Bill Text: IL HB0381 | 2013-2014 | 98th General Assembly | Amended

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Bill Title: Amends the Hotel Operators' Occupation Tax Act. Makes a technical change in a Section concerning the short title.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2014-12-03 - Session Sine Die [HB0381 Detail]

Download: Illinois-2013-HB0381-Amended.html

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Rep. Fred Crespo

Filed: 9/27/2013

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AMENDMENT TO HOUSE BILL 381
AMENDMENT NO. ______. Amend House Bill 381 by replacing
everything after the enacting clause with the following:
"Section 1. Short title. This Act may be cited as the
Interactive Digital Media Tax Credit Act.
Section 5. Definitions; rules.
(a) As used in this Act:
"Base Illinois production spending" is the average amount
of expenses incurred by the applicant for all productions in
calendar years 2011, 2012, and 2013, including, without
limitation, all of the following:
(1) expenses to purchase, from vendors within
Illinois, tangible personal property that is used in the
accredited production;
(2) expenses to acquire services from vendors in
Illinois for an accredited production, including services

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for editing and processing; and
(3) compensation paid to vendors for contractual or
salaried employees of the vendor who are Illinois residents
and who perform services with respect to the accredited
production, not to exceed $100,000 for any one employee.
"Base number of employees" is the average of all full-time
employees who were employed by an applicant in calendar years
2011, 2012, and 2013.
"Interactive digital media project" means:
(1) a production of interactive entertainment which is
produced for distribution in commercial or educational
markets, including computer games, video games, and
simulation or animation; or
(2) a production intended for Internet or wireless
distribution.
"Accredited production" means the production of an
interactive digital media project that has been certified by
the Department in which the Illinois production spending
included in the cost of the production exceeds $100,000 per
year.
"Accredited production certificate" means a certificate
issued by the Department certifying that the interactive
digital media production is an accredited production that meets
the guidelines of this Act.
"Applicant" means a taxpayer that is an interactive digital
media company that is operating or has operated an accredited

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production located within the State of Illinois and that: (i)
owns the copyright in the accredited production throughout the
Illinois production period; or (ii) has contracted directly
with the owner of the copyright in the accredited production or
a person acting on behalf of the owner to provide services for
the production if the owner of the copyright is not an eligible
production corporation.
"Credit" means, for an interactive digital media
accredited production commencing on or after January 1, 2014:
(1) an amount equal to 30% of the Illinois production
spending and Illinois labor expenditure for the taxable
year; and
(2) an additional amount equal to 5% of the Illinois
production spending if the accredited production company
is located in a geographic area of high poverty or high
unemployment, as determined by the Department.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of Commerce and Economic
Opportunity.
"Illinois labor expenditure" means salary or wages paid to
employees of the applicant for services on the accredited
production. To qualify as an Illinois labor expenditure, the
expenditure must be all of the following:
(1) reasonable in the circumstances;
(2) included in the applicant's federal income tax

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basis;
(3) incurred by the applicant for services performed on
or after January 1, 2014;
(4) incurred during the production stages of the
accredited production;
(5) limited to the first $100,000 of wages paid to or
incurred with respect to each new employee of a production
commencing on or after January 1, 2014;
(6) directly attributable to the accredited
production;
(7) paid in the tax year for which the applicant is
claiming the credit or no later than 60 days after the end
of the tax year;
(8) paid to persons residing in Illinois at the time
the payments were made; and
(9) paid for services rendered in Illinois.
"Illinois production spending" means the expenses incurred
by the applicant for an accredited production above the base
Illinois production spending, including, without limitation,
all of the following:
(1) expenses to purchase, from vendors located in
Illinois, tangible personal property that is used in the
accredited production;
(2) expenses to acquire services from vendors located
in Illinois for an accredited production, including
services related to editing or processing; and

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(3) the compensation paid by a vendor, not to exceed
$100,000 for any one employee, for contractual or salaried
employees of the vendor who are Illinois residents
performing services with respect to the accredited
production.
"New employee" means a full-time employee who: (i) is first
employed by an applicant on or after January 1, 2014; and (ii)
is in excess of, or in addition to, the applicant's base number
of employees. The term "new employee" does not include:
(1) an employee of the eligible employer who performs a
job that existed for at least 6 months before the employee
was hired and was previously performed by another employee;
(2) an employee of the eligible employer who was
previously employed in Illinois by a related member of the
eligible employer and whose employment was shifted to the
eligible employer after the eligible employer entered into
the agreement; or
(3) a child, grandchild, parent, or spouse, other than
a spouse who is legally separated from the individual, of
any individual who has a direct or indirect ownership
interest of at least 5% in the profits, capital, or value
of the eligible employer.
"Qualified production facility" means a facility in the
State in which interactive digital media projects are or are
intended to be regularly produced.
(b) The Department may adopt rules necessary to implement

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this Act.
Section 10. Tax credit awards. Subject to the conditions
set forth in this Act, an applicant is entitled to a credit
against the tax imposed under subsections (a) and (b) of
Section 201 of the Illinois Income Tax Act as approved by the
Department under Section 25 of this Act.
Section 15. Application for certification of accredited
production. Any applicant proposing an interactive digital
media production located or planned to be located in Illinois
may request an accredited production certificate by formal
application to the Department.
Section 20. Issuance of tax credit certificate.
(a) In order to qualify for a tax credit under this Act, an
applicant must file an application, on forms prescribed by the
Department, providing information necessary to calculate the
tax credit and any additional information as required by the
Department.
(b) Upon satisfactory review of the application, the
Department shall issue a tax credit certificate stating the
amount of the tax credit to which the applicant is entitled.
The tax credit certificate shall be effective for expenditures
made prior to the date of initial certification and shall be
valid until the production is completed.

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Section 25. Amount and duration of the credit. The amount
of the credit awarded under this Act is based on the amount of
the Illinois labor expenditure and Illinois production
spending approved by the Department for the production as set
forth under Section 5. The credit may be taken beginning with
the taxable year in which the accredited production company has
met the investment requirement. For each year in which such
accredited production company either claims or transfers the
credit, the accredited production company shall attach a
schedule to the accredited production company's Illinois
income tax return.
Section 30. Transfer of tax credits.
(a) Upon application and granting of an accredited
production certificate by the Department, an accredited
production company, or a partner or member that has received a
distribution under that certificate, may elect to transfer, in
whole or in part, any unused credit amount granted under this
Act. An election to transfer any unused credit amount must be
made no later than 5 years after the date the credit is
awarded, after which period the credit expires and may not be
used. The Department shall notify the Department of Revenue of
the election and transfer.
(b) An accredited production company that elects to apply a
credit amount against taxes remitted is permitted a one-time

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transfer of unused credits to one transferee. An accredited
production company that elects to apply a credit amount against
taxes due is permitted a one-time transfer of unused credits to
no more than 4 transferees, and such transfers must occur in
the same taxable year.
(c) The transferee is subject to the same rights and
limitations as the accredited production company awarded the
credit, except that the transferee may not sell or otherwise
transfer the credit.
(d) The Department of Revenue may adopt rules to administer
this Section.
Section 35. Interactive Digital Media Tax Credit Report.
The Department shall submit to the General Assembly, no later
than July 1, 2018, a report that includes, without limitation:
(1) an assessment of the economic impact of the tax
credit program created under this Act, including the number
of jobs created and retained, and whether the job positions
are entry level, management, vendor, or production
related;
(2) an assessment of the revenue impact of the program,
including, but not limited to, the amount of Illinois labor
expenditure and Illinois production expenditure brought to
Illinois, including the amount of spending and the type of
Illinois vendors hired in connection with an accredited
production company;

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(3) in the discretion of the Department, a review of
the practices and experiences of other states or nations
with similar programs;
(4) a determination of whether those receiving
qualifying Illinois labor expenditure salaries or wages
reflect the geographical, racial, ethnic, gender, and
income level diversity of the State of Illinois; and
(5) an assessment of the overall success of the
program.
Section 60. Repealer. This Act is repealed July 1, 2019.
Section 90. The Illinois Income Tax Act is amended by
adding Section 224 as follows:
(35 ILCS 5/224 new)
Sec. 224. Interactive Digital Media Tax Credit. For tax
years beginning on or after January 1, 2014, taxpayers who have
been awarded a credit under the Interactive Digital Media Tax
Credit Act are entitled to a credit against the tax imposed
under subsections (a) and (b) of Section 201 of this Act as
provided in the Interactive Digital Media Tax Credit Act.
The credit may not be carried back. If the amount of the
credit exceeds the tax liability for the year, the excess may
be carried forward and applied to the tax liability of the 5
taxable years following the excess credit year. The credit

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shall be applied to the earliest year for which there is a tax
liability. If there are credits from more than one tax year
that are available to offset a liability, the earlier credit
shall be applied first. In no event shall a credit under this
Section reduce the taxpayer's liability to less than zero.".