Senate Bill S6530

2011-2012 Legislative Session

Eliminates limitation on the annual aggregate amount of the empire state film credits that may be taken against state taxes

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Archive: Last Bill Status - Stricken

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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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Apr 30, 2012	recommit, enacting clause stricken
Feb 23, 2012	referred to investigations and government operations

2011-S6530 (ACTIVE) - Details

Law Section:: Tax Law
Laws Affected:: Amd Part P §§7 & 8, Chap 60 of 2004; amd §24, Tax L

2011-S6530 (ACTIVE) - Summary

Eliminates limitation on the annual aggregate amount of the empire state film credits that may be taken against state taxes.

2011-S6530 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S6530

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, and the tax law, in
relation to the aggregate annual amount of  such  credit  against  state
taxes

PURPOSE:
Eliminates limitation on the annual aggregate amount of the empire state
film credits that may be taken against state taxes.

SUMMARY OF PROVISIONS:
Section  1  of  the bill amends 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, subdivision (a) of section 7 as amended by section 4
of part WW-1 of chapter 57 of the  laws  of  2008,  subdivision  (b)  of
section  7  as  amended by section 2 and subdivision (c) of section 1 as
amended by section 3 of part Y of chapter 62 of the laws of 2006, subdi-
vision (d) of section 7 as amended by section 1 of part Q of chapter  57
of  the laws of 2010, subdivision (e) of section 7 as amended by section
1 of part C of chapter 312 of the laws of 2010 to eliminate the  limita-
tion  on  the  annual  aggregate amount of the Empire State Film Credits
that may be taken against state taxes.

Section 1 also amends section 8 of the  abovementioned  law  to  provide

that  the  annual report submitted by the Commissioner of the Department
of Taxation and Finance, in conjunction with the Director of the  Gover-
nor's  Office  for Motion Picture and Television Development, evaluating
the effectiveness of the film production tax credit provided by this act
in stimulating the growth of the film industry in the state may  include
recommendations  on whether, based on information in such annual report,
an annual limitation of the aggregate amount of the  empire  state  film
credits that may be taken against state taxes should be imposed.

Section  2  of the bill amends Paragraph 2 of subdivision (a) of section
24 of the tax law, as amended by section 4 of part Q of  chapter  57  of
the  laws  of 2010, to remove reference to a cap on the annual aggregate
amount of the Empire State Film Credits that may be taken against  state
taxes.

Section 3 establishes the effective date.

JUSTIFICATION:
The  Empire  State  Film  Production  Tax Credit has been an unqualified
success for the State of New  York,  both  culturally  and  financially.
Despite the fact that New York's tax credit is significantly less gener-
ous  than the credits offered by competing states (including Connecticut
and Massachusetts), it continues to be a premier destination  for  films
and  television shows, shining light on the State's rightful status as a
world capital for the arts. The tax credit program has  also  proven  to

have  a  consistently  beneficial  impact on the State's bottom line. In
2009, an Ernst & Young study estimated that the  program  had  cost  the
state  $690  million  while generating $2.6 billion in tax revenue. Even
more importantly, the program has helped create tens of thousands of new
jobs in this state.

While  the  2010-2011 state budget extended the program by five years in
2010, it failed to address a major institutional problem which dissuades
television shows from setting  up  roots  in  the  state.  Unlike  movie
productions,  television  productions are "quasi-permanent" institutions
that ordinarily must run for at least four years  to  reach  syndication
length  and  become  truly  profitable.  This  means that as soon as the
second year of a five-year tax credit extension,  television  production
companies  considering  putting down roots in the state can no longer be
assured that the credit will still be in place when  their  shows  reach
sufficient  length.   Consequently, in order to consistently attract the
most promising television series, it is critical that production  compa-
nies  be  given  the  peace of mind that, if their shows are successful,
they will not be forced to uproot production and move elsewhere in a few
short years.

This bill gives television producers that peace of mind by removing  the
cap on the Empire State Film Tax Credit program. A simple funding exten-
sion  would  only  delay  the  problem  instead of providing the genuine
solution that is called for. This bill does not increase the  percentage
of  production  costs  eligible  for a tax credit, it merely removes the
total cap on aggregate costs. It also instructs the Tax Commissioner  to
annually  evaluate whether such a limit should be imposed. Consequently,
the  State  would  remain  largely  insulated  from  risk  while  seeing
increased benefits. While removing the cap on a tax credit program might
be  a drastic step in other contexts, it is a simple matter in logic for
a program that nets the state a consistent and substantial return on its
investment.

Between 2002 and 2009 the number of states offering film-production  tax
credits  rose from 5 to 44. The vast majority of those states offer more
substantial credits to individual productions than New  York,  and  many
are  considering increasing the percentage of costs that can be credited
still further. Fortunately, New York does not need to take part in  this
film tax credit arms race.  Television production companies want to come
here, even if it costs more. They simply want to be assured that funding
for  the program will still be in place when their shows become profita-
ble.  If we are to continue to attract top-shelf television  productions
we  must make certain that our own program follows the basic dictates of
common sense. This bill provides that common sense solution.

LEGISLATIVE HISTORY:
This is a new bill

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This  act shall take effect January 1, 2015 and shall apply to tax years
commencing on or after such date.

2011-S6530 (ACTIVE) - Bill Text download pdf

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

                                  6530

                            I N  S E N A T E

                            February 23, 2012
                               ___________

Introduced  by  Sen. PERALTA -- 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, and the tax law,
  in relation to the aggregate annual  amount  of  such  credit  against
  state taxes

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

  Section 1. Sections 7 and 8 of part P of chapter 60  of  the  laws  of
2004,  amending the tax law relating to the empire state film production
credit, subdivision (a) of section 7 as amended by  section  4  of  part
WW-1  of chapter 57 of the laws of 2008, subdivision (b) of section 7 as
amended by section 2 and subdivision (c) of  section  1  as  amended  by
section  3  of part Y of chapter 62 of the laws of 2006, subdivision (d)
of section 7 as amended by section 1 of part Q of chapter 57 of the laws
of 2010, subdivision (e) of section 7 as amended by section 1 of part  C
of chapter 312 of the laws of 2010, are amended to read as follows:
  S  7.  Maximum  amount  of credits.   (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, $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.  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 application 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.
  (b)] The aggregate amount of  tax  credits  allowed  pursuant  to  the
authority  of  subdivision  (b)  of section 1201-a of the tax law in any

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

                                                           LBD14617-01-2

S. 6530                             2

calendar year shall be $12.5 million in 2004 and 2005 and $30 million in
2006 through 2011.  Such aggregate amount of credits shall be  allocated
by  the mayor's office of film, theater and broadcasting among taxpayers
in  order  of  priority based upon the date of filing an application 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.
  [(c) The New York state commissioner of  economic  development,  after
consulting with the New York state commissioner of taxation and finance,
the  New  York  city commissioner of finance and the commissioner of the
mayor's office of film, theater  and  broadcasting,  shall  amend  regu-
lations  by  October 31, 2006 to establish procedures for the allocation
of tax credits as required by subdivision (a) of this section. In  addi-
tion,  upon]  (B)  UPON  enactment  of  a local law allowing tax credits
pursuant to the authority of subdivision (b) of section  1201-a  of  the
tax  law,  the  mayor's  office  of film, theater and broadcasting shall
amend as soon as practicable substantially similar  rules  to  establish
procedures  for the allocation of tax credits as required by subdivision
[(b)] (A) of this section. Such  rules  and  regulations  shall  include
provisions  describing  the  application process, the due dates for such
applications, the standards which shall be used to evaluate the applica-
tions, the documentation that will be provided by taxpayers to  substan-
tiate  to [the New York state department of taxation and finance or] the
New York city department of finance the amount of tax credits  allocated
to  such  taxpayers,  and  such other provisions as deemed necessary and
appropriate. Notwithstanding any other provisions  to  the  contrary  in
[the  state  administrative  procedure  act  or] the city administrative
procedure act, such rules and regulations may be adopted on an emergency
basis if necessary.
  [(d) Additional pool 1 - The aggregate amount of tax  credits  allowed
in  subdivision  (a) of this section shall be increased by an additional
$350 million in 2009. This additional amount shall be allocated  by  the
governor's  office  for  motion picture and television development among
taxpayers in accordance with subdivision (a) of this section.
  (e) Additional pool 2 - The aggregate amount of tax credits allowed in
subdivision (a) of this section shall be increased by an additional $420
million in 2010, $420 million  in  2011,  $420  million  in  2012,  $420
million in 2013 and $420 million in 2014 provided however, $7 million of
the  annual allocation shall be available for the empire state film post
production credit pursuant to section 31 of the tax  law.    This  addi-
tional  amount  shall  be  allocated by the governor's office for motion
picture and television development among taxpayers  in  accordance  with
subdivision  (a)  of  this  section.  If  the director of the governor's
office for motion picture and television development determines that the
aggregate amount of tax credits available from additional pool 2 for the
empire state film production tax credit have been previously  allocated,
and  determines  that  the pending applications from eligible applicants
for the post production tax credit pursuant to section 31 of the tax law
is insufficient to utilize the balance of  unallocated  post  production
tax  credits  from such pool, the remainder, after such pending applica-
tions are considered, shall be made  available  for  allocation  in  the
empire  state  film tax credit pursuant to section 24, subdivision 36 of
section 210 and subsection (gg) of section 606 of  the  tax  law.    The
governor's  office  for  motion  picture and television development must

S. 6530                             3

notify taxpayers of their allocation year  and  include  the  allocation
year  on  the  certificate  of tax credit. Taxpayers eligible to claim a
credit must report the allocation year directly on  their  empire  state
film  production  credit  tax form for each year a credit is claimed and
include a copy of the certificate with their tax return.  In the case of
a qualified film that receives funds from additional pool 2,  no  empire
state  film  production  credit shall be claimed before the later of (1)
the taxable year the production of the qualified film  is  complete,  or
(2) the taxable year immediately following the allocation year for which
the  film  has been allocated credit by the governor's office for motion
picture and television development.]
  S 8. The commissioner of the department of taxation  and  finance,  in
conjunction  with  the  director  of  the  governor's  office for motion
picture and television development, shall submit to  the  governor,  the
temporary  president  of the senate, and the speaker of the assembly, an
annual report to be submitted in February of each  year  evaluating  the
effectiveness  of the film production tax credit provided by this act in
stimulating the growth of the film industry in the  state.  Such  report
shall  include,  but  not be limited to, in total and by qualified film,
the number of qualified  films,  the  qualified  production  costs,  the
production  costs,  the  qualified  film  production facilities, and the
credit amounts claimed by each qualified film, as well as the impact  on
employment  and  the  economy  of  the  state and city of New York. Such
report shall be based on data available from the application filed  with
the  governor's office for motion picture and television development for
allocation of film production credits. Notwithstanding any provision  of
law  to  the  contrary, the information contained in the report shall be
public information. The report may also include any recommendations  for
changes  in the calculation or administration of the credit, RECOMMENDA-
TIONS ON WHETHER, BASED ON THE INFORMATION IN  SUCH  ANNUAL  REPORT,  AN
ANNUAL  LIMITATION  OF THE AGGREGATE AMOUNT OF TAX CREDITS UNDER SECTION
24, SUBDIVISION 36 OF SECTION 210 AND SUBSECTION (GG) OF SECTION 606  OF
THE  TAX  LAW  SHOULD  BE  IMPOSED,  and any other recommendation of the
commissioner regarding continuing modification, or repeal of  such  act,
and  such  other  information  regarding the act as the commissioner may
feel useful and appropriate.
  S 2. Paragraph 2 of subdivision (a) of section 24 of the tax  law,  as
amended  by  section  4  of part Q of chapter 57 of the laws of 2010, is
amended to read as follows:
  (2) 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 thirty
percent and the qualified production  costs  paid  or  incurred  in  the
production  of  a  qualified  film,  provided  that:  (i)  the qualified
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  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
performance of services at any film production facility within and with-
out the state in the production of such qualified film, and (ii)  except
with  respect  to  a  qualified  independent  film production company or
pilot, at least ten percent of the total principal photography  shooting
days  spent  in the production of such qualified film must be spent at a
qualified film production facility. However, if the qualified production
costs (excluding post production costs) which are  attributable  to  the

S. 6530                             4

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 qualified 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 quali-
fied film. The credit shall be allowed for the taxable year in which the
production of such qualified film is completed. [However, in the case of
a qualified film that receives funds from additional pool 2,  no  credit
shall be claimed before the later of (1) the taxable year the production
of  the  qualified film is complete, or (2) the taxable year immediately
following the allocation year for which  the  film  has  been  allocated
credit by the governor's office for motion picture and television devel-
opment.] 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 first taxable year in which the credit  may
be claimed 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 first taxable  year  in  which
the  credit may be claimed and in the next two succeeding taxable years,
with one-third of the amount of the credit allowed being claimed in each
year.
  S 3. This act shall take effect January 1, 2015 and shall apply to tax
years commencing on or after such date.

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Senate Bill S6530

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Archive: Last Bill Status - Stricken

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2011-S6530 (ACTIVE) - Details

2011-S6530 (ACTIVE) - Summary

2011-S6530 (ACTIVE) - Sponsor Memo

2011-S6530 (ACTIVE) - Bill Text download pdf

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Sponsored By

Jose Peralta

Archive: Last Bill Status - Stricken

Actions

2011-S6530 (ACTIVE) - Details

2011-S6530 (ACTIVE) - Summary

2011-S6530 (ACTIVE) - Sponsor Memo

2011-S6530 (ACTIVE) - Bill Text download pdf

Comments