Senate File 2283 - Introduced SENATE FILE BY DOTZLER (COMPANION TO LSB 6005HH BY DAVITT) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act creating a film promotion program and fund, providing tax 2 credits and exemptions, and including effective and 3 retroactive applicability dates. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6005SS 81 6 tm/cf/24 PAG LIN 1 1 Section 1. NEW SECTION. 15.391 SHORT TITLE. 1 2 This part shall be known as the "Film Promotion Program". 1 3 Sec. 2. NEW SECTION. 15.392 PURPOSE. 1 4 The purpose of the film promotion program is to assist 1 5 legitimate film, television, and video producers in the making 1 6 of film, television, and video projects in the state and to 1 7 increase the fiscal impact on the state's economy of film, 1 8 television, and video projects produced in the state. 1 9 Sec. 3. NEW SECTION. 15.393 FILM PROMOTION PROGRAM. 1 10 1. The department shall establish and administer a film 1 11 promotion program that will provide for the registration of 1 12 projects involving films that are to be shot on location in 1 13 the state. A film project that is registered under the 1 14 program is entitled to the assistance provided in subsection 1 15 2. A fee shall not be charged for registering. The 1 16 department shall not register a film project unless the 1 17 department determines that all of the following are met: 1 18 a. The project is a legitimate effort to produce an entire 1 19 film, television, or video episode or a film, television, or 1 20 video segment in the state. 1 21 b. The film project will have an economic impact on the 1 22 economy of the state or locality sufficient to justify 1 23 assistance under the program. 1 24 c. The film project will further tourism, economic 1 25 development, and population retention or growth in the state 1 26 or locality. 1 27 d. Other criteria established by rule relating to the 1 28 economic impact and promotional aspects of the film project on 1 29 the state or locality. 1 30 2. A film project registered with the department under the 1 31 program is eligible for the following assistance: 1 32 a. (1) For tax years beginning on or after January 1, 1 33 2006, a qualified expenditure tax credit shall be allowed 1 34 against the taxes imposed in chapter 422, divisions II, III, 1 35 and V, and in chapter 432, and against the moneys and credits 2 1 tax imposed in section 533.24, for a portion of a taxpayer's 2 2 qualified expenditures in a film project registered under the 2 3 program. The tax credit shall equal twenty=five percent of 2 4 the qualified expenditures on a film project. An individual 2 5 may claim a tax credit under this paragraph "a" of a 2 6 partnership, limited liability company, S corporation, estate, 2 7 or trust electing to have income taxed directly to the 2 8 individual. The amount claimed by the individual shall be 2 9 based upon the pro rata share of the individual's earnings 2 10 from the partnership, limited liability company, S 2 11 corporation, estate, or trust. Any tax credit in excess of 2 12 the taxpayer's liability for the tax year may be credited to 2 13 the tax liability for the following five years or until 2 14 depleted, whichever is earlier. A tax credit shall not be 2 15 carried back to a tax year prior to the tax year in which the 2 16 taxpayer claims the tax credit. A tax credit shall not be 2 17 transferable to any other taxpayer. 2 18 (2) A qualified expenditure by a taxpayer is a payment to 2 19 an Iowa resident or an Iowa=based business for services 2 20 directly related to the registered film project. 2 21 b. For tax years beginning on or after January 1, 2006, an 2 22 investment tax credit shall be allowed against the taxes 2 23 imposed in chapter 422, divisions II, III, and V, and in 2 24 chapter 432, and against the moneys and credits tax imposed in 2 25 section 533.24, for a portion of a taxpayer's investment in a 2 26 film project registered under the program. The tax credit 2 27 shall equal ten percent of the investment in the film project. 2 28 An individual may claim a tax credit under this paragraph of a 2 29 partnership, limited liability company, S corporation, estate, 2 30 or trust electing to have income taxed directly to the 2 31 individual. The amount claimed by the individual shall be 2 32 based upon the pro rata share of the individual's earnings 2 33 from the partnership, limited liability company, S 2 34 corporation, estate, or trust. Any tax credit in excess of 2 35 the taxpayer's liability for the tax year may be credited to 3 1 the tax liability for the following five years or until 3 2 depleted, whichever is earlier. A tax credit shall not be 3 3 carried back to a tax year prior to the tax year in which the 3 4 taxpayer claims the tax credit. A tax credit shall not be 3 5 transferable to any other taxpayer. A taxpayer shall not 3 6 claim a tax credit under this paragraph "b" for qualified 3 7 expenditures for which a tax credit is claimed under paragraph 3 8 "a". 3 9 c. The sales and use tax exemptions provided in section 3 10 423.3, subsection 89, for purchases of tangible personal 3 11 property or services to be used for the film project in the 3 12 state. 3 13 d. A registration fee exemption for a vehicle used in the 3 14 production of a film pursuant to section 321.105. 3 15 e. A person producing a film project registered under the 3 16 program may apply to the department for purposes of being 3 17 reimbursed for film production costs charged by a local 3 18 government. Such costs include, but are not limited to, costs 3 19 for the use of public safety personnel and public equipment. 3 20 Reimbursement shall be provided from moneys in the film 3 21 promotion fund created in subsection 4. 3 22 3. The department shall promote the program and the 3 23 assistance available under the program on an internet website. 3 24 4. A film promotion fund is created in the state treasury 3 25 under the control of the department and consisting of any 3 26 moneys appropriated by the general assembly and any other 3 27 moneys available to and obtained or accepted by the department 3 28 for placement in the fund. Payments of interest, repayments 3 29 of moneys loaned pursuant to this section, and recaptures of 3 30 loans shall be deposited in the fund. The fund shall be used 3 31 to provide financial assistance under the film promotion 3 32 program. Moneys in the fund are not subject to section 8.33. 3 33 Notwithstanding section 12C.7, interest or earnings on moneys 3 34 in the fund shall be credited to the fund. 3 35 Sec. 4. Section 321.105, Code 2005, is amended by adding 4 1 the following new unnumbered paragraph: 4 2 NEW UNNUMBERED PARAGRAPH. A person whose vehicle is used 4 3 in the production of a film registered under the film 4 4 promotion program pursuant to section 15.393 is exempt from 4 5 payment of any registration fee for a period of one=hundred= 4 6 eighty days. In order to receive the film promotion program 4 7 exemption, the applicant must submit a certification issued by 4 8 the department of economic development that the vehicle was 4 9 used in a film project registered under the program. 4 10 Sec. 5. NEW SECTION. 422.11M FILM QUALIFIED EXPENDITURE 4 11 TAX CREDIT. 4 12 The taxes imposed under this division, less the credits 4 13 allowed under sections 422.12 and 422.12B, shall be reduced by 4 14 a qualified expenditure tax credit authorized pursuant to 4 15 section 15.393, subsection 2, paragraph "a". 4 16 Sec. 6. NEW SECTION. 422.11N FILM INVESTMENT TAX CREDIT. 4 17 The taxes imposed under this division, less the credits 4 18 allowed under sections 422.12 and 422.12B, shall be reduced by 4 19 an investment tax credit authorized pursuant to section 4 20 15.393, subsection 2, paragraph "b". 4 21 Sec. 7. Section 422.33, Code Supplement 2005, is amended 4 22 by adding the following new subsection: 4 23 NEW SUBSECTION. 20. The taxes imposed under this division 4 24 shall be reduced by a qualified expenditure tax credit 4 25 authorized pursuant to section 15.393, subsection 2, paragraph 4 26 "a". 4 27 Sec. 8. Section 422.33, Code Supplement 2005, is amended 4 28 by adding the following new subsection: 4 29 NEW SUBSECTION. 21. The taxes imposed under this division 4 30 shall be reduced by an investment tax credit authorized 4 31 pursuant to section 15.393, subsection 2, paragraph "b". 4 32 Sec. 9. Section 422.60, Code Supplement 2005, is amended 4 33 by adding the following new subsection: 4 34 NEW SUBSECTION. 11. The taxes imposed under this division 4 35 shall be reduced by a qualified expenditure tax credit 5 1 authorized pursuant to section 15.393, subsection 2, paragraph 5 2 "a". 5 3 Sec. 10. Section 422.60, Code Supplement 2005, is amended 5 4 by adding the following new subsection: 5 5 NEW SUBSECTION. 12. The taxes imposed under this division 5 6 shall be reduced by an investment tax credit authorized 5 7 pursuant to section 15.393, subsection 2, paragraph "b". 5 8 Sec. 11. Section 423.3, Code Supplement 2005, is amended 5 9 by adding the following new subsection: 5 10 NEW SUBSECTION. 89. The sales price of the following 5 11 tangible personal property sold or services furnished to a 5 12 film production company for the use of a film project 5 13 registered with the department of economic development 5 14 pursuant to section 15.393: 5 15 a. Vehicle rentals. 5 16 b. Camera equipment. 5 17 c. Lighting, stage, equipment, and supplies. 5 18 d. Sound equipment and supplies. 5 19 e. Recording equipment and supplies. 5 20 f. Costumes, wardrobe, and construction materials. 5 21 g. Props, scenery, and construction materials. 5 22 h. Film, digital processing, and tape. 5 23 i. Design supplies and equipment. 5 24 j. Special effects supplies and equipment. 5 25 k. Fabrication, printing, or production of scripts. 5 26 l. Storyboards. 5 27 m. Other purchases deemed unique and essential by the 5 28 department of economic development film office and identified 5 29 by rule. 5 30 Sec. 12. NEW SECTION. 432.12H FILM QUALIFIED EXPENDITURE 5 31 TAX CREDIT. 5 32 The tax imposed under this chapter shall be reduced by a 5 33 qualified expenditure tax credit authorized pursuant to 5 34 section 15.393, subsection 2, paragraph "a". 5 35 Sec. 13. NEW SECTION. 432.12I FILM INVESTMENT TAX 6 1 CREDIT. 6 2 The tax imposed under this chapter shall be reduced by an 6 3 investment tax credit authorized pursuant to section 15.393, 6 4 subsection 2, paragraph "b". 6 5 Sec. 14. Section 533.24, Code Supplement 2005, is amended 6 6 by adding the following new subsection: 6 7 NEW SUBSECTION. 8. The moneys and credits tax imposed 6 8 under this section shall be reduced by a qualified expenditure 6 9 tax credit authorized pursuant to section 15.393, subsection 6 10 2, paragraph "a". 6 11 Sec. 15. Section 533.24, Code Supplement 2005, is amended 6 12 by adding the following new subsection: 6 13 NEW SUBSECTION. 9. The moneys and credits tax imposed 6 14 under this section shall be reduced by an investment tax 6 15 credit authorized pursuant to section 15.393, subsection 2, 6 16 paragraph "b". 6 17 Sec. 16. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES. 6 18 This Act, being deemed of immediate importance, takes effect 6 19 upon enactment and is retroactively applicable to January 1, 6 20 2006, for tax years beginning on and after that date. 6 21 EXPLANATION 6 22 This bill creates a film promotion program and fund, 6 23 provides for tax credits and exemptions, and includes 6 24 effective and retroactive applicability dates. 6 25 The bill requires the department of economic development to 6 26 establish and administer a film promotion program that will 6 27 provide for the registration of projects involving films that 6 28 are to be shot on location in the state. The bill prohibits 6 29 the department from registering a film project unless the 6 30 department determines that the film project is a legitimate 6 31 effort to produce an entire film, television, or video episode 6 32 or a film, television, or video segment in the state, the film 6 33 project will have an economic impact on the economy of the 6 34 state or locality sufficient to justify assistance under the 6 35 program, the film project will further tourism and population 7 1 retention or growth in the state or locality, and the film 7 2 project satisfies any other criteria established by rule by 7 3 the department. The bill creates a film promotion fund in the 7 4 state treasury under the control of the department to be used 7 5 to provide financial assistance under the film promotion 7 6 program. 7 7 The bill provides that a film project registered with the 7 8 department under the program is eligible for the following 7 9 assistance: 7 10 1. QUALIFIED EXPENDITURE TAX CREDIT. The bill allows a 7 11 qualified expenditure tax credit for 25 percent of a 7 12 taxpayer's qualified expenditures in a film project registered 7 13 under the program. The tax credit is allowed against personal 7 14 and corporate income tax liabilities, franchise tax 7 15 liabilities for financial institutions, insurance premium tax 7 16 liabilities, and credit union moneys and credits tax 7 17 liabilities. The bill provides that a qualified expenditure 7 18 is a payment to an Iowa resident or an Iowa=based business for 7 19 services directly related to the registered film project. The 7 20 bill provides that any tax credit in excess of the taxpayer's 7 21 liability for the tax year may be credited to the tax 7 22 liability for the following five years or until depleted, 7 23 whichever is earlier. The bill prohibits a tax credit from 7 24 being carried back to a tax year prior to the tax year in 7 25 which the taxpayer claims the tax credit and provides that a 7 26 tax credit shall not be transferable to any other taxpayer. 7 27 2. INVESTMENT TAX CREDIT. The bill allows an investment 7 28 tax credit for 10 percent of a taxpayer's investment in a film 7 29 project registered under the program. The tax credit is 7 30 allowed against personal and corporate income tax liabilities, 7 31 franchise tax liabilities for financial institutions, 7 32 insurance premium tax liabilities, and credit union moneys and 7 33 credits tax liabilities. The bill provides that any tax 7 34 credit in excess of the taxpayer's liability for the tax year 7 35 may be credited to the tax liability for the following five 8 1 years or until depleted, whichever is earlier. The bill 8 2 provides that a tax credit shall not be carried back to a tax 8 3 year prior to the tax year in which the taxpayer claims the 8 4 tax credit and shall not be transferable to any other 8 5 taxpayer. The bill prohibits an investment tax credit from 8 6 being claimed for qualified expenditures for which a qualified 8 7 expenditure tax credit is claimed. 8 8 3. SALES AND USE TAX EXEMPTION. The bill allows a sales 8 9 and use tax exemption for purchases of certain tangible 8 10 personal property or services to be used for the film project 8 11 in the state. 8 12 4. VEHICLE REGISTRATION FEE EXEMPTION. The bill provides 8 13 for a registration fee exemption for a vehicle used in the 8 14 production of a film. 8 15 5. LOCAL CHARGES REIMBURSEMENT. The bill allows a person 8 16 producing a film project registered under the program to apply 8 17 to the department for purposes of being reimbursed for film 8 18 production costs charged by a local government. 8 19 The bill takes effect upon enactment and is retroactively 8 20 applicable to January 1, 2006, for tax years beginning on and 8 21 after that date. 8 22 LSB 6005SS 81 8 23 tm:rj/cf/24.1