NY State Assembly Bill 2009-A9060

Assembly Bill A9060

2009-2010 Legislative Session

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

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Archive: Last Bill Status - In Assembly 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 ways and means
Jun 23, 2009	referred to ways and means

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2009-A9060 (ACTIVE) - Details

See Senate Version of this Bill:: S2724
Current Committee:: Assembly Ways And Means
Law Section:: Tax Law
Laws Affected:: Amd §24, Tax L; amd Part P §7, Chap 60 of 2004

2009-A9060 (ACTIVE) - Summary

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

2009-A9060 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:A9060

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- eligible 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-A9060 (ACTIVE) - Bill Text download pdf

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

                                  9060

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                              June 23, 2009
                               ___________

Introduced by M. of A. MORELLE, ENGLEBRIGHT -- read once and referred to
  the Committee on Ways and Means

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
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-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07661-05-9

A. 9060                             2

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
31, 2009, ESTABLISHING PROCEDURES FOR THE CLAIMING  OF  TAX  CREDITS  AS
PROVIDED BY THIS SUBDIVISION.

A. 9060                             3

  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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Assembly Bill A9060

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MORELLE