senate Bill S7534

2011-2012 Legislative Session

Relates to the Empire state commercial production tax credit

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Archive: Last Bill Status - Passed Senate


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 20, 2012 referred to ways and means
delivered to assembly
passed senate
ordered to third reading cal.1391
committee discharged and committed to rules
May 31, 2012 referred to investigations and government operations

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S7534 - Bill Details

Current Committee:
Law Section:
Tax Law
Laws Affected:
Amd ยงยง28 & 606, Tax L

S7534 - Bill Texts

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Relates to the Empire state commercial production tax credit; includes production of digital gaming media.

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BILL NUMBER:S7534

TITLE OF BILL:
An act
to amend the tax law, in relation to Empire state
commercial and digital gaming media production
tax credit

PURPOSE:
The purpose of this bill is to provide a tax credit incentive for
commercial and digital gaming production

SUMMARY OF PROVISIONS:
Amends section 28 of the tax law relative to defining digital gaming
media and commercial production costs and provide for tax credits

JUSTIFICATION:
With technology changing rapidly, tax incentives for digital gaming
media production, will produce an increased level of competition for
NYS in this growing industry

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect immediately and shall apply to tax years
beginning on or after January 1, 2012.

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

                                  7534

                            I N  S E N A T E

                              May 31, 2012
                               ___________

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 the tax law, in relation to Empire state commercial  and
  digital gaming media production tax credit

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

  Section 1.  Section 28 of the tax law, as added by section 2 of part V
of chapter 62 of the laws of 2006, paragraph 1  of  subdivision  (a)  as
amended  by  section 1 and subparagraphs (i) and (iii) of paragraph 2 of
subdivision (a) as amended by section 2 of part I of chapter 59  of  the
laws  of  2012, paragraph 2 of subdivision (a) as amended by chapter 300
of the laws of 2007 and paragraph 2 of subdivision  (b)  as  amended  by
chapter 448 of the laws of 2009, is amended to read as follows:
  S  28.  Empire  state  commercial  AND DIGITAL GAMING MEDIA production
credit. (a) Allowance of credit.  (1) A taxpayer, which is  a  qualified
commercial  OR  DIGITAL  GAMING  MEDIA production company, or which is a
sole proprietor of  a  qualified  commercial  OR  DIGITAL  GAMING  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  subdivision  (c)  of this
section, to be computed as provided in this section. Provided,  however,
to  be  eligible  for  such credit, at least seventy-five percent of the
production costs (excluding post  production  costs)  paid  or  incurred
directly  and  predominantly  in  the actual filming or recording of the
qualified commercial OR DIGITAL GAMING MEDIA PRODUCTION  must  be  costs
incurred  in  New  York  state.  The tax credit allowed pursuant to this
section shall apply to taxable years beginning before January first, two
thousand fifteen.
  (2) The state has annually seven million dollars in total tax  credits
to   disburse  to  all  eligible  commercial  OR  DIGITAL  GAMING  MEDIA
production companies. The seven million dollars  in  total  tax  credits
shall  be  allocated  according  to subparagraphs (i), (ii) and (iii) of
this paragraph:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15851-03-2

S. 7534                             2

  (i) The state annually will disburse one million of  the  total  seven
million  in  tax  credits  to  all eligible production 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 twenty percent of
the  qualified  production costs paid or incurred in the production of a
qualified commercial OR DIGITAL GAMING MEDIA PRODUCTION,  provided  that
the  qualified 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 commercial OR DIGITAL  GAMING  MEDIA
PRODUCTION.    To  be  eligible  for  said  credit  the  total qualified
production costs of a qualified production company must  be  greater  in
the  aggregate  during the current calendar year than the average of the
three previous years for which the credit was applied. Provided,  howev-
er,  that  until  a qualified production 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 period is longer for
the qualified production company seeking the credit.  If  the  qualified
production 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  production  costs  of
the  current  calendar  year  that  are greater than the total amount of
production costs of the appropriate measurement period as  described  in
this  subparagraph.  The  tax  credit  must  be  distributed to eligible
production companies on a pro rata basis,  provided,  however,  that  no
such  qualified production company shall receive more than three hundred
thousand dollars annually for such credit. The credit shall  be  allowed
for  the  taxable year in which the production of such qualified commer-
cial OR DIGITAL GAMING MEDIA PRODUCTION is completed.
  (ii) The state annually will disburse three million of the total seven
million in tax credits to all eligible production companies who film  or
record  qualified  commercials  OR  HAVE  QUALIFIED DIGITAL GAMING MEDIA
PRODUCTION  COSTS  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
five percent of the qualified production costs paid or incurred  in  the
production  of  a qualified commercial OR DIGITAL GAMING MEDIA, provided
that the qualified 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 commercial OR DIGITAL
GAMING MEDIA.   To be eligible  for  said  credit  the  total  qualified
production  costs of a qualified production company must be greater than
five hundred thousand dollars in the aggregate during the calendar year.
Such credit will be applied to qualified production costs exceeding five
hundred thousand dollars in a calendar year.
  (iii) The state annually will disburse  three  million  of  the  total
seven  million  in  tax credits to all eligible production companies who
film or record a qualified commercial OR DIGITAL GAMING MEDIA outside of
the metropolitan commuter transportation district as defined in  section
twelve hundred sixty-two of the public authorities law; provided, howev-
er,  that  if,  after  the  state reviews all applications from eligible
production companies who  film  or  record  a  qualified  commercial  OR
DIGITAL  GAMING  MEDIA  PRODUCTION  outside of the metropolitan commuter
district for a given year, tax credits  remain  unallocated  under  this
subparagraph,  those  credits shall be allotted to the credits set forth
in subparagraph (i) of  this  paragraph  for  use  consistent  with  the

S. 7534                             3

purposes  of  such  subparagraph.  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  five percent of the qualified production costs paid or
incurred  in  the production of a qualified commercial OR DIGITAL GAMING
MEDIA, provided that the qualified 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 commercial
OR DIGITAL GAMING MEDIA.  To be eligible for said credit the total qual-
ified production costs of a qualified production company must be greater
than  two  hundred thousand dollars in the aggregate during the calendar
year. Such credit will be applied to qualified production costs  exceed-
ing two hundred thousand dollars in a calendar year.
  (3)  No  qualified  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 pursu-
ant to this chapter.
  Notwithstanding any provisions of this  section  to  the  contrary,  a
corporation  or  partnership,  which  otherwise qualifies as a qualified
commercial OR DIGITAL GAMING MEDIA production company, and is similar in
operation and in ownership to a business entity or entities taxable,  or
previously  taxable, under section one hundred eighty-three, one hundred
eighty-four or one hundred eighty-five of article nine; article  nine-A,
article  thirty-two  or thirty-three of this chapter or which would have
been subject to tax under article twenty-three of this chapter (as  such
article  was in effect on January first, nineteen hundred eighty) or the
income or losses of which is or was includable under article  twenty-two
of  this  chapter  shall  not  be deemed a new or separate business, and
therefore shall not be eligible for empire state commercial  OR  DIGITAL
GAMING MEDIA production benefits, if it was not formed for a valid busi-
ness  purpose, as such term is defined in clause (D) of subparagraph one
of paragraph (o) of subdivision nine of section  two  hundred  eight  of
this  chapter  and  was formed solely to gain empire state commercial OR
DIGITAL GAMING MEDIA production credit benefits.
  (b) Definitions. As used in this section, the  following  terms  shall
have the following meanings:
  (1)  "Qualified  production  COMMERCIAL  costs" means production costs
only to the extent such costs are attributable to the  use  of  tangible
property  or  the  performance of services within the state directly and
predominantly in the production (including pre-production and  post-pro-
duction) of a qualified commercial.
  (2)  "[Production]  COMMERCIAL  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  a
qualified  commercial.  "[Production] COMMERCIAL PRODUCTION costs" shall
not include (i) costs for a story, script or scenario to be used  for  a
qualified  commercial  and  (ii) wages or salaries or other compensation
for  writers,  directors,  including  music  directors,  producers   and
performers  (other than background actors with no scripted lines who are
employed by a qualified company and musicians). "[Production] COMMERCIAL
PRODUCTION costs" generally include technical and crew production costs,
such  as  expenditures  for  commercial  production  facilities   and/or
location  costs,  or  any  part  thereof,  film, audiotape, videotape or
digital medium, props, makeup, wardrobe, commercial processing,  camera,
sound  recording, scoring, set construction, lighting, shooting, editing
and meals. For purposes of this section, "post production costs" include

S. 7534                             4

the production of original content for a qualified commercial  employing
techniques  traditionally  used  in  post-production for visual effects,
graphic design, animation, and musical composition. However,  where  the
commercial  consists  in  its  entirety  of  techniques  such  as visual
effects, graphic design,  or  animation,  such  costs  incurred  in  the
production  of  the  commercial,  when  occurring  in New York, shall be
deemed qualified production costs for  the  purposes  of  this  section.
Provided  further,  however,  that  "post  production  costs"  shall not
include the editing of  previously  produced  content  for  a  qualified
commercial.
  (3)  "Qualified commercial" means an advertisement that is recorded on
film, audiotape, videotape or digital medium in New York for multi-mark-
et distribution by way of radio, television networks,  cable,  satellite
or motion picture theaters. "Qualified commercial" shall not include (i)
news  or  current  affairs  program,  interview or talk program, network
promos, i.e., commercials promoting television series or  movies,  "how-
to"  (i.e.,  instructional) commercial or program, commercial or program
consisting entirely of  stock  footage,  trailers  promoting  theatrical
films,  sporting  event  or sporting program, game show, award ceremony,
daytime drama (i.e., daytime "soap opera"),  or  "reality"  program,  or
(ii)  a  production for which records are required under section 2257 of
title 18, United States code, to  be  maintained  with  respect  to  any
performer in such production (reporting of books, commercials, etc. with
respect to sexually explicit conduct).
  (4)  "Qualified commercial production company" is a corporation, part-
nership, limited partnership, or other entity or individual which or who
is principally engaged in the production of a qualified  commercial  and
controls  the  production  of  the  qualified  commercial and is not the
distributor or contracting entity for production of such commercial.
  (5) "QUALIFIED DIGITAL GAMING MEDIA PRODUCTION  COSTS"  MEANS  DIGITAL
GAMING  MEDIA PRODUCTION COSTS ONLY TO THE EXTENT SUCH COSTS ARE ATTRIB-
UTABLE TO THE USE OF PROPERTY OR THE  PERFORMANCE  OF  SERVICES  BY  ANY
PERSONS  WITHIN  THE  STATE  DIRECTLY AND PREDOMINANTLY IN THE CREATION,
PRODUCTION OR MODIFICATION OF DIGITAL GAMING RELATED MEDIA.
  (6) "DIGITAL GAMING MEDIA PRODUCTION COSTS" MEANS ANY COSTS FOR  PROP-
ERTY  USED  AND  SERVICES  PERFORMED  DIRECTLY  AND PREDOMINANTLY IN THE
CREATION  OF  DIGITAL  GAMING  MEDIA  PROJECTS.  DIGITAL  GAMING   MEDIA
PRODUCTION  COSTS INCLUDE BUT SHALL NOT BE LIMITED TO PAYMENTS FOR PROP-
ERTY USED AND SERVICES  PERFORMED  DIRECTLY  AND  PREDOMINANTLY  IN  THE
DEVELOPMENT  (INCLUDING CONCEPT CREATION), DESIGN, PRODUCTION (INCLUDING
CONCEPT  CREATION),  DESIGN,  PRODUCTION  (INCLUDING  TESTING),  EDITING
(INCLUDING  ENCODING)  AND  COMPOSITING  (INCLUDING  THE  INTEGRATION OF
DIGITAL FILES FOR INTERACTION BY END USERS)  OF  DIGITAL  GAMING  MEDIA.
DIGITAL  GAMING  MEDIA  PRODUCTION  COSTS  SHALL  NOT  INCLUDE  EXPENSES
INCURRED FOR THE  DISTRIBUTION,  MARKETING,  PROMOTION,  OR  ADVERTISING
CONTENT  GENERATED BY END-USERS OR OTHER COSTS NOT DIRECTLY AND PREDOMI-
NANTLY RELATED TO THE CREATION, PRODUCTION OR  MODIFICATION  OF  DIGITAL
GAMING MEDIA.
  (7)  "DIGITAL  GAMING  MEDIA"  MEANS  (A) A WEBSITE, THE DIGITAL MEDIA
PRODUCTION  COSTS  OF  WHICH  ARE  PAID  OR  INCURRED  PREDOMINANTLY  IN
CONNECTION  WITH: (I) VIDEO SIMULATION, ANIMATION, TEXT, AUDIO, GRAPHICS
OR SIMILAR GAMING RELATED PROPERTY EMBODIED IN DIGITAL FORMAT; AND  (II)
INTERACTIVE  FEATURES  OF  DIGITAL  GAMING (E.G., LINKS, MESSAGE BOARDS,
COMMUNITIES, OR CONTENT MANIPULATION); (B) VIDEO  OR  INTERACTIVE  GAMES
PRODUCED  PRIMARILY FOR DISTRIBUTION OVER THE INTERNET, WIRELESS NETWORK
OR SUCCESSORS THERETO; (C) ANIMATION, SIMULATION  OR  EMBEDDED  GRAPHICS

S. 7534                             5

DIGITAL  GAMING  RELATED  SOFTWARE  INTENDED FOR COMMERCIAL DISTRIBUTION
REGARDLESS OF MEDIUM. QUALIFIED DIGITAL GAMING MEDIA DOES NOT INCLUDE  A
WEBSITE,  VIDEO, INTERACTIVE GAME OR SOFTWARE THAT IS USED PREDOMINANTLY
FOR:  ELECTRONIC  COMMERCE  (RETAIL OR WHOLESALE PURPOSES OTHER THAN THE
SALE OF VIDEO OR  INTERACTIVE  GAMES),  GAMBLING  (INCLUDING  ACTIVITIES
REGULATED  BY A NEW YORK GAMING AGENCY), EXCLUSIVE LOCAL CONSUMPTION FOR
ENTITIES NOT ACCESSIBLE BY THE GENERAL PUBLIC  INCLUDING  INDUSTRIAL  OR
OTHER  PRIVATE PURPOSES, AND POLITICAL ADVOCACY PURPOSES. DIGITAL GAMING
MEDIA SHALL NOT INCLUDE ANY (A) VIDEO GAME OR SIMILAR PRODUCT  RECEIVING
AN  "AO"  OR  "RP"  DESIGNATION  FROM  THE ENTERTAINMENT SOFTWARE RATING
BOARD; (B) ANY COMPUTER OR VIDEO GAME OR SIMILAR PRODUCT  THAT  HAS  NOT
BEEN  VOLUNTARILY  SUBMITTED  FOR  A  RATING DESIGNATION FROM THE ENTER-
TAINMENT SOFTWARE RATING BOARD; OR, (C) CAN REASONABLY BE DEEMED  TO  BE
AN EROGE.
  (c)  Cross-references.  For  application of the credit provided for in
this section, see the following provision of this chapter:
  (1) article 9-A: section 210: subdivision 38.
  (2) article 22: section 606: subsection (jj).
  S 2. The subsection heading of subsection (jj) of section 606  of  the
tax  law,  as  added by section 5 of part V of chapter 62 of the laws of
2006, is amended to read as follows:
  Empire state commercial AND DIGITAL GAMING MEDIA production credit.
  S 3. Clause (xxvi) of subparagraph (B) of paragraph  1  of  subsection
(i)  of  section 606 of the tax law, as amended by section 7 of part C-1
of chapter 57 of the laws of 2009, is amended to read as follows:

(xxvi) Empire state commercial       Amount of credit for qualified
AND DIGITAL GAMING MEDIA
production credit under subsection   production costs in production of
(jj)                                 a qualified commercial OR DIGITAL
                                     GAMING MEDIA
                                     under subdivision thirty-eight of
                                     section two hundred ten
  S 4. This act shall take effect immediately and  shall  apply  to  tax
years beginning on or after January 1, 2012.

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