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.