NY State Senate Bill 2009-S2724

Senate Bill S2724

2009-2010 Legislative Session

Removes the cap on the aggregate amount of tax credits allowed pursuant to the empire state film production credit

download bill text pdf

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to investigations and government operations
Jun 15, 2009	print number 2724a
Jun 15, 2009	amend (t) and recommit to investigations and government operations
Feb 27, 2009	referred to investigations and government operations

Bill Amendments

Original

A (Active)

co-Sponsors

2009-S2724 - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Taxation
Laws Affected:: Amd Part P §7, Chap 60 of 2004

2009-S2724 - Summary

Removes the cap on the aggregate amount of tax credits allowed pursuant to the empire state film production credit.

2009-S2724 - Sponsor Memo

                                 BILL NUMBER:  S2724

 TITLE OF BILL :
An act to amend chapter 60 of the laws of 2004 amending the tax law
relating to the empire state film production credit, in relation to
aggregate amounts of tax credits


 PURPOSE :
To eliminate the artificial cap on the empire state film production
credit. The credit is capped, and the total amount of funds available
under the cap has been allocated. The effect is as if New York had no
film tax credit, since no one can access the credit.

 SUMMARY OF PROVISIONS :
Amends subdivision (a) of section 7 of part P of chapter 60 of the
laws of 2004, amending the tax law relating to the empire state film
production credit, as amended by section 4 of part WW-1 of chapter 57
of the laws of 2008, to eliminate the cap on the film tax credit.

 JUSTIFICATION :
The film tax credit has more than proved its worth, as demonstrated by
the recent economic study from Ernst & Young. That study stated that
New York jobs created and retained: 19,512jobs as a direct result of
the credit, and that New York State and New York City have achieved a
remarkable return-on-Investment (ROI of 1.90. The ROI estimates

compare the "cost" of the 30% credit with the additional state and
local taxes collected from the 2007 level of economic activity for
film and production activities receiving the credit and supporting
activities.

Absent the credit, New York's film industry would return to its former
state of decline. Between 1999 and 2004, New York film and television
employment as a percentage of total US employment in the industry
declined by approximately 0.9% per year -from 13% in 1999 to 8% in
2004. Given this downward trend in New York film and television jobs
as a percentage of total US film and television jobs over the 1999 to
2004 period, and the increase and expansion of film incentives across
the country, there is no question that the decline would have
continued in the absence of the film credit program.

If New York film and television industry employment had continued to
decline through 2006, New York employment in the industry would have
been 9,472 in 2006 - 6,115 jobs fewer than the 15,587 actual jobs in
2006 under the credit program. Credit-eligible film spending in 2006
totaled $1.1 billion and created approximately 4,300 direct jobs,
meaning that the full rebound in industry employment is not captured
by the 4,300 jobs that were created by credit-eligible film
productions in 2006. An additional 1,815 jobs were created and are
assumed to be attributable to the film credit program. These 1,815
jobs are assumed to remain constant in 2007.

In addition to generating economic impacts from direct spending by
credit-assisted film productions in New York, the credit program has
helped reverse the downward trend in film and television productions
overall and contributed to expanded activities supporting film
production, such as post-production and film processing facilities.
The estimated economic and fiscal impact of the 30% film credit takes
into account the contribution of the productions qualifying for
credits, the increase in other production activities as well as the
contribution of post-production activities.

At present, the cap on the credit is $65 million in 2008, $75 million
in 2009, $85 million in 2010, $90 million in 2011 and 2012, and $110
million in 2013. All of these funds have been allocated, thus the
effect is as if New York had no credit whatsoever. This legislation is
vitally important to the future of jobs and the film industry in New
York.

 PRIOR LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
To be determined.

 EFFECTIVE DATE :
§ 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2009 and shall apply to
applications filed on or after the date this act becomes a law;
provided, however, that the amendments to subdivision (a) of section 7
of part P of chapter 60 of the laws of 2004, relating to the empire
state film production credit, made by section one of this act shall
not affect the repeal of such section and shall be deemed repealed
therewith.

2009-S2724 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2724

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 27, 2009
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend chapter 60 of the laws of  2004  amending  the  tax  law
  relating  to  the  empire state film production credit, in relation to
  aggregate amounts of tax credits

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.    Subdivision (a) of section 7 of part P of chapter 60 of
the laws of 2004, amending the tax law relating to the empire state film
production credit, as amended by section 4 of part WW-1 of chapter 57 of
the laws of 2008, is amended to read as follows:
  (a) The aggregate amount of tax  credits  allowed  under  section  24,
subdivision  36 of section 210 and subsection (gg) of section 606 of the
tax law in any calendar year shall be $25 million in 2004 and 2005,  AND
$60 million in 2006 and 2007[, $65 million in 2008, $75 million in 2009,
$85  million  in 2010, $90 million in 2011 and 2012, and $110 million in
2013]. THERE SHALL BE NO LIMIT  ON  THE  TOTAL  AMOUNT  OF  TAX  CREDITS
ALLOWED  UNDER  SECTION 24, SUBDIVISION 36 OF SECTION 210 AND SUBSECTION
(GG) OF  SECTION  606  OF  THE  TAX  LAW  FOR  CALENDAR  YEAR  2008  AND
THEREAFTER.   Such aggregate amount of credits shall be allocated by the
governor's office for motion picture and  television  development  among
taxpayers in order of priority based upon the date of filing an applica-
tion  for  allocation of film production credit with such office. If the
total amount of allocated credits applied for  in  any  particular  year
exceeds  the aggregate amount of tax credits allowed for such year under
this section, such excess shall be treated as having been applied for on
the first day of the subsequent year.
  S 2. This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2009 and shall apply to  applica-
tions  filed  on  or  after  the  date this act becomes a law; provided,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07661-03-9

S. 2724                             2

however, that the amendments to subdivision (a) of section 7 of  part  P
of  chapter  60  of  the laws of 2004, relating to the empire state film
production credit, made by section one of this act shall not affect  the
repeal of such section and shall be deemed repealed therewith.

co-Sponsors

2009-S2724A (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Taxation
Laws Affected:: Amd Part P §7, Chap 60 of 2004

2009-S2724A (ACTIVE) - Summary

Removes the cap on the aggregate amount of tax credits allowed pursuant to the empire state film production credit.

2009-S2724A (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S2724A

 TITLE OF BILL :
An act to amend the tax law, in relation to removing the cap on the
aggregate amount of tax credits allowed pursuant to the empire state
film production credit; and to amend chapter 60 of the laws of 2004
amending the tax law relating to the empire state film production
credit, in relation to aggregate amounts of tax credits


 PURPOSE OR GENERAL IDEA OF BILL :
To extend the NYS film tax credit through 2015.

 SUMMARY OF PROVISIONS :
Section 1 Amends Subdivision (b) of section 24 of the tax law to add a
definition of "Qualified independent film production company" as an
entity not publicly traded, or owned by more than 5% by a publicly
traded company.

Section 2. Amends paragraph 2 of subdivision (a) of section 24 of the
tax law is amended to remove the limitation on claiming from the new
credits.

Section 3. Adds a new section to section 7 of part P of chapter 60 of
the laws of 2004, relating to the empire state film production credit,
to add a new additional credit of $420 million a year in each year

2011, 2012, 2013, 2014 and 2015, to be allocated only after all other
prior credits have been allocated. The credits cannot be claimed prior
to January 1, 2011, and the aggregate amount of such tax credits paid
to taxpayers is capped at $420 million in any year, with any excess
amount to be treated as having been applied for on the first day of
the subsequent year and thus the first to be paid.  Provision of made
for qualified independent film production companies to receive their
credit in the year in which the production of their qualified film is
completed.

 JUSTIFICATION :
New York State's Empire Film Credit has attracted feature film and
television production to New York since 2004 by initially offering a
tax credit equal to 10% of qualified New York production activities.
A similar credit is available to productions in New York City, equal
to 5% of qualifying New York City production expenses. Competition
from states that have recently adopted new or more generous film
credits reduced the effectiveness of the Empire and NYC film credits.
According to data compiled by the New York State Governor's Film
Office, introduction of competing incentives from other states,
including Connecticut and Massachusetts caused a $750 million drop in
New York film production from July 2006 -- June 2007 as compared to
the previous 12 months. To improve New York's ability to continue to
attract films and television production activities, the Empire state
film credit rate was increased from 10% to 30% of qualifying costs in
2008. According to a major recent study, the 30% credit has had the
following impacts:

* New York jobs created and retained: 19,512 jobs

* New York State and City Return-on-Investment (ROI): 1.90

The estimated economic and fiscal impact of the 30% film credit takes
into account the contribution of the productions qualifying for
credits, the increase in other production activities as well as the
contribution of post-production activities. New York employment in the
film industry as a percentage of total US employment in the industry
steadily declined over the 1999 to 2004 period. Absent the film
credit, this trend would likely have continued, if not accelerated,
given the proliferation of film incentives across the country.
Following the adoption of the film credit, this trend was reversed. By
2007, New York enjoyed an estimated increase of 3,655 jobs from
credit-eligible film and television productions, 1,815 additional jobs
in non-credit-eligible production activity, and 1,561 jobs retained in
post production activities that support film and television production
activities in New York and outside the state.  The sum of the jobs in
these impacted areas (credit-eligib e productions, non-credit-eligible
productions, and retained post-production activities) is 7,031 jobs.
The estimated credit allocation and tax impact of film productions and
related activities will yield a State ROI of 1.1. When New York City
credits and local taxes are included, the ROI is 1.9. This translates
into a State tax return of $208.7 million, against credits paid out of
$184.4 million (State ROI of 1.1), of city taxes paid of $195.3
million, against a credit paid of $30.7 million (City ROI of 6.4). The
combined amounts are $404 million, against credits of $215.1 million
(ROI of 1.9).

 PRIOR LEGISLATIVE HISTORY :
2008 -- Investigations

 FISCAL IMPLICATIONS :
The bill will continue utilization of film/television production
refundable tax credits by extending the credit for 5 years with an
annual rolling cap of $420 million per year. The credits will be
applied to productions in 2009 and beyond, however, the companies
(except independent films) may not access these credits until taxable
years beginning January 1, 2011. The fiscal impact is dependant upon
the number and extent of productions that take advantage of the
credit.  According to a recent Ernst and Young study issued by the
Motion Picture Association of America, Inc., the current production
tax credit program yields a positive return on investment (ROI) with
an ROI of 1.1 to the state and a return on investment to the City of
New York of6.4, resulting in a combined ROI for the State and City of
1.9. Therefore, there is no fiscal impact.

 EFFECTIVE DATE :
Immediately.

2009-S2724A (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2724--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 27, 2009
                               ___________

Introduced  by  Sens.  GOLDEN, DeFRANCISCO, LANZA, PADAVAN -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Investigations and Government Operations --  committee  discharged,
  bill  amended,  ordered  reprinted  as amended and recommitted to said
  committee

AN ACT to amend the tax law, in relation to  removing  the  cap  on  the
  aggregate  amount  of tax credits allowed pursuant to the empire state
  film production credit; and to amend chapter 60 of the  laws  of  2004
  amending  the  tax  law  relating  to the empire state film production
  credit, in relation to aggregate amounts of tax credits

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subdivision (b) of section 24 of the tax law is amended by
adding a new paragraph 7 to read as follows:
  (7)  "QUALIFIED INDEPENDENT FILM PRODUCTION COMPANY" IS AN INDIVIDUAL,
OR A CORPORATION, PARTNERSHIP, LIMITED PARTNERSHIP, OR OTHER ENTITY THAT
IS NOT PUBLICLY TRADED,  AND  PUBLICLY  TRADED  COMPANIES  DO  NOT  OWN,
DIRECTLY  OR  INDIRECTLY,  MORE THAN FIVE PERCENT OF THE QUALIFIED INDE-
PENDENT FILM PRODUCTION COMPANY AND THE ENTITY OR INDIVIDUAL IS  PRINCI-
PALLY  ENGAGED  IN  THE  PRODUCTION OF A QUALIFIED FILM AND CONTROLS THE
QUALIFIED FILM DURING PRODUCTION.
  S 2. Paragraph 2 of subdivision (a) of section 24 of the tax  law,  as
amended  by  section 1 of part Y-1 of chapter 57 of the laws of 2009, is
amended to read as follows:
  (2) (I) 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 thir-
ty  percent  and  the qualified production costs paid or incurred in the
production of a qualified film, provided that the  qualified  production
costs  (excluding  post  production  costs)  paid  or incurred which are
attributable to the use of  tangible  property  or  the  performance  of
services  at  a  qualified film production facility in the production of

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07661-04-9

S. 2724--A                          2

such  qualified  film  equal  or  exceed  seventy-five  percent  of  the
production  costs  (excluding  post  production  costs) paid or incurred
which are attributable to the use of tangible property or  the  perform-
ance  of services at any film production facility within and without the
state in the production of such qualified film. However, if  the  quali-
fied  production  costs  (excluding  post  production  costs)  which are
attributable to the use of  tangible  property  or  the  performance  of
services  at  a  qualified film production facility in the production of
such qualified film is less than three million dollars, then the portion
of the qualified production costs attributable to the  use  of  tangible
property or the performance of services in the production of such quali-
fied  film  outside  of  a  qualified  film production facility shall be
allowed only if the shooting days spent in New York outside  of  a  film
production  facility  in  the production of such qualified film equal or
exceed seventy-five percent of the total shooting days spent within  and
without New York outside of a film production facility in the production
of such qualified film. The credit shall be allowed for the taxable year
in which the production of such qualified film is completed.
  (II)  If  the amount of the credit is at least one million dollars but
less than five million dollars, the credit shall be claimed over  a  two
year period beginning in the taxable year in which the production of the
qualified  film  is  completed  and in the next succeeding taxable year,
with one-half of the amount of credit  allowed  being  claimed  in  each
year.  If the amount of the credit is at least five million dollars, the
credit shall be claimed over a three year period beginning in the  taxa-
ble  year in which the production of the qualified film is completed and
in the next two succeeding taxable years, with one-third of  the  amount
of  the  credit  allowed being claimed in each year.  PROVIDED, HOWEVER,
THAT THE LIMITATIONS ON CLAIMING IMPOSED BY THIS SUBPARAGRAPH SHALL  NOT
APPLY  TO  CREDITS CLAIMED PURSUANT TO SUBDIVISION (E) OF SECTION TWO OF
PART Y-1 OF CHAPTER FIFTY-SEVEN OF THE LAWS OF TWO THOUSAND NINE.
  S 3. Section 7 of part P of chapter 60 of the laws of  2004,  amending
the  tax  law  relating  to  the empire state film production credit, is
amended by adding a new subdivision (e) to read as follows:
  (E) THE AGGREGATE AMOUNT OF TAX CREDITS ALLOWED IN SUBDIVISION (A)  OF
THIS  SECTION  SHALL  BE  INCREASED  BY $420 MILLION A YEAR IN EACH YEAR
2011, 2012, 2013, 2014 AND 2015. THIS ADDITIONAL AMOUNT SHALL  BE  ALLO-
CATED  BY THE GOVERNOR'S OFFICE FOR MOTION PICTURE AND TELEVISION DEVEL-
OPMENT AMONG TAXPAYERS  IN  ACCORDANCE  WITH  SUBDIVISION  (A)  OF  THIS
SECTION  BUT  ONLY  AFTER THE CREDITS IN SUBDIVISION (D) OF THIS SECTION
HAVE BEEN ALLOCATED. A  TAXPAYER  ALLOCATED  CREDITS  FROM  THE  AMOUNTS
AUTHORIZED  UNDER  THIS SUBDIVISION SHALL NOT CLAIM SUCH CREDITS AGAINST
THE TAX UNDER ARTICLES NINE-A OR TWENTY-TWO OF THE TAX LAW BEFORE  TAXA-
BLE  YEARS  BEGINNING ON OR AFTER JANUARY 1, 2011, PROVIDED HOWEVER THAT
NOTWITHSTANDING THE AMOUNT  OF  TAX  CREDITS  ALLOCATED,  THE  AGGREGATE
AMOUNT  OF  SUCH  TAX  CREDITS  PAID  TO TAXPAYERS SHALL NOT EXCEED $420
MILLION IN ANY YEAR, WITH ANY AMOUNT OF CREDITS IN EXCESS OF  SUCH  $420
MILLION AMOUNT TO BE TREATED AS HAVING BEEN APPLIED FOR ON THE FIRST DAY
OF  THE  SUBSEQUENT  YEAR AND THUS THE FIRST TO BE PAID. NOTWITHSTANDING
THE  FOREGOING,  A  TAXPAYER  WHICH  IS  A  QUALIFIED  INDEPENDENT  FILM
PRODUCTION  COMPANY,  AS  DEFINED IN SECTION 24 OF THE TAX LAW, WHICH IS
ALLOCATED CREDITS IN AN AMOUNT NOT EXCEEDING $3  MILLION  PER  QUALIFIED
FILM  FROM THE AMOUNTS AUTHORIZED UNDER THIS SUBDIVISION, MAY CLAIM SUCH
CREDITS FOR THE TAXABLE YEAR IN WHICH THE PRODUCTION OF  SUCH  QUALIFIED
FILM  IS  COMPLETED.  THE GOVERNOR'S OFFICE FOR MOTION PICTURE AND TELE-
VISION DEVELOPMENT SHALL PROMULGATE REGULATIONS NOT LATER  THAN  OCTOBER

S. 2724--A                          3

31,  2009,  ESTABLISHING  PROCEDURES  FOR THE CLAIMING OF TAX CREDITS AS
PROVIDED BY THIS SUBDIVISION.
  S 4. This act shall take effect immediately; provided however that the
amendments  to section 24 of the tax law made by sections one and two of
this act shall not affect the repeal of such section and shall be deemed
repealed therewith; and provided further, that the amendments to section
7 of part P of chapter 60 of the laws of 2004 made by section  three  of
this  act  shall  not affect the repeal of such part and shall be deemed
repealed therewith.

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Senate Bill S2724

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Sponsored By

Martin J. Golden

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Bill Amendments

co-Sponsors

John A. DeFrancisco

Andrew J. Lanza

Frank Padavan

2009-S2724 - Details

2009-S2724 - Summary

2009-S2724 - Sponsor Memo

2009-S2724 - Bill Text download pdf

co-Sponsors

John A. DeFrancisco

Andrew J. Lanza

Frank Padavan

2009-S2724A (ACTIVE) - Details

2009-S2724A (ACTIVE) - Summary

2009-S2724A (ACTIVE) - Sponsor Memo

2009-S2724A (ACTIVE) - Bill Text download pdf

Comments