Page 1, strike lines 14 through 28
Reletter to conform
Line 31, strike "one"
insert "two";
after "hundred"
insert "fifty"
Strike lines 33 through 37
Renumber to conform
Strike lines 40 through 46, insert:
"3. employ,
either directly or through its authorized payroll service company, residents of
this state for at least twenty-five per cent of its full‑time employment
positions in this state.
4. At its
expense, enter into a limited managed audit agreement pursuant to title 42,
chapter 2, article 7 that includes an audit of its production costs and other
requirements prescribed by this section to confirm the amount of any credit
under this section. The audit must be conducted by the taxpayer's authorized
representative, as defined in section 42-2301, who is an independent certified
public accountant licensed in this state. The certified public accountant and
the firm the certified public accountant is affiliated with shall not regularly
perform services for the production company or its affiliates. If the director
accepts the findings of the audit and issues a notice of determination pursuant
to section 42-2303 and the taxpayer timely files its income tax return with the
appropriate credit claim forms, the credit amount accepted is not subject to
recapture, disallowance, reduction or denial with respect to the production
company. The director's notice of determination shall include a written
certificate to the taxpayer stating the amount of the credit and that the
credit is not subject to recapture. This paragraph does not prohibit the
recapture of a credit from a production company if the company failed to
disclose material information during the audit or falsified its books or
records or otherwise engaged in an action that prevented an accurate audit.
C. The
amount of the credit with respect to any individual production is:
1. Seventeen
and one-half per cent of qualified production expenditures of at least two
hundred fifty thousand dollars, but not more than one million dollars.
2. Twenty
per cent of qualified production expenditures exceeding one million dollars.
3. An
additional five per cent of qualified production expenditures if the production
company uses a privately funded production facility having a certified
infrastructure investment of at least fifty million dollars at the time of
application to the department for at least fifty per cent of the production."
Reletter to conform
Page 2, strike lines 1 through 15
Line 19, strike "may
voluntarily" insert "shall"
Strike lines 33 through 37
Reletter to conform
Line 41, strike the blank insert "fifteen million dollars"
Strike lines 43 through 46
Page 3, strike lines 1 through 19, insert:
"G. The
department shall not preapprove income tax credits for the purposes of this
section and section 43-1163 that exceed a total of seventy million dollars for
a single year, except that of the amount:
1. Ten
million dollars each year is reserved for the purposes of infrastructure
credits pursuant to section 43-1075.01 and 43-1163.01.
2. Four
million dollars is reserved for the purposes of commercial advertisements and
music video production pursuant to subsection H of this section and section
43-1163, subsection H.
H. The following provisions apply with
respect to commercial advertisement and music video production:
1. A
commercial advertisement or music video production company may apply for
qualification under this section before the company reaches the minimum
expenditure threshold requirements of subsection B of this section.
2. In
lieu of a script, the applicant must submit a synopsis or storyboard that:
(a) Identifies the
product, service, person or event for a commercial advertisement or the artist
and song for a music video.
(b) Describes the general
content or message to be conveyed.
(c) Describes the location
or locations.
(d) Describes the sets.
(e) Describes the intended
distribution or medium and specific channels, if known.
3. The
department must review the completed application within fifteen business days.
4. Expenses
incurred before the date of submission of a completed application do not qualify
as production costs.
5. The
department shall allocate the income tax credit incentives based on priority
placement established by the date that the company files its application and
based on the percentage of estimated total expenditures in this state allowed
as a credit under this section or section 43‑1163.
6. Within
sixty days after applying with the department under subsection __ of this
section, a company that is preapproved for a specific production must notify
and provide documentation of expenditures to the department of the total amount
of eligible production costs associated with the production.
7. The
company is not eligible for a credit until the company's eligible production
expenditures reach two hundred fifty thousand dollars in a period of twelve
consecutive months. When the company reaches that threshold, the company may
apply to the department for approval of the credit pursuant to subsection __ of
this section. Applications for approval of credits may not be
submitted by the same company more frequently than once a calendar month.
8. Notwithstanding
any other provision of this section, the department shall adopt separate rules
and prescribe forms and procedures as necessary for the purposes of this
subsection.
I. The
department shall deny an application submitted on completion of a production if
it determines that:
1. The
production would constitute an obscene motion picture film or obscene pictorial
publication under title 12, chapter 7, article 1.1.
2. The
production depicts sexual activity as defined in title 13, chapter 35.
3. The
production would constitute sexual exploitation of a minor or commercial sexual
exploitation of a minor under title 13, chapter 35.1."
Reletter to conform
Page 3, line 34, after "data" insert "and other information"
Line 35, after "section"
insert a period strike remainder of line
Strike lines 36 through 41, insert:
"M. A
certified privately funded production facility shall maintain data on the
number of productions using its facility each year and report that information
to the speaker of the house of representatives and the president of the senate
on or before December 31 each year."
Reletter to conform
Page 4, between lines 3 and 4,
insert:
"P. If the department determines that a credit
refunded pursuant to this section is incorrect or invalid, the excess credit
issued may be treated as a tax deficiency pursuant to section 42-1108."
Reletter to conform
Between lines 4 and 5, insert:
"1. 'Infrastructure
investment' means expenditures for soundstages and support and augmentation
facilities that are constructed in this state and primarily used by a
production company but does not include motion picture theaters and other
commercial exhibition facilities."
Renumber to conform
Line 11, strike "motion
pictures" insert "by a production company"
Page 4, line 37, strike "Ten per cent of" insert "The"
Line 39, after "purchased"
insert "from a vendor located"
Line 41, after "leased"
insert "from a vendor located"
Line 42, after "purchased"
insert "from a vendor located"
Line 43, after "leased"
insert "from a lessee located in
this state"
Page 5, between lines 4 and 5, insert:
"5. 'Soundstage'
means a permanent facility in this state of one or more sets or stages used
primarily for staging and filming by a production company and any land,
permanent buildings or capital equipment that is in or adjacent to, and is
necessary for the operation of, a soundstage.
6. 'Support
and augmentation facilities' means permanent facilities in this state that are
used to complement production company needs and complement the production
process.
Sec. 3. Section 43-1075.01, Arizona Revised
Statutes, is amended to read:
START_STATUTE43-1075.01. Credit for motion picture
infrastructure projects; definition
A. A credit is allowed against the taxes imposed by
this title for investments in motion picture infrastructure projects in this
state as provided by section 41‑1517.01.
The amount of the credit is fifteen per cent of the total base investment in
the project during the taxable year as approved and reported by the department of commerce pursuant to section 41‑1517.01,
subsection F pursuant to
this section. The taxpayer may apply the credit against income
taxes for the taxable year in which the motion picture infrastructure project
is completed as provided by section 41‑1517.01,
subsection F.
B. The department shall not allow:
1. Tax credits in a total amount exceeding ten million dollars
for any taxable year under this section and section 43‑1163.01 that would violate the aggregate limits
prescribed by section 41‑1517.01, subsection C.
2. A tax credit under this section to a taxpayer who
has a delinquent tax balance owing to the department under this title or title
42.
C. An applicant, at its expense, may voluntarily
enter into a limited managed audit agreement pursuant to title 42, chapter 2,
article 7 that includes an audit of its base investment and other requirements
prescribed by section 41‑1517.01
and by this section to confirm the amount of any credit under
this section. The request to enter into the audit must be made after the
applicant receives approval for the credit pursuant to section 41‑1517.01, subsection F. The
audit must be conducted by the applicant's authorized representative, as
defined in section 42‑2301, who is an independent certified public
accountant licensed in this state. The certified public accountant
and the firm the certified public accountant is affiliated with shall not
regularly perform services for the taxpayer or its affiliates. If the director
accepts the findings of the audit and issues a notice of determination pursuant
to section 42‑2303 and the taxpayer timely files its income tax return
with the appropriate credit claim forms, the credit amount accepted is not
subject to recapture, disallowance, reduction or denial with respect to either
the taxpayer or any subsequent transferee of the credit, and subsection F, paragraph 4 of this section does not
apply. The director's notice of determination shall include a
written certificate to the taxpayer stating the amount of the credit and that
the credit is not subject to recapture from a transferee. This subsection does
not prevent the recapture of a credit if the taxpayer failed to disclose
material information during the audit or falsified its books or records or
otherwise engaged in an action that prevented an accurate audit.
D. Co-owners of a business, including partners in a
partnership, members of a limited liability company and shareholders of an S
corporation as defined in section 1361 of the internal revenue code, may
allocate the credit allowed under this section among the co-owners on any basis
without regard to their proportional ownership interest. The total of the
credits allowed all such owners may not exceed the amount that would have been
allowed for a sole owner of the company.
E. If the allowable tax credit for a taxpayer
exceeds the taxes otherwise due under this title on the claimant's income, or
if there are no taxes due under this title, the taxpayer may carry the amount
of the claim not used to offset the taxes under this title forward for not more
than five consecutive taxable years' income tax liability.
F. All or part
of any unclaimed amount of credit under this section may be sold or otherwise
transferred under the following conditions:
1. A single
sale or transfer may involve one or more transferees, and a transferee may in
turn resell or transfer the credit subject to the same conditions of this
subsection.
2. Both the transferor
and transferee must submit a written notice of the transfer to the department
within thirty days after the sale or transfer. The transferee's notice shall
include a processing fee equal to one per cent of the transferee's tax credit
balance or two hundred dollars, whichever is less. The notice shall include:
(a) The name
of the taxpayer.
(b) The date
of the transfer.
(c) The amount
of the transfer.
(d) The
transferor's tax credit balance before the transfer and the remaining balance
after the transfer.
(e) All tax
identification numbers for both transferor and transferee.
(f) Any other
information required by rule.
3. A sale or
transfer of the credit does not extend the time in which the credit can be
used. The carryforward period of time under subsection E of this section for a
credit that is sold or transferred begins on the date the credit was originally
earned.
4. Except as
provided by subsection C of this section, if a transferor was not qualified or
was disqualified from using the credit at the time of the transfer, the
department shall either disallow the credit claimed by a transferee or
recapture the credit from the transferee through any authorized collection
method. The transferee's recourse is against the transferor.
5. In the case
of any failure to comply with this subsection, the department shall disallow
the tax credit until the taxpayer is in full compliance.
G. F. The department of
revenue shall maintain annual data on the total amount of monies credited
pursuant to this section, and shall
provide that data to the department of commerce on request.
H. G. The department of
revenue, with the cooperation of the
department of commerce, shall adopt rules and publish and
prescribe forms and procedures as necessary to effectuate the purposes of this
section.
I. H. A taxpayer who
claims a credit for motion picture infrastructure projects under this section
shall not claim a credit under section 43‑1075 for the same costs.
J. I. The credit
allowed by this section is in lieu of any allowance for state tax purposes of a
deduction of those expenses allowed by the internal revenue code.
K. J. For the purposes
of this section, "motion picture infrastructure project" has the same meaning prescribed in section 41‑1517.01.:
(a) Means
soundstages and support and augmentation facilities that are constructed in
this state and primarily used for motion picture production.
(b) Does not
include motion picture theaters and other commercial exhibition facilities."
END_STATUTE
Renumber to conform
Page 5, strike lines 15 through 29
Reletter to conform
Line 32, strike "one"
insert "two";
after "hundred"
insert "fifty"
Strike lines 34 through 38
Renumber to conform
Strike lines 41 through 44, insert:
"3. employ, either directly or through its
authorized payroll service company, residents of this state for at least
twenty-five per cent of its full-time employment positions in this state.
4. At its
expense, enter into a limited managed audit agreement pursuant to title 42,
chapter 2, article 7 that includes an audit of its production costs and other
requirements prescribed by this section to confirm the amount of any credit
under this section. The audit must be conducted by the taxpayer's authorized
representative, as defined in section 42-2301, who is an independent certified
public accountant licensed in this state. The certified public accountant and
the firm the certified public accountant is affiliated with shall not regularly
perform services for the production company or its affiliates. If the director
accepts the findings of the audit and issues a notice of determination pursuant
to section 42-2303 and the taxpayer timely files its income tax return with the
appropriate credit claim forms, the credit amount accepted is not subject to
recapture, disallowance, reduction or denial with respect to the production
company. The director's notice of determination shall include a written
certificate to the taxpayer stating the amount of the credit and that the
credit is not subject to recapture. This paragraph does not prohibit the
recapture of a credit from a production company if the company failed to
disclose material information during the audit or falsified its books or
records or otherwise engaged in an action that prevented an accurate audit.
C. The
amount of the credit with respect to any individual production is:
1. Seventeen
and one-half per cent of qualified production expenditures of at least two
hundred fifty thousand dollars, but not more than one million dollars.
2. Twenty
per cent of qualified production expenditures exceeding one million dollars.
3. An
additional five per cent of qualified production expenditures if the production
company uses a privately funded production facility having a certified
infrastructure investment of at least fifty million dollars at the time of
application to the department for at least fifty per cent of the production."
Reletter to conform
Page 6, strike lines 1 through 18
Line 22, strike "may
voluntarily" insert "shall"
Strike lines 36 through 40
Reletter to conform
Page 6, line 44, strike the blank insert "fifteen million dollars"
Page 7, strike lines 1 through 23, insert:
"G. The
department shall not preapprove income tax credits for the purposes of this
section and section 43-1075 that exceed a total of seventy million dollars for
a single year, except that of the amount:
1. Ten
million dollars each year is reserved for the purposes of infrastructure
credits pursuant to section 43-1075.01 and 43-1163.01.
2. Four
million dollars is reserved for the purposes of commercial advertisements and
music video production pursuant to subsection H of this section and section
43-1075, subsection H.
H. The following provisions apply with
respect to commercial advertisement and music video production:
1. A
commercial advertisement or music video production company may apply for
qualification under this section before the company reaches the minimum
expenditure threshold requirements of subsection B of this section.
2. In
lieu of a script, the applicant must submit a synopsis or storyboard that:
(a) Identifies the
product, service, person or event for a commercial advertisement or the artist
and song for a music video.
(b) Describes the general
content or message to be conveyed.
(c) Describes the location
or locations.
(d) Describes the sets.
(e) Describes the intended
distribution or medium and specific channels, if known.
3. The
department must review the completed application within fifteen business days.
4. Expenses
incurred before the date of submission of a completed application do not
qualify as production costs.
5. The department shall allocate the
income tax credit incentives based on priority placement established by the
date that the company files its application and based on the percentage of
estimated total expenditures in this state allowed as a credit under this
section or section 43‑1075.
6. Within
sixty days after applying with the department under subsection __ of this
section, a company that is preapproved for a specific production must notify
and provide documentation of expenditures to the department of the total amount
of eligible production costs associated with the production.
7. The
company is not eligible for a credit until the company's eligible production
expenditures reach two hundred fifty thousand dollars in a period of twelve
consecutive months. When the company reaches that threshold, the company may
apply to the department for approval of the credit pursuant to subsection __ of
this section. Applications for approval of credits may not be
submitted by the same company more frequently than once a calendar month.
8. Notwithstanding
any other provision of this section, the department shall adopt separate rules
and prescribe forms and procedures as necessary for the purposes of this
subsection.
I. The
department shall deny an application submitted on completion of a production if
it determines that:
1. The
production would constitute an obscene motion picture film or obscene pictorial
publication under title 12, chapter 7, article 1.1.
2. The
production depicts sexual activity as defined in title 13, chapter 35.
3. The
production would constitute sexual exploitation of a minor or commercial sexual
exploitation of a minor under title 13, chapter 35.1."
Reletter to conform
Page 7, line 36, after "data" insert "and other information"
Line 37, after "section"
insert a period strike remainder of line
Strike lines 38 through 43, insert:
"M. A
certified privately funded production facility shall maintain data on the
number of productions using its facility each year and report that information
to the speaker of the house of representatives and the president of the senate
on or before December 31 each year."
Reletter to conform
Page 8, between lines 3 and 4, insert:
"P. If
the department determines that a credit refunded pursuant to this section is
incorrect or invalid, the excess credit issued may be treated as a tax
deficiency pursuant to section 42-1108."
Reletter to conform
Between lines 4 and 5, insert:
"1. 'Infrastructure
investment' means expenditures for soundstages and support and augmentation
facilities that are constructed in this state and primarily used by a
production company but does not include motion picture theaters and other
commercial exhibition facilities."
Renumber to conform
Line 11, strike "motion
pictures" insert "by a production company"
Line 37, strike "Ten
per cent of" insert "The"
Line 39, after "purchased"
insert "from a vendor located"
Line 41, after "leased"
insert "from a vendor located"
Line 42, after "purchased"
insert "from a vendor located"
Line 43, after "leased"
insert "from a lessee located in
this state"
Page 9, between lines 4 and 5, insert:
"5. 'Soundstage'
means a permanent facility in this state of one or more sets or stages used
primarily for staging and filming by a production company and any land,
permanent buildings or capital equipment that is in or adjacent to, and is
necessary for the operation of, a soundstage.
6. 'Support
and augmentation facilities' means permanent facilities in this state that are
used to complement production company needs and complement the production
process.
Sec. 5. Section
43-1163.01, Arizona Revised Statutes, is amended to read:
START_STATUTE43-1163.01. Credit for motion picture
infrastructure projects; definition
A. A credit is allowed against the taxes imposed by
this title for investments in motion picture infrastructure projects in this
state as provided by section 41‑1517.01.
The amount of the credit is fifteen per cent of the total base investment in
the project during the taxable year as approved and reported by the department of commerce pursuant to section 41‑1517.01,
subsection F pursuant to
this section. The taxpayer may apply the credit against income
taxes for the taxable year in which the motion picture infrastructure project
is completed as provided by section 41‑1517.01,
subsection F.
B. The department
shall not allow:
1. Tax credits in a total amount exceeding ten million
dollars for any taxable year under this section and section 43‑1075.01 that would violate the aggregate limits
prescribed by section 41‑1517.01, subsection C.
2. A tax credit under this section to a taxpayer
that has a delinquent tax balance owing to the department under this title or
title 42.
C. An applicant, at its expense, may voluntarily
enter into a limited managed audit agreement pursuant to title 42, chapter 2,
article 7 that includes an audit of its base investment and other requirements
prescribed by section 41‑1517.01
and by this section to confirm the amount of any credit under
this section. The request to enter into the audit must be made after the
applicant receives approval for the credit pursuant to section 41‑1517.01, subsection F. The
audit must be conducted by the applicant's authorized representative, as
defined in section 42‑2301, who is an independent certified public
accountant licensed in this state. The certified public accountant and the
firm the certified public accountant is affiliated with shall not regularly
perform services for the taxpayer or its affiliates. If the director accepts
the findings of the audit and issues a notice of determination pursuant to
section 42‑2303 and the taxpayer timely files its income tax return with
the appropriate credit claim forms, the credit amount accepted is not subject
to recapture, disallowance, reduction or denial with respect to either the
taxpayer or any subsequent transferee of the credit, and subsection F, paragraph 4 of this section does not
apply. The director's notice of determination shall include a
written certificate to the taxpayer stating the amount of the credit and that
the credit is not subject to recapture from a transferee. This subsection does
not prevent the recapture of a credit if the taxpayer failed to disclose
material information during the audit or falsified its books or records or
otherwise engaged in an action that prevented an accurate audit.
D. Co‑owners of a business, including corporate
partners in a partnership and members of a limited liability company, may
allocate the credit allowed under this section among the co-owners on any basis
without regard to their proportional ownership interest. The total of the
credits allowed all such owners may not exceed the amount that would have been
allowed for a sole owner of the company.
E. If the allowable tax credit for a taxpayer
exceeds the taxes otherwise due under this title on the claimant's income, or
if there are no taxes due under this title, the taxpayer may carry the amount
of the claim not used to offset the taxes under this title forward for not more
than five consecutive taxable years' income tax liability.
F. All or part
of any unclaimed amount of credit under this section may be sold or otherwise
transferred under the following conditions:
1. A single
sale or transfer may involve one or more transferees, and a transferee may in
turn resell or transfer the credit subject to the same conditions of this
subsection.
2. Both the transferor
and transferee must submit a written notice of the transfer to the department
within thirty days after the sale or transfer. The transferee's notice shall
include a processing fee equal to one per cent of the transferee's tax credit
balance or two hundred dollars, whichever is less. The notice shall include:
(a) The name
of the taxpayer.
(b) The date
of the transfer.
(c) The amount
of the transfer.
(d) The
transferor's tax credit balance before the transfer and the remaining balance
after the transfer.
(e) All tax
identification numbers for both transferor and transferee.
(f) Any other
information required by rule.
3. A sale or
transfer of the credit does not extend the time in which the credit can be
used. The carryforward period of time under subsection E of this section for a
credit that is sold or transferred begins on the date the credit was originally
earned.
4. Except as
provided by subsection C of this section, if a transferor was not qualified or
was disqualified from using the credit at the time of the transfer, the
department shall either disallow the credit claimed by a transferee or
recapture the credit from the transferee through any authorized collection
method. The transferee's recourse is against the transferor.
5. In the case
of any failure to comply with this subsection, the department shall disallow
the tax credit until the taxpayer is in full compliance.
G. F. The department of
revenue shall maintain annual data on the total amount of monies credited
pursuant to this section, and shall
provide that data to the department of commerce on request.
H. G. The department of
revenue, with the cooperation of the
department of commerce, shall adopt rules and publish and
prescribe forms and procedures as necessary to effectuate the purposes of this
section.
I. H. A taxpayer that
claims a credit for motion picture infrastructure projects under this section
shall not claim a credit under section 43‑1163 for the same costs.
J. I. The credit
allowed by this section is in lieu of any allowance for state tax purposes of a
deduction of those expenses allowed by the internal revenue code.
K. J. For the purposes
of this section, "motion picture infrastructure project" has the same meaning prescribed in section 41‑1517.01.:
(a) Means
soundstages and support and augmentation facilities that are constructed in
this state and primarily used for motion picture production.
(b) Does not
include motion picture theaters and other commercial exhibition facilities."
END_STATUTE
Renumber to conform
Page 9, line 23, after "development" insert "but
not requiring any company to use the infrastructure for purposes of the tax
incentives"
Amend title to conform
Bill
Number: S.B. 1409