Bill Text: OH HB6 | 2009-2010 | 128th General Assembly | Engrossed

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Bill Title: To authorize refundable, nontransferable credits against the corporation franchise tax or income tax for production of motion pictures in Ohio.

Spectrum: Partisan Bill (Democrat 36-1)

Status: (Engrossed - Dead) 2009-03-05 - To Ways & Means & Economic Development [HB6 Detail]

Download: Ohio-2009-HB6-Engrossed.html

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As Passed by the House

CORRECTED VERSION

128th General Assembly Regular Session 2009-2010

Sub. H. B. No. 6

Representatives Patten, Schneider 

Cosponsors: Representatives DeGeeter, Garrison, Harris, Heard, Letson, Luckie, Murray, Newcomb, Szollosi, Yuko, Winburn, Chandler, Foley, Koziura, Slesnick, Yates, Book, Boyd, Celeste, DeBose, Domenick, Dyer, Fende, Garland, Goyal, Harwood, Lundy, Mallory, Mandel, Miller, Pryor, Stewart, Sykes, Williams, B., Williams, S. 

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A BILL

To amend sections 5733.98 and 5747.98 and to enact

1

sections 122.85, 5733.58, and 5747.66 of the

2

Revised Code to authorize refundable,

3

nontransferable credits against the corporation

4

franchise tax or income tax for production of

5

motion pictures in Ohio.

7

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5733.98 and 5747.98 be amended and	8
sections 122.85, 5733.58, and 5747.66 of the Revised Code be	9
enacted to read as follows:	10

Sec. 122.85. (A) As used in this section and in sections	11
5733.58 and 5747.66 of the Revised Code:	12

(1) "Tax credit-eligible production" means a motion picture	13
production certified by the director of development under division	14
(B) of this section as qualifying the motion picture company for a	15
tax credit under section 5733.58 or 5747.66 of the Revised Code.	16

(2) "Certificate owner" means a motion picture company to	17
which a tax credit certificate is issued.	18

(3) "Motion picture company" means an individual,	19
corporation, partnership, limited liability company, or other form	20
of business association producing a motion picture.	21

(4) "Eligible production expenditures" means expenditures	22
made after the effective date of the enactment of this section by	23
H.B. 6 of the 128th general assembly for goods or services	24
purchased and consumed in this state by a motion picture company	25
directly for the production of a tax credit-eligible production.	26

"Eligible production expenditures" includes, but is not	27
limited to, expenditures for resident and nonresident cast and	28
crew wages, accommodations, costs of set construction and	29
operations, editing and related services, photography, sound	30
synchronization, lighting, wardrobe, makeup and accessories, film	31
processing, transfer, sound mixing, special and visual effects,	32
music, location fees, and the purchase or rental of facilities and	33
equipment. With respect to payroll for nonresident cast and crew,	34
"eligible production expenditures" means one hundred per cent of	35
the payroll expenditure for tax credit-eligible productions	36
certified before July 1, 2010, and seventy-five per cent of the	37
payroll expenditure for tax credit-eligible productions certified	38
on or after July 1, 2010.	39

(5) "Motion picture" means entertainment content created in	40
whole or in part within this state for distribution or exhibition	41
to the general public, including, but not limited to,	42
feature-length films; documentaries; long-form, specials,	43
miniseries, series, and interstitial television programming;	44
interactive web sites; sound recordings; videos; music videos;	45
interactive television; interactive games; videogames;	46
commercials; any format of digital media; and any trailer, pilot,	47
video teaser, or demo created primarily to stimulate the sale,	48
marketing, promotion, or exploitation of future investment in	49
either a product or a motion picture by any means and media in any	50
digital media format, film, or videotape, provided the motion	51
picture qualifies as a motion picture. "Motion picture" does not	52
include any television program created primarily as news,	53
weather, or financial market reports, a production featuring	54
current events or sporting events, an awards show or other gala	55
event, a production whose sole purpose is fundraising, a long-form	56
production that primarily markets a product or service or in-house	57
corporate advertising or other similar productions, a production	58
for purposes of political advocacy, or any production for which	59
records are required to be maintained under 18 U.S.C. 2257 with	60
respect to sexually explicit content.	61

(B) For the purpose of encouraging and developing a strong	62
film industry in this state, the director of development may	63
certify a motion picture produced by a motion picture company as	64
a tax credit-eligible production. In the case of a television	65
series, the director may certify the production of each episode	66
of the series as a separate tax credit-eligible production. A	67
motion picture company shall apply for certification of a motion	68
picture as a tax credit-eligible production on a form and in the	69
manner prescribed by the director. Each application shall	70
include the following information:	71

(1) The name and telephone number of the motion picture	72
production company;	73

(2) The name and telephone number of the company's contact	74
person;	75

(3) A list of the first preproduction date through the last	76
production date in Ohio;	77

(4) The Ohio production office address and telephone number;

78

(5) The total production budget of the motion picture;

79

(6) The total budgeted eligible production expenditures and	80
the percentage that amount is of the total production budget of	81
the motion picture;	82

(7) The total percentage of the motion picture being shot in	83
Ohio;	84

(8) The level of employment of cast and crew who reside in	85
Ohio;	86

(9) A synopsis of the script;

87

(10) The shooting script;

88

(11) A creative elements list that includes the names of the	89
principal cast and crew and the producer and director;	90

(12) The motion picture's distribution plan, including	91
domestic and international distribution, and sales estimates for	92
the picture;	93

(13) Documentation of financial ability to undertake and	94
complete the motion picture;	95

(14) Estimated value of the tax credit based upon total	96
budgeted eligible production expenditures;	97

(15) Any other information considered necessary by the	98
director.	99

Within ninety days after certification of a motion picture as	100
a tax credit-eligible production, and any time thereafter upon the	101
director's request, the motion picture company shall present to	102
the director of development sufficient evidence of reviewable	103
progress. If the motion picture company fails to present	104
sufficient evidence, the director of development may rescind the	105
certification. Upon rescission, the director shall notify the	106
applicant that the certification has been rescinded. Nothing in	107
this section prohibits an applicant whose tax credit-eligible	108
production certification has been rescinded from submitting a	109
subsequent application for certification.	110

(C)(1) A motion picture company whose motion picture has been	111
certified as a tax credit-eligible production may apply to the	112
director of development on or after July 1, 2009, for a refundable	113
credit against the tax imposed by section 5733.06 or 5747.02 of	114
the Revised Code. The director in consultation with the tax	115
commissioner shall prescribe the form and manner of the	116
application and the information or documentation required to be	117
submitted with the application.	118

The credit is determined as follows:

119

(a) If the total budgeted eligible production expenditures	120
stated in the application submitted under division (B) of this	121
section or the actual eligible production expenditures as finally	122
determined under division (D) of this section, whichever is least,	123
is less than or equal to three hundred thousand dollars, no	124
credit is allowed;	125

(b) If the total budgeted eligible production expenditures	126
stated in the application submitted under division (B) of this	127
section or the actual eligible production expenditures as finally	128
determined under division (D) of this section, whichever is least,	129
is greater than three hundred thousand dollars, the credit equals	130
twenty-five per cent of the least of those eligible production	131
expenditure amounts, subject to the limitation in division (C)(4)	132
of this section.	133

(2) Except as provided in division (C)(4) of this section, if	134
the director of development approves a motion picture company's	135
application for a credit, the director shall issue a tax credit	136
certificate to the company. The director in consultation with the	137
tax commissioner shall prescribe the form and manner of issuing	138
certificates. The director shall assign a unique identifying	139
number to each tax credit certificate and shall record the	140
certificate in a register devised and maintained by the director	141
for that purpose. The certificate shall state the amount of the	142
eligible production expenditures on which the credit is based and	143
the amount of the credit. Upon the issuance of a certificate, the	144
director shall certify to the tax commissioner the name of the	145
applicant, the amount of eligible production expenditures shown on	146
the certificate, and any other information required by the rules	147
adopted to administer this section.	148

(3) The amount of eligible production expenditures for which	149
a tax credit may be claimed is subject to inspection and	150
examination by the tax commissioner or employees of the	151
commissioner under section 5703.19 of the Revised Code and any	152
other applicable law. Once the eligible production expenditures	153
are finally determined under section 5703.19 of the Revised Code	154
and division (D) of this section, the credit amount is not subject	155
to adjustment unless the director determines an error was	156
committed in the computation of the credit amount.	157

(4) No tax credit certificate may be issued before the	158
completion of the tax credit-eligible production. Not more than	159
twenty million dollars of tax credit may be allowed per fiscal	160
biennium, and not more than ten million dollars may be allowed in	161
the first year of the biennium. Not more than five million dollars	162
of tax credit may be allowed per tax credit-eligible production.	163

(D) A motion picture company whose motion picture has been	164
certified as a tax credit-eligible production shall engage, at the	165
company's expense, an independent certified public accountant to	166
examine the company's production expenditures to identify the	167
expenditures that qualify as eligible production expenditures. The	168
certified public accountant shall issue a report to the company	169
and to the director of development certifying the company's	170
eligible production expenditures and any other information	171
required by the director. Upon receiving and examining the report,	172
the director may disallow any expenditure the director determines	173
is not an eligible production expenditure. If the director	174
disallows an expenditure, the director shall issue a written	175
notice to the motion picture production company stating that the	176
expenditure is disallowed and the reason for the disallowance.	177
Upon examination of the report and disallowance of any	178
expenditures, the director shall determine finally the lesser of	179
the total budgeted eligible production expenditures stated in the	180
application submitted under division (B) of this section or the	181
actual eligible production expenditures for the purpose of	182
computing the amount of the credit.	183

(E) No credit shall be allowed under section 5733.58 or	184
5747.66 of the Revised Code unless the director has reviewed the	185
report and made the determination prescribed by division (D) of	186
this section.	187

(F) This state reserves the right to refuse the use of this	188
state's name in the credits of any tax credit-eligible motion	189
picture production.	190

(G)(1) The director of development in consultation with the	191
tax commissioner shall adopt rules for the administration of this	192
section, including rules setting forth and governing the criteria	193
for determining whether a motion picture production is a tax	194
credit-eligible production; activities that constitute the	195
production of a motion picture; reporting sufficient evidence of	196
reviewable progress; expenditures that qualify as eligible	197
production expenditures; a competitive process for approving	198
credits; and consideration of geographic distribution of credits.	199
The rules shall be adopted under Chapter 119. of the Revised Code.	200

(2) The director may require a reasonable application fee to	201
cover administrative costs of the tax credit program. The fees	202
collected shall be credited to the motion picture tax credit	203
program operating fund, which is hereby created in the state	204
treasury. The motion picture tax credit program operating fund	205
shall consist of all grants, gifts, fees, and contributions made	206
to the director of development for marketing and promotion of the	207
motion picture industry within this state. The director of	208
development shall use money in the fund to pay expenses related to	209
the administration of the Ohio film office and the credit	210
authorized by this section and sections 5733.58 and 5747.66 of the	211
Revised Code.	212

Sec. 5733.58. (A) Any term used in this section has the same	213
meaning as in section 122.85 of the Revised Code.	214

(B) There is allowed a credit against the tax imposed by	215
section 5733.06 of the Revised Code for any corporation that is	216
the certificate owner of a tax credit certificate issued under	217
section 122.85 of the Revised Code. The credit shall be claimed	218
for the taxable year in which the certificate is issued by the	219
director of development. The credit amount equals the amount	220
stated in the certificate. The credit shall be claimed in the	221
order required under section 5733.98 of the Revised Code. If the	222
credit amount exceeds the tax otherwise due under section 5733.06	223
of the Revised Code after deducting all other credits in that	224
order, the excess shall be refunded.	225

(C) If, pursuant to division (G) of section 5733.01 of the	226
Revised Code, the corporation is not required to pay tax under	227
this chapter, the corporation may file an annual report under	228
section 5733.02 of the Revised Code and claim the credit	229
authorized by this section. Nothing in this section allows a	230
corporation to claim more than one credit per tax credit-eligible	231
production.	232

Sec. 5733.98.  (A) To provide a uniform procedure for	233
calculating the amount of tax imposed by section 5733.06 of the	234
Revised Code that is due under this chapter, a taxpayer shall	235
claim any credits to which it is entitled in the following order,	236
except as otherwise provided in section 5733.058 of the Revised	237
Code:	238

(1) For tax year 2005, the credit for taxes paid by a	239
qualifying pass-through entity allowed under section 5733.0611 of	240
the Revised Code;	241

(2) The credit allowed for financial institutions under	242
section 5733.45 of the Revised Code;	243

(3) The credit for qualifying affiliated groups under section	244
5733.068 of the Revised Code;	245

(4) The subsidiary corporation credit under section 5733.067	246
of the Revised Code;	247

(5) The savings and loan assessment credit under section	248
5733.063 of the Revised Code;	249

(6) The credit for recycling and litter prevention donations	250
under section 5733.064 of the Revised Code;	251

(7) The credit for employers that enter into agreements with	252
child day-care centers under section 5733.36 of the Revised Code;	253

(8) The credit for employers that reimburse employee child	254
care expenses under section 5733.38 of the Revised Code;	255

(9) The credit for maintaining railroad active grade crossing	256
warning devices under section 5733.43 of the Revised Code;	257

(10) The credit for purchases of lights and reflectors under	258
section 5733.44 of the Revised Code;	259

(11) The job retention credit under division (B) of section	260
5733.0610 of the Revised Code;	261

(12) The credit for tax years 2008 and 2009 for selling	262
alternative fuel under section 5733.48 of the Revised Code;	263

(13) The second credit for purchases of new manufacturing	264
machinery and equipment under section 5733.33 of the Revised Code;	265

(14) The job training credit under section 5733.42 of the	266
Revised Code;	267

(15) The credit for qualified research expenses under section	268
5733.351 of the Revised Code;	269

(16) The enterprise zone credit under section 5709.66 of the	270
Revised Code;	271

(17) The credit for the eligible costs associated with a	272
voluntary action under section 5733.34 of the Revised Code;	273

(18) The credit for employers that establish on-site child	274
day-care centers under section 5733.37 of the Revised Code;	275

(19) The ethanol plant investment credit under section	276
5733.46 of the Revised Code;	277

(20) The credit for purchases of qualifying grape production	278
property under section 5733.32 of the Revised Code;	279

(21) The export sales credit under section 5733.069 of the	280
Revised Code;	281

(22) The credit for research and development and technology	282
transfer investors under section 5733.35 of the Revised Code;	283

(23) The enterprise zone credits under section 5709.65 of the	284
Revised Code;	285

(24) The credit for using Ohio coal under section 5733.39 of	286
the Revised Code;	287

(25) The credit for small telephone companies under section	288
5733.57 of the Revised Code;	289

(26) The credit for eligible nonrecurring 9-1-1 charges under	290
section 5733.55 of the Revised Code;	291

(27) For tax year 2005, the credit for providing programs to	292
aid the communicatively impaired under division (A) of section	293
5733.56 of the Revised Code;	294

(28) The research and development credit under section	295
5733.352 of the Revised Code;	296

(29) For tax years 2006 and subsequent tax years, the credit	297
for taxes paid by a qualifying pass-through entity allowed under	298
section 5733.0611 of the Revised Code;	299

(30) The refundable credit for rehabilitating a historic	300
building under section 5733.47 of the Revised Code;	301

(31) The refundable jobs creation credit under division (A)	302
of section 5733.0610 of the Revised Code;	303

(32) The refundable credit for tax withheld under division	304
(B)(2) of section 5747.062 of the Revised Code;	305

(33) The refundable credit under section 5733.49 of the	306
Revised Code for losses on loans made to the Ohio venture capital	307
program under sections 150.01 to 150.10 of the Revised Code;	308

(34) For tax years 2006, 2007, and 2008, the refundable	309
credit allowable under division (B) of section 5733.56 of the	310
Revised Code;	311

(35) The refundable motion picture production credit under	312
section 5733.58 of the Revised Code.	313

(B) For any credit except the refundable credits enumerated	314
in divisions (A)(30) to (34) of this section, the amount of the	315
credit for a tax year shall not exceed the tax due after allowing	316
for any other credit that precedes it in the order required under	317
this section. Any excess amount of a particular credit may be	318
carried forward if authorized under the section creating that	319
credit.	320

Sec. 5747.66. (A) Any term used in this section has the same	321
meaning as in section 122.85 of the Revised Code.	322

(B) There is allowed a credit against the tax imposed by	323
section 5747.02 of the Revised Code for any individual who, on the	324
last day of the individual's taxable year, is the certificate	325
owner of a tax credit certificate issued under section 122.85 of	326
the Revised Code. The credit shall be claimed for the taxable year	327
that includes the date the certificate was issued by the director	328
of development. The credit amount equals the amount stated in the	329
certificate. The credit shall be claimed in the order required	330
under section 5747.98 of the Revised Code. If the credit amount	331
exceeds the tax otherwise due under section 5747.02 of the Revised	332
Code after deducting all other credits in that order, the excess	333
shall be refunded.	334

Nothing in this section limits or disallows pass-through	335
treatment of the credit.	336

Sec. 5747.98.  (A) To provide a uniform procedure for	337
calculating the amount of tax due under section 5747.02 of the	338
Revised Code, a taxpayer shall claim any credits to which the	339
taxpayer is entitled in the following order:	340

(1) The retirement income credit under division (B) of	341
section 5747.055 of the Revised Code;	342

(2) The senior citizen credit under division (C) of section	343
5747.05 of the Revised Code;	344

(3) The lump sum distribution credit under division (D) of	345
section 5747.05 of the Revised Code;	346

(4) The dependent care credit under section 5747.054 of the	347
Revised Code;	348

(5) The lump sum retirement income credit under division (C)	349
of section 5747.055 of the Revised Code;	350

(6) The lump sum retirement income credit under division (D)	351
of section 5747.055 of the Revised Code;	352

(7) The lump sum retirement income credit under division (E)	353
of section 5747.055 of the Revised Code;	354

(8) The low-income credit under section 5747.056 of the	355
Revised Code;	356

(9) The credit for displaced workers who pay for job training	357
under section 5747.27 of the Revised Code;	358

(10) The campaign contribution credit under section 5747.29	359
of the Revised Code;	360

(11) The twenty-dollar personal exemption credit under	361
section 5747.022 of the Revised Code;	362

(12) The joint filing credit under division (G) of section	363
5747.05 of the Revised Code;	364

(13) The nonresident credit under division (A) of section	365
5747.05 of the Revised Code;	366

(14) The credit for a resident's out-of-state income under	367
division (B) of section 5747.05 of the Revised Code;	368

(15) The credit for employers that enter into agreements with	369
child day-care centers under section 5747.34 of the Revised Code;	370

(16) The credit for employers that reimburse employee child	371
care expenses under section 5747.36 of the Revised Code;	372

(17) The credit for adoption of a minor child under section	373
5747.37 of the Revised Code;	374

(18) The credit for purchases of lights and reflectors under	375
section 5747.38 of the Revised Code;	376

(19) The job retention credit under division (B) of section	377
5747.058 of the Revised Code;	378

(20) The credit for selling alternative fuel under section	379
5747.77 of the Revised Code;	380

(21) The second credit for purchases of new manufacturing	381
machinery and equipment and the credit for using Ohio coal under	382
section 5747.31 of the Revised Code;	383

(22) The job training credit under section 5747.39 of the	384
Revised Code;	385

(23) The enterprise zone credit under section 5709.66 of the	386
Revised Code;	387

(24) The credit for the eligible costs associated with a	388
voluntary action under section 5747.32 of the Revised Code;	389

(25) The credit for employers that establish on-site child	390
day-care centers under section 5747.35 of the Revised Code;	391

(26) The ethanol plant investment credit under section	392
5747.75 of the Revised Code;	393

(27) The credit for purchases of qualifying grape production	394
property under section 5747.28 of the Revised Code;	395

(28) The export sales credit under section 5747.057 of the	396
Revised Code;	397

(29) The credit for research and development and technology	398
transfer investors under section 5747.33 of the Revised Code;	399

(30) The enterprise zone credits under section 5709.65 of the	400
Revised Code;	401

(31) The research and development credit under section	402
5747.331 of the Revised Code;	403

(32) The credit for rehabilitating a historic building under	404
section 5747.76 of the Revised Code;	405

(33) The refundable credit for rehabilitating a historic	406
building under section 5747.76 of the Revised Code;	407

(34) The refundable jobs creation credit under division (A)	408
of section 5747.058 of the Revised Code;	409

(35) The refundable credit for taxes paid by a qualifying	410
entity granted under section 5747.059 of the Revised Code;	411

(36) The refundable credits for taxes paid by a qualifying	412
pass-through entity granted under division (J) of section 5747.08	413
of the Revised Code;	414

(37) The refundable credit for tax withheld under division	415
(B)(1) of section 5747.062 of the Revised Code;	416

(38) The refundable credit under section 5747.80 of the	417
Revised Code for losses on loans made to the Ohio venture capital	418
program under sections 150.01 to 150.10 of the Revised Code;	419

(39) The refundable motion picture production credit under	420
section 5747.66 of the Revised Code.	421

(B) For any credit, except the refundable credits enumerated	422
in divisions (A)(33) to (38) of this section and the credit	423
granted under division (I) of section 5747.08 of the Revised	424
Code, the amount of the credit for a taxable year shall not	425
exceed the tax due after allowing for any other credit that	426
precedes it in the order required under this section. Any excess	427
amount of a particular credit may be carried forward if	428
authorized under the section creating that credit. Nothing in	429
this chapter shall be construed to allow a taxpayer to claim,	430
directly or indirectly, a credit more than once for a taxable	431
year.	432

Section 2. That existing sections 5733.98 and 5747.98 of the	433
Revised Code are hereby repealed.	434