House File 818 - Introduced HOUSE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 631) (SUCCESSOR TO HSB 166) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the eligibility for tax credits and income 2 reductions for qualified expenditures under the film, 3 television, and video project promotion program, providing for 4 a fee, and providing an applicability date provision. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1235HZ 83 7 tw/mg:sc/5 PAG LIN 1 1 Section 1. Section 15.393, subsection 1, unnumbered 1 2 paragraph 1, Code 2009, is amended to read as follows: 1 3 The department shall establish and administer a film, 1 4 television, and video project promotion program that provides 1 5 for the registration of projects to be shot on location in the 1 6 state. A project that is registered under the program is 1 7 entitled to the assistance provided in subsection 2. A fee 1 8shall notmay be charged for registering. The amount of the 1 9 fee charged for registering shall be determined by the 1 10 department by rule. Registration fees collected by the 1 11 department under this section shall be used to administer the 1 12 program. The department shall not register a project unless 1 13 the department determines that all of the following criteria 1 14 are met: 1 15 Sec. 2. Section 15.393, subsection 2, paragraph a, 1 16 subparagraph (2), Code 2009, is amended to read as follows: 1 17 (2) A qualified expenditure by a taxpayer is a payment to 1 18 an Iowa resident or an Iowa=based business for the sale, 1 19 rental, or furnishing of tangible personal property or for 1 20 services directly related to the registered project including 1 21 but not limited to aircraft, vehicles, equipment, materials, 1 22 supplies, accounting, animals and animal care, artistic and 1 23 design services, graphics, construction, data and information 1 24 services, delivery and pickup services, labor and personnel, 1 25 lighting, makeup and hairdressing, film, music, photography, 1 26 sound, video and related services, printing, research, site 1 27 fees and rental, travel related to Iowa distant locations, 1 28 trash removal and cleanup, and wardrobe.For the purposes of 1 29 this subparagraph, "labor and personnel" does not include the 1 30 director, producers, or cast members other than extras and 1 31 stand=ins.1 32 (a) For purposes of this subparagraph, "labor and 1 33 personnel" includes compensation paid to the principal 1 34 producer, principal director, and principal cast members if 1 35 the principal producer, principal director, or principal cast 2 1 member is an Iowa resident or an Iowa=based business, and if 2 2 the compensation paid meets one of the following conditions: 2 3 (i) If the qualified expenditures are at least ten million 2 4 dollars but less than twenty million dollars, the compensation 2 5 paid to each principal producer, principal director, and 2 6 principal cast member does not exceed two hundred fifty 2 7 thousand dollars each. 2 8 (ii) If the qualified expenditures are at least twenty 2 9 million dollars, the compensation paid to each principal 2 10 producer, principal director, and principal cast member does 2 11 not exceed one million dollars each. 2 12 (b) For purposes of this subparagraph, "labor and 2 13 personnel" includes compensation paid to personnel other than 2 14 the principal producer, principal director, or principal cast 2 15 members if the compensation paid meets one of the following 2 16 conditions: 2 17 (i) If the qualified expenditures are less than ten 2 18 million dollars, the compensation paid to labor and personnel 2 19 other than the principal producer, the principal director, and 2 20 principal cast members, does not exceed one hundred fifty 2 21 thousand dollars each. 2 22 (ii) If the qualified expenditures are at least ten 2 23 million dollars but less than twenty million dollars, the 2 24 compensation paid to labor and personnel other than the 2 25 principal producer, the principal director, and the principal 2 26 cast members, does not exceed two hundred thousand dollars 2 27 each. 2 28 (iii) If the qualified expenditures are at least twenty 2 29 million dollars, the compensation paid to labor and personnel 2 30 other than the principal producer, the principal director, and 2 31 the principal cast members, does not exceed three hundred 2 32 thousand dollars each. 2 33 (c) The department of revenue, in consultation with the 2 34 department of economic development, shall by rule establish a 2 35 list of eligible expenditures. 3 1 Sec. 3. Section 15.393, subsection 2, paragraph c, Code 3 2 2009, is amended to read as follows: 3 3 c. Fortax years beginning on or after January 1, 2007,3 4 the tax year in which a qualified expenditure occurred, and 3 5 for the ensuing three tax years, a taxpayer may claim a 3 6 reduction in adjusted gross income not to exceed in a tax year 3 7 twenty=five percent of the amount of the qualified expenditure 3 8 for purposes of taxes imposed in chapter 422, divisions II and 3 9 III, for payments received from the sale, rental, or 3 10 furnishing of tangible personal property or services directly 3 11 related to the production of a project registered under this 3 12 section which meets the criteria of a qualified expenditure 3 13 under paragraph "a", subparagraph (2). 3 14 Sec. 4. APPLICABILITY DATE. This Act applies to projects 3 15 registered on or after July 1, 2009. 3 16 EXPLANATION 3 17 This bill relates to the eligibility for tax credits for 3 18 qualified expenditures and deduction from income received from 3 19 certain qualified expenditures under the film, television, and 3 20 video project promotion program. 3 21 The bill allows the department to charge a fee to register 3 22 a project with the program. Current law does not allow a 3 23 registration fee. The amount of the fee is determined by rule 3 24 and must be used to administer the program. 3 25 The program currently does not allow salary expenditures 3 26 for directors, producers, and principal cast members, or other 3 27 personnel to be counted as qualified expenditures under the 3 28 program. The bill allows a portion of the compensation paid 3 29 to such persons to be counted toward a taxpayer's qualified 3 30 expenditures if the person is an Iowa resident or Iowa=based 3 31 business. 3 32 The bill provides that for principal producers, directors, 3 33 and cast members, as much as $250,000 of compensation paid may 3 34 be counted if the qualified expenditures are at least $10 3 35 million but less than $20 million. As much as $1 million of 4 1 compensation paid may be counted if the qualified expenditures 4 2 are at least $20 million. 4 3 The bill also provides that for personnel other than 4 4 principal producers, directors, and cast members, as much as 4 5 $150,000 of compensation paid may be counted if the qualified 4 6 expenditures are less than $10 million. As much as $200,000 4 7 of compensation paid may be counted if the qualified 4 8 expenditures are at least $10 million but less than $20 4 9 million. As much as $300,000 may be counted if the qualified 4 10 expenditures are at least $20 million. 4 11 The program currently allows vendors to take a reduction in 4 12 adjusted gross income for qualified expenditures in the same 4 13 year as the expenses are incurred. The bill makes the credit 4 14 available for the tax year in which the expenditures were 4 15 incurred and for three ensuing tax years. 4 16 The bill applies to projects registered on or after July 1, 4 17 2009. 4 18 LSB 1235HZ 83 4 19 tw/sc/5