2013 -- H 5634

=======

LC01587

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO TAXATION - MOTION PICTURE TAX CREDIT

     Introduced By: Representatives O`Neill, Lombardi, and Lima

     Date Introduced: February 27, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Sections 44-31.2-5 and 44-31.2-6 of the General Laws in Chapter 44-31.2

1-2

entitled "Motion Picture Production Tax Credits" are hereby amended to read as follows:

1-3

     44-31.2-5. Motion picture production company tax credit. -- (a) A motion picture

1-4

production company shall, subject to general assembly approval be allowed a credit to be

1-5

computed as provided in this chapter against a tax imposed by chapters 11, 14, 17 and 30 of this

1-6

title. The amount of the credit shall be twenty-five percent (25%) of the state certified production

1-7

costs incurred directly attributable to activity within the state, provided that the primary locations

1-8

are within the state of Rhode Island and the total production budget as defined herein is a

1-9

minimum of one hundred thousand dollars ($100,000). The credit shall be earned in the taxable

1-10

year in which production in Rhode Island is completed, as determined by the film office in final

1-11

certification pursuant to subsection 44-31.2-6(c).

1-12

      (b) For the purposes of this section: "total production budget" means and includes the

1-13

motion picture production company's pre-production, production and post-production costs

1-14

incurred for the production activities of the motion picture production company in Rhode Island

1-15

in connection with the production of a state-certified production. The budget shall not include

1-16

costs associated with the promotion or marketing of the film, video or television product.

1-17

      (c) Notwithstanding subsection (a), the credit shall not exceed five million dollars

1-18

($5,000,000) and shall be allowed against the tax for the taxable period in which the credit is

1-19

earned and can be carried forward for not more than three (3) succeeding tax years. Pursuant to

1-20

rules promulgated by the tax administrator, the administrator may The general assembly may

2-1

issue a waiver of the five million dollar ($5,000,000) tax credit cap for any feature-length film or

2-2

television series up to the remaining funds available pursuant to section (e).

2-3

      (d) Credits allowed to a motion picture production company, which is a subchapter S

2-4

corporation, partnership, or a limited liability company that is taxed as a partnership, shall be

2-5

passed through respectively to persons designated as partners, members or owners on a pro rata

2-6

basis or pursuant to an executed agreement among such persons designated as subchapter S

2-7

corporation shareholders, partners, or members documenting an alternate distribution method

2-8

without regard to their sharing of other tax or economic attributes of such entity.

2-9

      (e) No more than fifteen million dollars ($15,000,000) in total may be issued for any tax

2-10

year beginning after December 31, 2007 for motion picture tax credits pursuant to this chapter

2-11

and/or musical and theatrical production tax credits pursuant to chapter 31.3 of this title. Said

2-12

credits shall be equally available to motion picture productions and musical and theatrical

2-13

productions. No specific amount shall be set aside for either type of production.

2-14

     44-31.2-6. Certification and administration. -- (a) Initial certification of a production. -

2-15

The applicant shall properly prepare, sign and submit to the film office an application for initial

2-16

certification of the Rhode Island production. The application shall include such information and

2-17

data as the film office deems necessary for the proper evaluation and administration of said

2-18

application, including, but not limited to, any information about the motion picture production

2-19

company, and a specific Rhode Island motion picture. The film office shall review the completed

2-20

application and determine whether it meets the requisite criteria and qualifications for the initial

2-21

certification for the production. If the initial certification is granted, the film office shall issue a

2-22

notice of initial certification of the motion picture production to the motion picture production

2-23

company and to the tax administrator. The notice shall state that, after appropriate review, the

2-24

initial application meets the appropriate criteria for conditional eligibility. The notice of initial

2-25

certification will provide a unique identification number for the production and is only a

2-26

statement of conditional eligibility for the production and, as such, does not grant or convey any

2-27

Rhode Island tax benefits.

2-28

      (b) Final certification of a production. - Upon completion of the Rhode Island production

2-29

activities, the applicant shall request a certificate of good standing from the Rhode Island division

2-30

of taxation. Such certificates shall verify to the film office the motion picture production

2-31

company's compliance with the requirements of subsection 44-31.2-2(5). The applicant shall

2-32

properly prepare, sign and submit to the film office an application for final certification of the

2-33

production and which must include the certificate of good standing from the division of taxation.

2-34

In addition, the application shall contain such information and data as the film office determines

3-1

is necessary for the proper evaluation and administration, including, but not limited to, any

3-2

information about the motion picture production company, its investors and information about the

3-3

production previously granted initial certification. The final application shall also contain a cost

3-4

report and an "accountant's certification". The film office and tax administrator may rely without

3-5

independent investigation, upon the accountant's certification, in the form of an opinion,

3-6

confirming the accuracy of the information included in the cost report. Upon review of a duly

3-7

completed and filed application, the film office will make a determination recommendation to the

3-8

general assembly pertaining to the final certification of the production. The application shall be

3-9

forwarded to the general assembly for final approval. Within ninety (90) days after the division of

3-10

taxation's receipt of the motion picture production company final certification and cost report and

3-11

general assembly approval, the division of taxation shall issue a certification of the amount of

3-12

credit for which the motion picture production company qualifies under section 44-31.2-5. To

3-13

claim the tax credit, the division of taxation's certification as to the amount of the tax credit shall

3-14

be attached to all state tax returns on which the credit is claimed.

3-15

      (c) Final certification and credits. - Upon determination that the motion picture

3-16

production company qualifies for final certification, and has received general assembly approval,

3-17

the film office shall issue a letter to the production company indicating "certificate of completion

3-18

of a state certified production". A motion picture production company is prohibited from using

3-19

state funds, state loans or state guaranteed loans to qualify for the motion picture tax credit. All

3-20

documents that are issued by the film office pursuant to this section shall reference the

3-21

identification number that was issued to the production as part of its initial certification.

3-22

      (d) The director of the department of administration, in consultation as needed with the

3-23

tax administrator, shall promulgate such rules and regulations as are necessary to carry out the

3-24

intent and purposes of this chapter in accordance with the general guidelines provided herein for

3-25

the certification of the production and the resultant production credit.

3-26

      (e) The tax administrator of the division of taxation, in consultation with the director of

3-27

the Rhode Island film and television office, shall promulgate such rules and regulations as are

3-28

necessary to carry out the intent and purposes of this chapter in accordance with the general

3-29

guidelines for the tax credit provided herein.

3-30

      (f) Any motion picture production company applying for the credit shall be required to

3-31

reimburse the division of taxation for any audits required in relation to granting the credit.

4-32

     SECTION 2. This act shall take effect upon passage.

=======

LC01587

=======

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - MOTION PICTURE TAX CREDIT

***

5-1

     This act would require general assembly approval for all motion picture production

5-2

company tax credits.

5-3

     This act would take effect upon passage.

=======

LC01587

=======