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First Substitute H.B. 99
This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Thu, Mar 10, 2011 at 12:36 PM by rday. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Thu, Mar 10, 2011 at 12:38 PM by rday. -->
7 LONG TITLE
8 General Description:
9 This bill modifies provisions of the Motion Picture Incentive Account regarding
10 definitions, the issuance of tax credit certificates, and the ceiling on incentives granted
11 to a motion picture company or digital media company.
12 Highlighted Provisions:
13 This bill:
14 . provides that money in the Motion Picture Incentive Account is nonlapsing;
15 . modifies the definition of state-approved production and defines digital media
16 company, digital media project, and new state revenues;
17 . provides that the Governor's Office of Economic Development may issue tax credit
18 certificates annually as incentives for motion picture productions and digital media
19 projects within the state;
20 . provides for carryover of an amount of tax credit certificates equal to the amount
21 not issued by the office in a given fiscal year;
22 . provides that the office shall make rules establishing criteria for determining the
23 amount of the incentive;
24 . increases the ceiling on an incentive granted to a motion picture company from 20%
25 to up to 25% of the dollars left in the state by the company; and
26 . makes certain technical changes.
27 Money Appropriated in this Bill:
29 Other Special Clauses:
31 Utah Code Sections Affected:
33 63J-1-602.4, as enacted by Laws of Utah 2010, Chapter 265
34 63M-1-1802, as last amended by Laws of Utah 2010, Chapter 278
35 63M-1-1803, as last amended by Laws of Utah 2010, Chapters 151, 278 and last
36 amended by Coordination Clause, Laws of Utah 2010, Chapter 278
37 63M-1-1804, as last amended by Laws of Utah 2010, Chapter 278
39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 63J-1-602.4 is amended to read:
41 63J-1-602.4. List of nonlapsing funds and accounts -- Title 61 through Title 63M.
42 (1) The Utah Housing Opportunity Restricted Account created in Section 61-2-204 .
43 (2) Funds paid to the Division of Real Estate for the cost of a criminal background
44 check for a mortgage loan license, as provided in Section 61-2c-202 .
45 (3) Funds paid to the Division of Real Estate for the cost of a criminal background
46 check for principal broker, associate broker, and sales agent licenses, as provided in Section
47 61-2f-204 .
48 (4) Certain funds donated to the Department of Human Services, as provided in
49 Section 62A-1-111 .
50 (5) Certain funds donated to the Division of Child and Family Services, as provided in
51 Section 62A-4a-110 .
52 (6) Appropriations to the Division of Services for People with Disabilities, as provided
53 in Section 62A-5-102 .
54 (7) Certain donations to the Division of Substance Abuse and Mental Health, as
55 provided in Section 62A-15-103 .
56 (8) Assessments for DUI violations that are forwarded to an account created by a
57 county treasurer, as provided in Section 62A-15-503 .
58 (9) The Risk Management Fund created under Section 63A-4-201 .
59 (10) The Child Welfare Parental Defense Fund created in Section 63A-11-203 .
60 (11) The Constitutional Defense Restricted Account created in Section 63C-4-103 .
61 (12) A portion of the funds appropriated to the Utah Seismic Safety Commission, as
62 provided in Section 63C-6-104 .
63 (13) Funding for the Medical Education Program administered by the Medical
64 Education Council, as provided in Section 63C-8-102 .
65 (14) Certain money payable for commission expenses of the Pete Suazo Utah Athletic
66 Commission, as provided under Section 63C-11-301 .
67 (15) Funds collected for publishing the Division of Administrative Rules' publications,
68 as provided in Section 63G-3-402 .
69 (16) Money received by the military installation development authority, as provided in
70 Section 63H-1-504 .
71 (17) The appropriation to fund the Governor's Office of Economic Development's
72 Enterprise Zone Act, as provided in Section 63M-1-416 .
73 (18) The Tourism Marketing Performance Account, as provided in Section
74 63M-1-1406 .
75 (19) The Motion Picture Incentive Account created in Section 63M-1-1803 .
77 Restricted Account, as provided in Section 63M-1-2003 .
79 Authority, created under Section 63M-2-301 , as provided under Section 63M-2-302 .
81 Section 63M-1-2303 .
82 Section 2. Section 63M-1-1802 is amended to read:
83 63M-1-1802. Definitions.
84 As used in this part:
85 (1) "Board" means the Governor's Office of Economic Development Board.
86 (2) "Digital media company" means a company engaged in the production of a digital
87 media project.
88 (3) "Digital media project" means all or part of a production of interactive
89 entertainment or animated production that is produced for distribution in commercial or
90 educational markets, which shall include projects intended for Internet or wireless distribution.
92 state-approved production, including:
93 (a) an expenditure that is subject to:
94 (i) a corporate franchise or income tax under Title 59, Chapter 7, Corporate Franchise
95 and Income Taxes;
96 (ii) an individual income tax under Title 59, Chapter 10, Individual Income Tax Act;
98 (iii) a sales and use tax under Title 59, Chapter 12, Sales and Use Tax Act,
99 notwithstanding any sales and use tax exemption allowed by law; or
100 (iv) a combination of Subsections (4)(a)(i), (ii), and (iii);
101 (b) payments made to a nonresident only to the extent of the income tax paid to the
102 state on the payments, the amount of per diems paid in the state, and other direct
103 reimbursements transacted in the state; and
104 (c) payments made to a payroll company or loan-out corporation that is registered to do
105 business in the state, only to the extent of the amount of withholding under Section 59-10-402 .
107 provides services of the artists to a third party production company.
109 (a) motion pictures;
110 (b) television series; or
111 (c) made-for-television movies.
113 Incentive Account or a refundable tax credit under Section 59-7-614.5 or 59-10-1108 .
114 (8) "New state revenues" means:
115 (a) incremental new state sales and use tax revenues generated as a result of a digital
116 media project that a digital media company pays under Title 59, Chapter 12, Sales and Use Tax
118 (b) incremental new state tax revenues that a digital media company pays as a result of
119 a digital media project under:
120 (i) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
121 (ii) Title 59, Chapter 10, Part1, Determination and Reporting of Tax Liability and
123 (iii) Title 59, Chapter 10, Part 2, Trusts and Estates;
124 (iv) Title 59, Chapter 10, Part 4, Withholding of Tax; or
125 (v) a combination of Subsections (8)(b)(i), (ii), (iii), and (iv);
126 (c) incremental new state revenues generated as individual income taxes under Title
127 59, Chapter 10, Part 1, Determination and Reporting of Tax Liability and Information, paid by
128 employees of the new digital media project as evidenced by payroll records from the digital
129 media company; or
130 (d) a combination of Subsections (8)(a), (b), and (c).
133 becomes the employer of record for the staff, cast, and crew of a motion picture production.
135 authorized under Section 63M-1-1803 and claimed under Section 59-7-614.5 or 59-10-1108 .
137 Section 63M-1-1803 .
140 (a) approved by the [
141 (b) produced in the state by a motion picture company.
143 tax credit certificate for a taxable year.
145 (a) lists the name of the applicant;
146 (b) lists the applicant's taxpayer identification number;
147 (c) lists the amount of tax credit that the office awards the applicant for the taxable
148 year; and
149 (d) may include other information as determined by the office.
150 Section 3. Section 63M-1-1803 is amended to read:
151 63M-1-1803. Motion Picture Incentive Account created -- Cash rebate incentives
152 -- Refundable tax credit incentives.
153 (1) (a) There is created within the General Fund a restricted account known as the
154 Motion Picture Incentive Account, which the office shall [
155 incentives for[
159 (b) All interest generated from investment of money in the restricted account shall be
160 deposited in the restricted account.
161 (c) The restricted account shall consist of an annual appropriation by the Legislature.
162 (d) The office shall:
163 (i) with the advice of the board, administer the restricted account; and
164 (ii) make payments from the restricted account as required under this section.
165 (e) The cost of administering the restricted account shall be paid from money in the
166 restricted account.
167 (2) (a) A motion picture company or digital media company seeking disbursement of
168 an incentive allowed under an agreement with the office shall follow the procedures and
169 requirements of this Subsection (2).
170 (b) [
171 with a report identifying and documenting the dollars left in the state or new state revenues
172 generated by the motion picture company or digital media company for its state-approved
173 production, including any related tax returns by the motion picture company, payroll company,
174 digital medial company, or loan-out corporation under Subsection (2)[
179 dollars left in the state.
181 loan-out corporation shall provide the office with a document that expressly directs and
182 authorizes the State Tax Commission to disclose the entity's tax returns and other information
183 concerning the entity that would otherwise be subject to confidentiality under Section 59-1-403
184 or Section 6103, Internal Revenue Code, to the office.
186 State Tax Commission.
188 Tax Commission shall provide the office with the information requested by the office that the
189 motion picture company, digital media company, payroll company, or loan-out corporation
190 directed or authorized the State Tax Commission to provide to the office in the document
191 described in Subsection (2)[
193 (i) review the report from the motion picture company described in Subsection (2)(b)
194 and verify that it was reviewed by an independent certified public accountant as described in
195 Subsection (2)(c); and
196 (ii) based upon the certified public accountant's attestation under Subsection
198 under its agreement with the office.
199 (h) Subject to Subsection (3), for a digital media company the office shall:
200 (i) ensure the digital media project results in new state revenue; and
201 (ii) based upon review of new state revenue, determine the amount of the incentive that
202 a digital media company is entitled to under its agreement with the office.
204 office shall pay the incentive from the restricted account to the motion picture company,
205 notwithstanding Subsections 51-5-3 (23)(b) and 63J-1-104 (4)(c).
207 59-7-614.5 or 59-10-1108 , the office shall:
208 (i) issue a tax credit certificate to the motion picture company or digital media
209 company; and
210 (ii) provide a duplicate copy of the tax credit certificate to the State Tax Commission.
212 picture tax credit under Section 59-7-614.5 or 59-10-1108 unless the motion picture company
213 or digital media company has received a tax credit certificate for the claim issued by the office
214 under Subsection (2)[
216 picture tax credit on its tax return for the amount listed on the tax credit certificate issued by
217 the office.
219 under Subsection (2)[
220 documentation in accordance with Subsection 63M-1-1804 [
221 (3) (a) Subject to Subsection (3)(b), the office may issue [
221a $6,793,700 .S in
222 tax credit certificates under this part in a fiscal year [
236 (b) If the office does not issue tax credit certificates in a fiscal year totaling the amount
237 authorized under Subsection (3)(a), it may carry over that amount for issuance in subsequent
238 fiscal years.
239 Section 4. Section 63M-1-1804 is amended to read:
240 63M-1-1804. Motion picture incentives -- Standards to qualify for an incentive --
241 Limitations -- Content of agreement between office and motion picture company.
242 (1) In addition to the requirements for receiving a motion picture incentive as set forth
243 in this part, the office, in accordance with Title 63G, Chapter 3, Utah Administrative
244 Rulemaking Act, shall make rules establishing:
245 (a) the standards that a motion picture company or digital media company must meet to
246 qualify for the motion picture incentive[
247 (b) criteria for determining the amount of the incentive.
248 (2) The office shall ensure that those standards include the following:
249 (a) an incentive may only be issued for a [
254 (b) financing has been obtained and is in place for the production; and
255 (c) the economic impact of the production on the state represents new incremental
256 economic activity in the state as opposed to existing economic activity.
257 (3) With respect to a digital media project, the office shall consider economic
258 modeling, including the costs and benefits of the digital media project to state and local
259 governments in determining the motion picture incentive amount.
261 economic activity in rural areas of the state or that has Utah content, such as recognizing that
262 the production was made in the state or uses Utah as Utah in the production.
264 motion picture company or digital media company that meets the standards established under
265 this section and satisfies the other qualification requirements under this part.
266 (b) Subject to Subsection 63M-1-1803 (3), the office may commit or authorize a motion
267 picture incentive:
268 (i) to a motion picture company [
269 dollars left in the state by the motion picture company[
270 receive an additional 5%, not to exceed 25% of the dollars left in the state by the motion
271 picture company if the company fulfills certain requirements determined by the office
273 (A) employing a significant percentage of cast and crew from Utah;
274 (B) highlighting the state of Utah and the Utah Film Commission in the motion picture
275 credits; or
276 (C) other promotion opportunities as agreed upon by the office and the motion picture
277 company; and
278 (ii) to a digital media company, if the incentive does not exceed 100% of the new state
279 revenue less the considerations under Subsection (3), but not to exceed 20% of the dollars left
280 in the state by the digital media company.
281 (c) A cash rebate incentive from the Motion Picture Incentive Restricted Account may
282 not exceed $500,000 per state approved production for a motion picture project
283 (d) The office may not give a cash rebate incentive from the Motion Picture Incentive
284 Restricted Account for a digital media project.
286 company or digital media company under Subsection [
287 (a) details the requirements that the motion picture company or digital media company
288 must meet to qualify for an incentive under this part;
289 (b) specifies:
290 (i) the nature of the incentive; and
291 (ii) the maximum amount of the motion picture incentive that the motion picture
292 company or digital media company may earn for a taxable year and over the life of the
294 (c) establishes the length of time over which the motion picture company or digital
295 media company may claim the motion picture incentive;
296 (d) requires the motion picture company or digital media company to retain records
297 supporting its claim for a motion picture incentive for at least four years after the motion
298 picture company or digital media company claims the incentive under this part; and
299 (e) requires the motion picture company or digital media company to submit to audits
300 for verification of the claimed motion picture incentive.
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