Bill Text: HI SB461 | 2013 | Regular Session | Introduced

Hawaii Senate Bill 461 (Prior Session Legislation)

Introduced

Bill Title: Taxation; Motion Picture, Digital Media, and Film Production Income Tax Credit; Infrastructure Income Tax Credit; Appropriations ($)

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced - Dead) 2013-01-24 - Re-Referred to EGH/JDL/TEC, WAM. [SB461 Detail]

Download: Hawaii-2013-SB461-Introduced.html

THE SENATE	S.B. NO.	461
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII

A BILL FOR AN ACT

relating to the economy.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The legislature finds that 2010 was the first year in which $400,000,000 was spent in film and television production in Hawaii. 2010 also marked the growth of locally-produced Tetris Online and massive multiplayer platform Avatar/Blue Mars, and international recognition for Hawaii's human capital with breakout talent ranging from Andy South in fashion, Bruno Mars in music, "The Descendants" author Kaui Hemmings in writing, and Ty Sanga, the academy for creative media graduate, whose "Stones" premiered as the first Hawaiian language film at the 2011 Sundance Film Festival. In 2011, CBS Network's remake of the iconic "Hawaii Five-O" series averaged over fourteen million viewers for each episode, represented the season's highest-rated television series among adults eighteen to forty-nine, and was the most digitally recorded series on the air. In 2012, director Alexander Payne's critically-acclaimed film, "The Descendants", was nominated for best picture, director, and actor awards and its entire soundtrack (forty songs) was composed and performed by notable Hawaiian entertainers.

The legislature further finds that the production credits established by Act 88, Session Laws of Hawaii 2006, generated additional production work within the State, indicating that Hawaii could have a billion dollar industry given the right combination of responsible incentives, dedicated infrastructure, broader development of Hawaii's intellectual property workforce, and a global perspective. The right incentives also represent an investment to bolster the local economy and provide an international marketing advantage for the State's number one industry, tourism.

The purpose of this Act is to capitalize on the convergence of Hawaii's film, television, entertainment, digital media, and music industries by pursuing long-term growth through a comprehensive strategy to expand the number of high-quality local jobs in these industries. The incentives in this Act are intended to implement the strategy by promoting Hawaii as a site for filming and the digital production of films, and to develop and sustain the workforce and infrastructure for Hawaii's film, television, entertainment, digital media, and music industries.

PART II

SECTION 2. The purpose of this part is to:

(1) Establish the Hawaii film and digital media special fund; and

(2) Repeal part IX, chapter 201, Hawaii Revised Statutes, relating to Hawaii television and film development.

SECTION 3. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201- Hawaii film and digital media special fund. (a) There is established in the state treasury the Hawaii film and digital media special fund into which shall be deposited:

(1) Appropriations by the legislature;

(2) Donations and contributions made by private individuals or organizations for deposit into the fund;

(3) Grants provided by governmental agencies or from any other source;

(4) Fees collected pursuant to section 235-17; and

(5) Beginning July 1, 2014, quarterly payments made by the director of finance, in an amount equal to two per cent of the total aggregate wages and salaries paid to legal residents of this State, as calculated by the department of taxation using individual residency information provided by the department of business, economic development, and tourism, to satisfy the requirements of section 235-17(d)(4) and section 235- (d)(3).

(b) The fund shall be used for:

(1) The operation of the department's film and digital media programs;

(2) Specific development projects, including but not limited to grants to filmmakers and film festivals, loans, and other programs or activities to stimulate the growth of the film and digital media industry in the State; and

(3) Internships, apprenticeships, and training programs that expand the skill sets of Hawaii's film and digital media workforce, and enhance the growth of the film and digital media industry in the State."

SECTION 4. Chapter 201, part IX, Hawaii Revised Statutes, is repealed.

PART III

SECTION 5. The purpose of this part is to amend the motion picture, digital media, and film production income tax credit to:

(1) Strengthen incentives for hiring greater numbers of residents and to support training and employment opportunities for those residents; and

(2) Reflect advances in technology and changes in the creation and distribution of motion picture, digital media, and film productions.

SECTION 6. Section 235-17, Hawaii Revised Statutes, is amended to read as follows:

"§235‑17 Motion picture, digital media, and film production income tax credit. (a) Any law to the contrary notwithstanding, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The amount of the credit shall be:

(1) [~~Fifteen~~]

(A) Fifteen per cent of the qualified production costs incurred by a qualified production in any county of the State with a population of over seven hundred thousand; [or] and

[~~(2)~~ ~~Twenty~~]

(B) Twenty per cent of the qualified production costs incurred by a qualified production in any county of the State with a population of seven hundred thousand or less[.]; and

(2) An additional ten per cent of the qualified production costs paid to legal residents of this State and to Hawaii vendors and Hawaii suppliers; provided that:

(A) Any law to the contrary notwithstanding, for purposes of this section, legal residency is demonstrated by:

(i) Evidence that an individual has filed a Hawaii income tax return for the previous taxable year; or

(ii) A valid Hawaii driver's license or other state-issued identification confirming residency; and

(B) "Hawaii vendors and Hawaii suppliers" means vendors and suppliers that are registered with the State, have a physical location in the State, and employ one or more legal residents of the State.

A qualified production occurring in more than one county may prorate its expenditures based upon the amounts spent in each county, if the population bases differ enough to change the percentage of tax credit.

In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified production costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule. Notwithstanding any provision of law to the contrary, the credit may be recovered directly by the entity that incurred the qualified production costs.

If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code of 1986, as amended, no tax credit shall be allowed for those costs for which the deduction is taken.

The basis for eligible property for depreciation [of] or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purposes of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter. A taxpayer eligible to claim a tax credit under this section may assign all or a portion of a tax credit under this section to any assignee. An assignee may subsequently assign a tax credit or any portion of a tax credit assigned under this subsection to one or more assignees. A taxpayer may claim a portion of a tax credit and assign the remaining tax credit amount. A tax credit assignment made pursuant to this subsection shall be irrevocable and shall be made on a form prescribed by the department of taxation. A taxpayer claiming a tax credit under this section shall submit a copy of the completed assignment form to the department in the tax year in which the assignment is made and shall attach a copy of the form to the tax return on which the tax credit is claimed.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credits over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) To qualify for this tax credit, a production shall:

(1) Meet the definition of a qualified production specified in subsection [~~(l);~~] (o);

(2) Have qualified production costs totaling at least $200,000[;] for a qualified production, or $50,000 for a qualified digital media project or qualified independent and emerging media project;

(3) Provide [~~the State, at a minimum, a shared-card, end-title screen credit, where applicable;~~] marketing materials promoting the State as a tourist destination or film and digital media production destination, when appropriate, and by mutual agreement, at no cost to the State, which, at a minimum, shall include the placement of a "Filmed in Hawaii" or "Produced in Hawaii" logo in the end credits; and

(4) Provide evidence of reasonable efforts to hire local talent and crew; [~~and~~

~~(5)~~ Provide evidence of financial or in-kind contributions or educational or workforce development efforts, in partnership with related local industry labor organizations, educational institutions, or both, toward the furtherance of the local film and television and digital media industries.] provided that:

(A) For a digital media project or an independent and emerging media project, at least fifty per cent of the positions that make up the production cast and below-the-line production crew are filled by:

(i) Legal residents of this State, whose residency is demonstrated as specified in subsection (a)(2); or

(ii) Students enrolled full-time in a film-and-entertainment-related course of study at an institution of higher education in the State; or

(B) For a production on or after January 1, 2017, the percentage of positions in the production cast and below-the-line production crew to be filled by legal residents of this State shall be set at levels certified by the State as reflecting an appropriate workforce requirement, based upon the levels of aggregate wages and salaries paid for positions created by productions and projects that received tax credits under this section for the prior three years.

(e) On or after July 1, 2006, no qualified production cost that has been financed by investments for which a credit was claimed by any taxpayer pursuant to section 235-110.9 is eligible for credits under this section.

(f) To receive the tax credit, the taxpayer shall first prequalify the production for the credit by registering with the department of business, economic development, and tourism during the development or preproduction stage. Failure to comply with this provision may constitute a waiver of the right to claim the credit.

(g) The director of taxation shall prepare forms as may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(h) Every taxpayer claiming a tax credit under this section for a qualified production shall, no later than ninety days following the end of each taxable year in which qualified production costs were expended, submit a written, sworn statement to the department of business, economic development, and tourism, identifying:

(1) All qualified production costs as provided by subsection (a), if any, incurred in the previous taxable year;

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

(3) The number of [~~total hires versus the number of local hires~~] full-time equivalent positions for legal residents of this State created by each production, by category (i.e., department), and by county.

(i) The department of business, economic development, and tourism shall:

(1) Maintain records of the names of the taxpayers and qualified productions thereof claiming the tax credits under subsection (a);

(2) Obtain and total the aggregate amounts of all qualified production costs per qualified production and per qualified production per taxable year; and

(3) Provide a letter to the director of taxation specifying the amount of the tax credit per qualified production for each taxable year that a tax credit is claimed and the cumulative amount of the tax credit for all years claimed.

Upon each determination required under this subsection, the department of business, economic development, and tourism shall issue a letter to the taxpayer, regarding the qualified production, specifying the qualified production costs and the tax credit amount qualified for in each taxable year a tax credit is claimed. The department of business, economic development, and tourism may establish a fee of $ to process the taxpayer letter. The fee revenues shall be deposited into the Hawaii film and digital media special fund established in section 201- . The taxpayer for each qualified production shall file the letter with the taxpayer's tax return for the qualified production to the department of taxation. Notwithstanding the authority of the department of business, economic development, and tourism under this section, the director of taxation may audit and adjust the tax credit amount to conform to the information filed by the taxpayer.

(j) Total tax credits claimed per qualified production shall not exceed [~~$8,000,000.~~] $16,000,000.

(k) The director of taxation may revoke or modify any written decision qualifying, certifying, or otherwise granting eligibility for tax credits under this section if it is discovered that the taxpayer submitted any materially false statement, representation, or certification in any application, record, report, plan, or other document filed in an attempt to receive tax credits under this section.

(l) A taxpayer that fraudulently submits materially false information under this section shall be liable to reimburse the State for the amount of any credit obtained by fraud as well as reasonable costs and fees associated with the review, processing, investigation, and prosecution of the fraudulent claim.

(m) No later than December 31 of each year, the department of business, economic development, and tourism shall provide a report for the previous calendar year to the governor and the legislature that outlines the return on investment and economic benefits of the tax credits to the State. The report shall also include:

(1) The number of full-time equivalent positions for legal residents of this State;

(2) Aggregate wages and salaries paid for positions created by each production or project that received tax credits under this section; and

(3) Information relating to the distribution of productions receiving credits,

by county and by type of production.

[~~(k)~~] (n) Qualified productions shall comply with subsections (d), (e), (f), and (h).

[~~(l)~~] (o) For the purposes of this section:

"Commercial":

(1) Means an advertising message that is filmed using film, videotape, or digital media, for dissemination via television broadcast, the Internet, by wireless transmission, or theatrical distribution; and

(2) Includes a series of advertising messages if all parts are produced at the same time over the course of six consecutive weeks[~~; and~~

~~(3)~~ ~~Does not include an advertising message with Internet‑only distribution~~].

"Digital media" means any and all production methods and platforms, existing on or after the effective date of this Act, that are directly related to the creation of cinematic imagery and other content, specifically using digital means, including but not limited to digital cameras, digital sound equipment, and computers, to be delivered via film, videotape, interactive game platform, internet, wireless, or other digital distribution media [~~(excluding Internet-only distribution).~~] existing on or after the effective date of this Act.

"Legal resident" shall have the same meaning as "resident" in section 235-1.

"Post production" means production activities and services conducted after principal photography is completed, including but not limited to editing, film and video transfers, duplication, transcoding, dubbing, subtitling, credits, closed captioning, audio production, special effects (visual and sound), graphics, and animation.

"Production" means a series of activities that are directly related to the creation of visual and cinematic imagery to be delivered via film, videotape, or digital media and to be sold, distributed, or displayed as entertainment or the advertisement of products for mass public consumption, including but not limited to scripting, casting, set design and construction, transportation, videography, photography, sound recording, interactive game design, and post production.

"Qualified digital media project" means development of animation, graphics, visual effects, related sound recordings, post production, and interactive media for entertainment and education in any and all formats, existing on or after the effective date of this Act, that is produced for distribution in commercial or educational markets, including but not limited to applications for electronic devices, existing on or after the effective date of this Act, video games and productions intended for game platform, physical media, internet, or wireless distribution.

"Qualified independent and emerging media project" means a qualified production of film, video, television, or interactive entertainment that is produced for distribution in commercial or educational markets, including but not limited to feature film, short film, television show, television series, a video game or production intended for game platform, physical media, internet, or wireless distribution.

"Qualified production":

(1) Means a production, with expenditures in the State, for the total or partial production of a feature-length motion picture, short film, made-for-television movie, commercial, music video, interactive game, television series pilot, single season (up to twenty‑two episodes) of a television series regularly filmed in the State (if the number of episodes per single season exceeds twenty‑two, additional episodes for the same season shall constitute a separate qualified production), television special, single television episode that is not part of a television series regularly filmed or based in the State, national magazine show, or national talk show. For the purposes of subsections (d) and (j), each of the aforementioned qualified production categories shall constitute separate, individual qualified productions[;]. Notwithstanding the foregoing, for purposes of satisfying the criteria of subsection (d), a taxpayer shall claim as part of a qualified production the creation of related content intended for distribution over the Internet, wireless network, or similar methods of distribution existing on or after the effective date of this Act; and

(2) Does not include: daily news; public affairs programs; non-national magazine or talk shows; televised sporting events or activities; productions that solicit funds; productions produced primarily for industrial, corporate, institutional, or other private purposes; and productions that include any material or performance prohibited by chapter 712.

"Qualified production costs" means the costs incurred by a qualified production within the State that are subject to the general excise tax under chapter 237 or income tax under this chapter and that have not been financed by any investments for which a credit was or will be claimed pursuant to section 235‑110.9. Qualified production costs include but are not limited to:

(1) Costs incurred during preproduction such as location scouting and related services;

(2) Costs of set construction and operations, purchases or rentals of wardrobe, props, accessories, food, office supplies, transportation, equipment, and related services;

(3) Wages or salaries of cast, technical and production crew, and musicians;

(4) Costs of photography, sound synchronization, lighting, and related services;

(5) Costs of editing, digital effects, visual effects, music, other post-production, and related services;

(6) Rentals and fees for use of local facilities and locations;

(7) Rentals of vehicles and lodging for cast and crew;

(8) [~~Airfare~~] Costs for meals, accommodations, and travel, including but not limited to airfare for flights to or from Hawaii, and interisland flights;

(9) Insurance [~~and~~], bonding[;], legal, accounting, and payroll service fees;

(10) Shipping of equipment and supplies to or from Hawaii, and interisland shipments; [~~and~~]

(11) Up to $300,000 of the costs of newly purchased computer software and hardware unique to the project, including servers, data processing, and visualization technologies that are located in and used exclusively in the State for the production of digital media; and

[~~(11)~~] (12) Other direct production costs specified by the department in consultation with the department of business, economic development, and tourism."

PART IV

SECTION 7. The purpose of this part is to:

(1) Establish a motion picture, digital media, and film production infrastructure tax credit for qualified infrastructure costs;

(2) Require the expenditure of at least $10,000,000 in qualified infrastructure costs to qualify for the tax credit established in this part; and

(3) Provide for one hundred per cent recapture of the tax credit established in this part.

SECTION 8. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235‑ Motion picture, digital media, and film production infrastructure income tax credit. (a) Any law to the contrary notwithstanding, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The amount of the credit shall be fifty per cent of the qualified infrastructure costs incurred by a qualified taxpayer in any county of the State; provided that the tax credit claimed per qualified infrastructure project shall not exceed $25,000,000.

In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified infrastructure costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(d) To qualify for this tax credit, a qualified infrastructure project shall:

(1) Satisfy the requirements of a qualified infrastructure project as defined in subsection (l);

(2) Have qualified infrastructure costs totaling at least $10,000,000; and

(3) Provide evidence that for the first two years of the infrastructure project credit, at least sixty per cent, and thereafter, at least seventy per cent, of the positions are filled by legal residents of this State, whose residency is demonstrated as specified in section 235-17(a)(2), or students enrolled in a construction or related course of study at an educational institution in the State.

(e) To receive the tax credit, the taxpayer shall first prequalify the infrastructure project for the credit by registering with the department of business, economic development, and tourism during the development stage. Failure to comply with this subsection may constitute a waiver of the right to claim the credit.

(f) If all or a portion of an infrastructure project is a facility that may be used for other purposes unrelated to production or post-production activities, then the project shall be approved only if a determination is made by the department of business, economic development, and tourism that the multiple-use facility will support and will be necessary to secure production or post-production activity.

The taxpayer may also request a comfort ruling from the department of taxation regarding the applicability of the tax credit to a specific qualified infrastructure project.

(h) Every taxpayer claiming a tax credit under this section for a qualified infrastructure project, no later than ninety days following the end of each taxable year in which qualified infrastructure costs were incurred, shall submit a written, sworn statement to the department of business, economic development, and tourism, identifying:

(1) All qualified infrastructure costs, if any, incurred in the previous taxable year;

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

(3) The number of full-time equivalent positions for legal residents of this State created by each project, by job category and by county.

(i) The department of business, economic development, and tourism shall:

(1) Maintain records of the names of the taxpayers and qualified infrastructure projects thereof claiming the tax credits under subsection (a);

(2) Obtain and total the aggregate amounts of all qualified infrastructure costs per qualified infrastructure project per taxable year; and

(3) Provide a letter to the director of taxation specifying the amount of the tax credit per qualified infrastructure project for each taxable year that a tax credit is claimed and the cumulative amount of the tax credit for all years claimed.

(j) Upon each determination required under this subsection, the department of business, economic development, and tourism shall issue a letter to the taxpayer, regarding the qualified infrastructure project, specifying the qualified infrastructure costs and the tax credit amount qualified for in each taxable year a tax credit is claimed. The department of business, economic development, and tourism may establish a fee of $ to process the taxpayer letter. The fee revenues shall be deposited into the Hawaii film and digital media special fund established in section 201- . The taxpayer, for each qualified infrastructure project, shall file the letter with the taxpayer's tax return for the qualified infrastructure project to the department of taxation. Notwithstanding the authority of the department of business, economic development, and tourism under this section, the director of taxation may audit and adjust the tax credit amount to conform to the information filed by the taxpayer.

(k) No later than December 31 of each year, the department of business, economic development, and tourism shall provide a report for the previous fiscal year to the governor and the legislature that outlines the return on investment and economic benefits of the tax credits to the State. The report shall also include:

(1) The number of full-time equivalent positions for legal residents of this State;

(2) Aggregate wages and salaries paid for the positions created by each qualified infrastructure project that received tax credits under this section; and

(3) Information relating to the distribution of qualified infrastructure projects receiving credits,

by county and by type of project.

(l) For the purposes of this section:

"Qualified infrastructure costs" means the total costs incurred by a qualified infrastructure project within the State, including the cost of purchasing or leasing real property, which are subject to the general excise tax under chapter 237 or income tax under this chapter and that have not been financed by any investments for which a credit was or will be claimed pursuant to section 235-110.9.

"Qualified infrastructure project" means a construction project in the State, for the development, construction, or renovation of a film, video, television, or media production or post-production facility and the immovable property and equipment related thereto, or any other facility that supports and is a necessary component of the infrastructure project.

(m) For a qualified infrastructure project, the tax credit claimed under this section shall be repaid through an annual payment from the taxpayer to the State equal to fifteen per cent of the qualified infrastructure project's taxable income until such time as the tax credit has been repaid; provided that if the ownership of a qualified infrastructure project is transferred, the transferee shall be obligated to the terms of the repayment under this subsection.

(n) If at any time the infrastructure project ceases to be a qualified infrastructure project, the credit claimed under this section shall be recaptured. The amount of the recaptured tax credit determined under this subsection shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs under this subsection."

PART V

SECTION 9. Act 88, Session Laws of Hawaii 2006, is amended by amending section 4 to read as follows:

"SECTION 4. This Act shall take effect on July 1, 2006; provided that[:

~~(1)~~ ~~Section~~] section 2 of this Act shall apply to qualified production costs incurred on or after July 1, 2006[~~, and before January 1, 2016; and~~

~~(2)~~ ~~This Act shall be repealed on January 1, 2016, and section 235-17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act~~]."

SECTION 10. (a) The department of business, economic development, and tourism shall contract with the Hawaii tourism authority to coordinate the development of a film and digital media implementation plan to leverage national and international marketing and promotional opportunities with the Hawaii tourism authority's current marketing and development strategies.

(b) The department of business, economic development, and tourism and the Hawaii tourism authority shall include in their annual reports to the governor and the legislature those activities related to the film and digital media implementation plan.

SECTION 11. The department of business, economic development, and tourism may establish four new permanent full-time equivalents (4.0 FTE) to support requirements of the expanded workload, enhancements to film tax credits, and management and certification of infrastructure tax credits for the purposes of this Act.

SECTION 12. The department of taxation may establish two new permanent full-time equivalents (2.0 FTE) and one new temporary full-time equivalent (1.0 FTE) to calculate quarterly payments, prepare forms, adopt rules, and provide comfort rulings for the purposes of this Act.

PART VI

SECTION 13. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for additional resources and staffing support to assist state agencies in collecting and reporting annually on the number of full-time equivalent positions for legal Hawaii residents by each production receiving tax credits, aggregate wages and salaries paid to legal Hawaii residents in prior years, as well as distribution of productions receiving credits, by county and type of production.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 14. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for additional resources and staffing support for the office of information management and technology to assist state agencies in collecting and reporting annually on the number of full-time equivalent positions for legal Hawaii residents by each production receiving tax credits, aggregate wages and salaries paid to legal Hawaii residents in prior years, as well as distribution of productions receiving credits, by county and type of production.

The sums appropriated shall be expended by the department of accounting and general services for the purposes of this Act.

SECTION 15. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2013-2014 and the same sum or so much thereof as may be necessary for fiscal year 2014-2015 for additional resources and staffing support for the department of taxation to collect and report annually on the aggregate size of the film and digital media industry workforce, as it relates to those productions that take advantage of Hawaii's film and digital media industry tax credits.

The sums appropriated shall be expended by the department of taxation for the purposes of this Act.

PART VII

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect on July 1, 2013; provided that:

(1) Section 6 of this Act shall apply to qualified production costs incurred on or after July 1, 2013, and before January 1, 2028;

(2) Section 8 of this Act shall apply to taxable years beginning after June 30, 2013, and before January 1, 2028; and

(3) This Act shall be repealed on January 1, 2028; provided further that section 235-17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day

before the effective date of Act 88, Session Laws of Hawaii 2006.

INTRODUCED BY:	_____________________________

Report Title:

Taxation; Motion Picture, Digital Media, and Film Production Income Tax Credit; Infrastructure Income Tax Credit; Appropriations

Description:

Establishes the Hawaii film and digital media special fund; repeals part IX of chapter 201, Hawaii Revised Statutes, relating to Hawaii television and film development (part II); amends the motion picture, digital media, and film production income tax credit to add an additional credit for qualified production costs paid to legal residents of this State and to Hawaii vendors and Hawaii suppliers; amends the total tax credit cap; requires annual report; increases requirements for hiring of legal residents of this State; applies to qualified production costs incurred on or after 07/01/2013, and before 01/01/2028 (part III); establishes a motion picture, digital media, and film production infrastructure income tax credit for qualified infrastructure costs; requires qualified expenditure of at least $10,000,000; increases requirements for hiring of legal residents of this State; requires the credit to be repaid through an annual payment to the State equal to fifteen per cent of the qualified infrastructure project's taxable income until the credit has been repaid; provides for a recapture of the tax credit if the facilities are no longer used for a qualified activity; requires annual report; applies to taxable years beginning after 06/30/2013 (part IV); requires department of business, economic development, and tourism to contract with the Hawaii tourism authority to coordinate the development of a film and digital media implementation plan to leverage marketing and promotional opportunities with the Hawaii tourism authority's current marketing and development strategies; requires annual report (part V); appropriates funds for additional resource and staffing support to assist state agencies in collecting and reporting annually on the number of full-time equivalent positions for legal Hawaii residents by each production receiving tax credits (part VI); repeals on 01/01/2028.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.