S T A T E O F N E W Y O R K
________________________________________________________________________
6518
2019-2020 Regular Sessions
I N A S S E M B L Y
March 8, 2019
___________
Introduced by M. of A. LENTOL -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to the empire state commercial
production 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 chapter 518 of the laws of 2018, paragraph 2 of subdivision
(a) as amended by chapter 300 of the laws of 2007, subparagraph (i) of
paragraph 2 of subdivision (a) as amended by section 2 of part I of
chapter 59 of the laws of 2012, subparagraph (iii) of paragraph 2 of
subdivision (a) as amended by section 2 of part O of chapter 59 of the
laws of 2014, paragraph 3 of subdivision (a) as amended by section 45 of
part A of chapter 59 of the laws of 2014, paragraph 4 of subdivision (a)
as separately amended by section 45 of part A and section 6 of part S of
chapter 59 of the laws of 2014, paragraph 2 of subdivision (b) as
amended by chapter 448 of the laws of 2009, subdivision (c) as added and
subdivision (d) as relettered by section 2 of part J of chapter 59 of
the laws of 2015, is amended to read as follows:
§ 28. Empire state commercial production credit. (a) Allowance of
credit. (1) A taxpayer which is a qualified commercial production compa-
ny, or which is a sole proprietor of a qualified commercial 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 predomi-
nantly in the actual filming or recording of the qualified commercial
must be costs incurred in New York state. The tax credit allowed pursu-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10113-01-9
A. 6518 2
ant to this section shall apply to taxable years beginning before Janu-
ary first, two thousand twenty-four.
(2) The state has annually seven million dollars in total tax credits
to disburse to all eligible commercial production companies. The seven
million dollars in total tax credits shall be allocated according to
subparagraphs (i)[,] AND (ii) [and (iii)] of this paragraph:
(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, 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 qual-
ified commercial. 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 is completed.
(ii)] The state annually will disburse [three] FOUR million of the
total seven million in tax credits to all eligible production companies
who film or record qualified commercials within the metropolitan commu-
ter 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] TWENTY percent of the qualified production costs
paid or incurred in the production of a qualified commercial, 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. 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)] (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 a qualified commercial outside of the metropolitan
commuter transportation district as defined in section twelve hundred
sixty-two of the public authorities law; provided, however, that if,
after July thirty-first the state reviews all applications from eligible
production companies who film or record a qualified commercial outside
A. 6518 3
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 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] THIRTY percent of the
qualified production costs paid or incurred in the production of a qual-
ified commercial, 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 qual-
ified commercial. To be eligible for said credit the total qualified
production costs of a qualified production company must be greater than
one hundred thousand dollars in the aggregate during the calendar year.
Such credit will be applied to ALL qualified production costs [exceeding
one 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.
(4) Notwithstanding any provisions of this section to the contrary, a
corporation or partnership, which otherwise qualifies as a qualified
commercial production company, and is similar in operation and in owner-
ship to a business entity or entities taxable, or previously taxable,
under section one hundred eighty-three or one hundred eighty-four or
former section one hundred eighty-five of article nine; article nine-A
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 which would have
been subject to tax under article thirty-two of this chapter (as such
article was in effect on December thirty-first, two thousand fourteen)
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 busi-
ness, and therefore shall not be eligible for empire state commercial
production benefits, if it was not formed for a valid business 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 production credit
benefits.
(b) Definitions. As used in this section, the following terms shall
have the following meanings:
(1) "Qualified production 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-production) of a
qualified commercial.
(2) "Production costs" means any costs for tangible property used and
services performed directly and predominantly in the production (includ-
ing pre-production and post-production) of a qualified 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 sala-
ries 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 musi-
cians). "Production costs" generally include technical and crew
production costs, such as expenditures for commercial production facili-
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ties and/or location costs, or any part thereof, film, audiotape, vide-
otape 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 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 OF ANY LENGTH that
is recorded on film, audiotape, videotape or digital medium in New York
for multi-market distribution by way of radio, television networks,
cable, satellite [or], motion picture theaters, INTERNET OR DOWNLOADED
APPLICATION (APP). "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 sexu-
ally 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 THE contracting entity for production of such
commercial, NOR IS A VARIABLE INTEREST ENTITY OF SUCH DISTRIBUTOR OR
CONTRACTING ENTITY.
(c) The department of economic development shall submit, on or before
December first of each year, to the governor, the director of the divi-
sion of the budget, the temporary president of the senate, and the
speaker of the assembly an annual report including, but not limited to,
the following information regarding the previous calendar year:
(1) the total dollar amount of credits allocated, the name and address
of each qualified commercial production company allocated credits under
this section, the total amount of credits allocated to each qualified
commercial production company, the total amount of qualified production
costs and production costs for each qualified commercial production
company, and the estimated number of employees, credit-eligible man
hours, and credit-eligible wages associated with each qualified commer-
cial production company allocated credits under this section;
(2) for qualified commercial production companies that were allocated
credit pursuant to subparagraph [(ii)] (I) of paragraph two of subdivi-
sion (a) of this section: the name and address of each qualified commer-
cial production company, the total dollar amount of credits allocated,
the total amount of credits allocated to each qualified commercial
production company, total qualified production costs and production
costs for each qualified production company, and the estimated number of
A. 6518 5
employees, credit-eligible man hours, and credit-eligible wages associ-
ated with each qualified commercial production company that filmed or
recorded a qualified commercial within the district;
(3) for qualified commercial production companies that were allocated
credit pursuant to subparagraph [(iii)] (II) of paragraph two of subdi-
vision (a) of this section: the name and address of each qualified
commercial production company, the total dollar amount of credits allo-
cated, the total amount of credits allocated to each qualified commer-
cial production company, total qualified production costs and production
costs for each qualified production company, and the estimated number of
employees, credit-eligible man hours, and credit-eligible wages associ-
ated with each qualified commercial production company that filmed or
recorded a qualified commercial outside the district; and
(4) the amount of credits reallocated to all eligible qualified
commercial production companies pursuant to subparagraph [(iii)] (II) of
paragraph two of subdivision (a) of this section.
(5) The report may also include any recommendations for changes in the
calculation or administration of the credit, recommendations regarding
continuing modification or repeal of this credit, and any other informa-
tion regarding this credit as may be useful and appropriate.
(d) 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-B: subdivision 23.
(2) article 22: section 606: subsection (jj).
§ 2. This act shall take effect immediately.