S T A T E O F N E W Y O R K
________________________________________________________________________
6417
I N S E N A T E
(PREFILED)
January 6, 2010
___________
Introduced by Sen. C. JOHNSON -- read twice and ordered printed, and
when printed to be committed to the Committee on Investigations and
Government Operations
AN ACT to amend the tax law, in relation to authorizing an empire state
digital media production credit
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The tax law is amended by adding a new section 31 to read
as follows:
S 31. EMPIRE STATE DIGITAL MEDIA PRODUCTION CREDIT. (A) ALLOWANCE OF
CREDIT. (1) A TAXPAYER WHICH IS A QUALIFIED DIGITAL MEDIA PRODUCTION
COMPANY, OR WHICH IS A SOLE PROPRIETOR OF A QUALIFIED DIGITAL MEDIA
PRODUCTION COMPANY OR WHICH IS A MEMBER OF A PARTNERSHIP THAT IS A QUAL-
IFIED DIGITAL MEDIA PRODUCTION COMPANY, AND WHICH IS SUBJECT TO TAX
UNDER ARTICLE NINE-A OR TWENTY-TWO OF THIS CHAPTER, SHALL BE ALLOWED A
CREDIT AGAINST SUCH TAX, PURSUANT TO THE PROVISIONS REFERENCED IN SUBDI-
VISION (C) OF THIS SECTION, TO BE COMPUTED AS PROVIDED IN THIS SECTION.
(2) THE STATE HAS ANNUALLY SEVEN MILLION DOLLARS IN TOTAL TAX CREDITS
TO DISBURSE TO ALL QUALIFIED DIGITAL MEDIA COMPANIES. THE SEVEN MILLION
DOLLARS IN TOTAL TAX CREDITS SHALL BE ALLOCATED ACCORDING TO SUBPARA-
GRAPHS (I), (II) AND (III) OF THIS PARAGRAPH:
(I) THE STATE ANNUALLY WILL DISBURSE FOUR MILLION DOLLARS OF THE TOTAL
SEVEN MILLION DOLLARS IN TAX CREDITS TO ALL QUALIFIED DIGITAL MEDIA
COMPANIES AND THE AMOUNT OF THE CREDIT SHALL BE THE PRODUCT (OR PRO RATA
SHARE OF THE PRODUCT, IN THE CASE OF A MEMBER OF A PARTNERSHIP) OF TWEN-
TY PERCENT OF THE QUALIFIED DIGITAL MEDIA PRODUCTION COSTS PAID OR
INCURRED IN THE PRODUCTION OF THE QUALIFIED DIGITAL MEDIA CONTENT,
PROVIDED THAT THE QUALIFIED DIGITAL MEDIA PRODUCTION COSTS PAID OR
INCURRED ARE ATTRIBUTABLE TO THE USE OF TANGIBLE PROPERTY OR THE
PERFORMANCE OF SERVICES WITHIN THE STATE IN THE PRODUCTION OF SUCH QUAL-
IFIED DIGITAL MEDIA CONTENT. TO BE ELIGIBLE FOR SUCH CREDIT, THE TOTAL
QUALIFIED DIGITAL MEDIA PRODUCTION COSTS OF A QUALIFIED DIGITAL MEDIA
COMPANY MUST BE GREATER IN THE AGGREGATE DURING THE CURRENT CALENDAR
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02664-03-0
S. 6417 2
YEAR THAN THE AVERAGE OF THE THREE PREVIOUS YEARS FOR WHICH THE CREDIT
WAS APPLIED. PROVIDED, HOWEVER, THAT UNTIL A QUALIFIED DIGITAL MEDIA
COMPANY HAS ESTABLISHED A THREE YEAR HISTORY, THE CREDIT WILL BE BASED
ON EITHER THE PREVIOUS YEAR OR THE AVERAGE OF THE TWO PREVIOUS YEARS,
WHICHEVER IS GREATER. IF THE QUALIFIED DIGITAL MEDIA COMPANY HAS NEVER
APPLIED FOR THE GROWTH CREDIT, THE PREVIOUS YEAR'S DATA WILL BE USED TO
CREATE A BENCHMARK. THE TAX CREDIT SHALL BE APPLIED ONLY TO THE AMOUNT
OF THE TOTAL QUALIFIED DIGITAL MEDIA PRODUCTION COSTS OF THE CURRENT
CALENDAR YEAR THAT ARE GREATER THAN THE TOTAL AMOUNT OF QUALIFIED
DIGITAL MEDIA PRODUCTION COSTS OF THE PRECEDING CALENDAR YEAR. THE TAX
CREDIT MUST BE DISTRIBUTED TO QUALIFIED DIGITAL MEDIA COMPANIES ON A PRO
RATA BASIS. THE CREDIT SHALL BE ALLOWED FOR THE TAXABLE YEAR IN WHICH
THE PRODUCTION OF SUCH QUALIFIED DIGITAL MEDIA CONTENT IS COMPLETED.
(II) THE STATE ANNUALLY WILL DISBURSE ONE AND ONE-HALF MILLION DOLLARS
OF THE TOTAL SEVEN MILLION DOLLARS IN TAX CREDITS TO ALL QUALIFIED
DIGITAL MEDIA COMPANIES WHO PRODUCE QUALIFIED DIGITAL MEDIA CONTENT
WITHIN THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT AS DEFINED IN
SECTION TWELVE HUNDRED SIXTY-TWO OF THE PUBLIC AUTHORITIES LAW. THE
AMOUNT OF THE CREDIT SHALL BE THE PRODUCT (OR PRO RATA SHARE OF THE
PRODUCT, IN THE CASE OF A MEMBER OF A PARTNERSHIP) OF TWENTY PERCENT OF
THE QUALIFIED DIGITAL MEDIA PRODUCTION COSTS PAID OR INCURRED IN THE
PRODUCTION OF THE DIGITAL MEDIA CONTENT, PROVIDED THAT THE QUALIFIED
DIGITAL MEDIA PRODUCTION COSTS PAID OR INCURRED ARE ATTRIBUTABLE TO THE
USE OF TANGIBLE PROPERTY OR THE PERFORMANCE OF SERVICES WITHIN THE STATE
IN THE PRODUCTION OF SUCH QUALIFIED DIGITAL MEDIA CONTENT. TO BE ELIGI-
BLE FOR SUCH CREDIT, THE TOTAL QUALIFIED DIGITAL MEDIA PRODUCTION COSTS
OF A QUALIFIED PRODUCTION COMPANY MUST BE GREATER THAN FIFTY THOUSAND
DOLLARS IN THE AGGREGATE DURING THE CALENDAR YEAR. SUCH CREDIT WILL BE
APPLIED TO QUALIFIED DIGITAL MEDIA PRODUCTION COSTS EXCEEDING FIFTY
THOUSAND DOLLARS IN A CALENDAR YEAR.
(III) THE STATE ANNUALLY WILL DISBURSE TWO AND ONE-HALF MILLION
DOLLARS OF THE TOTAL SEVEN MILLION DOLLARS IN TAX CREDITS TO ALL QUALI-
FIED DIGITAL MEDIA COMPANIES WHO PRODUCE QUALIFIED DIGITAL MEDIA CONTENT
OUTSIDE OF THE METROPOLITAN COMMUTER TRANSPORTATION DISTRICT AS DEFINED
IN SECTION TWELVE HUNDRED SIXTY-TWO OF THE PUBLIC AUTHORITIES LAW. THE
AMOUNT OF THE CREDIT SHALL BE THE PRODUCT (OR PRO RATA SHARE OF THE
PRODUCT, IN THE CASE OF A MEMBER OF A PARTNERSHIP) OF TWENTY PERCENT OF
THE QUALIFIED DIGITAL MEDIA PRODUCTION COSTS PAID OR INCURRED IN THE
PRODUCTION OF THE QUALIFIED DIGITAL MEDIA CONTENT, PROVIDED THAT THE
QUALIFIED DIGITAL MEDIA PRODUCTION COSTS PAID OR INCURRED ARE ATTRIBUT-
ABLE TO THE USE OF TANGIBLE PROPERTY OR THE PERFORMANCE OF SERVICES
WITHIN THE STATE IN THE PRODUCTION OF SUCH QUALIFIED DIGITAL MEDIA
CONTENT. TO BE ELIGIBLE FOR SUCH CREDIT, THE TOTAL QUALIFIED DIGITAL
MEDIA PRODUCTION COSTS OF A QUALIFIED DIGITAL MEDIA COMPANY MUST BE
GREATER THAN ONE HUNDRED THOUSAND DOLLARS IN THE AGGREGATE DURING THE
CALENDAR YEAR. SUCH CREDIT WILL BE APPLIED TO QUALIFIED DIGITAL MEDIA
PRODUCTION COSTS EXCEEDING ONE HUNDRED THOUSAND DOLLARS IN A CALENDAR
YEAR.
(3) NO QUALIFIED DIGITAL MEDIA PRODUCTION COSTS USED BY A TAXPAYER
EITHER AS THE BASIS FOR THE ALLOWANCE OF THE CREDIT PROVIDED FOR UNDER
THIS SECTION OR USED IN THE CALCULATION OF THE CREDIT PROVIDED FOR UNDER
THIS SECTION SHALL BE USED BY SUCH TAXPAYER TO CLAIM ANY OTHER CREDIT
ALLOWED PURSUANT TO THIS CHAPTER.
(B) DEFINITIONS. AS USED IN THIS SECTION, THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:
S. 6417 3
(1) "QUALIFIED DIGITAL MEDIA PRODUCTION COSTS" MEANS DIGITAL MEDIA
PRODUCTION COSTS ONLY TO THE EXTENT SUCH COSTS ARE ATTRIBUTABLE TO THE
USE OF PROPERTY OR THE PERFORMANCE OF SERVICES WITHIN THE STATE DIRECTLY
AND PREDOMINANTLY IN THE PRODUCTION (INCLUDING PRE-PRODUCTION AND POST-
PRODUCTION) OF QUALIFIED DIGITAL MEDIA CONTENT.
(2) "DIGITAL MEDIA PRODUCTION COSTS" MEANS ANY COSTS FOR TANGIBLE
PROPERTY USED AND SERVICES PERFORMED DIRECTLY AND PREDOMINANTLY IN THE
PRODUCTION (INCLUDING PRE-PRODUCTION AND POST-PRODUCTION) OF QUALIFIED
DIGITAL MEDIA CONTENT, INCLUDING, BUT NOT LIMITED TO, THE COST OF
COMPUTER SOFTWARE AND HARDWARE, DATA PROCESSING, VISUALIZATION TECHNOLO-
GIES, SOUND SYNCHRONIZATION, EDITING, AND THE RENTAL OF FACILITIES AND
EQUIPMENT. "DIGITAL MEDIA PRODUCTION COSTS" SHALL NOT INCLUDE (I) COSTS
INCURRED IN MARKETING, PROMOTION OR ADVERTISING DIGITAL MEDIA OR OTHER
COSTS NOT DIRECTLY RELATED TO THE PRODUCTION OF DIGITAL MEDIA CONTENT,
AND (II) COSTS RELATED TO THE ACQUISITION OR LICENSING OF DIGITAL MEDIA
CONTENT BY THE TAXPAYER FOR DISTRIBUTION OR INCORPORATION INTO THE
TAXPAYER'S DIGITAL MEDIA CONTENT.
(3) "QUALIFIED DIGITAL MEDIA CONTENT" MEANS ANY DATA OR INFORMATION
THAT IS PRODUCED IN DIGITAL FORM, INCLUDING DATA OR INFORMATION CREATED
IN ANALOG FORM BUT REFORMATTED IN DIGITAL FORM, TEXT, GRAPHICS, PHOTO-
GRAPHS, ANIMATION, SOUND AND VIDEO CONTENT. "QUALIFIED DIGITAL MEDIA
CONTENT" DOES NOT MEAN CONTENT OFFERINGS GENERATED BY THE END USER
(INCLUDING POSTINGS ON ELECTRONIC BULLETIN BOARDS AND CHAT ROOMS);
CONTENT OFFERINGS COMPRISED PRIMARILY OF LOCAL NEWS, EVENTS, WEATHER OR
LOCAL MARKET REPORTS; PUBLIC SERVICE CONTENT; ELECTRONIC COMMERCE PLAT-
FORMS (SUCH AS RETAIL AND WHOLESALE WEBSITES); WEBSITES OR CONTENT
OFFERINGS THAT CONTAIN OBSCENE MATERIAL; WEBSITES OR CONTENT THAT ARE
PRODUCED OR MAINTAINED PRIMARILY FOR PRIVATE, INDUSTRIAL, CORPORATE OR
INSTITUTIONAL PURPOSES; OR DIGITAL MEDIA CONTENT ACQUIRED OR LICENSED BY
THE TAXPAYER FOR DISTRIBUTION OR INCORPORATION INTO THE TAXPAYER'S
DIGITAL MEDIA CONTENT.
(C) CROSS-REFERENCES. FOR APPLICATION OF THE CREDIT PROVIDED FOR IN
THIS SECTION, SEE THE FOLLOWING PROVISIONS OF THIS CHAPTER:
(1) ARTICLE 9-A: SECTION 210: SUBDIVISION 41.
(2) ARTICLE 22: SECTION 606: SUBSECTION (QQ).
S 2. Section 210 of the tax law is amended by adding a new subdivision
41 to read as follows:
41. EMPIRE STATE DIGITAL MEDIA PRODUCTION CREDIT. (A) ALLOWANCE OF
CREDIT. A TAXPAYER THAT IS ELIGIBLE PURSUANT TO THE PROVISIONS OF
SECTION THIRTY-ONE OF THIS CHAPTER SHALL BE ALLOWED A CREDIT TO BE
COMPUTED AS PROVIDED IN SUCH SECTION THIRTY-ONE OF THIS CHAPTER AGAINST
THE TAX IMPOSED BY THIS ARTICLE.
(B) APPLICATION OF CREDIT. THE CREDIT ALLOWED UNDER THIS SUBDIVISION
FOR ANY TAXABLE YEAR SHALL NOT REDUCE THE TAX DUE FOR SUCH YEAR TO LESS
THAN THE AMOUNT PRESCRIBED IN PARAGRAPH (D) OF SUBDIVISION ONE OF THIS
SECTION. PROVIDED, HOWEVER, THAT IF THE AMOUNT OF THE CREDIT ALLOWABLE
UNDER THIS SUBDIVISION FOR ANY TAXABLE YEAR REDUCES THE TAX TO SUCH
AMOUNT, FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT
OF TAX TO BE CREDITED OR REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED, HOWEVER, THE
PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHTY-EIGHT OF
THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THEREON. THE
BALANCE OF SUCH CREDIT NOT CREDITED OR REFUNDED IN SUCH TAXABLE YEAR MAY
BE CARRIED OVER TO THE IMMEDIATELY SUCCEEDING TAXABLE YEAR AND MAY BE
DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR. THE EXCESS, IF ANY, OF
THE AMOUNT OF CREDIT OVER THE TAX FOR SUCH SUCCEEDING YEAR SHALL BE
S. 6417 4
TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED OR REFUNDED IN ACCORD-
ANCE WITH THE PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS
CHAPTER. PROVIDED, HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION
ONE THOUSAND EIGHTY-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST
SHALL BE PAID THEREON.
S 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
of the tax law is amended by adding a new clause (xxxi) to read as
follows:
(XXXI) EMPIRE STATE DIGITAL MEDIA AMOUNT OF CREDIT FOR QUALIFIED
PRODUCTION CREDIT UNDER SUBSECTION PRODUCTION COSTS IN
(QQ) PRODUCTION OF QUALIFIED DIGITAL
MEDIA CONTENT UNDER SUBDIVISION
FORTY-ONE OF SECTION
TWO HUNDRED TEN
S 4. Section 606 of the tax law is amended by adding a new subsection
(qq) to read as follows:
(QQ) EMPIRE STATE DIGITAL MEDIA PRODUCTION CREDIT. (1) ALLOWANCE OF
CREDIT. A TAXPAYER THAT IS ELIGIBLE PURSUANT TO SECTION THIRTY-ONE OF
THIS CHAPTER SHALL BE ALLOWED A CREDIT TO BE COMPUTED AS PROVIDED IN
SUCH SECTION THIRTY-ONE AGAINST THE TAX IMPOSED BY THIS ARTICLE.
(2) APPLICATION OF CREDIT. IF THE AMOUNT OF THE CREDIT ALLOWABLE UNDER
THIS SUBSECTION FOR ANY TAXABLE YEAR EXCEEDS THE TAXPAYER'S TAX FOR SUCH
YEAR, FIFTY PERCENT OF THE EXCESS SHALL BE TREATED AS AN OVERPAYMENT OF
TAX TO BE CREDITED OR REFUNDED AS PROVIDED IN SECTION SIX HUNDRED EIGHT-
Y-SIX OF THIS ARTICLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID
THEREON. THE BALANCE OF SUCH CREDIT NOT CREDITED OR REFUNDED IN SUCH
TAXABLE YEAR MAY BE CARRIED OVER TO THE IMMEDIATELY SUCCEEDING TAXABLE
YEAR AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR. THE
EXCESS, IF ANY, OF THE AMOUNT OF THE CREDIT OVER THE TAX FOR SUCH
SUCCEEDING YEAR SHALL BE TREATED AS AN OVERPAYMENT OF TAX TO BE CREDITED
OR REFUNDED AS PROVIDED IN SECTION SIX HUNDRED EIGHTY-SIX OF THIS ARTI-
CLE, PROVIDED, HOWEVER, THAT NO INTEREST SHALL BE PAID THEREON.
S 5. This act shall take effect immediately and shall apply to taxable
years beginning on and after January 1, 2010 with respect to qualified
digital media production costs paid or incurred on or after such date,
regardless of whether the production of the qualified digital media
content commenced before such date.