Citations Affected: IC 6-2.5; IC 6-3.1; noncode.
Effective: July 1, 2007.
January 16, 2007, read first time and referred to Committee on Small Business and
Economic Development.
February 1, 2007, amended, reported _ Do Pass.
February 7, 2007, read second time, ordered engrossed. Engrossed.
February 8, 2007, read third time, passed. Yeas 83, nays 15.
production expenditures, apply to the IEDC for approval of the tax credit. Provides that the IEDC may not approve more than $5,000,000 in media production tax credits in a taxable year for taxpayers with qualified production expenditures of at least $6,000,000. Provides that a taxpayer that is a corporation or a nonresident person and that claims the tax credit (or any successor in interest of the corporation or nonresident person) must file an Indiana income tax return for at least the first five years that the taxpayer has income from the qualified media production for which the tax credit was granted. Provides that, notwithstanding the income apportionment statutes, the portion of the income from the qualified media production that for purposes of income taxation is considered to be derived from sources within Indiana is equal to: (1) the amount of qualified production expenditures for which the tax credit was granted for the qualified media production; divided by (2) the total production expenditures for the qualified media production. Provides that a taxpayer may not receive the tax credit unless the taxpayer consents that: (1) the taxpayer (and any successor in interest of the taxpayer) will be subject to the jurisdiction of Indiana courts; and (2) any civil action related to the tax credit and in which the taxpayer (or any successor in interest of the taxpayer) is a party will be heard in an Indiana court. Prohibits taxpayers from selling or otherwise transfer the tax credit. Expands the sales tax exemption for property acquired for use in a motion picture production to property acquired for use in qualified media productions. Provides that a qualified applicant may not claim a tax credit and a sales tax exemption for the purchase of the same tangible personal property.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
of theatrical or television viewing or as a television pilot:
(A) A feature length film, including a short feature, an
independent or studio production, or a documentary.
(B) A television series, program, or feature.
(2) A digital media production that is intended for reasonable
commercial exploitation.
(3) An audio recording or a music video.
(4) An advertising message broadcast on radio or television.
(5) A media production concerning:
(A) training; or
(B) external marketing or communications.
(b) The term includes preproduction, production, and
postproduction work.
(c) The term does not include a production in any medium that
is obscene (under the standard set forth in IC 35-49-2-1) or
television coverage of news or athletic events.
Sec. 6. (a) As used in this chapter, "qualified production
expenditure" means any of the following expenses incurred in
Indiana or expenditures in Indiana made in the direct production
of a qualified media production in Indiana:
(1) The payment of wages, salaries, and benefits to Indiana
residents.
(2) Acquisition costs for a story or scenario used in the
qualified media production.
(3) Acquisition costs for locations, sets, wardrobes, and
accessories.
(4) Expenditures for materials used to make sets, wardrobes,
and accessories.
(5) Expenditures for photography, sound synchronization,
lighting, and related services.
(6) Expenditures for editing and related services.
(7) Facility and equipment rentals.
(8) Food and lodging.
(9) Legal services if purchased from an attorney licensed to
practice law in Indiana.
(10) Any other production expenditure for which taxes are
assessed or imposed by the state.
(b) The term does not include expenditures for payments of
wages, salaries, or benefits to an individual who is a director, a
producer, a screenwriter, or an actor (excluding extras), unless the
individual is a resident of Indiana.
Sec. 7. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 6-5.5 (the financial institutions tax); and
(3) IC 27-1-18-2 (the insurance premiums tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
chapter.
Sec. 8. As used in this chapter, "taxpayer" means an individual
or entity that has any state tax liability.
Sec. 9. A qualified applicant that:
(1) incurs or makes qualified production expenditures of:
(A) at least one hundred thousand dollars ($100,000), in the
case of a qualified media production described in section
5(a)(1) of this chapter; or
(B) at least fifty thousand dollars ($50,000), in the case of
a qualified media production described in section 5(a)(2),
5(a)(3), 5(a)(4), or 5(a)(5) of this chapter; and
(2) satisfies the requirements of this chapter;
is entitled to a refundable tax credit as provided in this chapter.
Sec. 10. This section applies to a taxpayer that claims qualified
production expenditures of less than six million dollars
($6,000,000) in a taxable year for purposes of the tax credit under
this chapter. The amount of the tax credit to which a taxpayer is
entitled under this chapter equals the product of:
(1) fifteen percent (15%); multiplied by
(2) the amount of the taxpayer's qualified production
expenditures in the taxable year.
Sec. 11. This section applies to a taxpayer that claims qualified
production expenditures of at least six million dollars ($6,000,000)
in a taxable year for purposes of the tax credit under this chapter.
If the corporation approves the granting of a tax credit to the
taxpayer under section 13 of this chapter, the amount of the tax
credit to which the taxpayer is entitled under this chapter equals
the product of:
(1) the percentage determined by the corporation under
section 13 of this chapter; multiplied by
(2) the amount of the taxpayer's qualified production
expenditures in the taxable year.
Sec. 12. (a) To receive the tax credit provided by this chapter, a
taxpayer must claim the tax credit on the taxpayer's annual state
tax return or returns in the manner prescribed by the department.
The taxpayer shall submit to the department all information that
the department determines is necessary for the calculation of the
credit provided under this chapter.
(b) In the case of a taxpayer that claims a tax credit under
section 11 of this chapter, the taxpayer must also file with the
taxpayer's annual state tax return or returns a copy of the
agreement entered into by the corporation and the taxpayer under
section 13 of this chapter for the tax credit.
Sec. 13. (a) A taxpayer that proposes to claim a tax credit under
section 11 of this chapter must, before incurring or making the
qualified production expenditures, apply to the corporation for
approval of the tax credit.
(b) After receiving an application under subsection (a), the
corporation may enter into an agreement with the applicant for a
tax credit under section 11 of this chapter if the corporation
determines that:
(1) the applicant's proposed qualified media production:
(A) is economically viable; and
(B) will increase economic growth and job creation in
Indiana; and
(2) the applicant's proposed qualified media production and
qualified production expenditures otherwise satisfy the
requirements of this chapter.
(c) If the corporation and an applicant enter into an agreement
under this section, the agreement must specify the following:
(1) The percentage to be used under section 11(1) of this
chapter in determining the amount of the tax credit. The
percentage may not be more than fifteen percent (15%).
(2) Any requirements or restrictions that the applicant must
satisfy before the applicant may claim the tax credit.
(d) The maximum amount of tax credits that the corporation
may approve under this section during a particular taxable year
for all taxpayers is five million dollars ($5,000,000).
Sec. 14. If the amount of the tax credit provided under this
chapter to a taxpayer in a taxable year exceeds the taxpayer's state
tax liability for that taxable year, the taxpayer is entitled to a
refund of the excess.
Sec. 15. If a pass through entity is entitled to a tax credit under
this chapter but does not have state tax liability against which the
tax credit may be applied, a shareholder, partner, or member of
the pass through entity is entitled to a tax credit equal to:
(1) the tax credit determined for the pass through entity for
the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder, partner, or member is
entitled.
Sec. 16. A taxpayer may not sell, assign, convey, or otherwise
transfer a tax credit provided under this chapter.
Sec. 17. A qualified applicant is not entitled to a tax credit under
this chapter for tangible personal property:
(1) that is a qualified production expenditure; and
(2) for which the qualified applicant claims an exemption
under IC 6-2.5-5-41.
Sec. 18. Notwithstanding any other provision, including any
reciprocity agreements entered into by the state, a taxpayer that is
a corporation or a nonresident person and that claims a tax credit
under this chapter (or any successor in interest in any part of the
taxpayer) must file an Indiana income tax return for at least the
first five (5) years that the taxpayer has income from the qualified
media production for which the tax credit was granted.
Notwithstanding the income apportionment provisions of IC 6-3
and any rules adopted by the department of state revenue, in the
case of a corporation or a nonresident person (or any successor in
interest in any part of the corporation or nonresident person), the
portion of the income from the qualified media production that for
purposes of taxation under IC 6-3 is considered to be derived from
sources within Indiana is equal to:
(1) the income of the corporation or nonresident person (or
the successor in interest of the corporation or nonresident
person) from the qualified media production; multiplied by
(2) a percentage equal to:
(A) the amount of qualified production expenditures for
which the tax credit was granted for the qualified media
production; divided by
(B) the total production expenditures for the qualified
media production.
Sec. 19. (a) If a taxpayer (or any successor in interest of the
taxpayer) fails to satisfy any condition of this chapter or any
condition in an agreement under section 13 of this chapter, or fails
to file tax returns as required by section 18 of this chapter, the
corporation may:
(1) disallow the use of all or a part of any unused tax credit
granted to the taxpayer (or any successor in interest of the
taxpayer) under this chapter;
(2) recapture all or a part of the tax credit under this chapter
that has been applied to the state tax liability of the taxpayer
(or any successor in interest of the taxpayer); or
(3) both disallow the tax credit under subdivision (1) and
recapture the tax credit under subdivision (2).
(b) A taxpayer may not receive a credit under this chapter
unless the taxpayer:
(1) consents that the taxpayer (and any successor in interest
of the taxpayer) will be subject to the jurisdiction of Indiana
courts;
(2) consents that service of process in accordance with the
Indiana Rules of Trial Procedure is proper service and
subjects the taxpayer (and any successor in interest of the
taxpayer) to the jurisdiction of Indiana courts; and
(3) consents that any civil action related to the provisions of
this chapter and in which the taxpayer (or any successor in
interest of the taxpayer) is a party will be heard in an Indiana
court.
Sec. 20. (a) A tax credit may not be awarded under this chapter
for a taxable year ending after December 31, 2011.
(b) This chapter expires January 1, 2012.