Relates to eligibility for the empire state film post production credit; provides for eligibility for the credit if expenditures meet or exceed seventy-five percent of qualified expenditures, including picture and sound post production costs, music and visual effects; defines "picture and sound post production," "music," and "visual effects."

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S5314-2011 Actions

• Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
• May 5, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S5314-2011 Memo

BILL NUMBER:S5314

TITLE OF BILL:
An act
to amend the tax law, in relation to the empire state film production
credit

PURPOSE:
This legislation represents a technical correction to the 2010 Film
and Television Post Production Tax Credit and further removes barriers
to eligibility into the program.

The Post Production Film and Television Tax Credit has resulted in a
rethinking by production companies regarding where to locate a
production's post work. This understanding is based on numerous
conversations between New York based Post Production facilities and
the film and television production decision makers. What has been
learned is that while there exists great interest in posting in New
York, given its wealth of talent, landmarks and other resources, the
10% credit is not a high enough rebate for the industry to shift a
significant amount of work to New York. New York's post production
tax credit program is simply not maximizing its potential to entice
post production projects.

SUMMARY OF PROVISIONS:
This legislation further recognizes that Film and Television post
production work is comprised of three distinct subsets; "Music",
"Visual Effects" and "Editorial". In regards to music, there is only
one fully functioning scoring stage in New York State. Due to this
limited local resource, our State does not possess the infrastructure
to complete every score of every movie that might otherwise come to
New York for post production services. Similarly, while the visual
effects industry is growing in New York, it does not currently have
the labor force necessary to meet the VFX shot demands of every film
that desires to post in NY. These market realities are addressed in
this amendment by removing the requirement to meet a 75% threshold
for all of post production's aspects, thereby removing a barrier to
eligibility for those productions that seek to bring post production
work to New York (as the threshold on the post spend in its entirety
is nearly impossible to reach given the likelihood that all or
portions of the music and/or VFX work
will need to be created outside of the state). To structure the program
to require 75% of anyone of the subsets within the definition of
"post production" be met will enable the infrastructures of each
industry sector to grow, provide incentive for the producers to
remain in New York for post production and therefore result in
maximizing job creation.

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
Immediately.

S5314-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    5314

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 May 5, 2011
                                 ___________

  Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
    printed to be committed to the Committee on Investigations and Govern-
    ment Operations

  AN ACT to amend the tax law,  in  relation  to  the  empire  state  film
    production credit

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Section 31 of the tax law, as added by section 12 of part Q
  of chapter 57 of the laws of 2010, is amended to read as follows:

    S 31. Empire state film post production credit. (a) Allowance of cred-
  it. (1) A taxpayer which is a qualified  film  production  company,  and
  which is subject to tax under article nine-A or twenty-two of this chap-
  ter,  unless  eligible  for the credit under section twenty-four of this
  article with respect to the qualified film, shall be  allowed  a  credit
  against  such  tax, pursuant to the provisions referenced in subdivision
  (c) of this section to be computed as provided in this subdivision.
    (2) The amount of the credit shall be the product (or pro  rata  share
  of the product, in the case of a member of a partnership) of [ten] THIR-
  TY  percent  and  the  qualified  post  production  costs  paid  in  the
  production of a qualified film at a qualified post production facility.
    (3) A taxpayer shall not be eligible for  the  credit  established  by
  this  section  unless the qualified post production costs at a qualified
  post production facility meet or  exceed  seventy-five  percent  of  the
  [total post production costs] QUALIFIED EXPENDITURES WITH RESPECT TO ANY
  ONE OR MORE OF THE FOLLOWING SUBSETS:

    (I)  PICTURE  AND SOUND POST PRODUCTION COSTS, AS HEREINAFTER DEFINED;
  (II) MUSIC, AS HEREINAFTER DEFINED; AND (III) VISUAL EFFECTS, AS HEREIN-
  AFTER DEFINED; AS EACH MAY BE paid or incurred in the post production of
  the qualified film at any post production facility. The credit shall [be
  allowed] ONLY BE ALLOWED AS TO THE  SUBSET  OR  SUBSETS  FOR  WHICH  THE

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD11426-01-1

 S. 5314                             2

  SEVENTY-FIVE  PERCENT  THRESHOLD  HAS  BEEN  MET for the taxable year in
  which the production of such qualified film is completed.
    (4)  No  qualified  post production costs used by a taxpayer either as
  the basis for the allowance  of  the  credit  provided  for  under  this
  section or used in the calculation of the credit provided for under this
  section shall be used by such taxpayer to claim any other credit allowed
  pursuant to this chapter.
    (b)  Definitions.  As  used  in this section the following terms shall
  have the following meanings:

    (1) "Qualified film production company"  and  "qualified  film"  shall
  have  the  same meaning as are ascribed to such terms by section twenty-
  four of this article.
    (2) "Post production costs" means ANY EXPENDITURE IN PICTURE AND SOUND
  POST PRODUCTION,  MUSIC,  OR  VISUAL  EFFECTS,  AS  HEREIN  DEFINED,  IN
  CONNECTION  WITH THE production of original content for a qualified film
  employing traditional, emerging and  new  workflow  techniques  used  in
  post-production [for picture, sound and music editorial, rerecording and
  mixing, visual effects, graphic design, original scoring, animation, and
  musical  composition; but]. FOR PURPOSES OF THIS PARAGRAPH, "PICTURE AND
  SOUND POST PRODUCTION" SHALL INCLUDE COSTS INCURRED IN PICTURE AND SOUND
  EDITORIAL, ASSEMBLY, RECORDING, RERECORDING, MIXING, TRANSFERS,  RELATED
  EQUIPMENT AND FACILITY FEES, SCREENING, COLOR GRADING, COLOR CORRECTION,
  SCANNING,  FILM  CLEANING,  CONFORMING, AND LABORATORY SERVICES; "MUSIC"
  SHALL INCLUDE COSTS INCURRED IN ORIGINAL SCORING, MUSIC  EDITORIAL,  AND
  RELATED  EQUIPMENT  AND  FACILITY  FEES;  "VISUAL EFFECTS" SHALL INCLUDE
  COSTS INCURRED  IN  GRAPHIC  DESIGN,  COMPOSITING,  TRACKING,  REMOVALS,
  ANIMATION,  DATA  ARCHIVING,  RENTALS;  HOWEVER, THE FOREGOING shall not
  include the editing of previously produced content for a qualified film.
    (3) "Post production facility" means  a  building  and/or  complex  of
  buildings  and  their improvements on which film are intended to be post
  produced.
    (4) "Qualified post  production  facility"  means  a  post  production
  facility located in the state, engaged in finishing a qualified film.
    (c)  Notwithstanding  any  other provision of law to the contrary, the
  aggregate amount of tax credits available under this section  shall  not
  exceed  the amounts allowed pursuant to subdivision (e) of section seven
  of part P of chapter sixty of the laws of two thousand four and shall be
  allocated in the same manner as  provided  for  in  subdivision  (a)  of
  section  seven  of  part  P of chapter sixty of the laws of two thousand
  four.
    (d) Cross-references. For application of the credit  provided  for  in
  this section, see the following provisions of this chapter:

    (1) article 9-A: section 210: subdivision 41.
    (2) article 22: section 606: subsection (qq).
    S 2. This act shall take effect immediately.