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Introduced Version Senate Bill 338 History

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Key: Green = existing Code. Red = new code to be enacted

Senate Bill No. 338

(By Senator Palumbo, Gaunch, Snyder, M. Hall, Williams, Blair, Unger, Trump and Stollings)

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[Introduced January 27, 2015; referred to the Committee on Economic Development; and then to the Committee on Finance.]

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A BILL to amend and reenact §11-13X-3 and §11-13X-5 of the Code of West Virginia, 1931, as amended, all relating to the West Virginia Film Industry Investment tax credit; defining terms; specifying amount of West Virginia Film Industry Investment tax credit authorized as percentage of qualified expenditures for purposes of calculating tax credit; decreasing percentage authorized for expenditures on projects that do not employ ten or more West Virginia residents as part of the full-time employees working on the project in West Virginia or as apprentices working in West Virginia; increasing percentage authorized for expenditures on projects that do employ ten or more West Virginia residents as part of the full-time employees working on the project in West Virginia or as apprentices working in West Virginia; and specifying effective date.

Be it enacted by the Legislature of West Virginia:

            That §11-13X-3 and §11-13X-5 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:

ARTICLE 13X. WEST VIRGINIA FILM INDUSTRY INVESTMENT ACT.

§11-13X-3. Definitions.

            (a) General. -- When used in this article, or in the administration of this article, terms defined in subsection (b) of this section have the meanings ascribed to them by this section, unless a different meaning is clearly required by the context in which the term is used.

            (b) Terms defined. --

            (1) "Commercial exploitation" means reasonable intent for public viewing for the delivery medium used.

            (2) "Direct production expenditure" means a transaction that occurs in the State of West Virginia or with a West Virginia vendor and includes:

            (A) Payment of wages, fees and costs for related fringe benefits provided for talent, management or labor that are subject to West Virginia income tax;

            (B) Payment to a personal services corporation loan-out company for the an individual's services of a performing artist if:

            (I) The personal services corporation loan-out company is subject to West Virginia income tax on those payments; and

            (ii) The performing artist individual receiving payments from the personal services corporation loan-out company is subject to West Virginia income tax; and

            (C) Any of the following provided by a vendor:

            (I) The story and scenario to be used by a qualified project;

            (ii) Set construction and operations, wardrobe, accessories and related services;

            (iii) Photography, sound synchronization, lighting and related services;

            (iv) Editing and related services;

            (v) Rental of facilities and equipment;

            (vi) Leasing of vehicles;

            (vii) Food or lodging;

            (viii) Airfare if purchased through a West Virginia-based travel agency or travel company;

            (ix) Insurance coverage and bonding if purchased through a West Virginia-based insurance agent; and

            (x) Other direct costs of producing a qualified project in accordance with generally accepted entertainment industry practices.

            (3) "Eligible company" means a person or business entity engaged in the business of producing film industry productions.

            (4) "Feature length" means in excess of forty minutes.

            (5) (4) "Film industry production" means a qualified project intended for reasonable national or international commercial exploitation.

            (6) (5) "Film office" means the West Virginia Film Office, which is a division of the West Virginia Department of Commerce.

            (6) "Loan out company" --

            (A) The term “loan out company” means and includes a corporation, partnership, limited liability company, S-corporation, association, nominee trust, or any entity other than an individual:

            (I) Which is owned and controlled by an actor, performer, director, producer, cast member, crew member or other individual who performs services used directly in a qualified project;

            (ii) Which, for contractual purposes, serves as an entity separate from the individual that owns and controls the loan out company; and

            (iii) Which contracts with an eligible company to provide such services.

            (B) The term loan out company does not include any company or entity retained by the eligible company to provide tangible property or catering, construction, trailers, equipment or transportation.

            (C) For purposes of this definition, a loan out company is "owned and controlled" by an individual, if more than fifty percent of the loan out company is owned by the individual, or, in the case of a publicly owned business, more than fifty percent of all classes or types of the stock of the loan out company is owned by the individual, and management of the loan out company is controlled directly or indirectly by the individual.

            (7) "Postproduction expenditure" means a transaction that occurs in West Virginia or with a West Virginia vendor after the completion of principal photography, including editing and negative cutting, Foley recording and sound effects, automatic dialogue replacement (also known as ADR or dubbing), special effects or visual effects, including computer-generated imagery or other effects, scoring and music editing, sound editing, beginning and end credits, soundtrack production, subtitling or addition of sound or visual effects; but not including an expenditure for advertising, marketing, distribution or expense payments.

            (8) "Qualified project" means a feature length theatrical or direct-to-video or Internet broadcast motion picture, a made-for-television motion picture, a television miniseries or series, a television pilot program, a television documentary, a television special, a commercial, a music video, commercial still photography, programming containing both audio and video entertainment or educational content created for reasonable national or international commercial exploitation, a television pilot program, a television series, and a television mini-series that incurs a minimum of $25,000 in direct production expenditures and or post-production expenditures, as defined by this subsection, in West Virginia. The term excludes news or current affairs programming, radio broadcasts, a weather or market program, an a live interview or talk show, a sporting event or show, an awards show, a gala, a production that solicits funds, a home shopping program, a program that primarily markets a product or service, political advertising or a concert production.

            A qualified project may be produced on any single media or multimedia program that:

            (A) Is fixed on film, digital medium, videotape, computer disk, laser disc or other similar delivery medium;

            (B) Can be viewed or reproduced;

            (C) Is not intended to and does not violate article eight-c, chapter sixty-one of this code;

            (D) Does not contain obscene matter or sexually explicit conduct, as defined by article eight-a, chapter sixty-one of this code;

            (E) Is intended for reasonable commercial exploitation for the delivery medium used; and

            (F) Does not contain content that portrays the State of West Virginia in a significantly derogatory manner.

            (9) "Tax Commissioner" means the West Virginia State Tax Commissioner or his or her designee.

§11-13X-5. Amount of credit allowed; limitation of the credits.

            (a) Base allowance. -- The amount of credit allowed to every eligible company, except as provided in subsection (b) of this section, is twenty-seven twenty-five percent.

            (b) Extra allowance for hiring of local workers. -- Any The amount allowed in subsection (a) of this section shall be increased by an additional four thirty-five percent if the eligible company, or its authorized payroll service company, employs ten or more West Virginia residents as part of its full-time employees working in the state or as apprentices working in the state.

            (c) Application of the credits. -- The tax credit allowed under this section shall be applied to the eligible company's state tax liability as provided in section seven of this article.

            (d) Limitation of the credits. -- No more than $5 million of the tax credits may be allocated by the film office in any given West Virginia state fiscal year. The film office shall allocate the tax credits in the order the applications therefor are received.

            (e) Effective date. --The amendments to this section, enacted in the 2015 Regular Legislative Session, shall apply to projects for which an allocation of tax credit is made by the film office under this section for fiscal years beginning on and after July 1, 2015.

 


            NOTE: The purpose of this bill is to provide a greater incentive for hiring West Virginia workers, by adjusting the amount of tax credit authorized as a percentage of qualified expenditures for purposes of calculating the West Virginia Film Industry Investment tax credit (1) by decreasing the percentage of expenditures that will qualify for tax credit on qualified projects that do not employ ten or more West Virginia residents as part of the full-time employees working on the project in West Virginia or as apprentices working in West Virginia and (2) by increasing the percentage of expenditures that will qualify for tax credit on qualified projects that do employ ten or more West Virginia residents as part of the full-time employees working on the project in West Virginia or as apprentices working in West Virginia.


            Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

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