| (5) "Eligible production expenditures" means expenditures
| 25 |
|
made in or after 2009 for goods or services consumed in this
| 26 |
|
state, by a motion picture production
company directly
for the
| 27 |
|
production of a tax credit-eligible
production. "Eligible
| 28 |
|
production expenditures" includes, but is
not limited to,
| 29 |
|
expenditures for resident and nonresident cast and crew wages and
| 30 |
|
fringe
benefits, accommodations, travel, costs of set
| 31 |
|
construction and
operations, editing and related services,
| 32 |
|
photography, sound
synchronization, lighting, wardrobe, makeup
| 33 |
|
and accessories, film
processing, transfer, sound mixing, special
| 34 |
|
and visual effects,
music, location fees, the purchase or rental
| 35 |
|
of facilities and
equipment, and out-of-state goods purchased or
| 36 |
|
leased and
ultimately consumed in full or on a pro rata basis in
| 37 |
|
this state. | 38 |
| (7) "Motion picture" means entertainment content created in
| 43 |
|
whole or in part within this state, including feature-length
| 44 |
|
films; documentaries; long-form, specials, miniseries, series, and
| 45 |
|
interstitial television programming; sound recordings, videos, and
| 46 |
|
music videos; interactive television; interactive games;
| 47 |
|
videogames; commercials; infomercials; any format of digital
| 48 |
|
media, including an interactive web site, created for distribution
| 49 |
|
or exhibition to the general public; and any trailer, pilot, video
| 50 |
|
teaser, or demo created primarily to stimulate the sale,
| 51 |
|
marketing, promotion, or exploitation of future investment in
| 52 |
|
either a product or a motion picture by any means and media in any
| 53 |
|
digital media format, film or videotape, provided the motion
| 54 |
|
picture qualifies as a motion picture. "Motion picture" does not
| 55 |
|
include any television program created primarily as news, weather,
| 56 |
|
or financial market reports, a production featuring current events
| 57 |
|
or sporting events, an awards show or other gala event, a
| 58 |
|
production whose sole purpose is fundraising, a long-form
| 59 |
|
production that primarily markets a product or service, a
| 60 |
|
production used for corporate training or in-house corporate
| 61 |
|
advertising or other similar productions, any production for | 62 |
|
purposes of political advocacy, or any production for
which | 63 |
|
records are required to be maintained under 18 U.S.C. 2257
with | 64 |
|
respect to sexually explicit content. | 65 |
| (B) For the purpose of encouraging the development of a
| 78 |
|
strong capital base for motion picture productions in this state,
| 79 |
|
the director of development, on or after January 1, 2009, but | 80 |
|
before January 1, 2014, may certify a motion picture produced
by | 81 |
|
a motion picture production company as a
tax credit-eligible
| 82 |
|
production. In the case of a television
series, the director may
| 83 |
|
certify the production of each episode of
the series as a
| 84 |
|
separate tax credit-eligible production. If the
director
| 85 |
|
determines that the production of two or more commercials
or
| 86 |
|
videos are related parts of a distinct advertising,
promotional,
| 87 |
|
informational, or entertainment series or
undertaking, the
| 88 |
|
director may certify the productions as a single
tax
| 89 |
|
credit-eligible production for the purpose of computing the
| 90 |
|
credit amounts under division (D) of this section. | 91 |
| The director of development shall not certify a motion
| 92 |
|
picture production as a tax credit-eligible production unless the
| 93 |
|
motion picture production company and a financially responsible
| 94 |
|
affiliate of the company formally agree to reimburse this state
| 95 |
|
for the amount of tax credits allowed and claimed under section
| 96 |
|
5747.66 of the Revised Code on the basis of expenditures that are
| 97 |
|
certified under division (H) of this section but thereafter are
| 98 |
|
determined not to qualify as eligible production expenditures. The
| 99 |
|
reimbursement shall be in a form and amount acceptable to the
| 100 |
|
director of development. For the purposes of this division, a
| 101 |
|
financially responsible affiliate of a motion picture production
| 102 |
|
company is a person related to the motion picture production
| 103 |
|
company by direct or indirect ownership or control of a majority
| 104 |
|
of the capital stock or other equity interests and that the
| 105 |
|
director of development determines to be financially capable of
| 106 |
|
reimbursing this state as required by this division. | 107 |
| (D) Upon application by a qualifying investor, the director
| 130 |
|
of development shall determine the qualifying investor's base
| 131 |
|
investment, and shall issue a tax credit certificate to the
| 132 |
|
qualifying investor. The director shall prescribe the form and
| 133 |
|
manner of the application; the information or documentation
| 134 |
|
required to be submitted with the application; and the form and
| 135 |
|
manner of issuing the certificate. The director shall assign a
| 136 |
|
unique identifying number to each tax credit certificate and shall
| 137 |
|
record the certificate in a register devised and maintained by the
| 138 |
|
director for that purpose. The certificate shall state the amount
| 139 |
|
of the qualifying investor's base investment and the total amount
| 140 |
|
of the credit allowed, which shall equal twenty-five per cent of
| 141 |
|
the qualifying investor's base investment. Not more than one | 142 |
|
hundred million dollars in tax credit certificates may be issued | 143 |
|
per year, and not more than twenty-five million dollars in tax | 144 |
|
credit certificates may be issued per tax credit-eligible | 145 |
|
production. | 146 |
| (E) If a qualifying investor is a pass-through entity as
| 155 |
|
defined in section 5733.04 of the Revised Code, the pass-through
| 156 |
|
entity may allocate the credit amount among persons with an equity
| 157 |
|
interest in the entity in any proportion or manner provided in the
| 158 |
|
partnership agreement or other governing instrument of the entity,
| 159 |
|
notwithstanding any application of the principles of section 704
| 160 |
|
of the Internal Revenue Code. Upon allocation, the persons to
| 161 |
|
which the credit is allocated become the certificate owners of
| 162 |
|
their respective allocated shares of the credit. The pass-through
| 163 |
|
entity shall certify to the transfer agent the allocated share
| 164 |
|
allocated to each such person and provide such information as is
| 165 |
|
necessary to allow the transfer agent to provide the statements
| 166 |
|
and certifications required under division (G) of this section. | 167 |
| (F) Any certificate owner may transfer to any other person
| 168 |
|
all or a portion of the credit amount owned by the certificate
| 169 |
|
owner. Upon transfer, the transferee becomes the certificate owner
| 170 |
|
of the credit amount transferred. The transferor shall notify the
| 171 |
|
transfer agent of each transfer made by the transferor in
| 172 |
|
accordance with rules prescribed by the director of development.
| 173 |
|
The rules shall require the transferor to provide to the transfer
| 174 |
|
agent the identity of the transferee and the unique identifying
| 175 |
|
number assigned to the tax credit certificate that corresponds
| 176 |
|
with the credit amount transferred. | 177 |
| (G) Each motion picture production company that has a motion
| 178 |
|
picture production certified as a tax credit-eligible production
| 179 |
|
shall designate itself or another person as the transfer agent for
| 180 |
|
the purpose of providing the statements and certifications
| 181 |
|
required under this division. Upon making the designation, the
| 182 |
|
motion picture production company shall provide notice of the
| 183 |
|
designation to each certificate owner of a certificate issued with
| 184 |
|
respect to investments made in the company's motion picture
| 185 |
|
production. Before claiming a credit under section 5747.66 of the
| 186 |
|
Revised Code, a certificate owner shall request from the transfer
| 187 |
|
agent a statement certifying the certificate owner's share of the
| 188 |
|
credit amount, and the transfer agent shall provide the statement
| 189 |
|
to the certificate owner. The statement shall be in a form
| 190 |
|
prescribed by the director of development. The transfer agent also
| 191 |
|
shall provide a statement to the tax commissioner showing the
| 192 |
|
identity of the certificate owner and the certificate owner's
| 193 |
|
share of the credit amount. The statement shall be in a form
| 194 |
|
prescribed by the tax commissioner. A tax credit may not be
| 195 |
|
claimed by a certificate owner unless the transfer agent issues
| 196 |
|
the statement to the certificate owner. | 197 |
| (H) Each motion picture production company that has a motion
| 198 |
|
picture production certified as a tax credit-eligible production
| 199 |
|
shall engage, at the company's expense, an independent certified
| 200 |
|
public accountant to examine the company's production expenditures
| 201 |
|
to identify the expenditures that qualify as eligible production
| 202 |
|
expenditures. The certified public accountant shall issue a report
| 203 |
|
to the company and to the director of development certifying the
| 204 |
|
company's eligible production expenditures and any other
| 205 |
|
information required by the director. Upon receiving and examining
| 206 |
|
the report, the director may disallow any expenditure the director
| 207 |
|
determines is not an eligible production expense. If the director
| 208 |
|
disallows an expenditure, the director, not later than thirty days
| 209 |
|
after receiving the report, shall issue a written notice to the
| 210 |
|
motion picture production company stating that the expenditure is
| 211 |
|
disallowed, the reason for the disallowance, and the manner in
| 212 |
|
which an appeal of the disallowance may be made. If the director
| 213 |
|
does not issue the notice within the prescribed time, the eligible
| 214 |
|
production expenditures certified by the certified public
| 215 |
|
accountant's report are conclusively determined to be the eligible
| 216 |
|
production expenditures on the basis of which base investments are
| 217 |
|
determined and the credit is allowed under section 5747.66 of the
| 218 |
|
Revised Code. | 219 |
| The company, not later than thirty days after issuance of the
| 220 |
|
notice, may appeal the disallowance by filing a notice of appeal
| 221 |
|
with the director. If a notice of appeal is properly and timely
| 222 |
|
filed, the director shall schedule a hearing on the appeal. The
| 223 |
|
company shall be given the opportunity to present evidence and
| 224 |
|
testimony at the hearing regarding the disallowed expenditures.
| 225 |
|
The hearing may be continued from time to time as necessary. On
| 226 |
|
the basis of evidence or testimony presented by the company, the
| 227 |
|
director, within thirty days after the conclusion of the hearing,
| 228 |
|
may revise or affirm the initial notice of disallowance of
| 229 |
|
expenditures and issue a final notice to the company stating the
| 230 |
|
revision or affirmation. The director's final notice is not
| 231 |
|
appealable. | 232 |
| (2) A credit shall not be disallowed under section 5747.66 of
| 238 |
|
the Revised Code if, after the director of development issues the
| 239 |
|
final notice under division (H) of this section, it is discovered
| 240 |
|
that the credit is claimed on the basis of expenditures that do
| 241 |
|
not qualify as eligible production expenditures but that were
| 242 |
|
certified as eligible production expenditures by the certified
| 243 |
|
public accountant and not disallowed by the director. | 244 |
| (K) The director of development shall adopt rules for the
| 248 |
|
administration of this section, including rules governing the
| 249 |
|
criteria for determining whether a motion picture production is a
| 250 |
|
tax credit eligible production, which criteria shall be developed
| 251 |
|
by the director in consultation with the tax commissioner;
| 252 |
|
expenditures that qualify as eligible production expenditures; the
| 253 |
|
form and manner of certifications by transfer agents;
| 254 |
|
reimbursement requirements under division (B) of this section;
| 255 |
|
and the appeal procedure under division (H) of this section. The
| 256 |
|
rules shall be adopted under Chapter 119. of the Revised Code. | 257 |
| A nonrefundable credit is allowed against the tax imposed by
| 260 |
|
section 5747.02 of the Revised Code for any individual who, on the
| 261 |
|
last day of the individual's taxable year, is the certificate
| 262 |
|
owner of a tax credit certificate issued under section 122.85 of
| 263 |
|
the Revised Code. If the individual is the qualifying investor,
| 264 |
|
the credit shall be claimed for the individual's taxable year that
| 265 |
|
includes the day the base investment was made. If the individual
| 266 |
|
is not the qualifying investor, the credit shall be claimed for
| 267 |
|
the individual's taxable year that includes the last day of the
| 268 |
|
qualifying investor's taxable year in which the qualifying
| 269 |
|
investor's base investment was made. The amount of the credit
| 270 |
|
shall equal the credit amount certified by the transfer agent
| 271 |
|
under division (G) of section 122.85 of the Revised Code. The
| 272 |
|
credit shall be claimed in the order required under section
| 273 |
|
5747.98 of the Revised Code. If the credit amount exceeds the tax
| 274 |
|
otherwise due under section 5747.02 of the Revised Code after
| 275 |
|
deducting all other credits in that order, the excess may be
| 276 |
|
carried forward for not more than ten taxable years following the
| 277 |
|
taxable year in which the credit is first claimed, and the amount
| 278 |
|
claimed in any year shall be deducted from the balance carried
| 279 |
|
forward to an ensuing year. | 280 |
| (B) For any credit, except the refundable credits enumerated | 366 |
in
divisions (A)(33) to (38) of
this
section
and
the
credit | 367 |
|
granted
under division
(I) of
section
5747.08 of
the
Revised | 368 |
|
Code, the
amount of the credit
for
a
taxable year
shall
not | 369 |
|
exceed the tax
due after allowing for any
other credit
that | 370 |
|
precedes it in the
order required under this
section. Any
excess | 371 |
|
amount of a
particular credit may be carried
forward if | 372 |
|
authorized
under the
section creating that credit.
Nothing in | 373 |
|
this
chapter
shall be
construed to allow a taxpayer to
claim, | 374 |
|
directly
or
indirectly, a
credit more than once for a
taxable | 375 |
|
year. | 376 |
| (B) Not later than eighty days after the effective date of
| 385 |
|
this act, the Director of Development shall adopt initial rules to
| 386 |
|
effect the same purposes of the rules required under division (K)
| 387 |
|
of section 122.85 of the Revised Code, as enacted by this act. The
| 388 |
|
initial rules shall be adopted pursuant to section 111.15 of the
| 389 |
|
Revised Code, but division (D) of that section does not apply to
| 390 |
|
the adoption of the initial rules. The initial rules shall be
| 391 |
|
effective until the final rules adopted pursuant to division (A)
| 392 |
|
of this section and Chapter 119. of the Revised Code take effect.
| 393 |
