Bill Text: IL SB0005 | 2011-2012 | 97th General Assembly | Introduced

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Bill Title: Creates the Live Theater Production Tax Credit Act. Provides that certain taxpayers who are theater producers, owners, licensees, or operators, or who otherwise present live stage presentations within the State, are entitled to a credit against their income tax liability equal to a percentage of their Illinois production spending and Illinois labor expenditures. Provides that eligibility for the credit is determined by the Department of Commerce and Economic Opportunity. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2013-01-08 - Session Sine Die [SB0005 Detail]

Download: Illinois-2011-SB0005-Introduced.html

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97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 SB0005 Introduced 1/27/2011, by Sen. Dan Kotowski SYNOPSIS AS INTRODUCED:
New Act
35 ILCS 5/221 new
Creates the Live Theater Production Tax Credit Act. Provides that certain taxpayers who are theater producers, owners, licensees, or operators, or who otherwise present live stage presentations within the State, are entitled to a credit against their income tax liability equal to a percentage of their Illinois production spending and Illinois labor expenditures. Provides that eligibility for the credit is determined by the Department of Commerce and Economic Opportunity. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the Live
Theater Production Tax Credit Act.
Section 5. Purpose. The Illinois economy depends heavily on
the commercial for-profit live theater industry and the
pre-Broadway and long-run shows that are presented in Illinois.
As a result of intense competition from other prominent theater
cities in the United States and abroad in attracting
pre-Broadway and long-run shows, Illinois must move
aggressively with new business development investment tools so
that Illinois is more competitive in site location decision
making for show producers. In an increasingly global economy,
Illinois' long term development will benefit from the rational,
strategic use of State resources in support of pre-Broadway
live theater and long run show development and growth. It is
the purpose of this Act to preserve and expand the existing
work force used in live theater and enhance the marketing of
the presentation of live theater in Illinois. It shall be the
policy of this State to promote and encourage the training and
hiring of Illinois residents who represent the diversity of the
Illinois population through the creation and implementation of

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training, education, and recruitment programs organized in
cooperation with Illinois colleges and universities, labor
organizations, and the commercial for-profit live theater
industry.
Section 10. Definitions. As used in this Act:
"Accredited theater production" means a for-profit live
stage presentation in a qualified production facility, as
defined in this Section, that is either (i) a pre-Broadway
production or (ii) a long-run production for which the
aggregate Illinois labor and marketing expenditures exceed
$100,000.
"Pre-Broadway production" means a live stage production
that, in its original or adaptive version, is performed in a
qualified production facility having a presentation scheduled
for Broadway's Theater District in New York City within 12
months after its Illinois presentation.
"Long-run production" means a live stage production that is
performed in a qualified production facility for longer than 8
weeks, with at least 6 performances per week, and includes a
production that spans the end of one tax year and the
commencement of a new tax year that, in combination, meets the
criteria set forth in this definition making it a long-run
production eligible for a theater tax credit award in each tax
year or portion thereof.
"Accredited theater production certificate" means a

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certificate issued by the Department certifying that the
production is an accredited theater production that meets the
guidelines of this Act.
"Applicant" means a taxpayer that is a theater producer,
owner, licensee, operator, or presenter that is presenting or
has presented a live stage presentation located within the
State of Illinois who:
(1) owns or licenses the theatrical rights of the stage
presentation for the Illinois production period; or
(2) has contracted or will contract directly with the
owner or licensee of the theatrical rights or a person
acting on behalf of the owner or licensee to provide live
performances of the production.
An applicant that directly or indirectly owns, controls, or
operates multiple qualified production facilities shall be
presumed to be and considered for the purposes of this Act to
be a single applicant; provided, however, that as to each of
the applicant's qualified production facilities, the applicant
shall be eligible to separately and contemporaneously (i) apply
for and obtain accredited theater production certificates,
(ii) stage accredited theater productions, and (iii) apply for
and receive a tax credit award certificate for each of
applicant's accredited theater productions performed at each
of the applicant's qualified production facilities.
"Department" means the Department of Commerce and Economic
Opportunity.

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"Director" means the Director of the Department.
"Illinois labor expenditure" means gross salary or wages
including, but not limited to, taxes, benefits, and any other
consideration incurred or paid to non-talent employees of the
applicant for services rendered to and on behalf of the
accredited theater production. To qualify as an Illinois labor
expenditure, the expenditure must be:
(1) incurred or paid by the applicant on or after the
effective date of the Act for services related to any
portion of an accredited theater production from its
pre-production stages, including, but not limited to, the
writing of the script, casting, hiring of service
providers, purchases from vendors, marketing, advertising,
public relations, load in, rehearsals, performances, other
accredited theater production related activities, and load
out;
(2) directly attributable to the accredited theater
production;
(3) limited to the first $100,000 of wages incurred or
paid to each employee of an accredited theater production
in each tax year;
(4) included in the federal income tax basis of the
property;
(5) paid in the tax year for which the applicant is
claiming the tax credit award, or no later than 60 days
after the end of the tax year;

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(6) paid to persons residing in Illinois at the time
payments were made; and
(7) reasonable in the circumstances.
"Illinois production spending" means any and all expenses
directly or indirectly incurred relating to an accredited
theater production presented in any qualified production
facility of the applicant, including, but not limited to,
expenditures for:
(1) national marketing, public relations, and the
creation and placement of print, electronic, television,
billboard, and other forms of advertising; and
(2) the construction and fabrication of scenic
materials and elements; provided, however, that the
maximum amount of expenditures attributable to the
construction and fabrication of scenic materials and
elements eligible for a tax credit award shall not exceed
$500,000 per applicant per production in any single tax
year.
"Qualified production facility" means a facility located
in the State in which live theatrical productions are, or are
intended to be, exclusively presented that contains at least
one stage, a seating capacity of 1,200 or more seats, and
dressing rooms, storage areas, and other ancillary amenities
necessary for the accredited theater production.
"Tax credit award" means the issuance to a taxpayer by the
Department of a tax credit award in conformance with Sections

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40 and 45 of this Act.
"Tax year" means a calendar year for the period January 1
to and including December 31.
Section 15. Powers of the Department. The Department, in
addition to those powers granted under the Civil Administrative
Code of Illinois, is granted and has all the powers necessary
or convenient to carry out and effectuate the purposes and
provisions of this Act, including, but not limited to, the
power and authority to:
(1) adopt rules deemed necessary and appropriate for
the administration of the Tax Credit Award program;
establish forms for applications, notifications,
contracts, or any other agreements; and accept
applications at any time during the year;
(2) assist applicants pursuant to the provisions of
this Act to promote, foster, and support live theater
development and production and its related job creation or
retention within the State;
(3) gather information and conduct inquiries, in the
manner and by the methods set forth in this Act, required
for the Department to comply with Section 40 and, without
limitation, obtain information with respect to applicants
for the purpose of making any designations or
certifications necessary or desirable to assist the
Department with any recommendation or guidance in the

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furtherance of the purposes of this Act and relating to
applicants' participation in training, education, and
recruitment programs that are organized in cooperation
with Illinois colleges and universities or labor
organizations designed to promote and encourage the
training and hiring of Illinois residents who represent the
diversity of the Illinois population;
(4) provide for sufficient personnel to permit
administrative, staffing, operating, and related support
required to adequately discharge its duties and
responsibilities described in this Act from funds as may be
appropriated by the General Assembly for the
administration of this Act; and
(5) require that the applicant at all times keep proper
books and records of accounts relating to the tax credit
award, in accordance with generally accepted accounting
principles consistently applied, and make, upon reasonable
written request by the Department, those books and records
available for reasonable Department inspection and audit
during the applicant's normal business hours. Any
documents or data made available to or received from the
applicant by any agent, employee, officer, or service
provider to the Department shall be deemed confidential and
shall not constitute public records to the extent that the
documents or data consist of commercial or financial
information regarding the operation by the applicant of any

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theater or any accredited theater production, or any
recipient of any tax credit award under this Act.
Section 20. Tax credit award. Subject to the conditions set
forth in this Act, an applicant is entitled to a tax credit
award as approved by the Department for qualifying Illinois
labor expenditures and Illinois production spending for each
tax year in which the applicant is awarded an accredited
theater production certificate issued by the Department.
Section 25. Application for certification of accredited
theater production. Any applicant proposing an accredited
theater production located or planned to be located in Illinois
may request an accredited theater production certificate by
application to the Department.
Section 30. Review of application for accredited theater
production certificate.
(a) The Department shall issue an accredited theater
production certificate to an applicant if it finds that by a
preponderance the following conditions exist:
(1) the applicant intends to make the expenditure in
the State required for certification of the accredited
theater production;
(2) the applicant's accredited theater production is
economically sound and will benefit the people of the State

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of Illinois by increasing opportunities for employment and
will strengthen the economy of Illinois;
(3) the following requirements related to the
implementation of a diversity plan have been met: (i) the
applicant has filed with the Department a diversity plan
outlining specific goals for hiring Illinois labor
expenditure eligible minority persons and females, as
defined in the Business Enterprise for Minorities,
Females, and Persons with Disabilities Act, and for using
vendors receiving certification under the Business
Enterprise for Minorities, Females, and Persons with
Disabilities Act; (ii) the Department has approved the plan
as meeting the requirements established by the Department
and verified that the applicant has met or made good faith
efforts in achieving those goals; and (iii) the Department
has adopted any rules that are necessary to ensure
compliance with the provisions set forth in this paragraph
and necessary to require that the applicant's plan reflects
the diversity of the population of this State;
(4) the applicant's accredited theater production
application indicates whether the applicant intends to
participate in training, education, and recruitment
programs that are organized in cooperation with Illinois
colleges and universities, labor organizations, and the
holders of accredited theater production certificates and
are designed to promote and encourage the training and

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hiring of Illinois residents who represent the diversity of
the Illinois;
(5) that, if not for the tax credit award, the
applicant's accredited theater production would not occur
in Illinois, which may be demonstrated by any means,
including, but not limited to, evidence that: (i) the
applicant, presenter, owner, or licensee of the production
rights has other state or international location options at
which to present the production and could reasonably and
efficiently locate outside of the State, (ii) at least one
other state or nation could be considered for the
production, (iii) the receipt of the tax award credit is a
major factor in the decision of the applicant, presenter,
production owner or licensee as to where the production
will be presented and that without the tax credit award the
applicant likely would not create or retain jobs in
Illinois, or (iv) receipt of the tax credit award is
essential to the applicant's decision to create or retain
new jobs in the State; and
(6) the tax credit award will result in an overall
positive impact to the State, as determined by the
Department using the best available data.
(b) If any of the provisions in this Section conflict with
any existing collective bargaining agreements, the terms and
conditions of those collective bargaining agreements shall
control.

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(c) The Department shall act expeditiously regarding
approval of applications for accredited theater production
certificates so as to accommodate the pre-production work,
booking, commencement of ticket sales, determination of
performance dates, load in, and other matters relating to the
live theater productions for which approval is sought.
Section 35. Training programs for skills in critical
demand. To accomplish the purposes of this Act, the Department
may use the training programs provided under Section 605-800 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Section 40. Issuance of Tax Credit Award Certificate.
(a) In order to qualify for a tax credit award under this
Act, an applicant must file an application for each accredited
theater production at each of the applicant's qualified
production facilities, on forms prescribed by the Department,
providing information necessary to calculate the tax credit
award and any additional information as reasonably required by
the Department.
(b) Upon satisfactory review of the application, the
Department shall issue a tax credit award certificate stating
the amount of the tax credit award to which the applicant is
entitled for that tax year and shall contemporaneously notify
the applicant and Illinois Department of Revenue in accordance

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with Section 221 of the Illinois Income Tax Act, as amended.
Section 45. Amount and payment of the tax credit award. The
tax credit award shall be calculated each tax year based upon
the filing by the applicant on forms prescribed by the
Department containing information regarding qualifying and
quantified Illinois labor expenditures, as defined in Section
10, net of the limitation in that Section, and Illinois
production spending, as defined in Section 10, net of the
limitation in that Section. From the amount calculated, the
applicant shall be entitled to receive a tax credit award of:
(1) 20% of the Illinois labor expenditures and Illinois
production spending for each tax year; plus
(2) 15% of the Illinois labor expenditures generated by
the employment of Illinois residents in geographic areas of
high poverty or high unemployment in each tax year, as
determined by the Department.
Following the Department's determination of the tax credit
award, the Department shall issue the tax credit award to the
applicant.
Section 50. Live theater tax credit award program
evaluation and reports.
(a) The Department's live theater tax credit award
evaluation must include:
(i) an assessment of the effectiveness of the program

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in creating and retaining new jobs in Illinois;
(ii) an assessment of the revenue impact of the
program,
(iii) in the discretion of the Department, a review of
the practices and experiences of other states or nations
with similar programs; and
(iv) an assessment of the overall success of the
program. The Department may make a recommendation to
extend, modify, or not extend the program based on the
evaluation.
(b) At the end of each fiscal quarter, the Department shall
submit to the General Assembly a report that includes, without
limitation:
(i) an assessment of the economic impact of the
program, including the number of jobs created and retained,
and whether the job positions are entry level, management,
vendor, or production related;
(ii) the amount of accredited theater production
spending brought to Illinois, including the amount of
spending and type of Illinois vendors hired in connection
with an accredited theater production; and
(iii) a determination of whether those receiving
qualifying Illinois labor expenditure salaries or wages
reflect the geographical, racial and ethnic, gender, and
income level diversity of the State of Illinois.
(c) At the end of each fiscal year, the Department shall

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submit to the General Assembly a report that includes, without
limitation:
(i) the identification of each vendor that provided
goods or services that were included in an accredited
theater production's Illinois production spending;
(ii) a statement of the amount paid to each identified
vendor by the accredited theater production and whether the
vendor is a minority or female owned business as defined in
Section 2 of the Business Enterprise for Minorities,
Females and Persons with Disability Act; and
(iii) a description of the steps taken by the
Department to encourage accredited theater productions to
use vendors who are minority or female owned businesses.
Section 55. Program terms and conditions. Any documentary
materials or data made available or received from an applicant
by any agent or employee of the Department are confidential and
are not public records to the extent that the materials or data
consist of commercial or financial information regarding the
operation of or the production of the applicant or recipient of
any tax credit award under this Act.
Section 80. The Illinois Income Tax Act is amended by
adding Section 221 as follows:
(35 ILCS 5/221 new)

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Sec. 221. Live theater production credit.
(a) For tax years beginning on or after January 1, 2012, a
taxpayer who has received a tax credit award under the Live
Theater Production Tax Credit Act is entitled to a credit
against the taxes imposed under subsections (a) and (b) of
Section 201 of this Act in an amount determined under that Act
by the Department of Commerce and Economic Opportunity.
(b) If the taxpayer is a partnership, limited liability
partnership, limited liability company, or Subchapter S
corporation, the tax credit award is allowed to the partners,
unit holders, or shareholders in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and Subchapter S of the Internal Revenue
Code.
(c) A sale, assignment, or transfer of the tax credit award
may be made by the taxpayer earning the credit within one year
after the credit is awarded in accordance with rules adopted by
the Department of Commerce and Economic Opportunity.
(d) The Department of Revenue, in cooperation with the
Department of Commerce and Economic Opportunity, shall adopt
rules to enforce and administer the provisions of this Section.
(e) This Section is exempt from the provisions of Section
250 of this Act.
(f) The tax credit award 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

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liability of the 3 tax years following the excess credit year.
The tax credit award 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 liability, the
earlier credit shall be applied first. In no event may a credit
under this Section reduce the taxpayer's liability to less than
zero.
Section 99. Effective date. This Act takes effect upon
becoming law.