. The	165
certified public accountant shall issue a report to the company	166
and to the director of development certifying the company's	167
eligible production expenditures and any other information	168
required by the director. Upon receiving and examining the report,	169
the director may disallow any expenditure the director determines	170
is not an eligible production expenditure. If the director	171
disallows an expenditure, the director shall issue a written	172
notice to the motion picture production company stating that the	173
expenditure is disallowed and the reason for the disallowance.	174
Upon examination of the report and disallowance of any	175
expenditures, the director shall determine finally the lesser of	176
the total budgeted eligible production expenditures stated in the	177
application submitted under division (B) of this section or the	178
actual eligible production expenditures for the purpose of	179
computing the amount of the credit.	180

(E) No credit shall be allowed under section 5733.59 or	181
5747.66 of the Revised Code unless the director has reviewed the	182
report and made the determination prescribed by division (D) of	183
this section.	184

(F) This state reserves the right to refuse the use of this	185
state's name in the credits of any tax credit-eligible motion	186
picture production.	187

(G)(1) The director of development in consultation with the	188
tax commissioner shall adopt rules for the administration of this	189
section, including rules setting forth and governing the criteria	190
for determining whether a motion picture production is a tax	191
credit-eligible production; activities that constitute the	192
production of a motion picture; reporting sufficient evidence of	193
reviewable progress; expenditures that qualify as eligible	194
production expenditures; a competitive process for approving	195
credits; and consideration of geographic distribution of credits.	196
The rules shall be adopted under Chapter 119. of the Revised Code.	197

(2) The director may require a reasonable application fee to	198
cover administrative costs of the tax credit program. The fees	199
collected shall be credited to the motion picture tax credit	200
program operating fund, which is hereby created in the state	201
treasury. The motion picture tax credit program operating fund	202
shall consist of all grants, gifts, fees, and contributions made	203
to the director of development for marketing and promotion of the	204
motion picture industry within this state. The director of	205
development shall use money in the fund to pay expenses related to	206
the administration of the Ohio film office and the credit	207
authorized by this section and sections 5733.59 and 5747.66 of the	208
Revised Code.	209