Bill Text: CA SB132 | 2023-2024 | Regular Session | Chaptered

California Senate Bill 132

Bill Title: Income taxes: tax credits: motion pictures: occupational safety: California Film Commission.

Spectrum: Committee Bill

Status: (Passed) 2023-07-10 - Chaptered by Secretary of State. Chapter 56, Statutes of 2023. [SB132 Detail]

Download: California-2023-SB132-Chaptered.html

Senate Bill No. 132

CHAPTER 56

An act to amend Section 14998.2 of the Government Code, to add Part 13 (commencing with Section 9150) to Division 5 of, and to repeal Sections 9152 and 9152.5 of, the Labor Code, and to amend Sections 6902.5, 17039, 17053.98, 23036, and 23698 of, and to add Sections 17053.98.1 and 23698.1 to, the Revenue and Taxation Code, relating to the motion picture and television industry, and making an appropriation therefor, to take effect immediately, bill related to the budget.

[ Approved by Governor July 10, 2023. Filed with Secretary of State July 10, 2023. ]

LEGISLATIVE COUNSEL'S DIGEST

SB 132, Committee on Budget and Fiscal Review. Income taxes: tax credits: motion pictures: occupational safety: California Film Commission.

(1) Existing law grants the Division of Occupational Safety and Health, which is within the Department of Industrial Relations, jurisdiction over all employment and places of employment, with the power necessary to enforce and administer all occupational health and safety laws and standards. The Occupational Safety and Health Standards Board, an independent entity within the department, has the exclusive authority to adopt occupational safety and health standards within the state. Existing law, the California Occupational Safety and Health Act of 1973, requires employers to comply with certain standards ensuring healthy and safe working conditions, as specified, and charges the division with enforcement of the act. Other existing law relating to occupational safety imposes special provisions on certain industries and charges the division with enforcement of these provisions.

This bill would establish the Safety on Productions Pilot Program. The bill, commencing July 1, 2025, and until June 30, 2030, inclusive, would require that an employer for a motion picture production that receives a specified motion picture tax credit, for that motion picture production, hire or assign a qualified safety advisor for California filming activities to perform a risk assessment and, if required under the bill, a specific risk assessment, as specified. The bill would require a dedicated safety advisor to be present on every motion picture production in the pilot program who is assigned exclusively to that motion picture production. The bill would require assessments to be accessible to specified affected persons and safety advisor access to locations and relevant facilities and items to ensure safety. The bill would require production to conduct a daily safety meeting, including, but not limited to, a safety meeting required when firearms are involved in a scene. The bill would require a safety advisor to participate in daily safety meetings, as specified. The bill would require an employer to identify a person for performers, crew, labor organization representatives, and the division to contact for issues regarding compliance. The bill would require the safety advisor to prepare a final safety evaluation report based on the actual risk and compliance experience. The bill would require the safety advisor, within 60 days following completion of filming activities, to provide the final safety evaluation report to the Industry-Wide Labor-Management Safety Committee and the California Film Commission. The bill would require the committee and the California Film Commission to jointly select an organization or firm to perform a written evaluation of the pilot program. The bill would require the selected organization or firm to review and assess the final safety evaluation reports on or before June 30, 2029, and make a nonbinding set of recommendations to the Legislature, as prescribed. These pilot program provisions would be repealed as of January 1, 2031.

This bill would allow the use of a firearm or blank on motion picture productions only for specified purposes and under specified safety conditions. The bill would require a qualified property master, armorer, or assistant property master handling a firearm in the course of the motion picture production to have a specified state permit, to have completed certain training in firearms, and to have a specified federal document for the possession and custody of the firearm. The bill would specifically impose prescribed reporting requirements on employers engaged in motion picture production. The bill would specifically authorize the division to investigate, inspect, and cite employers, as prescribed.

This bill would prohibit ammunition on a motion picture production, except in prescribed circumstances, subject to certain safety rules and laws. The bill would require an employer to require that any employee responsible for handling, or in proximity to, firearms on set completes a specific firearm training or equivalent training, as prescribed. The bill would require an employer to comply with the bill and any applicable safety standard. The bill would establish exemptions from its provisions for specified registered security guards and peace officers when they are on the perimeter of a set where motion picture production is happening.

This bill would require the division to enforce these provisions. The bill would define terms for these purposes. These provisions of the bill would become operative on January 1, 2025.

(2) Existing law, the Motion Picture, Television, and Commercial Industries Act of 1984, establishes within the Governor’s Office of Business and Economic Development (GO-Biz), the California Film Commission consisting of 26 members, with 13 members appointed by the Governor, as provided.

This bill would increase the number of members of the California Film Commission to 27, and would require that the Governor appoint 14 of those members. The bill would also require that, in addition to existing member requirements, one of the members of the California Film Commission appointed by the Governor be a diversity, equity, and inclusion expert employed in the motion picture industry.

(3) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including a motion picture credit for taxable years beginning on or after January 1, 2020, to be allocated by the California Film Commission on or after July 1, 2020, and before July 1, 2025, in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state, with additional credit amounts allowed, including for amounts equal to specified qualified expenditures and qualified wages relating to original photography outside the Los Angeles zone, as specified.

Existing law also allows a credit for taxable years beginning on or after January 1, 2022, and before January 1, 2032, in an amount equal to 20% or 25%, or as modified, of qualified expenditures paid or incurred during the taxable year by a qualified motion picture produced in this state at a certified studio construction project. Existing law defines a qualified motion picture for these purposes in the same manner as the motion picture credit and additionally requires that the qualified motion picture provide a diversity workplan that is approved by the commission and be certified as a certified studio construction project by the commission within 3 years of claiming the credit. Existing law requires a diversity workplan to include certain goals the motion picture will seek to achieve in terms in relation to race, ethnicity, and gender of employees and contractors. Existing law requires the qualified motion picture to pay or incur at least $7,500,000 in qualified wages during the taxable year for filming on soundstages certified as a certified studio construction project.

This bill would instead require a certified studio construction project to be certified by the commission for a period of 5 years. This bill would require the qualified motion picture to pay or incur at least $5,000,000 in qualified wages, and would remove the requirement that it be during the taxable year. This bill would also require a diversity workplan, in addition to existing requirements, to include information relating to goals the motion picture will seek to achieve in terms of disability status.

Existing law limits the aggregate amount of credits that may be allocated under the certified studio construction project credit to $150,000,000, as specified, and limits the allocation for a season of a series or a feature film to $12,000,000.

This bill would limit the amount that may be allocated to any qualified motion picture to $12,000,000, or $750,000 per episode for a season of a television series.

(4) Existing law prohibits a qualified motion picture from receiving both the motion picture credit and the certified studio construction project credit during the same fiscal year, unless the applicant is a recurring television series that is no longer eligible for the certified studio construction project credit, as specified.

This bill would instead authorize a qualified motion picture that satisfies the criteria of the certified studio construction project credit but does not receive a certified studio construction project credit for specified reasons to apply for a motion picture credit. The bill would require a recurring television series that satisfies the criteria of the certified studio construction project credit but is no longer eligible for a certified studio construction project credit to receive a motion picture credit allocation, as provided. The bill would authorize a qualified motion picture to apply for, and would require a recurring television series to receive, a credit allocation from any successor motion picture tax credit program. This bill would define a recurring television series for these purposes as any television series that was previously approved and issued a credit allocation letter.

(5) Existing law, with respect to the motion picture credit allowed under the Corporation Tax Law, authorizes a qualified taxpayer, in the case where the motion picture credit exceeds the taxpayer’s tax liability, to elect to assign any portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed. Existing law defines an affiliated corporation for these purposes as a corporation that is related to a corporation required to file under the Corporation Tax Law because of specified conditions, including that more than 50% of its voting stock is owned directly or indirectly by a corporation also required to file.

This bill would instead define an affiliated corporation for these purposes as a corporation that is a member of a commonly controlled group, as defined.

(6) This bill would provide that the provisions referenced in paragraphs (3) to (5), inclusive, would be operative for taxable years beginning on or after January 1, 2023, except as provided.

(7) This bill, for taxable years beginning on or after January 1, 2025, would allow a new motion picture credit (motion picture credit 4.0) to be allocated by the California Film Commission on or after July 1, 2025, and before July 1, 2030, in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state, and would require the credit to be administered in accordance with the existing motion picture credit, except as specified.

This bill would allow a qualified taxpayer to submit a diversity workplan, as defined, and would require the California Film Commission to reduce the monetary value of the motion picture credit 4.0 allocation by 4% if a qualified taxpayer chooses not to submit a diversity workplan or if the California Film Commission determines that the qualified taxpayer has not met or made a good-faith effort to meet the diversity goals in its diversity workplan.

Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account.

This bill would allow a qualified taxpayer to elect to be paid a refund if the amount allowable as a credit under the motion picture credit 4.0 exceeds the qualified taxpayer’s tax liability for the taxable year, and would allow the excess to be carried over, as specified. By requiring moneys to be paid from the Tax Relief and Refund Account, the bill would make an appropriation.

(8) The Personal Income Tax Law and the Corporation Tax Law require credits allowed against the taxes imposed by those laws to be applied in a specified order. Those laws also describe a tentative minimum tax, and prohibit a tax credit from reducing the tax owed by a taxpayer below the tentative minimum tax, except as provided.

This bill, for taxable years beginning on or after January 1, 2020, would allow the motion picture credit and the certified studio construction project credit to reduce the amount owed by a taxpayer below the tentative minimum tax. The bill, for taxable years beginning on or after January 1, 2025, would also allow the motion picture credit 4.0 to reduce the amount owed by a taxpayer below the tentative minimum tax.

(9) Existing law requires any bill authorizing a new tax expenditure, as defined, to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would include findings and reporting requirements in compliance with this requirement.

(10) This bill would also make findings and declarations related to a gift of public funds.

(11) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

(12) This bill would state that its provisions are severable.

(13) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

(a) The Legislature finds and declares that the California Film & Television Tax Credit Program is part of the state’s ongoing efforts to retain its status as the world’s film and TV production capital, a status long earned due to its superior crews, talent, infrastructure, weather, locations, and a host of other attributes that lead to business and creative success.

(b) The Legislature finds and declares that attractive tax credit incentives from other states and countries to host film and television productions have been on the rise.

(c) The Legislature finds and declares that California is the largest and most diverse state in the nation, shaped by the contributions of all its residents, including California Native Americans, communities of color, immigrants, and descendants of immigrants who call the golden state home.

(d) The Legislature finds and declares an overall trend toward increasing diversity based on existing research on diversity in the motion picture production and television industry.

(e) The Legislature finds and declares that despite this progress, continued work remains to attain shared goals of providing equal opportunity for all and uplifting women, people of color, the LGBTQ community, people with disabilities, and other marginalized communities in all aspects of the motion picture and television production industry.

(f) The Legislature finds and declares the importance of diversity in the workplace to encourage innovation, performance, and new perspectives.

(g) The Legislature finds and declares that the Film & Television Tax Credit Program 4.0 (Program 4.0) will keep California competitive and encourage the industry to actively diversify projects within Program 4.0.

(h) It is the intent of the Legislature to include a discounted, refundable tax credit which enables all major studios to compete for spots within Program 4.0 and ensures Program 4.0 attracts high-value productions with the greatest economic return to the state.

(i) It is the intent of the Legislature to develop policies within this program to promote workforce training and voluntary diversity, equity, and inclusion initiatives.

(j) It is the intent of the Legislature to incentivize recipients of this tax credit to share their diversity initiatives with the state through providing specific workplans, consistent with federal and state constitutional requirements, to address unequal starting points and drive equal outcomes so equity is embedded within productions that receive the California Film and Television Tax Credit.

SEC. 2.

Section 14998.2 of the Government Code is amended to read:

14998.2.

(a) There is in the Governor’s Office of Business and Economic Development, the California Film Commission. The commission shall have a Board of Commissioners consisting of 27 members. The Governor shall appoint 14 members, the Senate Committee on Rules shall appoint four members, the Speaker of the Assembly shall appoint four members, and five members shall be ex officio. The members of the board appointed by the Governor may include representatives of state and local government, motion picture development companies, employee and professional organizations composed of persons employed in the motion picture industry, and other appropriate members of this or related industries.

All members of the board, except legislators who are appointed either by the Senate Committee on Rules or by the Speaker of the Assembly, shall serve at the pleasure of the appointing authority for a term of two years from the effective date of the appointment.

(b) (1) One of the members appointed by the Senate Committee on Rules shall, and another one may, be a Senator and one of the members appointed by the Speaker of the Assembly shall, and another one may, be a Member of the Assembly. These persons shall be appointed for terms of four years.

(2) Of the legislators appointed to the board, no more than three legislators from the same political party may be appointed to or serve on the board at the same time.

(c) Any legislator appointed shall serve as a voting member of the board and shall meet with, and participate in the activities of, the board to the extent that participation is not incompatible with the legislator’s position as a Member of the Legislature, but shall only serve in that capacity while concurrently serving as a Member of the Legislature. Whenever a legislator vacates an office, the appointing power shall appoint another person for a new full term.

(d) Nine of the 14 members appointed by the Governor shall be as follows:

(1) One shall be a member or employee of a union or guild of motion picture artists.

(2) One shall be a member or employee of a union or guild representing motion picture craftsmen, technicians, or photographers.

(3) Two shall be from major motion picture studios.

(4) One shall be a member of the city council or a member of the county board of supervisors of a city or a county with a population of at least two million people.

(5) One shall be a member of the city council or a member of the county board of supervisors of a city or a county with a population of less than two million people.

(6) (A) One shall be an independent filmmaker.

(B) For purposes of this section, “independent filmmaker” means a producer of a film that meets all of the following criteria:

(i) Has a running time of at least 75 minutes.

(ii) Is intended for commercial distribution to a motion picture theater, directly to the home video market, directly to television, or through the Internet.

(iii) Is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 25 percent of the producing company.

(7) One shall be a diversity, equity, and inclusion expert employed in the motion picture industry.

(8) (A) One shall be a member who is an independent commercial producer, or employee of a trade association representing independent commercial producers.

(B) For purposes of this section, “independent commercial producer” means a producer who owns or is employed by a company that is principally engaged in the physical or digital production of advertising content for advertisers, has control over the selection of production location, deployment, or management of the production equipment, and directly employs the production crew as the person that has control over the hiring and firing of the crew for a commercial production. The company shall not be wholly or partly owned or operated by an advertising agency or an advertiser or be publicly traded. The company shall also not produce any production to which the recordkeeping requirements of Section 2257 of Title 18 of the United States Code apply.

(e) The Director of Transportation shall serve as an ex officio nonvoting member.

(f) The Director of Parks and Recreation shall serve as an ex officio nonvoting member.

(g) The Commissioner of the California Highway Patrol shall serve as an ex officio nonvoting member.

(h) The State Fire Marshal shall serve as an ex officio nonvoting member.

(i) The director of the commission shall serve as an ex officio nonvoting member.

SEC. 3.

Part 13 (commencing with Section 9150) is added to Division 5 of the Labor Code, to read:

PART 13. SAFETY IN MOTION PICTURE PRODUCTIONS

9150.

(a) The Legislature finds and declares the following:

(1) All workers deserve a safe and healthy workplace. Because the sets of motion picture productions have potential hazards, proactive planning and oversight of the workplace are key to worker safety.

(2) The growing popularity of a diverse array of media platforms and reality television and increased customer demand for new content and new production has increased the need for safety on sets.

(3) Improving the overall health and safety on motion picture production sets is especially critical for the safe handling of firearms.

(4) The primary protections for the cast and crew in a motion picture production, including when firearms are used, are found in voluntary safety standards developed by the Industry-Wide Labor-Management Safety Committee for use in motion picture production.

(b) It is the intent of the Legislature to do the following:

(1) Establish a pilot program to address the implementation and oversight of safety practices and procedures in motion picture productions participating in the pilot program.

(2) Require the productions in the pilot program to employ a safety advisor to oversee production safety and complete detailed, script-specific general and, if applicable, specific risk assessments as part of this pilot program.

(3) Establish training requirements and safety standards that focus on the safe handling of firearms and blanks in all motion picture production in California.

(4) Prohibit, except in the most limited circumstances, the use of live ammunition in motion picture production in California.

(1) Adversely impact the employment or retention of craft employees responsible for handling firearms used in motion picture productions.

(2) Preclude the use of firearms, blanks, replicas, simulated firearms, or inert prop firearms or to influence content in motion picture productions.

9151.

As used in this part:

(a) “Ammunition” means one or more loaded cartridges consisting of a primed case, propellant, and with one or more projectiles. “Ammunition” does not include blanks.

(b) “Blank” means a cartridge consisting of a primer cap, a shell case, and a quantity of gunpowder, but that does not contain a projectile.

(d) “Employer” means an employer engaged in producing a motion picture production.

(e) “Filming activities” includes principal photography and any subsequent filming, such as reshoots or additional scenes, as well as the construction and breakdown of sets and loading equipment, but does not include postproduction activity, including, but not limited to, editing, sound mixing, additional dialogue, or visual effects unrelated to reshoots.

(f) “Firearm” means a device, designed to expel through a barrel a projectile by the force of an explosion or other form of combustion, including the frame or receiver of the device. “Firearm” does not include a replica or simulated firearm or a special effects device.

(g) “Industry-Wide Labor-Management Safety Committee” or “committee” means the California group composed of union, guild, and employer representatives that establishes safety guidelines for motion picture production and that meets regularly.

(h) “Motion picture production” means the development or creation of motion pictures, television programs, streaming productions, commercial advertisements, music videos, or any other moving images, including, but not limited to, productions made for entertainment, commercial, religious, or educational purposes.

(i) “Pilot program” means the Safety on Productions Pilot Program established in Sections 9152 and 9152.5.

(j) “Risk assessment” is a detailed written review of a script and production plan prepared in accordance with Section 9152.5.

(k) “Safety advisor” means a person who works in tandem with, but independent of, performers and crew and who is not employed for any other role on the motion picture production; who reports to the unit production manager, or a person or persons having overall responsibility for the safety program, but retains autonomy to address production-related risk, including, as a last resort, the authority to temporarily halt production until a thorough examination of the potential hazard or hazards and the mitigation plan can take place among the decisionmakers on productions; and who meets the following qualifications:

(1) One of the following:

(A) At least two years’ experience primarily performing safety-related work in the entertainment industry as a department head, foreperson, or in a production safety position within motion picture production.

(B) At least 500 verifiable days in another crew position in motion picture production, so long as they possess an appropriate breadth of specialist knowledge, experience, and expertise aimed at minimizing risks to both performers and crew.

(C) Five or more years of safety-related work, where safety was a primary role and responsibility, in another industry, so long as they possess an appropriate breadth of specialist knowledge, experience, and expertise aimed at minimizing risks to workers and the public.

(2) Completion of a joint labor and management training on industry protocols, state and federal law, and safety practices in motion picture production.

(3) Completion of an OSHA 30-hour training for general industry.

(l) “Specific risk assessment” means a risk assessment for identified high-risk activities or situations prepared in accordance with Section 9152.5.

9152.

(a) The Safety on Productions Pilot Program is hereby established. Commencing July 1, 2025, until June 30, 2030, inclusive, an employer for a motion picture production that receives a motion picture tax credit pursuant to a tax credit program that succeeds, on or after July 1, 2025, the tax credit program established in Section 17053.98 or 23698 of the Revenue and Taxation Code shall, for that motion picture production, hire or assign a safety advisor for California filming activities by the time the department heads start the preproduction process of planning for construction or high-risk activities to perform a risk assessment and, if required under this part, a specific risk assessment, to be completed in collaboration and consultation with appropriate production personnel, including, but not limited to, department heads and those with specialized knowledge. There shall be a dedicated safety advisor present on every motion picture production in the pilot program who is assigned exclusively to that motion picture production. The safety advisor shall have the authority to determine which worksite is most appropriate to have a physical presence on when multiple production-related activities are taking place in multiple locations.

(b) Any specific risk assessment shall be revised if there are meaningful changes to the proposed activity or location that would change the specific risk assessment or mitigation plan.

(c) All risk assessments shall be accessible via electronic transmission, upon request, to performers, crew, and labor organization representatives.

(d) The safety advisor shall have access to, and the opportunity to inspect, all locations, facilities, equipment, supplies, materials, and props to safeguard the safety of the performers and crew members. Access or inspection by a safety advisor pursuant to this subdivision does not include handling or otherwise touching a firearm.

(e) Production shall conduct a daily safety meeting, including, but not limited to, the meeting required in paragraph (4) of subdivision (a) of Section 9153.

(f) The safety advisor shall participate in daily safety meetings when occurring at the safety advisor’s selected worksite or worksites, if there are multiple production-related activities taking place in multiple locations.

(g) The employer shall identify a person for performers, crew, labor organization representatives, and the division to contact for issues regarding compliance.

(h) The safety advisor shall prepare a final safety evaluation report based on the actual risk and compliance experience, as set forth in subdivisions (a) to (e), inclusive. Within 60 days following completion of filming activities, the safety advisor shall provide the final safety evaluation report to the Industry-Wide Labor-Management Safety Committee and the California Film Commission. Unplanned or unknown reshoots or additional scenes filmed after the submission of the initial report shall require an addendum report.

(i) (1) The Industry-Wide Labor-Management Safety Committee and the California Film Commission shall jointly select an organization or firm to perform a written evaluation of the pilot program. The selected organization or firm shall review and assess the final safety evaluation reports on or before June 30, 2029, and make a nonbinding set of recommendations to the Legislature as to whether the pilot program should be implemented on a permanent basis and to what other motion pictures productions in this state it should, or should not, be extended. The California Film Commission shall not be responsible for the cost of the written evaluation.

(2) The report submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code.

(j) This section shall remain in effect only until January 1, 2031, and as of that date is repealed.

9152.5.

Risk assessments shall be performed in accordance with the following:

(a) A risk assessment shall be written and shall be a script and production plan that identifies and evaluates preproduction and production activity or production locations that may pose a risk and hazard to employees and sets forth a mitigation plan of those risks and hazards. Department heads and those with specialized knowledge shall be involved in creating a plan to mitigate risk. The process for developing the risk assessment shall commence once the department heads start preproduction planning for construction or high-risk activities.

(b) A specific risk assessment shall be written and shall comply with the following:

(1) Be focused on identified high-risk activities or situations.

(2) Include detailed and specific risk mitigation plans and procedures to identify and evaluate workplace hazards that have an elevated risk factor or factors or a combination of multiple risk factors.

(3) Identify the precautions and controls to be taken to mitigate that risk and reevaluate the level of risk assuming those controls are implemented or if no steps are taken to mitigate that risk.

(4) Identify the group of employees affected by the assessed risk.

(1) Firearms.

(2) Major pyrotechnics and explosives.

(3) Major stunts.

(4) Process shot moves.

(5) Aircraft or trains.

(6) Vehicles off road.

(7) Watercraft in open water and for individuals under water for prolonged periods.

(8) Workweeks of more than 60 hours.

(d) A safety advisor shall have the authority to determine if, and when, a specific risk assessment is necessary for both on and off set activities and situations, including the following:

(1) Overhead rigging.

(2) Rugged outdoor locations.

(3) Inclement weather.

(4) Animals.

(5) Heights.

(6) Intermittent traffic control.

(7) Night shoots.

(8) Other high-risk activities or situations as identified by the safety advisor.

(e) This section shall remain in effect only until January 1, 2031, and as of that date is repealed.

9153.

(a) A firearm or blank shall only be permitted on motion picture productions, for the purposes of rehearsal, actor training, the filming of an on-camera sequence, or other development of content of the motion picture production with individuals of the performers or crew, under the following conditions:

(1) Under the custody and control of a qualified property master, armorer, or assistant property master.

(2) While handling the firearm, the property master, armorer, or assistant property master is the only person who can hand that firearm to the performer or cast or crew member standing in for that performer during the scene. Only the property master, armorer, or assistant property master shall collect the firearm upon completion of the activity.

(3) A property master, armorer, or assistant property master shall have no other duties, responsibilities, or obligations during the time the property master, armorer, or assistant property master is preparing for the use of a firearm and that a firearm is in the possession of the performer. It remains their sole responsibility until firearms are no longer in use and have been locked away.

(4) As indicated in safety bulletins of the Industry-Wide Labor-Management Safety Committee, a safety meeting shall be conducted when firearms are involved in a scene.

(5) The employer shall identify a person for performers, crew, labor organization representatives, and the division to contact for issues regarding compliance.

(6) The employer has ensured sufficient staffing of qualified property masters, armorers, or assistant property masters.

(b) A qualified property master, armorer, or assistant property master handling a firearm in the course of the motion picture production shall have all of the following:

(1) A current entertainment firearms permit or current dangerous weapons permit or license issued by the California Department of Justice.

(2) A joint entertainment industry labor-management firearm safety industry-specific training course certificate with training on industry protocols, state and federal law, and best practices on safety.

(3) One of the following:

(A) A signed rental sheet or copy of a completed Bureau of Alcohol, Tobacco, Firearms and Explosives “ATF Form 4473,” stating the lawful transfer of Title 1 Firearms to that property master, armorer, or assistant property master or a copy of a current Federal Firearms License (FFL) establishing the property master, armorer, or assistant property master as the lawful possessor of the firearms who may obtain and retain custody of all firearms used in motion picture productions.

(B) In the event of the use of restricted firearms classified under the Bureau of Alcohol, Tobacco, Firearms and Explosives National Firearms Act Division (ATF NFA) rules, and including “assault weapons,” as defined by California law, a set of current dangerous weapons permits issued by the Department of Justice, or in the absence of such permits, a clearly dated extension letter for 120 days from the Department of Justice Bureau of Firearms permitting the property master, armorer, or assistant property master to continue their activities with restricted firearms, and a signed rental sheet from the federally licensed armory providing the firearms, or a current FFL and current ATF Special Occupational Tax Stamp establishing lawful possession of restricted firearms by that property master, armorer, or assistant property master shall be presented for the property master, armorer, or assistant property master to obtain and retain custody of NFA firearms. In such a case, the dangerous weapons permits issued by the Department of Justice shall supersede the entertainment firearms permit.

9154.

(a) Employers engaged in motion picture production shall report to the division any serious injury or illness, or death, of an employee occurring in a place of employment or in connection with any employment pursuant to Section 342 of Title 8 of the California Code of Regulations. Pursuant to Section 6309, if the division learns or has reason to believe that an employment or place of employment is not safe or is injurious to the welfare of an employee, the division, on its own motion or upon complaint, may summarily investigate the employment or place of employment. Every inspection conducted by the division shall include an evaluation of the employer’s injury prevention program established pursuant to Section 6401.7 and any risk assessment for those participating in the pilot program established pursuant to Sections 9152 and 9152.5.

(b) Pursuant to Sections 6314 and 6317, if, upon inspection or investigation, the division determines that an employer has violated any standard, rule, order, regulation or these provisions, the division may with reasonable promptness issue a citation to the employer.

9155.

(a) Ammunition shall not be permitted on a motion picture production, except as follows:

(1) In the controlled and supervised environment of a shooting range or equivalent and for the purposes of actor training or postproduction gunfire sound recording, a documentary, except reenactments, or firearms education.

(2) Where ammunition is essential to the subject matter of the work, such as a competitive reality show, a documentary, except dramatic reenactments, or a firearms education and safety training production.

(3) While filming footage of trained military or police personnel firing weapons in a controlled military or police facility.

(b) In the exceptions set forth in subdivision (a), all range safety rules, federal, state, and local laws, and Industry-Wide Labor-Management Safety Committee Safety Bulletins #1 and #2 shall be followed under the supervision of the property master, armorer, or qualified assistant property master. Appropriate medical personnel shall be available.

9156.

Every employer shall require that any employee responsible for handling, or in proximity to, firearms on set completes a Contract Services Administration Trust Fund (CSATF) Firearms Safety Course for the Entertainment Industry, or an equivalent training, as determined by the Industry-Wide Labor-Management Safety Committee. This training requirement shall be paid for by the employer and is not limited to crew or guild members.

9157.

An employer shall comply with this part and any applicable safety standard.

9158.

This part does not apply to the following persons when they are on the perimeter of a set where motion picture production is happening:

(a) A registered security guard carrying a firearm in compliance with security guard firearms qualifications established in Sections 7583.2 to 7583.5, inclusive, of the Business and Professions Code, who is employed to provide security to the motion picture production and who, in the scope and the course of that employment, is at all times in possession and control of the firearm.

(b) A sworn peace officer, as defined in Chapter 4.5 (commencing with Section 830) of Title 3 of Part 2 of the Penal Code, or sworn federal law enforcement officer, who is authorized to carry a firearm in the course and scope of the officer’s duties and who, in the scope and the course of their duties, is at all times in possession and control of the firearm.

9159.

The division shall enforce this part.

9160.

This part shall not prevent or limit employer adoption of stricter safety standards.

9161.

This part shall become operative on January 1, 2025.

SEC. 4.

Section 6902.5 of the Revenue and Taxation Code is amended to read:

6902.5.

(a) For the purposes of this section:

(1) “Qualified taxpayer” means a person who is a qualified taxpayer within the meaning of paragraph (17) of subdivision (b) of Section 17053.85, 17053.95, 23685, or 23695, paragraph (19) of subdivision (b) of Section 17053.98 or 23698, or paragraph (20) of subdivision (b) of Section 17053.98.1 or 23698.1.

(2) “Affiliate” means a qualified taxpayer’s affiliated corporation that has been assigned any portion of the credit amount by the qualified taxpayer pursuant to subdivision (c) of Section 23685, subdivision (c) of Section 23695, subdivision (c) of Section 23698, or subdivision (c) of Section 23698.1.

(3) “Credit amount” means an amount equal to the tax credit amount that would otherwise be allowed to a qualified taxpayer pursuant to Section 17053.85, 17053.95, 17053.98, 17053.98.1, 23685, 23695, 23698, or 23698.1, but for the election made pursuant to this section.

(4) “Production period” means the production period as defined in paragraph (12) of subdivision (b) of Section 17053.85, 17053.95, 23685, or 23695, in paragraph (14) of subdivision (b) of Section 17053.98 or 23698, or in paragraph (15) of subdivision (b) Section 17053.98.1 or Section 23698.1.

(5) (A) “Qualified sales and use taxes” means any state sales and use taxes imposed by Part 1 (commencing with Section 6001), on the operative date of the act adding this section.

(B) Notwithstanding subparagraph (A), “qualified sales and use taxes” does not mean taxes imposed by Section 6051.2, 6051.5, 6201.2, 6201.5, Part 1.5 (commencing with Section 7200), Part 1.6 (commencing with Section 7251), or Section 35 of Article XIII of the California Constitution.

(b) (1) A qualified taxpayer may, in lieu of claiming the credit allowed by Section 17053.85, 17053.95, 17053.98, 17053.98.1, 23685, 23695, 23698, or 23698.1, make an irrevocable election to apply the credit amount against qualified sales and use taxes imposed on the qualified taxpayer in accordance with this section.

(2) An affiliate may, in lieu of claiming the assigned portion of the credit allowed by Section 23685, 23695, 23698, or 23698.1, make an irrevocable election to apply the assigned portion of the credit amount against qualified sales and use taxes imposed on the affiliate in accordance with this section.

(c) (1) A qualified taxpayer or affiliate shall submit to the California Department of Tax and Fee Administration an irrevocable election, in a form as prescribed by the California Department of Tax and Fee Administration, which shall include, but not be limited to, the following information:

(A) Representation that the claimant is a qualified taxpayer or an affiliate.

(B) Statement of the dates on which the production period began and ended.

(C) The credit amount, and if an affiliate, the portion of the credit amount assigned to it and documentation supporting the assignment of that portion of the credit amount.

(D) The amount of qualified sales and use taxes the claimant remitted to the California Department of Tax and Fee Administration during the period commencing on the first day of the calendar quarter commencing immediately before the beginning of the production period, and ending on the date the claimant was required to file its most recent sales and use tax return with the California Department of Tax and Fee Administration.

(E) A copy of the credit certificate issued pursuant to subparagraph (C) of paragraph (2) of subdivision (g) of Section 17053.85 or 23685 or subparagraph (D) of paragraph (3) of subdivision (g) of Section 17053.95, 17053.98, 23695, 23698, or subparagraph (C) of paragraph (3) of subdivision (g) of Section 17053.98.1 or 23698.1.

(2) The election shall be filed on or before the date on which the qualified taxpayer or affiliate would first be allowed to claim a credit pursuant to Section 17053.85, 17053.95, 17053.98, 17053.98.1, 23685, 23695, 23698, or 23698.1 on its tax return.

(3) (A) For those amounts for which an irrevocable election is made in lieu of tax credits allowed pursuant to Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698 that would otherwise be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2022, subdivision (d) and paragraph (1) of subdivision (e) shall only apply to those in-lieu credit amounts that do not exceed five million dollars ($5,000,000) for that taxable year.

(B) For those amounts for which an irrevocable election is made in lieu of tax credits allowed pursuant to Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698 that would otherwise be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2022, that are in excess of five million dollars ($5,000,000) for that taxable year, subdivision (f) shall apply.

(d) (1) The claimant may elect to obtain a refund of qualified sales and use taxes paid during the period described in subparagraph (D) of paragraph (1) of subdivision (c). If the claimant elects to obtain a refund of qualified sales and use taxes, the claimant shall file a claim for refund with the irrevocable election described in subdivision (c). The refund amount shall not exceed, for a qualified taxpayer, the credit amount, or for an affiliate, the portion of the credit amount assigned to it.

(2) No interest shall be paid on any amount refunded or credited pursuant to paragraph (1).

(e) (1) If the claimant does not elect to obtain a refund or in the case where the credit amount, or assigned portion, exceeds the amount of its claim for refund for the qualified sales and use taxes, the claimant may, for the reporting periods in the five years following the last reporting period as described in subparagraph (D) of paragraph (1) of subdivision (c), offset any remaining credit amount, or assigned portion, against the qualified sales and use taxes imposed during those reporting periods.

(2) Notwithstanding paragraph (1), the total amount of refunds or credit offsets claimed under subdivision (d) and paragraph (1) of this subdivision in lieu of tax credits allowed pursuant to Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698 that would otherwise be allowed for a taxable year beginning on or after January 1, 2020, and before January 1, 2022, shall not exceed five million dollars ($5,000,000).

(f) Notwithstanding subdivision (d) and paragraph (1) of subdivision (e), for those amounts for which an irrevocable election is made in lieu of tax credits allowed pursuant to Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698 that would otherwise be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2022, that are in excess of five million dollars ($5,000,000) for that taxable year, both of the following shall apply:

(1) The claimant may elect to obtain a refund of the qualified sales and use taxes paid or offset that excess credit amount, or assigned portion against the qualified sales and use taxes imposed, during the reporting periods that occur during the 2021 calendar year. The total amount of refunds or credit offsets claimed under this paragraph, subdivision (d), and paragraph (1) of subdivision (e) shall not exceed five million dollars ($5,000,000) in the 2021 calendar year for each claimant.

(2) If the claimant has not exhausted the excess credit amount, or assigned portion, as provided by paragraph (1), the claimant may offset the remaining excess credit amount, or assigned portion, against the qualified sales and use taxes imposed during the reporting periods in the five years following and including the reporting period beginning on and after January 1, 2022.

(g) Section 6961 shall apply to any refund, or part thereof, that is erroneously made and any credit, or part thereof, that is erroneously allowed pursuant to this section.

(h) The California Department of Tax and Fee Administration shall provide an annual listing to the Franchise Tax Board, in a form and manner agreed upon by the California Department of Tax and Fee Administration and the Franchise Tax Board, of the qualified taxpayers, or affiliates that have been assigned a portion of the credit allowed under Section 23685 pursuant to subdivision (c) of Section 23685, Section 23695 pursuant to subdivision (c) of Section 23695, Section 23698 pursuant to subdivision (c) of Section 23698, or Section 23698.1 pursuant to subdivision (c) of Section 23698.1, who, during the year, have made an irrevocable election pursuant to this section and the credit amount, or portion of the credit amount, claimed by each qualified taxpayer or affiliate.

(i) The California Department of Tax and Fee Administration may prescribe rules and regulations for the administration of this section.

(j) The amendments made to this section by the act adding this subdivision shall not apply to irrevocable elections made before the operative date of the act adding this subdivision.

(k) The amendments made to this section by the act adding this subdivision shall apply to irrevocable elections made on and after June 29, 2020.

SEC. 5.

Section 17039 of the Revenue and Taxation Code is amended to read:

17039.

(a) Notwithstanding any provision in this part to the contrary, for the purposes of computing tax credits, the term “net tax” means the tax imposed under either Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to lump-sum distributions) less the credits allowed by Section 17054 (relating to personal exemption credits) and any amount imposed under paragraph (1) of subdivision (d) and paragraph (1) of subdivision (e) of Section 17560. Notwithstanding the preceding sentence, the “net tax” shall not be less than the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions), if any. Credits shall be allowed against “net tax” in the following order:

(1) Credits that do not contain carryover or refundable provisions, except those described in paragraphs (4) and (5).

(2) Credits that contain carryover provisions but do not contain refundable provisions, except for those that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.

(3) Credits that contain both carryover and refundable provisions, except the credit described in paragraph (9).

(4) The minimum tax credit allowed by Section 17063 (relating to the alternative minimum tax).

(5) (A) For taxable years beginning on or after January 1, 2002, and before January 1, 2022, credits that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.

(B) For taxable years beginning on or after January 1, 2022, credits that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062, except the credit described in paragraph (7) and the credit described in paragraph (9).

(6) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(7) For taxable years beginning on or after January 1, 2022, the credit allowed by Section 17052.10 (relating to the elective tax under the Small Business Relief Act).

(8) Credits that contain refundable provisions but do not contain carryover provisions.

(9) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 17053.98.1.

(10) The credits provided by Sections 17061 (relating to refunds pursuant to the Unemployment Insurance Code) and 19002 (relating to tax withholding).

(b) The order within each paragraph of subdivision (a) shall be determined by the Franchise Tax Board.

(c) (1) Notwithstanding any other provision of this part, no tax credit shall reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, except the following credits:

(A) The credit allowed by former Section 17052.2 (relating to teacher retention tax credit, repealed on August 24, 2007).

(B) The credit allowed by former Section 17052.4 (relating to solar energy, repealed on December 1, 1989).

(D) The credit allowed by former Section 17052.5 (relating to solar energy, repealed on December 1, 1994).

(E) The credit allowed by Section 17052.12 (relating to research expenses).

(F) The credit allowed by former Section 17052.13 (relating to sales and use tax credit, repealed on January 1, 1997).

(G) The credit allowed by former Section 17052.15 (relating to Los Angeles Revitalization Zone sales tax credit, repealed on December 1, 1998).

(H) The credit allowed by Section 17052.25 (relating to the adoption costs credit).

(I) The credit allowed by Section 17053.5 (relating to the renter’s credit).

(J) The credit allowed by former Section 17053.8 (relating to enterprise zone hiring credit, repealed on October 3, 1997).

(K) The credit allowed by former Section 17053.10 (relating to Los Angeles Revitalization Zone hiring credit, repealed on December 1, 1998).

(L) The credit allowed by former Section 17053.11 (relating to program area hiring credit, repealed on January 1, 1997).

(M) For each taxable year beginning on or after January 1, 1994, the credit allowed by former Section 17053.17 (relating to Los Angeles Revitalization Zone hiring credit, repealed on December 1, 1998).

(N) The credit allowed by former Section 17053.33 (relating to targeted tax area sales or use tax credit, repealed on December 1, 2015).

(O) The credit allowed by former Section 17053.34 (relating to targeted tax area hiring credit, repealed on December 1, 2019).

(P) The credit allowed by former Section 17053.49 (relating to qualified property, repealed on January 1, 2004).

(Q) The credit allowed by former Section 17053.70 (relating to enterprise zone sales or use tax credit, repealed on December 1, 2015).

(R) The credit allowed by former Section 17053.74 (relating to enterprise zone hiring credit, repealed on December 1, 2019).

(S) The credit allowed by Section 17054 (relating to credits for personal exemption).

(T) The credit allowed by Section 17054.5 (relating to the credits for a qualified joint custody head of household and a qualified taxpayer with a dependent parent).

(U) The credit allowed by Section 17054.7 (relating to the credit for a senior head of household).

(V) The credit allowed by former Section 17057 (relating to clinical testing expenses, repealed on December 1, 1993).

(W) The credit allowed by Section 17058 (relating to low-income housing).

(X) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 17059.2 (relating to GO-Biz California Competes Credit).

(Y) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).

(Z) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).

(AA) The credit allowed by Section 19002 (relating to tax withholding).

(AB) For taxable years beginning on or after January 1, 2014, the credit allowed by former Section 17053.86 (relating to the College Access Tax Credit Fund, repealed on December 1, 2017).

(AC) For taxable years beginning on or after January 1, 2017, the credit allowed by Section 17053.87 (relating to the College Access Tax Credit Fund).

(AD) For taxable years beginning on or after January 1, 2021, the credit allowed by Section 17052.10 (relating to the elective tax under the Small Business Relief Act).

(AE) For taxable years beginning on or after January 1, 2020, the credit allowed by Section 17053.98 (relating to the California Motion Picture and Television Production Credit).

(AF) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 17053.98.1 (relating to the California Motion Picture and Television Production Credit).

(2) Any credit that is partially or totally denied under paragraph (1) shall be allowed to be carried over and applied to the net tax in succeeding taxable years, if the provisions relating to that credit include a provision to allow a carryover when that credit exceeds the net tax.

(d) Unless otherwise provided, any remaining carryover of a credit allowed by a section that has been repealed or made inoperative shall continue to be allowed to be carried over under the provisions of that section as it read immediately before being repealed or becoming inoperative.

(e) (1) Unless otherwise provided, if two or more taxpayers (other than spouses) share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to the taxpayer’s respective share of the costs paid or incurred.

(2) In the case of a partnership, the credit shall be allocated among the partners pursuant to a written partnership agreement in accordance with Section 704 of the Internal Revenue Code, relating to partner’s distributive share.

(3) In the case of spouses who file separate returns, the credit may be taken by either or equally divided between them.

(f) Unless otherwise provided, in the case of a partnership, any credit allowed by this part shall be computed at the partnership level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit shall be applied to the partnership and to each partner.

(g) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity shall be limited in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “net tax,” as defined in subdivision (a), for the taxable year shall be limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 17062), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to that disregarded business entity. A credit shall not be allowed if the taxpayer’s regular tax (as defined in Section 17062), determined by including the income attributable to the disregarded business entity, is less than the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to the disregarded business entity.

(3) If the amount of a credit allowed pursuant to the section establishing the credit exceeds the amount allowable under this subdivision in any taxable year, the excess amount may be carried over to subsequent taxable years pursuant to subdivisions (c) and (d).

(h) (1) Unless otherwise specifically provided, in the case of a taxpayer that is a partner or shareholder of an eligible pass-thru entity described in paragraph (2), any credit passed through to the taxpayer in the taxpayer’s first taxable year beginning on or after the date the credit is no longer operative may be claimed by the taxpayer in that taxable year, notwithstanding the repeal of the statute authorizing the credit before the close of that taxable year.

(2) For purposes of this subdivision, “eligible pass-thru entity” means any partnership or “S” corporation that files its return on a fiscal year basis pursuant to Section 18566, and that is entitled to a credit pursuant to this part for the taxable year that begins during the last year the credit is operative.

(3) This subdivision applies to credits that become inoperative on or after January 1, 2002.

(i) The amendments made to this section by Chapter 3 of the Statutes of 2022 shall apply as follows:

(1) The amendments to subdivisions (a), (e), and (h) shall be operative for taxable years beginning on or after January 1, 2022.

(2) The amendments to subdivision (c) shall be operative for taxable years beginning on or after January 1, 2021.

(j) The amendments made to this section by the act adding this subdivision shall apply as follows:

(1) The amendments to paragraphs (3), (5), and (9) of subdivision (a) shall be operative for taxable years beginning on or after January 1, 2025.

(2) The amendments to subparagraph (AE) of paragraph (1) of subdivision (c) shall be operative for taxable years beginning on or after January 1, 2020.

(3) The amendments to subparagraph (AF) of paragraph (1) of subdivision (c) shall be operative for taxable years beginning on or after January 1, 2025.

SEC. 6.

Section 17053.98 of the Revenue and Taxation Code is amended to read:

17053.98.

(a) (1) For taxable years beginning on or after January 1, 2020, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to a computation and ranking by the California Film Commission in subdivision (g) and the allocation amount categories described in subdivision (i), in an amount equal to 20 percent or 25 percent, whichever is the applicable credit percentage described in paragraph (4), of the qualified expenditures for the production of a qualified motion picture in California. A credit shall not be allowed under this section for any qualified expenditures for the production of a motion picture in California if a credit has been claimed for those same expenditures under Section 17053.85 or 17053.95.

(2) Except as otherwise provided in this section, the credit shall be allowed for the taxable year in which the California Film Commission issues the credit certificate pursuant to subdivision (g) for the qualified motion picture, but in no instance prior to July 1, 2020, and shall be for the applicable percentage of all qualified expenditures paid or incurred by the qualified taxpayer in all taxable years for that qualified motion picture.

(3) (A) The amount of the credit allowed to a qualified taxpayer shall be limited to the amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (g).

(B) In determining the amount specified in the credit certificate in subparagraph (A), the California Film Commission shall be limited to the following amounts of qualified expenditures for each qualified motion picture:

(i) In the case of a feature, up to one hundred million dollars ($100,000,000).

(ii) In the case of a miniseries described in clause (ii) of subparagraph (A) of paragraph (18) of subdivision (b), up to one hundred million dollars ($100,000,000).

(iii) In the case of a television series described in clause (iii) or clause (v) of subparagraph (A) of paragraph (18) of subdivision (b), up to one hundred million dollars ($100,000,000) per season.

(iv) In the case of an independent film, up to ten million dollars ($10,000,000).

(4) For purposes of paragraphs (1) and (2), the applicable credit percentage shall be:

(A) Twenty percent of the qualified expenditures attributable to the production of a qualified motion picture in California, including, but not limited to, a feature or a television series that relocated to California that is in its second or subsequent years of receiving a tax credit allocation pursuant to this section, Section 17053.85, or Section 17053.95.

(B) Twenty-five percent of the qualified expenditures attributable to the production of a qualified motion picture in California where the qualified motion picture is a television series that relocated to California in its first year of receiving a tax credit allocation pursuant to this section.

(C) Twenty-five percent of the qualified expenditures attributable to the production of a qualified motion picture that is an independent film.

(D) Additional credits shall be allowed for the production of a qualified motion picture whose applicable credit percentage is determined pursuant to subparagraph (A), in an aggregate amount not to exceed 5 percent of the qualified expenditures under that subparagraph, as follows:

(i) (I) Five percent of qualified expenditures, excluding qualified wages described in subparagraph (E), relating to original photography outside the Los Angeles zone.

(II) For purposes of this clause and subparagraph (E):

(ia) “Applicable period” means the period that commences with preproduction and ends when original photography concludes. The applicable period includes the time necessary to strike a remote location and return to the Los Angeles zone.

(ib) “Los Angeles zone” means the area within a circle 30 miles in radius from Beverly Boulevard and La Cienega Boulevard, Los Angeles, California, and includes Agua Dulce, Castaic, including Castaic Lake, Leo Carrillo State Beach, Ontario International Airport, Piru, and Pomona, including the Los Angeles County Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch property is within the Los Angeles zone.

(ic) “Original photography” includes principal photography and reshooting original footage.

(id) “Qualified expenditures relating to original photography outside the Los Angeles zone” means amounts paid or incurred during the applicable period for tangible personal property purchased or leased and used or consumed outside the Los Angeles zone and relating to original photography outside the Los Angeles zone and qualified wages paid for services performed outside the Los Angeles zone and relating to original photography outside the Los Angeles zone.

(ii) Five percent of the qualified expenditures relating to qualified visual effects attributable to the production of a qualified motion picture in California.

(E) (i) Notwithstanding subparagraph (D), an amount equal to 10 percent of qualified wages paid for services performed relating to original photography outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone shall be allowed as an additional credit for the production of a qualified motion picture whose applicable credit percentage is determined pursuant to subparagraph (A).

(ii) Notwithstanding subparagraph (D), an amount equal to 5 percent of qualified wages paid for services performed relating to original photography outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone shall be allowed as an additional credit for the production of a qualified motion picture whose applicable credit percentage is determined pursuant to subparagraph (B) or (C).

(b) For purposes of this section:

(1) “Ancillary product” means any article for sale to the public that contains a portion of, or any element of, the qualified motion picture.

(2) “Budget” means an estimate of all expenses paid or incurred during the production period of a qualified motion picture. It shall be the same budget used by the qualified taxpayer and production company for all qualified motion picture purposes.

(3) “Clip use” means a use of any portion of a motion picture, other than the qualified motion picture, used in the qualified motion picture.

(4) “Credit certificate” means the certificate issued by the California Film Commission pursuant to subparagraph (D) of paragraph (3) of subdivision (g).

(5) (A) “Employee fringe benefits” means the amount allowable as a deduction under this part to the qualified taxpayer involved in the production of the qualified motion picture, exclusive of any amounts contributed by employees, for any year during the production period with respect to any of the following:

(i) Employer contributions under any pension, profit-sharing, annuity, or similar plan.

(ii) Employer-provided coverage under any accident or health plan for employees.

(iii) The employer’s cost of life or disability insurance provided to employees.

(B) Any amount treated as wages under clause (i) of subparagraph (A) of paragraph (21) shall not be taken into account under this paragraph.

(6) “Independent film” means a motion picture with a minimum budget of one million dollars ($1,000,000) that is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 25 percent of the producing company.

(7) “Jobs ratio” means the amount of qualified wages paid to qualified individuals divided by the amount of tax credit, not including any additional credit allowed pursuant to subparagraphs (D) and (E) of paragraph (4) of subdivision (a), as computed by the California Film Commission. For the purposes of the calculation of the jobs ratio only, 70 percent of qualified expenditures for visual effects paid to third-party vendors for work performed in California shall be deemed to be qualified wages paid to a qualified individual.

(8) “Licensing” means any grant of rights to distribute the qualified motion picture, in whole or in part.

(9) “New use” means any use of a motion picture in a medium other than the medium for which it was initially created.

(10) “Pilot for a new television series” means the initial episode produced for a proposed television series.

(11) (A) “Postproduction” means the final activities in a qualified motion picture’s production, including editing, foley recording, automatic dialogue replacement, sound editing, scoring, music track recording by musicians and music editing, beginning and end credits, negative cutting, negative processing and duplication, the addition of sound and visual effects, sound mixing, film-to-tape transfers, encoding, and color correction.

(B) “Postproduction” does not include the manufacture or shipping of release prints or their equivalent.

(12) “Preproduction” means the process of preparation for actual physical production which begins after a qualified motion picture has received a firm agreement of financial commitment, or is greenlit, with, for example, the establishment of a dedicated production office, the hiring of key crew members, and includes, but is not limited to, activities that include location scouting and execution of contracts with vendors of equipment and stage space.

(13) “Principal photography” means the phase of production during which the motion picture is actually shot, as distinguished from preproduction and postproduction.

(14) “Production period” means the period beginning with preproduction and ending upon completion of postproduction.

(15) “Qualified entity” means a personal service corporation as defined in Section 269A(b)(1) of the Internal Revenue Code, a payroll services corporation, or any entity receiving qualified wages with respect to services performed by a qualified individual.

(16) “Qualified expenditures” means amounts paid or incurred for tangible personal property purchased or leased, and used, within this state in the production of a qualified motion picture and payments, including qualified wages, for services performed within this state in the production of a qualified motion picture.

(17) (A) “Qualified individual” means any individual who performs services during the production period in an activity related to the production of a qualified motion picture.

(B) “Qualified individual” shall not include either of the following:

(i) Any individual related to the qualified taxpayer as described in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of the Internal Revenue Code, of the qualified taxpayer.

(18) (A) “Qualified motion picture” means a motion picture that is produced for distribution to the general public, regardless of medium, that is one of the following:

(i) A feature with a minimum production budget of one million dollars ($1,000,000).

(ii) A miniseries consisting of two or more episodes, each longer than 40 minutes of running time, exclusive of commercials, that is produced in California, with a minimum production budget of one million dollars ($1,000,000) per episode.

(iii) A new television series of episodes longer than 40 minutes each of running time, exclusive of commercials, that is produced in California, with a minimum production budget of one million dollars ($1,000,000) per episode.

(iv) An independent film.

(v) A television series that relocated to California.

(vi) A pilot for a new television series that is longer than 40 minutes of running time, exclusive of commercials, that is produced in California, and with a minimum production budget of one million dollars ($1,000,000).

(B) To qualify as a “qualified motion picture,” all of the following conditions shall be satisfied:

(i) At least 75 percent of the principal photography days occur wholly in California or 75 percent of the production budget is incurred for payment for services performed within the state and the purchase or rental of property used within the state.

(ii) Production of the qualified motion picture is completed within 30 months from the date on which the qualified taxpayer’s application is approved by the California Film Commission. For purposes of this section, a qualified motion picture is “completed” when the process of postproduction has been finished.

(iii) The copyright for the motion picture is registered with the United States Copyright Office pursuant to Title 17 of the United States Code.

(iv) Principal photography of the qualified motion picture commences after the date on which the application is approved by the California Film Commission, but no later than 180 days after the date of that approval if the qualified motion picture has a budget with qualified expenditures of less than one hundred million dollars ($100,000,000), and no later than 240 days after the date of that approval in the case of a qualified motion picture with a budget of qualified expenditures with at least one hundred million dollars ($100,000,000), unless death, disability, or disfigurement of the director or of a principal cast member; an act of God, including, but not limited to, fire, flood, earthquake, storm, hurricane, or other natural disaster; terrorist activities; or government sanction has directly prevented a production’s ability to begin principal photography within the prescribed 180- or 240-day commencement period.

(C) For the purposes of subparagraph (A), in computing the total wages paid or incurred for the production of a qualified motion picture, all amounts paid or incurred by all persons or entities that share in the costs of the qualified motion picture shall be aggregated.

(D) “Qualified motion picture” shall not include commercial advertising, music videos, a motion picture produced for private noncommercial use, such as weddings, graduations, or as part of an educational course and made by students, a news program, current events or public events program, talk show, game show, sporting event or activity, awards show, telethon or other production that solicits funds, reality television program, clip-based programming if more than 50 percent of the content is comprised of licensed footage, documentaries, variety programs, daytime dramas, strip shows, one-half hour (air time) episodic television shows, or any production that falls within the recordkeeping requirements of Section 2257 of Title 18 of the United States Code.

(19) (A) “Qualified taxpayer” means a taxpayer who has paid or incurred qualified expenditures, participated in the Career Readiness requirement in Section 17053.95, and has been issued a credit certificate by the California Film Commission pursuant to subdivision (g).

(B) In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section is not allowed to the pass-thru entity but shall be passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, “pass-thru entity” means any entity taxed as a partnership or “S” corporation.

(20) “Qualified visual effects” means visual effects where at least 75 percent or a minimum of ten million dollars ($10,000,000) of the qualified expenditures for the visual effects are paid or incurred in California.

(21) (A) “Qualified wages” means all of the following:

(i) Any wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code that were paid or incurred by any taxpayer involved in the production of a qualified motion picture with respect to a qualified individual for services performed on the qualified motion picture production within this state.

(ii) The portion of any employee fringe benefits paid or incurred by any taxpayer involved in the production of the qualified motion picture that are properly allocable to qualified wage amounts described in clauses (i), (iii), and (iv).

(iii) Any payments made to a qualified entity for services performed in this state by qualified individuals within the meaning of paragraph (17).

(iv) Remuneration paid to an independent contractor who is a qualified individual for services performed within this state by that qualified individual.

(B) “Qualified wages” shall not include any of the following:

(i) Expenses, including wages, related to new use, reuse, clip use, licensing, secondary markets, or residual compensation, or the creation of any ancillary product, including, but not limited to, a soundtrack album, toy, game, trailer, or teaser.

(ii) Expenses, including wages, paid or incurred with respect to acquisition, development, turnaround, or any rights thereto.

(iii) Expenses, including wages, related to financing, overhead, marketing, promotion, or distribution of a qualified motion picture.

(iv) Expenses, including wages, paid per person per qualified motion picture for writers, directors, music directors, music composers, music supervisors, producers, and performers, other than background actors with no scripted lines.

(22) “Recurring television series” means any television series that was previously approved and issued a credit allocation letter under this section.

(23) “Residual compensation” means supplemental compensation paid at the time that a motion picture is exhibited through new use, reuse, clip use, or in secondary markets, as distinguished from payments made during production.

(24) “Reuse” means any use of a qualified motion picture in the same medium for which it was created, following the initial use in that medium.

(25) “Secondary markets” means media in which a qualified motion picture is exhibited following the initial media in which it is exhibited.

(26) “Television series that relocated to California” means a television series, without regard to episode length or initial media exhibition, with a minimum production budget of one million dollars ($1,000,000) per episode, that filmed at least 75 percent of principal photography days in its most recent season outside of California or has filmed all seasons outside of California and for which the taxpayer certifies that the credit provided pursuant to this section is the primary reason for relocating to California.

(27) “Visual effects” means the creation, alteration, or enhancement of images that cannot be captured on a set or location during live action photography and therefore is accomplished in postproduction. It includes, but is not limited to, matte paintings, animation, set extensions, computer-generated objects, characters and environments, compositing (combining two or more elements in a final image), and wire removals. “Visual effects” does not include fully animated projects, whether created by traditional or digital means.

(c) (1) Notwithstanding any other law, a qualified taxpayer may sell any credit allowed under this section that is attributable to an independent film, as defined in paragraph (6) of subdivision (b), to an unrelated party.

(2) The qualified taxpayer shall report to the Franchise Tax Board prior to the sale of the credit, in the form and manner specified by the Franchise Tax Board, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the qualified taxpayer for the sale of the credit.

(3) In the case where the credit allowed under this section exceeds the “net tax,” the excess credit may be carried over to reduce the “net tax” in the following taxable year, and succeeding eight taxable years, if necessary, until the credit has been exhausted.

(4) A credit shall not be sold pursuant to this subdivision to more than one taxpayer, nor may the credit be resold by the unrelated party to another taxpayer or other party.

(5) A party that has acquired tax credits under this subdivision shall be subject to the requirements of this section.

(6) In no event may a qualified taxpayer assign or sell any tax credit to the extent the tax credit allowed by this section is claimed on any tax return of the qualified taxpayer.

(7) In the event that both the taxpayer originally allocated a credit under this section by the California Film Commission and a taxpayer to whom the credit has been sold both claim the same amount of credit on their tax returns, the Franchise Tax Board may disallow the credit of either taxpayer, so long as the statute of limitations upon assessment remains open.

(8) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this subdivision.

(9) Subdivision (g) of Section 17039 shall not apply to any credit sold pursuant to this subdivision.

(10) For purposes of this subdivision, the unrelated party or parties that purchase a credit pursuant to this subdivision shall be treated as a qualified taxpayer pursuant to paragraph (1) of subdivision (a).

(d) (1) No credit shall be allowed pursuant to this section unless the qualified taxpayer provides the following to the California Film Commission:

(A) Identification of each qualified individual.

(B) The specific start and end dates of production.

(D) The total amount of qualified wages paid to qualified individuals.

(E) Aggregate data for individuals whose wages are excluded from qualified wages by clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b), including their gender, ethnic, and racial makeup.

(F) The copyright registration number, as reflected on the certificate of registration issued under the authority of Section 410 of Title 17 of the United States Code, relating to registration of claim and issuance of certificate. The registration number shall be provided on the return claiming the credit.

(G) The total amounts paid or incurred to purchase or lease tangible personal property used in the production of a qualified motion picture.

(H) Information to substantiate its qualified expenditures.

(I) Information required by the California Film Commission under regulations promulgated pursuant to subdivision (g) necessary to verify the amount of credit claimed.

(J) Data regarding the diversity of the workforce employed by the applicant on the qualified motion picture, as described in subdivision (g).

(K) Documentation verifying completion of the Career Readiness requirement.

(L) Documentation verifying that the qualified taxpayer paid a fee as described in subdivision (e).

(2) (A) Based on the information provided in paragraph (1), the California Film Commission shall recompute the jobs ratio previously computed in subdivision (g) and compare this recomputed jobs ratio to the jobs ratio that the qualified taxpayer previously listed on the application submitted pursuant to subdivision (g).

(B) (i) If the California Film Commission determines that the jobs ratio has been reduced by more than 10 percent for a qualified motion picture, the California Film Commission shall reduce the amount of credit allowed by an equal percentage, unless the qualified taxpayer demonstrates, and the California Film Commission determines, that reasonable cause exists for the jobs ratio reduction.

(ii) If the California Film Commission determines that the jobs ratio has been reduced by more than 20 percent for a qualified motion picture, the California Film Commission shall not accept an application described in subdivision (g) from that qualified taxpayer or any member of the qualified taxpayer’s controlled group for a period of not less than one year from the date of that determination, unless the qualified taxpayer demonstrates, and the California Film Commission determines, that reasonable cause exists for the jobs ratio reduction.

(C) For the purposes of this paragraph, “reasonable cause” means unforeseen circumstances beyond the control of the qualified taxpayer, such as, but not limited to, the cancellation of a television series prior to the completion of the scheduled number of episodes or other similar circumstances as determined by the California Film Commission in regulations to be adopted pursuant to subdivision (e).

(e) (1) (A) Subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the California Film Commission shall adopt rules and regulations to implement a pilot Career Pathways Training program including a fee to be paid by the qualified taxpayer, if the qualified taxpayer receives a credit under this section, to fund technical skills training to individuals from underserved communities for entry into film and television industry jobs. The California Film Commission shall (i) identify a not-for-profit fiscal agent with direct relationships to industry skills training programs to manage the funds; and (ii) engage labor-management jointly administered training programs with skills training focused on the entertainment industry to implement the program with California Film Commission approval and oversight. With regard to the Career Readiness requirement in Section 17053.95, the California Film Commission shall identify training and public service opportunities that may include, but not be limited to, hiring interns, public service announcements, and community outreach shall continue. The California Film Commission may prescribe rules and regulations to carry out the purposes of this section, including, subparagraph (D) of paragraph (4) of subdivision (a) and clause (iv) of subparagraph (D) of paragraph (2) of subdivision (g), and including any rules and regulations necessary to establish procedures, processes, requirements, application fee structure, and rules identified in or required to implement this section, including credit and logo requirements and credit allocation procedures over multiple fiscal years where the qualified taxpayer is producing a series of features that will be filmed concurrently.

(B) Notwithstanding any other law, prior to preparing a notice of proposed action pursuant to Section 11346.4 of the Government Code and prior to making any revision to the proposed regulation other than a change that is nonsubstantial or solely grammatical in nature, the Governor’s Office of Business and Economic Development shall first approve the proposed regulation or proposed change to a proposed regulation regarding allocating the credit pursuant to subdivision (i), computing the jobs ratio as described in subdivisions (d) and (g), and defining “reasonable cause” pursuant to subparagraph (C) of paragraph (2) of subdivision (d).

(2) (A) Implementation of this section for the 2020–21 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the California Film Commission is hereby authorized to adopt emergency regulations to implement this section during the 2020–21 fiscal year in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(B) Nothing in this paragraph shall be construed to require the Governor’s Office of Business and Economic Development to approve emergency regulations adopted pursuant to this paragraph.

(3) The California Film Commission shall not be required to prepare an economic impact analysis pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) with regard to any rules and regulations adopted pursuant to this subdivision.

(f) If the qualified taxpayer fails to provide the copyright registration number as required in subparagraph (E) of paragraph (1) of subdivision (d), the credit shall be disallowed and assessed and collected under Section 19051 until the procedures are satisfied.

(g) For purposes of this section, the California Film Commission shall do the following:

(1) Subject to the requirements of subparagraphs (A) to (E), inclusive, of paragraph (2), on or after July 1, 2020, and before July 1, 2025, in two or more allocation periods per fiscal year, allocate tax credits to applicants.

(2) (A) Establish a procedure for applicants to file with the California Film Commission a written application, on a form jointly prescribed by the California Film Commission and the Franchise Tax Board for the allocation of the tax credit. The application shall include, but not be limited to, the following information:

(i) The budget for the motion picture production.

(ii) The number of production days.

(iii) A financing plan for the production.

(iv) The diversity of the workforce employed by the applicant, including, but not limited to, the ethnic and racial makeup of the individuals employed by the applicant during the production of the qualified motion picture, to the extent possible.

(v) All members of a combined reporting group, if known at the time of the application.

(vi) The amount of qualified wages the applicant expects to pay to qualified individuals.

(vii) The amount of tax credit the applicant computes the qualified motion picture will receive, applying the applicable credit percentages described in paragraph (4) of subdivision (a).

(viii) A statement establishing that the tax credit described in this section is a significant factor in the applicant’s choice of location for the qualified motion picture. The statement shall include information about whether the qualified motion picture is at risk of not being filmed or specify the jurisdiction or jurisdictions in which the qualified motion picture will be located in the absence of the tax credit. The statement shall be signed by an officer or executive of the applicant.

(ix) The applicant’s written policy against unlawful harassment, including, but not limited to, sexual harassment, which includes procedures for reporting and investigating harassment claims, a phone number for an individual who will be responsible for receiving harassment claims, and a statement that the company will not retaliate against an individual who reports harassment. The applicant shall also indicate how the policy will be distributed to employees and include a summary of education training resources, including the prohibition against, and prevention and correction of, sexual harassment and remedies available.

(x) The ethnic and racial makeup and gender of individuals whose wages are excluded from qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b).

(xi) A summary of the applicant’s voluntary programs to increase the representation of minorities and women in the job classifications that are not included in qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b) and information about how these programs are publicized to interested parties. The officer or executive referenced in clause (x) who is signing the statement shall provide additional information about these programs, if needed and upon request, to the California Film Commission.

(xii) Any other information deemed relevant by the California Film Commission or the Franchise Tax Board.

(B) Establish criteria, consistent with the requirements of this section, for allocating tax credits.

(D) (i) For purposes of allocating the credit amounts subject to the categories described in subdivision (i) in any fiscal year, the California Film Commission shall do all of the following:

(ii) For each allocation date and for each category, list each applicant from highest to lowest according to the jobs ratio as computed by the California Film Commission.

(iii) Subject to the applicable credit percentage, allocate the credit to each applicant according to the highest jobs ratio, working down the list, until the credit amount is exhausted.

(iv) (I) Pursuant to regulations adopted pursuant to subdivision (e), the California Film Commission may increase the jobs ratio by up to 25 percent if a qualified motion picture increases economic activity in California according to criteria developed by the California Film Commission that would include, but not be limited to, such factors as, the amount of the production and postproduction spending in California, the utilization of scoring musicians in California, and other criteria measuring economic impact in California as determined by the California Film Commission.

(II) For qualified motion pictures that are described in subparagraph (D) of paragraph (8) of subdivision (k), the jobs ratio shall be equal to the product of the jobs ratio calculated in paragraph (7) of subdivision (b) and 133 percent.

(v) Notwithstanding any other law, any television series, relocating television series, or any new television series based on a pilot for a new television series that has been approved and issued a credit allocation by the California Film Commission under this section, including subdivision (k), Section 23698, including subdivision (k), or Section 17053.95, 23695, 17053.85, or 23685 shall be issued a credit for each subsequent season, for the life of that television series whenever credits are allocated within a fiscal year. The California Film Commission shall limit the amount of credits any recurring television series receives in a subsequent season to no more than the amount reserved in its prior fiscal year Credit Allocation Letter or Letters, or if no amounts were reserved in the prior fiscal year, the most immediate prior fiscal year in which a Credit Allocation Letter or Letters were received. In the event that insufficient tax credits are available to fund all recurring television series pursuant to this clause for any fiscal year or in the event the California Film Commission projects, in collaboration with the Department of Finance, that there will be insufficient tax credits available to fund all recurring television series in either of the subsequent two fiscal years, the California Film Commission shall make the following adjustments in the order given until the shortfall, or any projected shortfall for the two subsequent fiscal years, for recurring television series is eliminated:

(I) Notwithstanding clause (iii) of subparagraph (A) of paragraph (2) of subdivision (i), the California Film Commission may redirect up to 100 percent of the credit amounts allocated to the relocating television series category to recurring television series for that fiscal year until the shortfall or projected shortfall is eliminated.

(II) Notwithstanding clause (iv) of subparagraph (A) of paragraph (2) of subdivision (i), the California Film Commission may redirect up to 100 percent of the credit amounts allocated to a new television series to recurring television series for that fiscal year until the shortfall or projected shortfall is eliminated.

(III) Notwithstanding clause (ii) of subparagraph (A) of paragraph (2) of subdivision (i), the California Film Commission may redirect up to 100 percent of the credit allocations from the features category to the recurring television series category for that fiscal year until the shortfall is eliminated.

(IV) Allocate up to 25 percent of total credit allocations that would otherwise be allocated in the 2024–25 fiscal year to recurring television series in the current fiscal year until the shortfall is eliminated. Any amounts transferred for allocation in the current fiscal year shall be subtracted from the amount allowed to be allocated in the 2024–25 fiscal year as specified in subdivision (i). Notwithstanding paragraph (3), the credit allocations that are subtracted from 2024–25 shall not be certified until July 1, 2025 or later.

(V) The California Film Commission shall consult with the qualified taxpayers who are producing the recurring television series for purposes of negotiating a minimally impactful reduction in the amount of credits awarded to each recurring television series for that fiscal year until the shortfall is eliminated.

(E) Subject to the annual cap and the allocation credit amounts based on categories described in subdivision (i), allocate an aggregate amount of credits under this section and Section 23698, and allocate any carryover of unallocated or unused credits from prior years and Sections 17053.85, 17053.95, 23685, and 23695, and the amount of any credits reduced pursuant to paragraph (2) of subdivision (d).

(3) Certify tax credits allocated to qualified taxpayers.

(A) Establish a verification procedure to update the information in subparagraph (A) of paragraph (2) of subdivision (g), including, but not limited to, all of the following:

(i) The amounts of qualified expenditures paid or incurred by the applicant.

(ii) The diversity of the workforce employed by the applicant.

(iii) The ethnic and racial makeup and gender of individuals whose wages are excluded from qualified wages by clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b).

(B) Establish audit requirements that shall be satisfied before a credit certificate may be issued by the California Film Commission.

(C) (i) Establish a procedure for a qualified taxpayer to report to the California Film Commission, prior to the issuance of a credit certificate, the following information:

(I) If readily available, a list of the states, provinces, or other jurisdictions in which any member of the applicant’s combined reporting group in the same business unit as the qualified taxpayer that, in the preceding calendar year, has produced a qualified motion picture intended for release in the United States market. For purposes of this clause, “qualified motion picture” shall not include any episodes of a television series that were complete or in production prior to July 1, 2020.

(II) Whether a qualified motion picture described in subclause (I) was awarded any financial incentive by the state, province, or other jurisdiction that was predicated on the performance of primary principal photography or postproduction in that location.

(ii) The California Film Commission may provide that the report required by this subparagraph be filed in a single report provided on a calendar year basis for those qualified taxpayers that receive multiple credit certificates in a calendar year.

(D) Issue a credit certificate to a qualified taxpayer upon completion of the qualified motion picture reflecting the credit amount allocated after qualified expenditures have been verified and the jobs ratio computed under this section. The amount of credit shown on the credit certificate shall not exceed the amount of credit allocated to that qualified taxpayer pursuant to this section.

(4) Obtain, when possible, the following information from applicants that do not receive an allocation of credit:

(A) Whether the qualified motion picture that was the subject of the application was completed.

(B) If completed, in which state or foreign jurisdiction was the primary principal photography completed.

(C) Whether the applicant received any financial incentives from the state or foreign jurisdiction to make the qualified motion picture in that location.

(5) Provide the Legislative Analyst’s Office, upon request, any or all application materials or any other materials received from, or submitted by, applicants for which a credit allocation decision has been made, including, but not limited to, applicants that did not receive a credit allocation. Materials provided to the Legislative Analyst’s Office shall be in electronic format when available and include, but not be limited to, information provided pursuant to clauses (i) to (xii), inclusive, of subparagraph (A) of paragraph (2) and the diversity workplans provided pursuant to clause (iv) of subparagraph (B) of paragraph (2) of subdivision (k).

(6) The information provided to the California Film Commission pursuant to this section shall constitute confidential tax information for purposes of Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2.

(7) (A) Notwithstanding any other law, on or after July 1, 2025, the California Film Commission may allocate, pursuant to this section, any previously allocated credits not certified that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.

(B) For purposes of this section, “previously allocated credits not certified” means either:

(i) Credits allocated under paragraph (1) for which the qualified taxpayer to which the credit amounts were originally allocated has notified the California Film Commission in writing that the qualified taxpayer will not request certification for the allocated credits.

(ii) The difference between the amount of credits allocated under paragraph (1) to a qualified taxpayer and the amount of credits the California Film Commission certified, for that qualified taxpayer. For purposes of calculating the difference, the California Film Commission shall not consider any credit amounts for which the qualified taxpayer notifies the California Film Commission under clause (i).

(8) Notwithstanding any other law, on or after July 1, 2025, the California Film Commission may allocate, pursuant to this section, any credit amounts described in subparagraphs (B) and (E) of paragraph (1) of subdivision (i) that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.

(9) The California Film Commission shall submit a report to the Legislature, on an annual basis beginning January 1, 2022, on aggregate diversity information for the productions allocated tax credits allowed in this section and the diversity of the motion picture production industry in California more generally.

(h) (1) The California Film Commission shall annually provide the Legislative Analyst’s Office, the Franchise Tax Board, and the California Department of Tax and Fee Administration with a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission. The list shall include the names and taxpayer identification numbers, including taxpayer identification numbers of each partner or shareholder, as applicable, of the qualified taxpayer.

(2) (A) Notwithstanding paragraph (6) of subdivision (g), the California Film Commission shall annually post on its internet website and make available for public release the following:

(i) A table which includes all of the following information: a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission, the number of production days in California the qualified taxpayer represented in its application would occur, the number of California jobs that the qualified taxpayer represented in its application would be directly created by the production, and the total amount of qualified expenditures expected to be spent by the production.

(ii) A narrative staff summary describing the production of the qualified taxpayer as well as background information regarding the qualified taxpayer contained in the qualified taxpayer’s application for the credit.

(iii) For qualified taxpayers allocated a credit, the aggregate diversity information collected pursuant to clauses (iv) and (xii) of subparagraph (A) of paragraph (2) of subdivision (g) organized per production and an aggregate compilation describing the voluntary programs collected pursuant to clause (xiii) of subparagraph (A) of paragraph (2) of subdivision (g).

(B) Nothing in this subdivision shall be construed to make the information submitted by an applicant for a tax credit under this section a public record, including for the purposes of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(3) The California Film Commission shall provide each city and county in California with an instructional guide that includes, but is not limited to, a review of best practices for facilitating motion picture production in local jurisdictions, resources on hosting and encouraging motion picture production, and the California Film Commission’s Model Filming Ordinance. The California Film Commission shall maintain on its internet website a list of initiatives by locality that encourage motion picture production in regions across the state. The list shall be distributed to each approved applicant for the program to highlight local jurisdictions that offer incentives to facilitate film production.

(i) (1) (A) The aggregate amount of credits that may be allocated for a fiscal year pursuant to this section and Section 23698, except as provided in subdivision (k) of this section and subdivision (k) of Section 23698, is three hundred thirty million dollars ($330,000,000), plus any amount described in subparagraph (B), (C), (D), or (E) in credits for the 2020–21 fiscal year and each fiscal year thereafter, through and including the 2024–25 fiscal year, except as provided in paragraph (7) of subdivision (g), plus the amount described in subparagraph (F) in credits for the 2021–22 and 2022–23 fiscal years.

(B) (i) Subject to clauses (ii) and (iii), the unused allocation credit amount, if any, for the preceding fiscal year.

(ii) The amount of unused credit allocation attributable to independent films shall only be allocated according to clause (i) of subparagraph (A) of paragraph (2).

(iii) The total amount of any unused credit allocation amount that is remaining shall only be allocated pursuant to clause (iv) of subparagraph (A) of paragraph (2).

(D) The amount of any credits reduced pursuant to paragraph (2) of subdivision (d).

(E) That portion of any unused allocation credit amount, if any, attributable to Section 17053.85, 17053.95, 23685, or 23695 available for that fiscal year in a manner as determined by regulations promulgated by the California Film Commission.

(F) (i) For fiscal years 2021–22 and 2022–23, the California Film Commission shall allocate an additional fifteen million dollars ($15,000,000) in credits to be granted exclusively to television series that relocate to California.

(I) Notwithstanding subparagraph (A) of paragraph (2) of this subdivision and clause (v) of subparagraph (D) of paragraph (2) of subdivision (g), the moneys allocated pursuant to this subparagraph shall not be redirected or reallocated.

(II) Notwithstanding paragraph (25) of subdivision (b), for purposes of this subparagraph, a “television series that relocated to California” means a television series, without regard to episode length or initial media exhibition, with a minimum production budget of one million dollars ($1,000,000) per episode that both filmed at least 75 percent of principal photography days for at least one episode outside of California and has not filmed more than 25 percent of principal photography days for any episode inside of California.

(ii) For fiscal years 2021–22 and 2022–23, the California Film Commission shall allocate an additional seventy-five million dollars ($75,000,000) in credits to be granted exclusively to recurring television series.

(2) (A) Notwithstanding the foregoing, and subject to paragraph (4) of this subdivision and changes in allocations pursuant to clause (v) of subparagraph (D) of paragraph (2) of subdivision (g), the California Film Commission shall allocate the credit amounts subject to the following categories:

(i) Independent films with qualified expenditures of ten million dollars ($10,000,000) or less shall be allocated 4.8 percent of the amount specified in paragraph (1). Independent films with qualified expenditures in excess of ten million dollars ($10,000,000) shall be allocated 3.2 percent of the amount specified in paragraph (1). These amounts shall be in addition to any unused allocation credit amount, if any, for the preceding fiscal year as described in subparagraph (B) of paragraph (1).

(ii) Features shall be allocated 35 percent of the amount specified in paragraph (1).

(iii) A relocating television series shall be allocated 17 percent of the amount specified in paragraph (1).

(iv) A new television series, pilots for a new television series, miniseries, and recurring television series shall be allocated 40 percent of the amount specified in paragraph (1), plus any unused allocation credit amount, if any, for the preceding fiscal year as described in subparagraph (B) of paragraph (1).

(B) Within any allocation period for credits to a relocating television series, any unused amount shall be reallocated to the category described in clause (iv) of subparagraph (A) and, if any unused amount remains, reallocated in the next allocation period for credits to a relocating television series.

(C) With respect to a relocating television series issued a credit in a subsequent year pursuant to clause (v) of subparagraph (D) of paragraph (2) of subdivision (g), that subsequent credit amount shall be allowed from the allocation amount described in clause (iv) of subparagraph (A).

(3) Any act that reduces the amount that may be allocated pursuant to paragraph (1) constitutes a change in state taxes for the purpose of increasing revenues within the meaning of Section 3 of Article XIII A of the California Constitution and may be passed by not less than two-thirds of all Members elected to each of the two houses of the Legislature.

(4) A qualified motion picture, as defined in subdivision (k), shall not be eligible for an allocation under subdivisions (a) to (j), inclusive, if it receives a credit under subdivision (k) during that fiscal year.

(j) The California Film Commission shall have the authority to allocate tax credits in accordance with this section and in accordance with any regulations prescribed pursuant to subdivision (e) upon adoption.

(k) (1) For taxable years beginning on or after January 1, 2022, and before January 1, 2032, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to allocation by the California Film Commission, in an amount equal to 20 percent or 25 percent, whichever is the applicable credit percentage described in paragraph (4) of subdivision (a), as modified by paragraph (3) of this subdivision, of the qualified expenditures for the production of a qualified motion picture produced in the state at a certified studio construction project.

(2) For purposes of this subdivision, the definitions in subdivision (b) shall apply except as otherwise provided in this subdivision.

(A) “Certified studio construction project” means a construction or renovation project certified for a period of five years by the California Film Commission as having met all of the following criteria:

(i) The project provides for the construction or renovation of one or more soundstages located in the state.

(ii) Actual construction or renovation expenditures are not less than twenty-five million dollars ($25,000,000) of actual construction or renovation expenditures made over not more than five continuous calendar years.

(iii) The construction or renovation of each certified studio construction project is performed in accordance with Section 17053.99.

(iv) The construction or renovation of each certified studio construction project commences pursuant to a foundation permit or a structural building permit for the construction or renovation that is issued after the effective date of the act adopting this subdivision.

(v) The certified studio construction project applicant or its affiliates shall not have received a California Competes Grant under Section 12096.6 of the Government Code for wages or investment related to construction of the studio construction project.

(B) “Qualified motion picture” means a qualified motion picture, as defined in subdivision (b), that meets all of the following requirements:

(i) During the production period, the qualified motion picture films at least 50 percent of its principal photography stage shooting days on a soundstage or soundstages certified as a certified studio construction project.

(ii) During the production period, the qualified motion picture pays or incurs at least five million dollars ($5,000,000) in qualified wages for filming on a soundstage or soundstages certified as a certified studio construction project.

(iii) Is produced by a qualified taxpayer that is either of the following:

(I) More than 50 percent owned, directly or indirectly, by the same owner or owners of the soundstage or soundstages that is part of a certified studio construction project on which the production is filmed.

(II) Entered into a contract or lease of 10 years or more with the owner or owners of a certified studio construction project on which the production is filmed.

(iv) Provides a diversity workplan that is approved by the California Film Commission.

(C) For purposes of this subdivision, a qualified taxpayer and a taxpayer include a passthrough entity and a disregarded entity.

(3) (A) The diversity workplan required pursuant to clause (iv) of subparagraph (B) of paragraph (2) shall include all of the following:

(i) A statement of the diversity goals the motion picture will seek to achieve in terms of qualified wages paid by race, ethnicity, gender, and disability status.

(ii) A statement of the diversity goals the motion picture will seek to achieve for individuals whose wages are excluded from qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b), with respect to both compensation and to the representation of diversity in the creative aspects of the motion picture.

(iii) A plan of what strategies the motion picture will employ to achieve the goals in clauses (i) and (ii).

(B) The diversity workplan shall include goals that are broadly reflective of California’s population, in terms of race, ethnicity, gender, and disability status.

(C) The California Film Commission shall approve or reject the diversity workplan of an applicant, to the extent allowed by federal and state law.

(D) (i) The California Film Commission shall not certify any tax credit under this subdivision until they have received a final diversity report from the qualified motion picture applicant.

(ii) The final diversity report shall calculate and provide evidence for the extent to which the applicant met the diversity goals laid out in their diversity workplan.

(iii) The California Film Commission shall have the authority to audit the final diversity report to determine if the diversity goals set forth in the applicant’s diversity workplan for the motion picture production were achieved.

(iv) If the California Film Commission determines that the qualified motion picture applicant has met or made a good faith effort to meet the diversity goals in its diversity workplan, the applicant’s credit percentage described in paragraph (1) shall be increased by up to four percentage points as follows:

(I) By two percentage points if the California Film Commission determines that the applicant has met or made a good faith effort to meet the diversity goals with respect to the diversity of the workforce employed by the applicant in its diversity workplan statement.

(II) By two percentage points if the California Film Commission determines that the applicant has met or made a good faith effort to meet the diversity goals with respect to individuals whose wages are excluded from qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (21) of subdivision (b), in its diversity workplan statement.

(E) The California Film Commission, in consultation with the Governor’s Office of Business and Economic Development, shall establish guidelines to evaluate diversity workplans as described in this paragraph. The guidelines shall be posted on the California Film Commission’s internet website.

(4) The credit allowed under this subdivision shall be administered in accordance with subdivisions (a), (b), (c), (d), (h), and (l), except that paragraph (1) of subdivision (a) shall not apply, paragraph (7) of subdivision (b) shall not apply, and paragraph (2) of subdivision (d) shall not apply.

(5) Subparagraph (A) of paragraph (2), subparagraphs (A), (B), and (C) of paragraph (3), and paragraphs (4), (5), and (6) of subdivision (g) shall apply.

(6) A conflict between this subdivision and any other subdivisions in this section shall be reconciled in favor of this subdivision.

(7) The aggregate amount of credit allocated by the California Film Commission pursuant to subdivisions (a) to (j), inclusive, of this section and Section 23698 shall not be reduced by the tax credit allowed pursuant to this subdivision. The amount of credit allowed by this subdivision shall not be limited by subdivision (i).

(8) (A) The credit allocated pursuant to this subdivision shall be allowed for the taxable year in which the California Film Commission issues a credit certificate in accordance with the procedures provided for in subdivision (g) for the qualified motion picture. The California Film Commission shall issue a credit certificate to a qualified taxpayer upon completion of the qualified motion picture reflecting the credit amount allocated after qualified expenditures have been verified.

(B) The California Film Commission, commencing with fiscal year 2021–22, shall allocate tax credits each year to qualified motion pictures meeting the criteria of this subdivision. The total amount of credits that may be allocated under this subdivision is one hundred fifty million dollars ($150,000,000). The amount of credit that may be allocated to a qualified motion picture under this subdivision may not exceed the greater of twelve million dollars ($12,000,000), or seven hundred fifty thousand dollars ($750,000) per episode, for a season of a television series. Recurring television series receiving an initial allocation under this subdivision shall be allocated for subsequent seasons no more than allowed under this paragraph.

(C) In any year the tax credits under this paragraph have been allocated by the California Film Commission, a qualified motion picture or a recurring television series that satisfies the criteria of this subdivision, but have not received an allocation of credits, may apply to receive an allocation of credits pursuant to subdivision (i).

(D) A qualified motion picture that satisfies the criteria of this subdivision, other than a recurring television series described in subparagraph (E) of this paragraph, that does not receive a credit allocation under this subdivision because the total amount of credits authorized for the program in subparagraph (B) has been allocated or the qualified motion picture commenced production during the sixth year the certified studio construction project has been certified by the California Film Commission, or any year thereafter, may apply for a credit allocation under subdivisions (a) through (j), inclusive, subject to the jobs ratio enhancement in subclause (II) of clause (iv) of subparagraph (D) of paragraph (2) of subdivision (g).

(E) A recurring television series that satisfies the criteria of this subdivision and that is no longer eligible for a credit allocation under this subdivision for a reason described in subparagraph (D) shall receive a credit allocation under subdivisions (a) through (j), inclusive, pursuant to clause (v) of subparagraph (D) of paragraph (2) of subdivision (g).

(F) Credits shall be allocated based on the assumption that the motion picture meets the diversity criteria specified in clause (iv) of subparagraph (D) of paragraph (3).

(G) If any successor tax credit program that modifies or replaces the program specified in subdivisions (a) through (j), inclusive, of this section or Section 23698 is enacted, both of the following shall apply:

(i) A qualified motion picture described in subparagraph (D) may apply to receive an allocation of credits under the successor program.

(ii) A recurring television series described in paragraph (E) shall receive an allocation of credits under the successor program.

(9) A qualified motion picture meeting the requirements of this subdivision that receives a credit allocation during the five-year period the certified studio construction project is certified by the California Film Commission shall be allowed a credit under this subdivision for subsequent seasons for the life of that recurring television series as long as the qualified motion picture continues to satisfy the criteria of this subdivision and to the extent the total credit amount the California Film Commission is permitted to allocate pursuant to subparagraph (B) of paragraph (8) has not previously been allocated.

(10) Within six months of the effective date of this subdivision, the California Film Commission shall:

(A) Establish procedures to certify a certified studio construction project.

(B) Establish procedures to verify a qualified motion picture has met the criteria established in this section for filming in a certified studio construction project facility. That procedure shall include a requirement that the qualified motion picture pay 0.5 percent of the approved credit amount to the Career Pathways Training program specified in subdivision (e).

(C) (i) Implementation of this subdivision for the 2023–24 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the California Film Commission is hereby authorized to adopt emergency regulations to implement this subdivision during the 2023–24 fiscal year in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(ii) The California Film Commission shall adopt regulations in order to implement this paragraph.

(iii) The California Film Commission shall not be required to prepare an economic impact analysis pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) with regard to any rules and regulations adopted pursuant to this subdivision.

(11) In the case where the credit allowed by this subdivision exceeds the taxpayer’s tax liability computed under this part, the excess credit may be carried over to reduce the “net tax” in the following taxable year, and succeeding eight taxable years, if necessary, until the credit has been exhausted.

(12) Upon completion of construction or renovation of the soundstage or soundstages, the certified studio construction project applicant shall certify to the California Film Commission that all contractors and subcontractors performing construction work on the soundstage or soundstages were required to use a skilled and trained workforce to perform such work in accordance with subdivision (b) of Section 17053.99.

(13) (A) Upon completion of construction or renovation of the soundstage or soundstages, the soundstage or soundstages shall be continuously operated, maintained, and repaired by any of the following:

(i) A workforce that is paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, if such services are performed by a workforce that is employed directly, or indirectly through a motion picture payroll services company, by the owner or affiliate of the owner of the soundstage or lessee of the soundstage described in subclause (II) of clause (iii) of subparagraph (B) of paragraph (2) of this subdivision.

(ii) A skilled and trained workforce as defined in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code, if such services are provided by third-party vendors.

(B) Each year following completion of construction or renovation of the soundstage or soundstages that a qualified motion picture is allocated a tax credit pursuant to this subdivision, the certified studio construction project applicant shall certify to the California Film Commission both of the following:

(i) The total amount of payments to third-party vendors or qualified wages for operation, maintenance, and repair of the certified soundstage.

(ii) The amount and percentage of the total amount of payments to third-party vendors or qualified wages for operation, maintenance, and repair of the certified soundstage performed by each workforce described in subparagraph (A).

(C) If the percentage paid to workers in clause (i) of subparagraph (A) is certified to be 90 percent of the total amount under clause (i) of subparagraph (B) or greater, the qualified taxpayer shall be entitled to 100 percent of the applicable credit issued under this subdivision for the period. If the percentage paid to workers in clause (i) of subparagraph (A) is certified to be less than 90 percent of the total amount under clause (i) of subparagraph (B) but greater than or equal to 75 percent of the total amount under clause (i) of subparagraph (B), the qualified taxpayer shall be entitled to 50 percent of the applicable credit issued under this subdivision for the period. If the percentage paid to workers in clause (i) of subparagraph (A) is certified to be less than 75 percent of the total amount under clause (i) of subparagraph (B), the qualified taxpayer shall not be entitled to any credit issued under this subdivision for the applicable period.

(14) (A) Except as provided in subparagraph (B), the changes made to this subdivision by the act adding this paragraph shall apply to taxable years beginning on or after January 1, 2023.

(B) The changes made to subparagraphs (A) and (B) of paragraph (2) by the act adding this paragraph shall apply for all taxable years to any certified studio construction project that has been certified, and any qualified motion picture that has been allocated a credit, pursuant to this subdivision.

(l) Section 41 shall not apply to the credits allowed by this section.

SEC. 7.

Section 17053.98.1 is added to the Revenue and Taxation Code, to read:

17053.98.1.

(a) (1) For taxable years beginning on or after January 1, 2025, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to a computation and ranking by the California Film Commission in subdivision (g) and the allocation amount categories described in subdivision (i), in an amount equal to 20 or 25 percent, whichever is the applicable credit percentage described in paragraph (4), of the qualified expenditures for the production of a qualified motion picture in California. A credit shall not be allowed under this section for any qualified expenditures for the production of a motion picture in California if a credit has been claimed for those same expenditures under Section 17053.85, 17053.95, or 17053.98.

(2) Except as otherwise provided in this section, the credit shall be allowed for the taxable year in which the California Film Commission issues the credit certificate pursuant to subdivision (g) for the qualified motion picture, but in no instance prior to July 1, 2025, and shall be for the applicable percentage of all qualified expenditures paid or incurred by the qualified taxpayer in all taxable years for that qualified motion picture.

(i) In the case of a feature, up to one hundred million dollars ($100,000,000).

(ii) In the case of a miniseries or limited series described in clause (ii) of subparagraph (A) of paragraph (19) of subdivision (b), up to one hundred million dollars ($100,000,000).

(iii) In the case of a television series described in clause (iii) or clause (v) of subparagraph (A) of paragraph (19) of subdivision (b), up to one hundred million dollars ($100,000,000) per season.

(iv) In the case of an independent film, up to ten million dollars ($10,000,000).

(4) For purposes of paragraphs (1) and (2), the applicable credit percentage shall be as follows:

(C) Twenty-five percent of the qualified expenditures attributable to the production of a qualified motion picture that is an independent film.

(D) Additional credits shall be allowed for the production of a qualified motion picture which applicable credit percentage is determined pursuant to subparagraph (A), in an aggregate amount not to exceed 5 percent of the qualified expenditures under that subparagraph, as follows:

(i) (I) Five percent of qualified expenditures, excluding qualified wages described in subparagraph (E), relating to original photography outside the Los Angeles zone.

(II) For purposes of this clause and subparagraph (E):

(ic) “Original photography” includes principal photography and reshooting original footage.

(ii) Five percent of the qualified expenditures relating to qualified visual effects attributable to the production of a qualified motion picture in California.

(E) (i) Notwithstanding subparagraph (D), an amount equal to 10 percent of qualified wages paid for services performed relating to original photography outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone shall be allowed as an additional credit for the production of a qualified motion picture which applicable credit percentage is determined pursuant to subparagraph (A).

(ii) Notwithstanding subparagraph (D), an amount equal to 5 percent of qualified wages paid for services performed relating to original photography outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone shall be allowed as an additional credit for the production of a qualified motion picture which applicable credit percentage is determined pursuant to subparagraph (B) or (C).

(b) For purposes of this section:

(1) “Ancillary product” means any article for sale to the public that contains a portion of, or any element of, the qualified motion picture.

(3) “Clip use” means a use of any portion of a motion picture, other than the qualified motion picture, used in the qualified motion picture.

(4) “Credit certificate” means the certificate issued by the California Film Commission pursuant to subparagraph (D) of paragraph (3) of subdivision (g).

(5) “Diversity workplan checklist” means a checklist developed by regulation by the California Film Commission that may include consideration of inclusive hiring above the line, inclusive hiring below the line, equity education, industry capacity building and supplier diversity as part of any diversity workplan.

(6) (A) “Employee fringe benefits” means the amount allowable as a deduction under this part to the qualified taxpayer involved in the production of the qualified motion picture, exclusive of any amounts contributed by employees, for any year during the production period with respect to any of the following:

(i) Employer contributions under any pension, profit sharing, annuity, or similar plan.

(ii) Employer-provided coverage under any accident or health plan for employees.

(iii) The employer’s cost of life or disability insurance provided to employees.

(B) Any amount treated as wages under clause (i) of subparagraph (A) of paragraph (21) shall not be taken into account under this paragraph.

(7) “Independent film” means a motion picture with a minimum budget of one million dollars ($1,000,000) that is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 25 percent of the producing company.

(8) “Jobs ratio” means the amount of qualified wages paid to qualified individuals divided by the amount of tax credit, not including any additional credit allowed pursuant to subparagraphs (D) and (E) of paragraph (4) of subdivision (a), as computed by the California Film Commission. For the purposes of the calculation of the jobs ratio only, 70 percent of qualified expenditures for visual effects paid to third-party vendors for work performed in California shall be deemed to be qualified wages paid to a qualified individual.

(9) “Licensing” means any grant of rights to distribute the qualified motion picture, in whole or in part.

(10) “New use” means any use of a motion picture in a medium other than the medium for which it was initially created.

(11) “Pilot for a new television series” means the initial episode produced for a proposed television series.

(12) (A) “Postproduction” means the final activities in a qualified motion picture’s production, including editing, foley recording, automatic dialogue replacement, sound editing, scoring, music track recording by musicians and music editing, beginning and end credits, negative cutting, negative processing and duplication, the addition of sound and visual effects, sound mixing, film-to-tape transfers, encoding, and color correction.

(B) “Postproduction” does not include the manufacture or shipping of release prints or their equivalent.

(13) “Preproduction” means the process of preparation for actual physical production which begins after a qualified motion picture has received a firm agreement of financial commitment, or is greenlit, with, for example, the establishment of a dedicated production office, the hiring of key crew members, and includes, but is not limited to, activities that include location scouting and execution of contracts with vendors of equipment and stage space.

(14) “Principal photography” means the phase of production during which the motion picture is actually shot, as distinguished from preproduction and postproduction.

(15) “Production period” means the period beginning with preproduction and ending upon completion of postproduction.

(16) “Qualified entity” means a personal service corporation as defined in Section 269A(b)(1) of the Internal Revenue Code, a payroll services corporation, or any entity receiving qualified wages with respect to services performed by a qualified individual.

(17) “Qualified expenditures” means amounts paid or incurred for tangible personal property purchased or leased, and used, within this state in the production of a qualified motion picture and payments, including qualified wages, for services performed within this state in the production of a qualified motion picture.

(18) (A) “Qualified individual” means any individual who performs services during the production period in an activity related to the production of a qualified motion picture.

(B) “Qualified individual” shall not include either of the following:

(i) Any individual related to the qualified taxpayer as described in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of the Internal Revenue Code, of the qualified taxpayer.

(19) (A) “Qualified motion picture” means a motion picture that is produced for distribution to the general public, regardless of medium, that is one of the following:

(i) A feature with a minimum production budget of one million dollars ($1,000,000).

(ii) A miniseries or limited series consisting of two or more episodes, each longer than 40 minutes of running time, exclusive of commercials, that is produced in California, with a minimum production budget of one million dollars ($1,000,000) per episode.

(iv) An independent film.

(v) A television series that relocated to California.

(B) To qualify as a “qualified motion picture,” all of the following conditions shall be satisfied:

(iii) The copyright for the motion picture is registered with the United States Copyright Office pursuant to Title 17 of the United States Code.

(v) (I) At least 75 percent of production costs for picture editing and postproduction sound labor and services shall be incurred in California.

(II) This requirement shall only apply to a qualified motion picture applying for an allocation of credits under this section pursuant to subparagraph (G) of paragraph (8) of subdivision (k) of Section 17053.98 or Section 23698.

(vi) Provides a diversity workplan checklist.

(20) (A) “Qualified taxpayer” means a taxpayer who has paid or incurred qualified expenditures, participated in the Career Readiness requirement in Section 17053.95, and has been issued a credit certificate by the California Film Commission pursuant to subdivision (g).

(B) In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section is not allowed to the pass-thru entity, but shall be passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, “pass-thru entity” means any entity taxed as a partnership or “S” corporation.

(21) “Qualified visual effects” means visual effects where at least 75 percent or a minimum of ten million dollars ($10,000,000) of the qualified expenditures for the visual effects are paid or incurred in California.

(22) (A) “Qualified wages” means all of the following:

(iii) Any payments made to a qualified entity for services performed in this state by qualified individuals within the meaning of paragraph (17).

(iv) Remuneration paid to an independent contractor who is a qualified individual for services performed within this state by that qualified individual.

(B) “Qualified wages” shall not include any of the following:

(ii) Expenses, including wages, paid or incurred with respect to acquisition, development, turnaround, or any rights thereto.

(iii) Expenses, including wages, related to financing, overhead, marketing, promotion, or distribution of a qualified motion picture.

(23) “Recurring television series” means any television series that was previously approved and issued a credit allocation letter under this section.

(24) “Residual compensation” means supplemental compensation paid at the time that a motion picture is exhibited through new use, reuse, clip use, or in secondary markets, as distinguished from payments made during production.

(25) “Reuse” means any use of a qualified motion picture in the same medium for which it was created, following the initial use in that medium.

(26) “Secondary markets” means media in which a qualified motion picture is exhibited following the initial media in which it is exhibited.

(27) “Television series that relocated to California” means a television series, without regard to episode length or initial media exhibition, with a minimum production budget of one million dollars ($1,000,000) per episode, that filmed at least 75 percent of principal photography days in its most recent season outside of California or has filmed all seasons outside of California and for which the taxpayer certifies that the credit provided pursuant to this section is the primary reason for relocating to California.

(c) (1) Notwithstanding any other law, a qualified taxpayer may sell any credit allowed under this section that is attributable to an independent film, as defined in paragraph (7) of subdivision (b), to an unrelated party.

(4) A credit shall not be sold pursuant to this subdivision to more than one taxpayer, nor may the credit be resold by the unrelated party to another taxpayer or other party.

(5) A party that has acquired tax credits under this subdivision shall be subject to the requirements of this section.

(6) In no event may a qualified taxpayer assign or sell any tax credit to the extent the tax credit allowed by this section is claimed on any tax return of the qualified taxpayer.

(9) Subdivision (g) of Section 17039 shall not apply to any credit sold pursuant to this subdivision.

(d) (1) No credit shall be allowed pursuant to this section unless the qualified taxpayer provides the following to the California Film Commission:

(A) Identification of each qualified individual.

(B) The specific start and end dates of production.

(D) The total amount of qualified wages paid to qualified individuals.

(E) Aggregate data for individuals whose wages are excluded from qualified wages by clause (iv) of subparagraph (B) of paragraph (22) of subdivision (b), including their gender, ethnic, and racial makeup.

(G) The total amounts paid or incurred to purchase or lease tangible personal property used in the production of a qualified motion picture.

(H) Information to substantiate its qualified expenditures.

(I) Information required by the California Film Commission under regulations promulgated pursuant to subdivision (g) necessary to verify the amount of credit claimed.

(J) Data regarding the diversity of the workforce employed by the applicant on the qualified motion picture, as described in subdivision (g).

(K) Documentation verifying completion of the Career Readiness requirement.

(L) Documentation verifying that the qualified taxpayer paid the Career Pathways Program fee.

(i) Subparagraph (D) of paragraph (4) of subdivision (a) and clause (iv) of subparagraph (D) of paragraph (2) of subdivision (g).

(ii) Any rules and regulations necessary to establish procedures, processes, requirements, and applications.

(iii) (I) Continuing a Career Pathways Program established pursuant to subdivision (e) of Sections 17053.98 and 23698 to fund technical skills training for individuals from underserved communities for entry into film and television jobs. The program shall be funded by a fee equal to 0.5 percent of the approved credit amount for a qualified motion picture. The program shall work with nonprofit organizations that have an established record of training and job placement in the entertainment industry, focus on training individuals from traditionally underserved communities, and offer training courses focused on skilled, technical positions that would be eligible for qualified wages if performed on a qualified motion picture as well as administrative- and industry-related technical occupations or soft skills training for the motion picture industry.

(II) Notwithstanding subclause (I), independent films are required to pay a fee equal to 0.25 percent of the approved credit amount for a qualified motion picture.

(iv) (I) Beginning in January 1, 2028, the California Film Commission, in collaboration with labor and industry stakeholders, has the authority to increase the Career Pathways Training program fee by 0.25 percent per year, up to 1 percent of the approved credit amount for a qualified motion picture, based on evaluation of available information, including, but not limited to, the number of jobs available, job growth in the industry, and information included in the annual reports of the Career Pathways Training program required pursuant to paragraph (10) of subdivision (g). The evaluation shall be included in the annual report to the Legislature.

(II) Independent films are not subject to an increase to the fee pursuant to subclause (I).

(2) The California Film Commission shall not be required to prepare an economic impact analysis pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) with regard to any rules and regulations adopted pursuant to this subdivision.

(g) For purposes of this section, the California Film Commission shall do all of the following:

(1) Subject to the requirements of subparagraphs (A) to (E), inclusive, of paragraph (2), on or after July 1, 2025, and before July 1, 2030, in two or more allocation periods per fiscal year, allocate tax credits to applicants.

(i) The budget for the motion picture production.

(ii) The number of production days.

(iii) A financing plan for the production.

(v) The amount of qualified wages the applicant expects to pay to qualified individuals.

(vi) The amount of tax credit the applicant computes the qualified motion picture will receive, applying the applicable credit percentages described in paragraph (4) of subdivision (a).

(vii) A statement establishing that the tax credit described in this section is a significant factor in the applicant’s choice of location for the qualified motion picture. The statement shall include information about whether the qualified motion picture is at risk of not being filmed or specify the jurisdiction or jurisdictions in which the qualified motion picture will be located in the absence of the tax credit. The statement shall be signed by an officer or executive of the applicant.

(viii) The applicant’s written policy against unlawful harassment, including, but not limited to, sexual harassment, which includes procedures for reporting and investigating harassment claims, a phone number for an individual who will be responsible for receiving harassment claims, and a statement that the company will not retaliate against an individual who reports harassment. The applicant shall also indicate how the policy will be distributed to employees and include a summary of education training resources, including the prohibition against, and prevention and correction of, sexual harassment and remedies available.

(ix) If applicable, summary of the applicant’s voluntary programs to increase the representation of minorities and women in the job classifications that are not included in qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (22) of subdivision (b) and information about how these programs are publicized to interested parties. The officer or executive referenced in clause (xi) who is signing the statement shall provide additional information about these programs, if needed and upon request, to the California Film Commission.

(x) Any other information deemed relevant by the California Film Commission or the Franchise Tax Board.

(B) Establish criteria, consistent with the requirements of this section, for allocating tax credits.

(D) For purposes of allocating the credit amounts subject to the categories described in subdivision (i) in any fiscal year, the California Film Commission shall do all of the following:

(i) For each allocation date and for each category, list each applicant from highest to lowest according to the jobs ratio as computed by the California Film Commission.

(ii) Subject to the applicable credit percentage, allocate the credit to each applicant according to the highest jobs ratio, working down the list, until the credit amount is exhausted.

(iii) (I) Pursuant to regulations adopted pursuant to subdivision (e), the California Film Commission may increase the jobs ratio by up to 25 percent if a qualified motion picture increases economic activity in California according to criteria developed by the California Film Commission that would include, but not be limited to, those factors as, the amount of the production and postproduction spending in California, the utilization of scoring musicians in California, and other criteria measuring economic impact in California as determined by the California Film Commission.

(II) For qualified motion pictures that are described in clause (i) of subparagraph (G) of paragraph (8) of subdivision (k) of Section 17053.98 and Section 23698, the jobs ratio shall be equal to the product of the jobs ratio calculated in paragraph (8) of subdivision (b) and 133 percent.

(iv) Notwithstanding any other law, any television series, relocating television series, or any new television series based on a pilot for a new television series that has been approved and issued a credit allocation by the California Film Commission under this section, Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698.1 shall be issued a credit for each subsequent season, for the life of that television series whenever credits are allocated within a fiscal year. The California Film Commission shall limit the amount of credits any recurring television series receives in a subsequent season to no more than the amount reserved in its prior fiscal year Credit Allocation Letter or Letters, or if no amounts were reserved in the prior fiscal year, the most immediate prior fiscal year in which a Credit Allocation Letter or Letters were received. In the event that insufficient tax credits are available to fund all recurring television series pursuant to this clause for any fiscal year or in the event the California Film Commission projects, in collaboration with the Department of Finance, that there will be insufficient tax credits available to fund all recurring television series in either of the subsequent two fiscal years, the California Film Commission shall make the following adjustments in the order given until the shortfall, or any projected shortfall for the two subsequent fiscal years, for recurring television series is eliminated:

(IV) Allocate up to 25 percent of total credit allocations that would otherwise be allocated in the 2029–30 fiscal year to recurring television series in the current fiscal year until the shortfall is eliminated. Any amounts transferred for allocation in the current fiscal year shall be subtracted from the amount allowed to be allocated in the 2029–30 fiscal year as specified in subdivision (i). Notwithstanding paragraph (3), the credit allocations that are subtracted from the 2029–30 fiscal year shall not be certified until July 1, 2030 or later.

(E) Subject to the annual cap and the allocation credit amounts based on categories described in subdivision (i), allocate an aggregate amount of credits under this section and Section 23698.1, and allocate any carryover of unallocated or unused credits from prior years and Sections 17053.85, 17053.95, 17053.98, 23685, 23695, and 23698 and the amount of any credits reduced pursuant to paragraph (2) of subdivision (d).

(3) Certify tax credits allocated to qualified taxpayers and do all of the following:

(A) Establish a verification procedure to do both of the following:

(i) Update the information in subparagraph (A) of paragraph (2) of subdivision (g), including, but not limited to, the amounts of qualified expenditures paid or incurred by the applicant.

(ii) Ensure that the final safety evaluation report required pursuant to Section 9152 of the Labor Code has been submitted.

(B) Establish audit requirements that shall be satisfied before a credit certificate may be issued by the California Film Commission.

(C) Issue a credit certificate to a qualified taxpayer upon completion of the qualified motion picture reflecting the credit amount allocated after qualified expenditures have been verified and the jobs ratio computed under this section. The amount of credit shown on the credit certificate shall not exceed the amount of credit allocated to that qualified taxpayer pursuant to this section.

(D) (i) Notwithstanding any other law, the California Film Commission shall certify a credit amount equal to 96 percent of the total credit allocated to the qualified taxpayer, unless the qualified taxpayer chooses to submit a diversity workplan and the California Film Commission determines that the qualified taxpayer has met or made a good-faith effort to meet the diversity goals in its diversity workplan, pursuant to clause (ii).

(ii) The California Film Commission shall certify an additional credit amount equal to 4 percent of the total credit allocated to the qualified taxpayer if a qualified taxpayer submits to the California Film Commission, in the form and manner required by the commission, all of the following:

(I) A diversity workplan within 30 days after receiving a credit allocation letter. The workplan shall be consistent with the diversity workplan checklist to address diversity and be broadly reflective of California’s population in terms of race, ethnicity, gender, and disability status, and shall include all of the following:

(ia) A statement of the diversity goals the motion picture will seek to achieve in terms of qualified wages.

(ib) A statement of the diversity goals the motion picture will seek to achieve for individuals whose wages are excluded from qualified wages.

(ic) A plan of what strategies the motion picture will employ to achieve the goals in this subclause and subclause (II).

(id) Other requirements as the California Film Commission shall determine by regulation.

(II) An interim assessment on the qualified taxpayer’s efforts to meet the diversity workplan prior to the commencement of principal photography. Upon review pursuant to a procedure prescribed in regulations, the California Film Commission shall determine whether the interim assessment indicates that the qualified motion picture is making a good-faith effort to meet the goals of the diversity workplan and shall notify the qualified motion picture of its findings.

(III) A final diversity assessment that includes information about how the project met or made a good-faith effort to meet the diversity workplan, including, but not limited to, aggregate data, voluntarily self-reported by individuals whose wages are included in qualified wages and individuals whose wages are excluded from qualified wages, with regard to their race, ethnicity, gender, and disability status.

(iii) The California Film Commission, in consultation with the Governor’s Office of Business and Economic Development, shall establish guidelines to evaluate diversity workplans as described in this subparagraph. The guidelines shall be posted on the California Film Commission’s internet website.

(iv) The California Film Commission shall approve or reject the diversity workplan of an applicant, to the extent allowed by federal and state law.

(v) This subparagraph shall not apply to an independent film with qualified expenditures of ten million dollars ($10,000,000) or less.

(vi) The requirements of this subparagraph shall not apply to a recurring television series receiving an allocation of credits under this section pursuant to clause (ii) of subparagraph (G) of paragraph (8) of subdivision (k) of Section 17053.98 or Section 23698 and fulfills the diversity workplan and report requirements pursuant to subdivision (k) of Section 17053.98 or Section 23698.

(vii) A qualified motion picture described in subparagraph (D) of paragraph (8) of subdivision (k) of Section 17053.98 or Section 23698 that applies for an allocation of credits under this section shall be subject to the requirements of this subparagraph and not those of clause (iv) of subparagraph (B) of paragraph (2) of subdivision (k) of Sections 17053.98 and 23698 and paragraph (3) of subdivision (k) of Sections 17053.98 and 23698.

(4) Obtain, when possible, the following information from applicants that do not receive an allocation of credit:

(A) Whether the qualified motion picture that was the subject of the application was completed.

(B) If completed, in which state or foreign jurisdiction was the primary principal photography completed.

(C) Whether the applicant received any financial incentives from the state or foreign jurisdiction to make the qualified motion picture in that location.

(5) Provide the Legislative Analyst’s Office, upon request, any or all application materials or any other materials received from, or submitted by, applicants for which a credit allocation decision has been made, including, but not limited to, applicants that did not receive a credit allocation. Materials provided to the Legislative Analyst’s Office shall be in electronic format when available and include, but not be limited to, information provided pursuant to subclauses (I) to (III), inclusive, of clause (ii) of subparagraph (D) of paragraph (3).

(7) (A) Notwithstanding any other law, on or after July 1, 2030, the California Film Commission may allocate, pursuant to this section, any previously allocated credits not certified that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.

(B) For purposes of this section, “previously allocated credits not certified” means either of the following:

(8) Notwithstanding any other law, on or after July 1, 2030, the California Film Commission may allocate, pursuant to this section, any credit amounts described in subparagraphs (B) and (E) of paragraph (1) of subdivision (i) that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.

(9) The California Film Commission shall submit a report to the Legislature, on an annual basis beginning June 30, 2027, containing diversity data provided by the applicants. The report shall contain, in the aggregate and per project, an assessment of whether the diversity workplan goals required by this section were met for qualified motion pictures that submitted the final assessment to the California Film Commission in the prior fiscal year. The assessment shall contain an account of diversity workplans submitted, interim assessments submitted, and final assessments submitted, as well as which categories of the diversity workplan checklist established pursuant paragraph (5) of subdivision (b) were included. In the event that a report is required pursuant to paragraph (9) of subdivision (g) of Section 17053.98 and Section 23698 in the same year as a report is required under this paragraph, the reports may be combined to one report.

(10) Beginning January 1, 2025, the California Film Commission shall collect information to the extent available and based on data provided by the Career Pathways Training program, about the breakdown of spending by the Career Pathways Program, how participation in the Career Pathways Program by both program partners and participants has changed in comparison to prior years, whether graduates of the program are accessing jobs in the film industry upon completion of the program, what projects the students have worked on, whether those projects received a tax credit, whether students are employed in California or another state, and the aggregated self-reported and voluntarily provided ethnic, racial, gender, and disability status of such individuals. The California Film Commission shall report to the Legislature, in compliance with Section 9795 of the Government Code, and publish on its internet website an annual report about the Career Pathways Training program, with the above information. Such information shall be reported for participants for five years following a participant’s completion of the Career Pathways Training program, to the extent the information is available. This paragraph shall be applicable consistent with federal and state law.

(2) (A) Notwithstanding paragraph (6) of subdivision (g), the California Film Commission shall annually post on its internet website and make available for public release all of the following:

(iii) The diversity report submitted annually to the Legislature described in paragraph (2) of subdivision (g) organized per production and an aggregate compilation describing the voluntary programs collected pursuant to clause (xiii) of subparagraph (A) of paragraph (2) of subdivision (g).

(i) (1) (A) The aggregate amount of credits that may be allocated for a fiscal year pursuant to this section and Section 23698.1, except as provided in subdivision (k) of Section 17053.98.1 and subdivision (k) of Section 23698, is three hundred thirty million dollars ($330,000,000), plus any amount described in subparagraph (B), (C), (D), or (E) in credits for the 2025–26 fiscal year and each fiscal year thereafter, through and including the 2029–30 fiscal year, except as provided in paragraph (7) of subdivision (g).

(B) (i) Subject to clauses (ii) and (iii), the unused allocation credit amount, if any, for the preceding fiscal year.

(ii) The amount of unused credit allocation attributable to independent films shall only be allocated according to clause (i) of subparagraph (A) of paragraph (2).

(iii) The total amount of any unused credit allocation amount that is remaining shall only be allocated pursuant to clause (iv) of subparagraph (A) of paragraph (2).

(D) The amount of any credits reduced pursuant to paragraph (2) of subdivision (d).

(E) That portion of any unused allocation credit amount, if any, attributable to Section 17053.85, 17053.95, 17053.98, 23685, 23695, or 23698 available for that fiscal year in a manner as determined by regulations promulgated by the California Film Commission.

(ii) Features shall be allocated 35 percent of the amount specified in paragraph (1).

(iii) A relocating television series shall be allocated 17 percent of the amount specified in paragraph (1).

(4) A qualified motion picture, as defined in subdivision (k) of Sections 17053.98 and 23698, shall not be eligible for an allocation under subdivisions (a) to (j), inclusive, if it receives a credit under subdivision (k) of Section 17053.98 or Section 23698 during that fiscal year.

(k) (1) A qualified taxpayer may make a one-time election to be paid a refund for each taxable year of the refundable period, not to exceed the annual refundable amount.

(2) For purposes of this subdivision, the following definitions shall apply:

(A) “Annual refundable amount” means 20 percent of the total refundable amount.

(B) (i) “Credit amount” means the credit amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (g).

(ii) In the case of a pass-thru entity, the “credit amount” described in paragraphs (2) and (3) means the pro rata share or distributive share of the credit passed through to the partner or shareholder of the qualified taxpayer. For purposes of this subclause, the term “pass-thru entity” means any partnership, “S” corporation, or limited liability company treated as a partnership.

(iii) In the case of an assigned credit, the “credit amount” means the credit amount that was assigned to the taxpayer.

(C) “Refundable period” means the first taxable year that the credit certificate is issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (g), and the succeeding four taxable years.

(D) “Total refundable amount” means 90 percent of the credit amount that exceeds the “net tax” in the first taxable year of the refundable period.

(3) The refund shall be computed as follows:

(A) (i) In the first taxable year of the refundable period, the credit amount shall be allowed against the “net tax” computed under this part for the taxable year.

(ii) If the credit allowed by this section exceeds the “net tax” in the first taxable year of the refundable period, the annual refundable amount shall be refunded to the qualified taxpayer.

(B) (i) In each taxable year after the first taxable year of the refundable period, the annual refundable amount shall be allowed as a credit against the “net tax” computed under this part for the taxable year, and the excess, if any, shall be refunded to the qualified taxpayer.

(ii) If the qualified taxpayer’s tax liability for the taxable year exceeds the annual refundable amount, only the annual refundable amount shall be allowed as a credit against the qualified taxpayer’s “net tax.”

(4) (A) In the first taxable year of the refundable period, the total refundable amount, less the annual refundable amount, shall be carried over to the succeeding taxable year.

(B) In each taxable year other than first taxable year of refundable period, the total refundable amount, less the annual refundable amount allowed against the qualified taxpayer’s “net tax” or refunded in the current and prior taxable years in the refundable period, shall be carried over to the next succeeding year of the refundable period.

(C) Notwithstanding paragraph (3) of subdivision (c), if an election is made pursuant to this subdivision, no amount of credit shall be allowed after the refundable period.

(5) Any refund pursuant to this subdivision shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the qualified taxpayer upon their election.

(6) An election made pursuant to this subdivision shall be irrevocable and shall be made on an original, timely filed return required under Part 10.2 (commencing with Section 18401) for the taxable year that the credit certificate is issued in the form and manner as prescribed by the Franchise Tax Board.

(7) A taxpayer that purchases a credit pursuant to subdivision (c) cannot elect to be paid a refund pursuant to this subdivision.

(l) For the purposes of complying with Section 41 with respect to this section and Section 23698.1 the Legislature finds and declares all of the following:

(1) The specific goals, purposes, and objectives that the credits allowed by this section and Section 23698.1 will achieve include all of the following:

(A) To maintain and expand motion picture and television productions, and the quality of the jobs they provide, in California.

(B) To keep California’s Film Tax Credit competitive with production incentives offered by other states and other countries.

(C) To increase the competitiveness of the tax credits allowed by this section and Section 23698.1 relative to previous California motion picture tax credit programs authorized by Sections 17053.85, 17053.95, 17053.98, 23685, 23695, and 23698 by allowing the tax credit to be refundable.

(2) The performance indicators for the Legislature to use in determining if the credits accomplish the specific goals, purposes, and objectives may include, but are not limited to, all of the following:

(A) The number and types of productions that apply for the tax credits allowed by this Section and Section 23698.1.

(B) The total amount of credit allocations applied for under this section and Section 23698.1.

(D) The total amount of credits certified as eligible to be claimed on a tax return under this section and Section 23698.1.

(E) The number of jobs included in the budgets of productions receiving the tax credits allocated by this section and Section 23698.1.

(F) The number of productions relocating from another state or country to California and receive the tax credits allocated by this section and Section 23698.1.

(G) A comparison of the performance indicators specified in paragraphs (1) to (6), inclusive, with results from California motion picture tax credit programs authorized by Sections 17053.85, 17053.95, 17053.98, 23685, 23695, and 23698.

(H) The total amount of credits allocated by this section and Section 23698.1 that are claimed as a refund on a tax return.

(3) On or before May 1, 2028, the Legislative Analyst’s Office shall provide to the Assembly Committee on Revenue and Taxation, the Senate Committee on Governance and Finance, and the public a report evaluating the effectiveness of the tax credits allowed by this section and Section 23698.1 in achieving the metrics outlined in subdivision (a), including an assessment of the refundability of the tax credit in achieving those metrics. In researching the reports, the Legislative Analyst’s Office may do all of the following:

(A) Request and receive all information of California Film Commission applicants for which a credit allocation decision has been made, including, but not limited to, applicants that did not receive a credit allocation, provided to the California Film Commission pursuant to subdivision (g) of this section and Sections 17053.95, 17053.98, 23695, 23698, and 23698.1.

(B) Request and receive all information provided to the Franchise Tax Board relating to the sale or assignment of credits pursuant to subdivision (c) of this section and Sections 17053.95, 17053.98, 23695, 23698, and 23698.1.

(C) Request and receive all information provided to the California Department of Tax and Fee Administration pursuant to subdivisions (c) and (g) of Section 6902.5.

(4) Notwithstanding Section 19542, the California Film Commission, the California Department of Tax and Fee Administration, the Franchise Tax Board, the Employment Development Department, and all other relevant state agencies shall provide additional information, as requested by the Legislative Analyst’s Office, as necessary to research the report required by this subdivision.

(5) (A) The information received by the Legislative Analyst’s Office pursuant to this section shall be considered confidential taxpayer information subject to Sections 7056, 7056.5, and 19542 of this code and Section 1094 of the Unemployment Insurance Code, and shall be subject to the appropriate confidentiality requirements of the participating state agency.

(B) The Legislative Analyst’s Office may publish statistics in conjunction with the reports required by this section that are derived from information provided to the Legislative Analyst’s Office pursuant to this section, if the published statistics are classified to prevent the identification of particular taxpayers, reports, and tax returns and the publication of the percentage of dividends paid by a corporation that is deductible by the recipient under Part 11 (commencing with Section 23001) of Division 2.

SEC. 8.

Section 23036 of the Revenue and Taxation Code is amended to read:

23036.

(a) (1) The term “tax” includes any of the following:

(A) The tax imposed under Chapter 2 (commencing with Section 23101).

(B) The tax imposed under Chapter 3 (commencing with Section 23501).

(D) The tax on “S” corporations imposed under Section 23802.

(2) The term “tax” does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667.

(b) For purposes of Article 5 (commencing with Section 18661) of Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4, Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7 (commencing with Section 19501) of Part 10.2, and for purposes of Sections 18601, 19001, and 19005, the term “tax” also includes all of the following:

(1) The tax on limited partnerships, imposed under Section 17935, the tax on limited liability companies, imposed under Section 17941, and the tax on registered limited liability partnerships and foreign limited liability partnerships imposed under Section 17948.

(2) The alternative minimum tax imposed under Chapter 2.5 (commencing with Section 23400).

(3) The tax on built-in gains of “S” corporations, imposed under Section 23809.

(4) The tax on excess passive investment income of “S” corporations, imposed under Section 23811.

(1) Credits that do not contain carryover provisions.

(2) Credits that, when the credit exceeds the “tax,” allow the excess to be carried over to offset the “tax” in succeeding taxable years, except for those credits that are allowed to reduce the “tax” below the tentative minimum tax, as defined by Section 23455. The order of credits within this paragraph shall be determined by the Franchise Tax Board.

(3) The minimum tax credit allowed by Section 23453.

(4) Credits that are allowed to reduce the “tax” below the tentative minimum tax, as defined by Section 23455, except the credit described in paragraph (5).

(5) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 23698.1.

(6) Credits for taxes withheld under Section 18662.

(d) Notwithstanding any other provision of this part, each of the following applies:

(1) A credit may not reduce the “tax” below the tentative minimum tax (as defined by paragraph (1) of subdivision (a) of Section 23455), except the following credits:

(A) The credit allowed by former Section 23601 (relating to solar energy).

(B) The credit allowed by former Section 23601.4 (relating to solar energy).

(D) The credit allowed by Section 23609 (relating to research expenditures).

(E) The credit allowed by former Section 23609.5 (relating to clinical testing expenses).

(F) The credit allowed by Section 23610.5 (relating to low-income housing).

(G) The credit allowed by former Section 23612 (relating to sales and use tax credit).

(H) The credit allowed by Section 23612.2 (relating to enterprise zone sales or use tax credit).

(I) The credit allowed by former Section 23612.6 (relating to Los Angeles Revitalization Zone sales tax credit).

(J) The credit allowed by former Section 23622 (relating to enterprise zone hiring credit).

(K) The credit allowed by Section 23622.7 (relating to enterprise zone hiring credit).

(L) The credit allowed by former Section 23623 (relating to program area hiring credit).

(M) The credit allowed by former Section 23623.5 (relating to Los Angeles Revitalization Zone hiring credit).

(N) The credit allowed by former Section 23625 (relating to Los Angeles Revitalization Zone hiring credit).

(O) The credit allowed by Section 23633 (relating to targeted tax area sales or use tax credit).

(P) The credit allowed by Section 23634 (relating to targeted tax area hiring credit).

(Q) The credit allowed by former Section 23649 (relating to qualified property).

(R) For taxable years beginning on or after January 1, 2011, the credit allowed by Section 23685 (relating to qualified motion pictures).

(S) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 23689 (relating to GO-Biz California Competes Credit).

(T) For taxable years beginning on or after January 1, 2016, the credit allowed by Section 23695 (relating to qualified motion pictures).

(U) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 23686 (relating to the College Access Tax Credit Fund).

(V) For taxable years beginning on or after January 1, 2017, the credit allowed by Section 23687 (relating to the College Access Tax Credit Fund).

(W) For taxable years beginning on or after January 1, 2020, and before January 1, 2026, the credit allowed by Section 23636 (relating to the new advanced strategic aircraft credit).

(X) For taxable years beginning on or after January 1, 2020, the credit allowed by Section 23698 (relating to the California Motion Picture and Television Production Credit).

(Y) For taxable years beginning on or after January 1, 2025, the credit allowed by Section 23698.1 (relating to the California Motion Picture and Television Production Credit).

(2) A credit against the tax may not reduce the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101).

(e) Any credit which is partially or totally denied under subdivision (d) is allowed to be carried over to reduce the “tax” in the following year, and succeeding years if necessary, if the provisions relating to that credit include a provision to allow a carryover of the unused portion of that credit.

(f) Unless otherwise provided, any remaining carryover from a credit that has been repealed or made inoperative is allowed to be carried over under the provisions of that section as it read immediately prior to being repealed or becoming inoperative.

(g) Unless otherwise provided, if two or more taxpayers share in costs that would be eligible for a tax credit allowed under this part, each taxpayer is eligible to receive the tax credit in proportion to their respective share of the costs paid or incurred.

(h) Unless otherwise provided, in the case of an “S” corporation, any credit allowed by this part is computed at the “S” corporation level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit applies to the “S” corporation and to each shareholder.

(i) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity is limited in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “tax,” as defined in subdivision (a), for the taxable year is limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 23455), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 23455), determined by excluding the income attributable to that disregarded business entity. A credit is not allowed if the taxpayer’s regular tax (as defined in Section 23455), determined by including the income attributable to the disregarded business entity is less than the taxpayer’s regular tax (as defined in Section 23455), determined by excluding the income attributable to the disregarded business entity.

(j) (1) Unless otherwise specifically provided, in the case of a taxpayer that is a partner or shareholder of an eligible pass-thru entity described in paragraph (2), any credit passed through to the taxpayer in the taxpayer’s first taxable year beginning on or after the date the credit is no longer operative may be claimed by the taxpayer in that taxable year, notwithstanding the repeal of the statute authorizing the credit prior to the close of that taxable year.

(3) This subdivision applies to credits that become inoperative on or after the operative date of the act adding this subdivision.

(k) The amendments made to this section by the act adding this subdivision shall apply as follows:

(1) The amendments to subdivision (c) shall be operative for taxable years beginning on or after January 1, 2025.

(2) The amendments to subparagraph (X) of paragraph (1) of subdivision (d) shall be operative for taxable years beginning on or after January 1, 2020.

(3) The amendments to subparagraph (Y) of paragraph (1) of subdivision (d) shall be operative for taxable years beginning on or after January 1, 2025.

SEC. 9.

Section 23698 of the Revenue and Taxation Code is amended to read:

23698.

(a) (1) For taxable years beginning on or after January 1, 2020, there shall be allowed to a qualified taxpayer a credit against the “tax,” as defined in Section 23036, subject to a computation and ranking by the California Film Commission in subdivision (g) and the allocation amount categories described in subdivision (i), in an amount equal to 20 percent or 25 percent, whichever is the applicable credit percentage described in paragraph (4), of the qualified expenditures for the production of a qualified motion picture in California. A credit shall not be allowed under this section for any qualified expenditures for the production of a motion picture in California if a credit has been claimed for those same expenditures under Section 23685 or 23695.