HB2096 SFA Nelson #1 3-9
Johnson 7909
Senator Nelson moved to amend the bill by striking out everything after the enacting clause and inserting in lieu thereof the following:
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 for the services of a performing artist if:
(i) The personal services corporation is subject to West Virginia income tax on those payments; and
(ii) The performing artist receiving payments from the personal services corporation is subject to West Virginia income tax; and
(C) Any of the following provided by a West Virginia 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: Provided, That “direct production expenditure” shall not include depreciation of any item that has less than one full year of depreciable life.
(3) “Eligible company” means a person or business entity
engaged in the business of producing film industry productions. The term
excludes state agencies.
(4) “Feature length” means in excess of 40 minutes.
(5) “Film industry production” means a qualified project
intended for reasonable national or international commercial exploitation.
(6) “Film office” means
the West Virginia Film Office, which is a division of the West Virginia
Department of Commerce
“Multi-state distribution” means reaching at least one other state besides West Virginia.
(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 motion picture, a made-for-television motion
picture, a commercial a music video, commercial still photography, a
television pilot program, a television series, and a television mini-series
that incurs a minimum of $25,000 cumulative amount of $50,000
in a calendar year in direct production expenditures and post-production
expenditures ,as defined by this subsection, in West Virginia or any
combination of projects not previously claimed that would qualify for the
credit except for cost, and that combined meets or exceeds the cumulative
amount of $50,000 in a calendar year. The term excludes news or current
affairs programming, a weather or market program, an interview or a
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 §61-8C-1 et seq. of this code;
(D) Does not contain obscene matter or sexually explicit conduct, as defined by §61-8A-1 et seq. of this code;
(E) Is intended for reasonable commercial exploitation for the delivery medium used whether delivery is in state or multi-state distribution; and
(F) Does not contain
content that, in the sole discretion of the Office of Economic Development,
negatively 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-4. Creation of the tax credit.
(a) An eligible company may apply for, and the Tax Commissioner shall allow, a nonrefundable tax credit in an amount equal to the percentage specified in §11-13X-5 of this code of:
(1) Direct production
expenditures incurred in West Virginia that are directly attributable to the
production in West Virginia of a qualified project and that which
expenditures occur in West Virginia or with a West Virginia vendor; and
(2) Postproduction expenditures incurred in West Virginia that are:
(A) Directly attributable to the production of a qualified project; and
(B) For services performed in West Virginia.
(b) Expenditures utilized by an eligible company for purposes of calculating the tax credit authorized by this article shall in no event be utilized by the eligible company for the purpose of calculating or qualifying investment for claiming the economic opportunity tax credit authorized by §11-13Q-1 et seq. of this code or the manufacturing investment tax credit authorized by §11-13S-1 et seq. of this code.
§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 27 percent.
(b) Extra allowance for hiring of local workers. — Any amount allowed in subsection (a) of this section shall be increased by an additional four percent if the eligible company, or its authorized payroll service company, employs 10 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 §11-13X-7 of this code.
(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 office shall
allocate the tax credits in the order the applications therefor are received.
§11-13X-6. Requirements for credit.
(a) In order for any eligible company to claim a tax credit under this article, it shall comply with the following requirements:
(1) If the qualified
project contains production credits, the eligible company shall agree, upon
request by the film office Office of
Economic Development, to recognize the State of West Virginia with the
following acknowledgment in the end credit roll: “Filmed in West Virginia with
assistance of the West Virginia Film Industry Investment Act”;
(2) Apply to the film
office Office of Economic Development on forms and in the manner
the film office Office of Economic Development may prescribe; and
(3) If an eligible company submits a proposal to perform a qualified project for a state agency, the eligible company shall indicate its intention to claim the tax credit provided by this article; and
(3) (4) Submit to the film office Office
of Economic Development information required by the film office to
demonstrate conformity with the requirements of this section and shall agree in
writing:
(A) To pay all obligations the eligible company has incurred in West Virginia; and
(B)
To delay filing of a claim for the tax credit authorized by this article until
the film office Office of Economic Development delivers written
notification to the Tax Commissioner that the eligible company has fulfilled
all requirements for the credit.
The
film office Office of Economic Development shall determine the
eligibility of the company and the qualification of each project, and shall
report this information to the Tax Commissioner in a manner and at times the film
office Office of Economic Development and the Tax Commissioner shall
agree upon.
(b) Upon completion of a qualified project:
(1) An eligible company shall have filed all required West Virginia tax reports and returns and paid any balance of West Virginia tax due on those returns;
(2)
All claims for the tax credit shall be filed with an expense verification
report prepared by an independent certified public accountant, utilizing “agreed
upon procedures” which are prescribed by the film office Office of
Economic Development in accordance with generally accepted auditing
standards in the United States. The certified public accountant will render a
report as to the qualification of the credits, consistent with guidelines to be
determined by the film office Office of Economic Development
and approved by the Tax Commissioner; and
(3)
An eligible company claiming an extra allowance for employing local workers
shall submit to the film office Office of Economic Development documentation
verifying West Virginia residency for all individuals claimed to qualify for
the extra allowance. The documentation shall include the name, home address,
and telephone number for all individuals used to qualify for the extra
allowance.
(c)
If the requirements of this section have been complied with, the film office
Office of Economic Development shall approve the film tax credit and
issue a document granting the appropriate tax credit to the eligible company
and shall report this information to the Tax Commissioner.
§11-13X-7. Application of credit to state taxes.
(a) Credit allowed. -–
Beginning in the taxable year that the expenditures
permitted under section four of this article are incurred, eligible companies
and owners of eligible companies, as described in subsection (d) of this
section, are permitted a credit, as described in section five of this article,
against the taxes imposed by articles twenty-three, twenty-four and
twenty-one of this chapter, in that order, as specified in this section.
(b) Business franchise tax. -–
The credit is first applied to reduce the taxes imposed
by article twenty-three of this chapter for the taxable year, determined after
application of the credits against tax provided in section seventeen of said
article, but before application of any other allowable credits against tax.
(c) (b) Corporation net income taxes. -–
After application of subsection (b) of this section, any unused credit is next applied to reduce the taxes imposed by article twenty-four of this chapter for the taxable year, determined before application of allowable credits against tax.
(d) (c) Personal income tax. -–
(1) If the eligible taxpayer is an electing small business corporation (as defined in Section 1361 of the United States Internal Revenue Code of 1986, as amended), a partnership, a limited liability company that is treated as a partnership for federal income tax purposes or a sole proprietorship, then any unused credit, after application of subsections (b) and (c) of this subsection, is allowed as a credit against the taxes imposed by article twenty-one of this chapter on the income from business or other activity subject to tax under article twenty-three of this chapter or on income of a sole proprietor attributable to the business.
(2) Electing small business corporations, limited liability companies, partnerships and other unincorporated organizations shall allocate the credit allowed by this article among its members in the same manner as profits and losses are allocated for the taxable year.
§11-13X-8. Uses of credit; unused credit; carry forward; carry back prohibited; expiration and forfeiture of credit.
(a) No credit is allowed under this section against any employer withholding taxes imposed by §11-21-1 et seq. of this code.
(b) If the tax credit allowed under this article in any taxable year exceeds the sum of the taxes enumerated in subsections (b), (c), or (d) of §11-13X-7 of this code, for that taxable year, the excess may be applied against those taxes, in the order and manner stated in §11-13X-7 of this code, for succeeding taxable years until the earlier of the following:
(1) The full amount of the excess tax credit is used;
(2) The expiration of the second taxable year after the taxable year in which the expenditures occurred. The tax credit remaining thereafter is forfeited; or
(3) The excess tax credit is transferred or sold.
(c) No carryback is allowed to a prior taxable year that does not have qualified expenditures for the amount of any unused portion of any annual credit allowance.
(d) The transfer or sale of
this credit does not extend the time in which the credit can be used. The carry
forward period for credit that is transferred or sold begins on the date on
which the credit was originally issued by the film office Office of
Economic Development.
(e) Any tax credit certificate issued in accordance with this article, which has been issued to an eligible company, and to the extent not previously claimed against the tax of the eligible company or the owner of the certificate, may be transferred or sold by such eligible company to another West Virginia taxpayer, subject to the following conditions:
(1) A single transfer or sale may involve one or more transferees, assignees or purchasers. A transfer or sale of the credits may involve multiple transfers to one or more transferees, assignees or purchasers;
(2) Transferors and sellers
shall apply to the film office for approval of any transfer, sale, or
assignment of the tax credit. Any amount of the tax credit that has been
transferred or assigned shall be subject to the same limitations and conditions
that apply to the eligible company’s or seller’s entitlement, use and
application of the credit. The application for sale, transfer or assignment of
the credit shall include the transferor’s tax credit balance prior to transfer,
the credit certificate number, the name of the seller, the transferor’s
remaining tax credit balance after transfer, if any, all tax identification
numbers for both transferor and transferee, the date of transfer, the amount
transferred, a copy of the credit certificate and any other information
required by the film office Office of Economic Development or the
Tax Commissioner.
(3) The film office
Office of Economic Development shall not approve the transfer or assignment
of a tax credit if the seller or transferor has an outstanding tax obligation
with the State of West Virginia for any prior taxable year.
(f) The transferee, assignee or purchaser shall apply such credits in the same manner and against the same taxes as specified in this article.
(g) For purposes of this chapter, any proceeds received by the eligible company or transferor for its assignment or sale of the tax credits allowed pursuant to this section are exempt from the West Virginia consumers sales and service tax, use tax, the corporate net income tax, and personal income tax.
(h) The Tax Commissioner shall not seek recourse against the transferee for any portion of the credit that may be subsequently disqualified.
Failure to comply with this section will result in the disallowance of the tax credit until the seller or transferor is in full compliance.
§11-13X-11. Tax credit review and accountability.
(a) Beginning on the first
day of the third taxable year after the passage of this article and every two
years thereafter, the film office Office of Economic Development shall
submit to the Governor, the President of the Senate and the Speaker of the
House of Delegates a tax credit review and accountability report evaluating the
cost effectiveness of the Film Industry Investment Act during the most recent
two-year period for which information is available. The criteria to be
evaluated shall include, but not be limited to, for each year of the
two-year period:
(1) The number of eligible companies claiming the credit;
(2) The dollar amount of tax credit certificates issued to taxpayers;
(3) The number of new businesses created by the tax credit;
(4) The number of new jobs, if any, created by the tax credit;
(5) The amount of direct expenditures made on qualified projects; and
(6) The cost of the credit.
(b) Eligible companies
claiming the credit shall provide any information the Tax Commissioner and the film
office Office of Economic Development may require to prepare the
report: Provided, That the information provided is subject to the
confidentiality and disclosure provisions of §11-10-5d and §11-10-5s of this code. However, ; Provided,
however, That notwithstanding the provisions of §11-10-5d and §11-10-5s of
this code, the Tax Department is hereby authorized to disclose to the film
and to the development office Office of Economic Development such
tax information as may be necessary to compile the report required by this
section and the report required by §11-13X-12 of this code.
§11-13X-12. Economic development; utilization of state locations, talent, and production companies.
(a) The West Virginia Development Office Office
of Economic Development , in consultation and coordination with the
appropriate public and private entities, shall promote, foster, encourage, and
monitor the development of the film industry in this state as part of its
comprehensive economic development strategy for West Virginia and report
recommendations for expanding the industry in the state to the Governor and the
Joint Committee on Government and Finance annually on or before December 1.
(b) The West Virginia Office of Economic Development shall coordinate with property owners, musicians and other performers, and other managers of resources suitable for film production to develop a database of locations, music, and other resources available for incorporation into film projects. To the greatest feasible extent, the Economic Development Office shall establish methods for interface with national and international databases of these resources that are available to, or used by, film and video production teams in the identification and selection of location, music, and other resources. The Economic Development Office shall also implement means for property owners and for staff in the field to connect to the state’s database and to submit entries or nominations thereto.
§11-13X-13. Effective date, elimination of film tax credits, preservation of film tax credits earned prior to the sunset date; cessation of the West Virginia Film Office.
(a) The credit allowed by this article shall be allowed upon eligible expenditures occurring after December 31, 2007 and before January 16, 2018, and shall be allowed upon eligible expenditures occurring on and after the date specified in subsection (d) of this section and before the termination date specified therein.
(b) The amendments to
this article enacted in the year 2009 shall apply to all taxable years
beginning after December 31, 2007, and shall apply with retroactive effect with
relation to taxable years beginning prior to the date of passage of such
amendments.
(c) No tax credits
authorized under this article shall be issued following the effective date of
legislation establishing this subsection, §11-13X-13(d), and §11-13X-13(e) of
this code in the year 2018. Notwithstanding any provision of this article to
the contrary, no entitlement to any tax credit under this article may result
from, and no credit is available to any person for, expenditures incurred
following the effective date of this subsection
(d) (b) Notwithstanding the provisions of
§11-13X-13(c) of this code, film Film tax credits to which a
taxpayer has gained lawful entitlement prior to the effective date of this
subsection, after December 31, 2007, and before January 16, 2018 may
continue to be applied against tax liabilities, subject to the conditions, limitations,
and constraints applicable to such credit under this article, until exhausted
or otherwise terminated in accordance with the terms of this article and this
code. Film tax credits to which a taxpayer has gained lawful entitlement prior
to the effective date of this subsection may be transferred in accordance with
§11-13X-8 of this code, subject to the conditions, limitations, and constraints
applicable to such credit under this article, until exhausted or otherwise
terminated in accordance with the terms of this article and this code.
(e) (c) Effective July 1, 2018, all operations of
the West Virginia Film Office shall cease. To the extent necessary to settle,
finalize, and conclude business relating to outstanding film tax credits issued
prior to the effective date of the bill, the Division of Tourism is hereby
authorized to administer such duties for that limited purpose.
(d) The amendments to this article enacted in the year 2022 shall apply to all taxable years beginning on or after July 1, 2022: Provided, That, unless sooner terminated by law, the film investment tax credit will terminate on December 31, 2027. No entitlement to any tax credit authorized by this article may result from, and no credit is available to any person for, expenditures incurred subsequent to December 31, 2027. Film tax credits to which a taxpayer has gained lawful entitlement on or after July 1, 2022, and on or before December 31, 2027, may continue to be applied against tax liabilities, subject to the conditions, limitations, and constraints applicable to such credit under this article, until exhausted or otherwise terminated in accordance with the terms of this article and this code. Film tax credits to which a taxpayer has gained lawful entitlement on or after July 1, 2022, and on or before December 31, 2027, may be transferred in accordance with §11-13X-8 of this code, subject to the conditions, limitations, and constraints applicable to such credit under this article, until exhausted or otherwise terminated in accordance with the terms of this article and this code.
Adopted
Rejected