Bill Text: NY S05887 | 2017-2018 | General Assembly | Amended
Bill Title: Establishes the empire state digital gaming media production credit; provides such credit shall be calculated as a percentage of eligible production costs incurred within this state; provides such credits be allocated on a regional basis; limits credits to an aggregate of twenty-five million dollars per year.
Spectrum: Bipartisan Bill
Status: (Engrossed - Dead) 2018-06-20 - referred to ways and means [S05887 Detail]
Download: New_York-2017-S05887-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 5887--A 2017-2018 Regular Sessions IN SENATE May 4, 2017 ___________ Introduced by Sens. GOLDEN, BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations -- recommitted to the Committee on Investi- gations and Government Operations in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law and the economic development law, in relation to the creation of the empire state digital gaming media production credit; and providing for the repeal of certain provisions upon expiration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The tax law is amended by adding a new section 44 to read 2 as follows: 3 § 44. Empire state digital gaming media production credit. (a) Allow- 4 ance of credit. (1) A taxpayer which is a digital gaming media 5 production entity engaged in qualified digital gaming media production, 6 or who is a sole proprietor of or a member of a partnership, which is a 7 digital gaming media production entity engaged in qualified digital 8 gaming media production, and is subject to tax under article nine-A or 9 twenty-two of this chapter, shall be allowed a credit against such tax 10 to be computed as provided herein. 11 (2) The amount of the credit shall be the product (or pro rata share 12 of the product, in the case of a member of a partnership or limited 13 liability company) of twenty-five percent and the eligible production 14 costs of one or more qualified digital gaming media productions. 15 (3) Eligible digital gaming media production costs for a qualified 16 digital gaming media production incurred and paid in this state but 17 outside such metropolitan commuter transportation district shall be 18 eligible for a credit of ten percent of such eligible production costs EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11396-03-8S. 5887--A 2 1 in addition to the credit specified in paragraph two of this subdivi- 2 sion. 3 (4) Eligible production costs shall not include those costs used by 4 the taxpayer or another taxpayer as the basis calculation of any other 5 tax credit allowed under this chapter or allowed in any other state. 6 (b) Allocation of credit. The aggregate amount of tax credits allowed 7 under this section, subdivision fifty-three of section two hundred ten-B 8 and subsection (jjj) of section six hundred six of this chapter in any 9 taxable year shall be twenty-five million dollars. The aggregate amount 10 of credits for any taxable year must be distributed on a regional basis 11 as follows: fifty percent of the aggregate amount of credits shall be 12 available for qualified digital gaming media productions that incur at 13 least sixty percent of eligible production costs for a qualified digital 14 gaming media production in region one; twenty percent of the aggregate 15 amount of credits shall be available for qualified digital gaming media 16 productions that incur at least sixty percent of eligible production 17 costs for a qualified digital gaming media production in region two; and 18 thirty percent of the aggregate amount of credits shall be available for 19 qualified digital gaming media productions that incur at least sixty 20 percent of eligible production costs for a qualified digital gaming 21 media production in region three. If such regional distribution is not 22 fully allocated in any taxable year, the remainder of such credits shall 23 be available for allocation to any region in the subsequent tax year. 24 For the purposes of this section region one shall contain the city of 25 New York; region two shall contain the counties of Westchester, Rock- 26 land, Nassau and Suffolk; and region three shall contain any county not 27 contained in regions one and two. Such credit shall be allocated by the 28 empire state development corporation among taxpayers in order of priori- 29 ty based upon the date of filing an application for allocation of 30 digital gaming media production credit with such office. If the total 31 amount of allocated credits applied for in any particular year exceeds 32 the aggregate amount of tax credits allowed for such year under this 33 section, such excess shall be treated as having been applied for on the 34 first day of the subsequent taxable year. 35 (c) Definitions. As used in this section: 36 (1) "Qualified digital gaming media production" means: (i) a website, 37 the digital media production costs of which are paid or incurred predo- 38 minately in connection with (A) video simulation, animation, text, 39 audio, graphics or similar gaming related property embodied in digital 40 format, and (B) interactive features of digital gaming (e.g., links, 41 message boards, communities or content manipulation); (ii) video or 42 interactive games produced primarily for distribution over the internet, 43 wireless network or successors thereto; (iii) animation, simulation or 44 embedded graphics digital gaming related software intended for commer- 45 cial distribution regardless of medium; and (iv) a digital gaming media 46 production in which qualified digital gaming media production costs 47 equal to or are in excess of seven thousand five hundred dollars if 48 incurred and paid in this state in twelve months preceding the date on 49 which the credit is claimed. Provided, however, if such a production 50 costs are incurred and paid outside the metropolitan commuter transpor- 51 tation district in this state, such production costs shall be equal to 52 or in excess of three thousand seven hundred fifty dollars to be a qual- 53 ified digital gaming media production for purposes of this paragraph. A 54 qualified digital gaming media production does not include a website, 55 video, interactive game or software that is used predominately for: 56 electronic commerce (retail or wholesale purposes other than the sale ofS. 5887--A 3 1 video or interactive games), gambling (including activities regulated by 2 a New York gaming agency), exclusive local consumption for entities not 3 accessible by the general public including industrial or other private 4 purposes, and political advocacy purposes. 5 (2) "Digital gaming media production costs" means any costs for prop- 6 erty used and wages or salaries paid to individuals directly employed 7 for services performed by those individuals directly and predominantly 8 in the creation of a digital gaming media production or productions. 9 Digital gaming media production costs include but shall not be limited 10 to to payments for property used and services performed directly and 11 predominantly in the development (including concept creation), design, 12 production (including concept creation), design, production (including 13 testing), editing (including encoding) and compositing (including the 14 integration of digital files for interaction by end users) of digital 15 gaming media. Digital gaming media production costs shall not include 16 expenses incurred for the distribution, marketing, promotion, or adver- 17 tising content generated by end-users or other costs not directly and 18 predominantly related to the creation, production or modification of 19 digital gaming media. In addition, salaries or other income distribution 20 related to the creation of digital gaming media for any person who 21 serves in the role of chief executive officer, chief financial officer, 22 president, treasurer or similar position shall not be included as 23 digital gaming media production costs. Furthermore, any income or other 24 distribution to any individual who holds an ownership interest in a 25 digital gaming media production entity shall not be included as digital 26 gaming media production costs. 27 (3) "Qualified digital gaming media production costs" means digital 28 gaming media production costs only to the extent such costs are attrib- 29 utable to the use of property or the performance of services by any 30 persons within the state directly and predominantly in the creation, 31 production or modification of digital gaming related media. Such total 32 production costs incurred and paid in this state shall be equal to or 33 exceed seventy-five percent of total cost of an eligible production 34 incurred and paid within and without this state. 35 (d) Cross-references. For application of the credit provided for in 36 this section, see the following provisions of this chapter: 37 (1) Article nine-A: section two hundred ten-B, subdivision fifty- 38 three. 39 (2) Article twenty-two: section six hundred six, subsection (i), para- 40 graph one, subparagraph (B), clause (xliv). 41 (3) Article twenty-two: section six hundred six, subsection (jjj). 42 § 2. Section 210-B of the tax law is amended by adding a new subdivi- 43 sion 53 to read as follows: 44 53. Empire state digital gaming media production credit. (a) Allowance 45 of credit. A taxpayer who is eligible pursuant to section forty-four of 46 this chapter shall be allowed a credit to be computed as provided in 47 such section forty-four against the tax imposed by this article. 48 (b) Application of credit. The credit allowed under this subdivision 49 for any taxable year shall not reduce the tax due for such year to less 50 than the amount prescribed in paragraph (d) of subdivision one of 51 section two hundred ten of this article. Provided, however, that if the 52 amount of the credit allowable under this subdivision for any taxable 53 year reduces the tax to such amount, the excess shall be treated as an 54 overpayment of tax to be credited or refunded in accordance with the 55 provisions of section one thousand eighty-six of this chapter, provided, 56 however, no interest shall be paid thereon.S. 5887--A 4 1 § 3. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 2 of the tax law is amended by adding a new clause (xliv) to read as 3 follows: 4 (xliv) Empire state digital Amount of credit 5 gaming media production under subdivision 6 credit under subsection (jjj) fifty-three of section 7 two hundred ten-B 8 § 4. Section 606 of the tax law is amended by adding a new subsection 9 (jjj) to read as follows: 10 (jjj) Empire state digital gaming media production credit. (1) Allow- 11 ance of credit. A taxpayer who is eligible pursuant to section forty- 12 four of this chapter shall be allowed a credit to be computed as 13 provided in such section forty-four against the tax imposed by this 14 article. 15 (2) Application of credit. If the amount of the credit allowable under 16 this subsection for any taxable year exceeds the taxpayer's tax for such 17 year, the excess shall be treated as an overpayment of tax to be credit- 18 ed or refunded as provided in section six hundred eighty-six of this 19 article, provided, however, that no interest shall be paid thereon. 20 § 5. The state commissioner of economic development, after consulting 21 with the state commissioner of taxation and finance, shall promulgate 22 regulations by December 31, 2018 to establish procedures for the allo- 23 cation of tax credits as required by subdivision (a) of section 44 of 24 the tax law. Such rules and regulations shall include provisions 25 describing the application process, the due dates for such applications, 26 the standards which shall be used to evaluate the applications, the 27 documentation that will be provided to taxpayers substantiate to the New 28 York state department of taxation and finance the amount of tax credits 29 allocated to such taxpayers, under what conditions all or a portion of 30 this tax credit may be revoked, and such other provisions as deemed 31 necessary and appropriate. Notwithstanding any other provisions to the 32 contrary in the state administrative procedure act, such rules and regu- 33 lations may be adopted on an emergency basis if necessary to meet such 34 December 31, 2018 deadline. 35 § 6. Subdivision 23 of section 352 of the economic development law, as 36 amended by section 1 of part K of chapter 59 of the laws of 2017, is 37 amended to read as follows: 38 23. "Software development" means the creation of coded computer 39 instructions [or production or post-production of video games, as40defined in subdivision one-a of section six hundred eleven of the gener-41al business law, other than those embedded and used exclusively in42advertising, promotional websites or microsites,] and [also] includes 43 new media as defined by the commissioner in regulations. 44 § 7. The economic development law is amended by adding a new section 45 242 to read as follows: 46 § 242. Reports on the digital gaming industries in New York. 1. The 47 empire state development corporation shall file a report on a biannual 48 basis with the director of the division of the budget and the chair- 49 persons of the assembly ways and means committee and senate finance 50 committee. The report shall be filed no later than thirty days before 51 the mid-point and the end of the state fiscal year. The first report 52 shall cover the calendar half year that begins on January first, two 53 thousand nineteen. Each report must contain the following information 54 for the covered calendar half year:S. 5887--A 5 1 (a) the total dollar amount of credits allocated pursuant to section 2 forty-four of the tax law during the half year, broken down by month; 3 (b) the number of digital gaming projects, which have been allocated 4 tax credits of less than one million dollars per project, and the total 5 dollar amount of credits allocated to those projects distributed by 6 region pursuant to subdivision (b) of section forty-four of the tax law; 7 (c) the number of digital gaming projects, which have been allocated 8 tax credits of more than one million dollars, and the total dollar 9 amount of credits allocated to those projects distributed by region 10 pursuant to subdivision (b) of section forty-four of the tax law; 11 (d) a list of each eligible digital gaming project, which has been 12 allocated a tax credit enumerated by region pursuant to subdivision (b) 13 of section forty-four of the tax law, and for each of those projects, 14 (i) the estimated number of employees associated with the project, (ii) 15 the estimated qualifying costs for the projects, (iii) the estimated 16 total costs of the project, (iv) the credit eligible employee hours for 17 each project, and (v) total wages for such credit eligible employee 18 hours for each project; and 19 (e) (i) the name of each taxpayer allocated a tax credit for each 20 project and the county of residence or incorporation of such taxpayer 21 or, if the taxpayer does not reside or is not incorporated in New York, 22 the state of residence or incorporation; however, if the taxpayer claims 23 a tax credit because the taxpayer is a member of a limited liability 24 company, a partner in a partnership or a shareholder in a subchapter S 25 corporation, the name of each limited liability company, partnership or 26 subchapter S corporation earning any of those tax credits must be 27 included in the report instead of information about the taxpayer claim- 28 ing the tax credit, (ii) the amount of tax credit allocated to each 29 taxpayer; provided however, if the taxpayer claims a tax credit because 30 the taxpayer is a member of a limited liability company, a partner in a 31 partnership or a shareholder in a subchapter S corporation, the amount 32 of tax credit earned by each entity must be included in the report 33 instead of information about the taxpayer claiming the tax credit, and 34 (iii) information identifying the project associated with each taxpayer 35 for which a tax credit was claimed under section forty-four of the tax 36 law. 37 2. The empire state development corporation shall file a report on a 38 triennial basis with the director of the division of the budget and the 39 chairpersons of the assembly ways and means committee and senate finance 40 committee. The first report shall be filed no later than March first, 41 two thousand twenty-one. The report must be prepared by an independent 42 third party auditor and include: (a) information regarding the empire 43 state digital gaming production credit program including the efficiency 44 of operations, reliability of financial reporting, compliance with laws 45 and regulations and distribution of assets and funds; (b) an economic 46 impact study prepared by an independent third party of the program with 47 special emphasis on the regional impact by region and the total dollar 48 amount of credits allocated to those projects distributed by region 49 pursuant to subdivision (b) of section forty-four of the tax law; and 50 (c) any other information or statistical information that the commis- 51 sioner of economic development deems to be useful in analyzing the 52 effects of the programs. 53 § 8. This act shall take effect immediately and shall apply to taxable 54 years beginning on January 1, 2019 and before January 1, 2025; provided 55 that sections one through four of this act shall expire and be deemed 56 repealed December 31, 2023.
