H. B. 3100
(By Delegates Reynolds, Craig, Morgan, Stephens,
Sobonya and C. Miller)
[Introduced February 16, 2007; referred to the
Committee on Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated
§11-13W-1, §11-13W-2,
§11-13W-3, §11-13W-4, §11-13W-5, §11-13W-6,
§11-13W-7,
§11-13W-8, §11-13W-9 and §11-13W-10, all relating to providing
a tax incentive for production companies; providing tax
credits for private resident investors; providing for motion
picture infrastructure development; and providing for related
matters.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated,
§11-13W-1, §11-13W-2,
§11-13W-3, §11-13W-4, §11-13W-5, §11-13W-6,
§11-13W-7, §11-13W-8,
§11-13W-9 and §11-13W-10, all to read as follows:
ARTICLE 13W. MOTION PICTURE TAX CREDIT.
§11-13W-1. Definitions.
When used in this article, unless the context clearly requires
a different meaning:
(a) "State-certified production" means a production approved
by the Governor's Office, the West Virginia Film Office, and the
West Virginia Development Office produced by a motion picture or
television production company filming in West Virginia which has a
viable commercial distribution plan;
(b) "Motion picture" means a nationally distributed
feature-length film, video, television series, or commercial made
in West Virginia, in whole or in part, for theatrical or television
viewing, or as a television pilot. The term "motion picture" does
not include the production of television coverage of news and
athletic events;
(c) "Motion picture production company" means a company
engaged in the business of producing nationally distributed motion
pictures as defined in this section. "Motion picture production
company" does not mean or include any company owned, affiliated, or
controlled, in whole or in part, by any company or person which is
in default on a loan made by the state or a loan guaranteed by the
state, nor with any company or person who has ever declared
bankruptcy under which an obligation of the company or person to
pay or repay public funds or moneys was discharged as a part of
such bankruptcy;
(d) "Production expenditures" means preproduction, production,
and postproduction expenditures directly incurred in this state
that are directly used in a state-certified production, including
costs associated with the following: Filming, acquiring or
improving filming sets and locations, wardrobe, editing, cast and
crew expenses incurred within the state, music: Provided, That the
music is performed, composed, or recorded by a West Virginia
resident musician, transportation, and repair services for which a
separate charge is made. This term does not include postproduction
expenditures for marketing and distribution, any indirect costs, or
any amounts that are paid to persons or entities as a result of
their participation in profits from the exploitation of the
production;
(e) "State-certified infrastructure project" means an
infrastructure project approved by the Governor's Office, the West
Virginia Film Office, and the West Virginia Development Office, not
including movie theaters or other commercial exhibition facilities;
(f) "Resident" means any person domiciled in West Virginia and
any other person who maintains a permanent place of abode within
the state and spends an aggregate of more than six months of each
year within the state;
(g) "Expended in the state" means tangible property which is
acquired from a source within the state and services procured and
performed within the state;
(h) "Payroll" means all salary, wages, and other compensation,
including related benefits sourced or apportioned to West Virginia;
(i) "Production" means, in the case of an episodic television
series, an entire season of episodes.
§11-13W-2. Tax credits for motion picture companies.
(a) Credits are computed based on all of the taxpayer's
qualifying expenses, incurred with respect to the production, not
just the qualifying expenses incurred during the taxable year.
(b) A qualified production is eligible for a tax credit up to
fifteen percent for persons employed in conjunction with a West
Virginia production. The wages of all crew, cast and extras,
loan-out corporations and personal service companies that meet the
following requirements are eligible for the credit:
(1) An individual wage must be less than one million dollars
for the production to be included;
(2) Wages must be subject to the West Virginia withholding
tax;
(3) The credit shall be equal to ten percent for qualified
productions when the total costs in West Virginia are between two
hundred fifty thousand dollars and one million dollars.
(4) The credit shall be equal to fifteen percent for qualified
productions when the total production costs in West Virginia exceed
one million dollars.
(c) A qualified production is eligible for a tax credit up to
fifteen percent of all goods and services purchased, rented, or
leased by the production company from a West Virginia supplier.
Qualified purchases include all production expenditures procured
from a West Virginia company. Productions must spend at least one
million dollars in the state to receive the fifteen percent credit.
Productions spending between two hundred fifty thousand dollars and
$999,999 in the state are eligible for a ten percent tax credit.
Certain big-budget expenditures made "out-of-state" qualify for a
ten percent tax credit, such as camera rental, film stock,
catering, rolling stocks, and special equipment if the adequate
purchase cannot be found in West Virginia.
(d) The maximum total tax credit is capped at $5 million for
a feature film.
(e) A taxpayer may claim the credit on a tax return filed for
the taxable year in which the production activities are completed.
The return must state the name of the production, a description of
production, and a detailed accounting of the qualifying expenses
with respect to which a credit is claimed.
§11-13W-3. Restrictions.
This article does not apply to any production that satisfies
one of the following conditions:
(a) It is political advertising;
(b) It is a television production of a news program or
sporting event;
(c) It contains material that is obscene as defined in section
five-b, article twelve, chapter eight; or
(d) It is a radio production.
§11-13W-4. Sales tax exemptions.
(a) State sales tax may not be charged for purchases, rentals,
and leases for all production companies spending at least two
hundred fifty thousand dollars or more in West Virginia.
(b) Production companies spending at least two hundred fifty
thousand dollars in the state will be exempt from sales and
occupancy tax on hotel rooms within the state that are occupied by
a guest for thirty or more consecutive days.
(c) A detailed accounting of production expenses must be
presented to the Governor's Office to receive the sales tax waiver
certificate.
§11-13W-5. Location fee exemption.
For all state-owned properties, a location fee will not be
charged. Production companies must spend at least two hundred
fifty thousand dollars in the state to receive this exemption.
§11-13W-6. Investor tax credits.
A tax credit against state income tax is created for residents who invest in a state-certified production. The tax credit shall
be earned by investors at the time expenditures are made by the
motion picture production company. The tax credit shall be
calculated as a percentage of the total base investment dollars
certified per project. If the total base investment is greater
than one hundred thousand dollars and less than or equal to five
million dollars, each investor shall be allowed a tax credit of
fifteen percent of the actual cash investment made by that
taxpayer. To the extent that the base investment is expended on
payroll for residents employed in connection with a state-certified
production, each investor shall be allowed an additional tax credit
of five percent of such payroll investment: Provided, That, if the
payroll to any one person exceeds one million dollars, this
additional tax credit shall exclude any salary for that person that
exceeds one million dollars. Production wage earners are not
eligible for this tax credit. Applicants for the motion picture
investor tax credit shall submit an application to the Governor's
Office providing detailed description of the project and the
investment. The West Virginia Film Office will provide investors
with applications on request.
§11-13W-7. Disclosure of information.
A taxpayer allowed credit or exemption under this article must
maintain and make available for inspection any information or
records required by the State Tax Department. The taxpayer has the burden of proving eligibility for a credit and the amount of the
credit. The State Tax Department may consult with the Governor's
Office and the West Virginia Film Office in order to determine the
amount of qualifying expenses.
§11-13W-8. Certification.
Prior to the certification of a state-certified production,
the motion picture production company shall submit to the
Governor's Office a cost report of production expenditures audited
and certified by an independent certified public accountant as
determined by rule. The Governor's Office will review the
production expenses and issue a tax credit certification letter
upon approval. A unique identifying number will be assigned for
each state-certified production. Motion picture production
companies applying for the wage tax credit must remit a schedule to
the State Tax Department including the names of all persons
receiving salaries, wages, or other forms of compensation for
services performed in the state in connection with the production,
along with the address, taxpayer identification number, and the
amount of compensation for services performed in the state received
by each person. The Governor's Office shall submit a written
report to the Joint Committee on Government and Finance annually
sixty days prior to the start of the regular session detailing the
overall impact of the tax credits, the amount of the tax credits
issued, the number of new jobs created, the amount of new infrastructure developed in the state, the economic impact of the
tax credits and film industry, and any other factors that describe
the impact of the program.
§11-13W-9. Audit.
The Department of Revenue shall audit the cost report by the
motion picture production company.
§11-13W-10. Continuation of tax credit.
The provisions of this section shall be of no force or effect
after the thirty-first day of December, two thousand fourteen.
NOTE: The purpose of this bill is to create a tax credit for
motion picture companies who spend at least $250,000 in West
Virginia on state-certified productions. It also provides a tax
credit for investors in motion pictures. This bill sets forth the
qualifications for eligibility for the tax credit while providing
restrictions and a maximum credit that may be obtained. Finally,
the bill provides that motion picture companies have the burden of
proving eligibility for this tax credit and for certifying their
productions with the state.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.