Bill Text: VA SB251 | 2024 | Regular Session | Prefiled
Bill Title: Content manufacturing tax credit; removes sunset for the motion picture credit, redesignates credit.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2024-02-12 - Continued to 2025 in Finance and Appropriations (15-Y 0-N) [SB251 Detail]
Download: Virginia-2024-SB251-Prefiled.html
Be it enacted by the General Assembly of Virginia:
1. That §58.1-439.12:03 of the Code of Virginia is amended and reenacted as follows:
§58.1-439.12:03. Content manufacturing tax credit.
A. For the purposes of this section:
"Eligible project" means the production of a motion picture or an episodic television series. "Eligible project" does not include any production that (i) is political advertising, (ii) is a television production of a news program or live sporting event, (iii) contains obscene material, or (iv) is a reality television production.
"Episodic television series" means a television program consisting of multiple episodes of a single season. In the case of an episodic television series, an entire season of episodes shall be deemed to be one production.
"Physical production infrastructure" means buildings, facilities, and equipment located in the Commonwealth and necessary for the production of eligible projects.
"Qualifying expenses" means the sum of the following amounts spent in the Commonwealth by a production company in connection with the production of an eligible project produced in the Commonwealth:
1. Goods and services leased or purchased. For goods with a purchase price of $25,000 or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed; and
2. Compensation and wages, except in the case of each individual who directly or indirectly receives compensation in excess of $1 million for personal services with respect to a single production. In such a case, only the first $1 million of salary shall be considered a qualifying expense. An individual is deemed to receive compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
"Qualifying expenses" does not include any expenses that were exempt from retail sales and use tax pursuant to the provisions of Chapter 6 (§58.1-600 et seq.); however, if a taxpayer accrued such expenses at least one year prior to entering into a memorandum of understanding with the Virginia Tourism Authority pursuant to the provisions of subdivision C 3 and such expenses were exempt from retail sales and use tax, such expenses may be counted as qualifying expenses.
B. 1. For
taxable years beginning on and after January 1, 2011,
but prior to January 1, 2027, any motion picture production
company with qualifying expenses of at least $250,000 with respect to a motion
picture production filmed in Virginia shall be allowed a refundable credit
against the taxes imposed by §58.1-320 or 58.1-400 in an amount equal to 15
percent of the production company's qualifying expenses or 20 percent of such
expenses if the production is filmed in an economically distressed area of the
Commonwealth. The Virginia Economic Development Partnership Authority shall
designate which areas of the Commonwealth are deemed to be economically
distressed areas. The credit shall be computed based on all of the taxpayer's
qualifying expenses incurred with respect to the production, not just the
qualifying expenses incurred during the taxable year. The refundable tax
credits allowed under this section are for one tax year only. Where a motion
picture production continues for more than one year, a separate application for
each tax year the production continues must be made. The grant of a refundable
tax credit for a motion picture film production does not create a presumption
that the production will receive a refundable tax credit for subsequent tax
years. Effective on January 1, 2013, for purposes of eligibility for refundable
tax credits, a motion picture film production shall include digital interactive
media production.
"Qualifying
expenses" means the sum of the following amounts spent in the Commonwealth
by a production company in connection with the production of a motion picture
filmed in the Commonwealth:
1. Goods and services
leased or purchased. For goods with a purchase price of $25,000 or more, the
amount included in qualifying expenses is the purchase price less the fair
market value of the good at the time the production is completed.
2. Compensation and
wages, except in the case of each individual who directly or indirectly
receives compensation in excess of $1 million for personal services with
respect to a single production. In such a case, only the first $1 million of
salary shall be considered a qualifying expense. An individual is deemed to
receive compensation indirectly when a production company pays a personal
service company or an employee leasing company that pays the individual.
B. 1. 2. In addition
to the refundable credit authorized under
subsection A
subdivision 1,
such production company shall be allowed an additional refundable credit equal to
10 percent of the total aggregate payroll for Virginia residents employed in
connection with the production of a film in the Commonwealth when total
production costs in the Commonwealth are at least $250,000 but not more than $1
million. This additional credit shall be equal to 20 percent of the total
aggregate payroll for Virginia residents employed in connection with such
production when total production costs in the Commonwealth exceed $1 million.
2. 3. In addition
to the credits authorized under subsection A and
subdivision B 1 subdivisions 1 and 2,
such production company shall be allowed an additional refundable credit equal
to 10 percent of the total aggregate payroll for Virginia residents employed
for the first time as actors or members of a production crew in connection with
the production of a film in the Commonwealth.
C. 1. For purposes of this
section, in the case of an episodic television series, an entire season of
episodes shall be deemed to be one production.
2. No credit shall be
allowed under this section for any production that (i) is political
advertising, (ii) is a television production of a news program or live sporting
event, (iii) contains obscene material, or (iv) is a reality television
production.
D. 1.
The issuance of refundable tax credits under this section shall be in
accordance with procedures, qualifying criteria, and deadlines established by
the Department and the Virginia Tourism Authority. The qualifying criteria
established by the Virginia Tourism Authority shall take into account whether
the production involves physical production within the Commonwealth of
Virginia, the number of residents of Virginia that will be employed in the
production and the level of compensation they will be paid, the extent to which
the production will contribute to the support and expansion of existing
production companies in Virginia, the extent to which the production will
impact existing local businesses and the local economy, the extent to which the
production will involve existing and new companies located in Virginia, the amount of capital investment in the
Commonwealth, and other relevant
considerations. The taxpayer shall apply for a credit by submitting such forms
as prescribed by the Virginia Tourism Authority, prior to the start of production
in Virginia.
2. Any taxpayer seeking credits under this section must enter into a memorandum of understanding with the Virginia Tourism Authority that at a minimum provides the requirements that the taxpayer must meet in order to receive the credits, including but not limited to the estimated amount of money to be spent in Virginia, the timeline for completing production in Virginia, and the maximum amount of credits allocated to the taxpayer.
3. Once the taxpayer has satisfied all of the requirements in the memorandum of understanding to the satisfaction of the Virginia Tourism Authority and completed production in Virginia, the Virginia Tourism Authority shall certify the final tax credit amount to the taxpayer and to the Tax Commissioner. In addition, such certificate shall specify the fiscal year in which such tax credit may be refunded by the Department of Taxation. The tax return filed for the taxable year in which the Virginia production activities are completed shall contain information specifying the amount of tax credit and shall specify the fiscal year in which such tax credit may be refunded. The return must state the name of the production, provide a description of the production, and include a detailed accounting of the qualifying expenses with respect to which a credit is claimed.
4. The Virginia Tourism Authority shall report to the Tax Commissioner on an annual basis the amount of tax credits that have been authorized for each fiscal year and the amount of tax credits that may be claimed for the current fiscal year by each taxpayer.
5. No interest shall be paid pursuant to §58.1-1833 on any tax credit issued by the Department under this section.
E. D. A taxpayer
allowed a credit under this section must maintain and make available for
inspection any information or records required by the Tax Commissioner. The
taxpayer has the burden of proving eligibility for a credit and the amount of
the credit. The Tax Commissioner shall consult with the Virginia Tourism
Authority in order to determine the amount of qualifying expenses.
F. E. For
purposes of this section, the amount of any credit attributable to a
partnership, electing small business corporation (S corporation), or limited
liability company may be allocated to the individual partners, shareholders, or
members, respectively, in proportion to their ownership or interest in such
business entities.
G. F. 1. The
total amount of credits allocated to all taxpayers under this section shall not
exceed $2.5 million in the 2010-2012 biennium, $5 million in the 2012-2014
biennium, and $6.5 million in fiscal year
years 2015 through 2023,
and $46.5 million in fiscal year 2024 and each fiscal year
thereafter. In the event that
$100 million worth of either new
physical production infrastructure or
new vendor establishments or
both in Virginia does not occur by January 1, 2027, the
annual amount shall be reduced to $10 million per
fiscal year.
2. Beginning with fiscal year 2024, if the amount of credits actually claimed is less than the aggregate limit specified in subdivision 1, the unclaimed remainder shall be carried over to the next fiscal year and added to the aggregate limit for that year.
H. G. The
Department of Taxation, in consultation with the Virginia Tourism Authority,
must publish by November 1 of each year for the 12-month period ending the
preceding December 31 the following information:
1. Location of sites used in a production for which a credit was claimed;
2. Qualifying expenses for which a credit was claimed, classified by whether the expenses were for goods, services, or compensation paid by the production company;
3. Number of people employed in the Commonwealth with respect to credits claimed; and
4. Total cost to the Commonwealth's general fund of the credits claimed.
Notwithstanding any provision of §58.1-3 or any other law, such information shall be published by the Department, even if such information is not classified, so as to prevent the identification of particular taxpayers, reports, or returns and items.
I. H. The Tax
Commissioner shall develop guidelines implementing the provisions of this
section, including but not limited to the definition of "qualifying
expenses" and setting forth the recordkeeping requirements applicable to
production companies claiming this credit. Such guidelines shall be exempt from
the provisions of the Administrative Process Act (§2.2-4000 et seq.).
