BILL NUMBER: S5537

SPONSOR: BENJAMIN
 
TITLE OF BILL:

An act to amend the tax law, in relation to expanding the definition of
a qualified post production facility to include certain services
performed outside the state

 
PURPOSE:

Clarifies that post production work conducted remotely shall be an
eligible cost for the purpose of claiming post production credits.

 
SUMMARY OF PROVISIONS:

Section 1. Amends paragraph 4 of subdivision (b) of section 31 of the
tax law to specify that the performance of services conducted outside
the state for projects taxable in the state shall be deemed qualified
for the project.

              

Section 2. Effective date.

 
EXISTING LAW:

Current definitions of telecommuted work is not clear as to whether it
is a qualified expense under the Empire State Film Production credit.

 
JUSTIFICATION:

This bill clarifies that the labor costs of out-of-state workers,
subject to New York taxes, remain a qualified eligible cost under the
Empire State Film Post Production Credit. The proposed language aligns
the post production rebate with the Department of Taxation and Finance
policy guidelines, which subjects certain types of out-of-state work to
state taxes. However, this amendment is distinguishable from the tax
guidelines in that it merely provides the State of New York with clari-
fying language in regards to qualifications into its post production
rebate program.

Like most industries, post production has been highly impacted by the
COVID-19 pandemic. Physical offices work with skeleton crews to adhere
to State COVID-19 protocols, and much of our editorial work has thus
occurred in individual workers' homes. The post production credit
requires 75% of eligible spending occur within the state, however many
displaced post production workers in the New York City metropolitan
region commute (and now telecommute) from homes in neighboring New
Jersey, Connecticut, or Pennsylvania.

This telecommuting has led to significant confusion regarding how to
accurately determine eligibility for the incentive (where the primary
office is in New York, but the individual is telecommuting from their
home state). This is not an academic question: already, a few large film
projects and repeat TV series, not sure whether they would still qualify
for the post production credit, simply took their work to other states.
This dilemma is already costing New York its jobs and tax revenues.

The bill incorporates by reference 20 CRR-NY 1.32.18 (Earnings of
nonresident employees and officers) language, and thus the "Convenience
of the Employer" test into the post production program.  This test is
used by the Department of Taxation and Finance to determine whether an
out-of-state telecommuter is obligated to pay New York taxes. As long as
these telecommuting workers pay New York state taxes, their work would
also be eligible for New York's post production tax incentive.

This nuanced change to current law is critical to ensuring that post
production projects continue to site in New York, ensuring a continua-
tion of the growth, vibrancy, and vitality of the post production indus-
try throughout the state.

 
LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

To be determined.

 
LOCAL FISCAL IMPLICATIONS:

To be determined

 
EFFECTIVE DATE:
This act shall take effect immediately.