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2012 -- S 2272 | |
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LC00188 | |
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STATE OF RHODE ISLAND | |
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IN GENERAL ASSEMBLY | |
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JANUARY SESSION, A.D. 2012 | |
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____________ | |
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A N A C T | |
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RELATING TO TAXATION -- MUSICAL AND THEATRICAL PRODUCTION AND | |
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MOTION PICTURE PRODUCTION TAX CREDITS | |
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Introduced By: Senators Miller, Goodwin, Jabour, Perry, and Pichardo | |
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Date Introduced: February 01, 2012 | |
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Referred To: Senate Finance | |
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It is enacted by the General Assembly as follows: | |
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SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by |
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adding thereto the following chapter: |
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CHAPTER 31.3 |
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MUSICAL AND THEATRICAL PRODUCTION TAX CREDITS |
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44-31.3-1. Declaration of purpose. -- (a) The general assembly finds and declares that it |
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is Rhode Island’s priority to reduce the state's unemployment rate by stimulating new industries |
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that have large employment growth potential by providing tax incentives and other means |
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necessary and therefore recognizes that such incentives should be created for the arts and |
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entertainment industry. The purpose of this chapter is to create economic incentives for the |
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purpose of stimulating the local economy and reducing unemployment in Rhode Island. |
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44-31.3-2. Musical and Theatrical Production Tax Credits. – |
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(a) Definitions - As used in this chapter: |
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(1) “Accredited theater production” means a for-profit live stage presentation in a |
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qualified production facility, as defined in this chapter that is either: (i) A Pre-Broadway |
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production, or (ii) A Post-Broadway production. |
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(2) “Accredited theater production certificate” means a certificate issued by the film |
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office certifying that the production is an accredited theater production that meets the guidelines |
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of this chapter. |
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(3) “Advertising and public relations expenditure” means costs incurred within the state |
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by the accredited theater productions for goods or services related to the national marketing, |
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public relations, creation and placement of print, electronic, television, billboards and other forms |
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of advertising to promote the accredited theater production. |
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(4) "Payroll" means all salaries, wages, fees, and other compensation including related |
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benefits for services performed and costs incurred within Rhode Island. |
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(5) “Pre-Broadway Production” means a live stage production that, in its original or |
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adaptive version, is performed in a qualified production facility having a presentation scheduled |
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for Broadway’s theater district in New York City within (12) months after its Rhode Island |
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presentation. |
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(6) “Post-Broadway production” means a live stage production that, in its original or |
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adaptive version, is performed in a qualified production facility and opens its US tour in Rhode |
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Island after a presentation scheduled for Broadway’s theater district in New York City. |
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(7) “Production and Performance Expenditures” means a contemporaneous exchange of |
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cash or cash equivalent for goods or services related to development, production, performance or |
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operating expenditures incurred in this state for a qualified theater production including, but not |
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limited to, expenditures for design, construction and operation, including sets, special and visual |
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effects, costumes, wardrobes, make-up, accessories, costs associated with sound, lighting, |
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staging, payroll, transportation expenditures, advertising and public relations expenditures, |
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facility expenses, rentals, per diems, accommodations and other related costs. |
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(8) “Qualified Production Facility” means a facility located in the State of Rhode Island |
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in which live theatrical productions are, or are intended to be, exclusively presented that contains |
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at least one stage, a seating capacity of one thousand five hundred (1,500) or more seats, and |
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dressing rooms, storage areas, and other ancillary amenities necessary for the accredited theater |
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production. |
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(9) “Resident” or “Rhode Island resident” means for the purpose of determination of |
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eligibility for the tax incentives provided by this chapter, an individual who is domiciled in the |
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State of Rhode Island or who is not domiciled in this state but maintains a permanent place of |
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abode in this state and is in this state for an aggregate of more than one hundred eighty-three |
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(183) days of the taxable year, unless the individual is in the armed forces of the United States. |
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(10) “Rhode Island film and television office” means the office within the Rhode Island |
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state council on the arts that has been established in order to promote and encourage the locating |
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of film and television productions within the state of Rhode Island. The office is also referred to |
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as the “film office”. |
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(11) (i) “Transportation expenditures” means expenditures for the packaging, crating, and |
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transportation both to the state for use in a qualified theater production of sets, costumes, or other |
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tangible property constructed or manufactured out of state, and/or from the state after use in a |
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qualified theater production of sets, costumes, or other tangible property constructed or |
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manufactured in this state and the transportation of the cast and crew to and from the state. Such |
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term shall include the packaging, crating, and transporting of property and equipment used for |
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special and visual effects, sound, lighting, and staging, costumes, wardrobes, make-up and related |
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accessories and materials, as well as any other performance or production-related property and |
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equipment. |
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(ii) Transportation expenditures shall not include any costs to transport property and |
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equipment to be used only for filming and not in a qualified theater production, any indirect costs, |
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and expenditures that are later reimbursed by a third party, or any amounts that are paid to |
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persons or entities as a result of their participation in profits from the exploitation of the |
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production. |
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(b) Tax Credit. (1) Any person, firm, partnership, trust, estate or other entity that receives |
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an accredited theater production certificate shall be allowed a tax credit equal to twenty-five |
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percent (25%) of the total production and performance expenditures and transportation |
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expenditures for the accredited theater production and to be computed as provided in this chapter |
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against a tax imposed by chapters 11, 12, 13, 14, 17 and 30 of this title. |
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(2) In no event shall the film office allow the collective total tax credit award(s) in any |
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calendar year to exceed a maximum of two million five hundred thousand dollars ($2,500,000). |
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(3) The tax credit shall be allowed against the tax for the taxable period in which the |
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credit is earned and can be carried forward for not more than three (3) succeeding tax years. |
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(4) Credits allowed to a company, which is a subchapter S corporation, partnership, or a |
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limited liability company that is taxed as a partnership, shall be passed through respectively to |
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persons designated as partners, members or owners on a pro rata basis or pursuant to an executed |
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agreement among such persons designated as subchapter S corporation shareholders, partners, or |
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members documenting an alternate distribution method without regard to their sharing of other |
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tax or economic attributes of such entity. |
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(5) If the company has not claimed the tax credits in whole or part, taxpayers eligible for |
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the tax credits may assign, transfer or convey the tax credits, in whole or in part, by sale or |
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otherwise to any individual or entity and such assignee of the tax credits that have not claimed the |
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tax credits in whole or part may assign, transfer or convey the tax credits, in whole or in part, by |
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sale or otherwise to any individual or entity. The assignee of the tax credits may use acquired |
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credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed |
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pursuant to chapter 11, 12, 13 (other than the tax imposed under section 44-13-13), 14, 17 or 30 |
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of this title. The assignee may apply the tax credit against taxes imposed on the assignee until the |
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end of the tenth (10th) calendar year after the year in which the qualified expenditures are |
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incurred or until the full credit assigned is used, whichever occurs first. Fiscal year assignees may |
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claim the credit until the expiration of the fiscal year that ends within the third (3rd) year after the |
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year in which the production and performance expenditures are incurred. The assignor shall |
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perfect the transfer by notifying the state of Rhode Island division of taxation, in writing, within |
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thirty (30) calendar days following the effective date of the transfer and shall provide any |
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information as may be required by the division of taxation to administer and carry out the |
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provisions of this section. |
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(6) For purposes of this chapter, any assignment or sales proceeds received by the |
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assignor for its assignment or sale of the tax credits allowed pursuant to this section shall be |
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exempt from this title. |
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(7) In the case of a corporation, this credit is only allowed against the tax of a corporation |
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included in a consolidated return that qualifies for the credit and not against the tax of other |
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corporations that may join in the filing of a consolidated tax return. |
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(c) Certification and administration. - (1) The applicant shall properly prepare, sign and |
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submit to the film office an application for initial certification of the theater production. The |
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application shall include such information and data as the film office deems reasonably necessary |
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for the proper evaluation and administration of said application, including, but not limited to, any |
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information about the theater production company and a specific Rhode Island live theater or |
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musical production. The film office shall review the completed application and determine |
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whether it meets the requisite criteria and qualifications for the initial certification for the |
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production. If the initial certification is granted, the film office shall issue a notice of initial |
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certification of the accredited theater production to the theater production company and to the tax |
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administrator. The notice shall state that, after appropriate review, the initial application meets the |
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appropriate criteria for conditional eligibility. The notice of initial certification will provide a |
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unique identification number for the production and is only a statement of conditional eligibility |
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for the production and, as such, does not grant or convey any Rhode Island tax benefits. (2) Upon |
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completion of an accredited theater production, the applicant shall properly prepare, sign and |
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submit to the film office an application for final certification of the accredited theater production. |
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The final application shall also contain a cost report and an “accountant’s certification.” The film |
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office and tax administrator may rely without independent investigation, upon the accountant’s |
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certification, in the form of an opinion, confirming the accuracy of the information included in |
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the cost report. Upon review of a duly completed and filed application and upon no later than |
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thirty (30) days of submission thereof, the film office will make a determination pertaining to the |
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final certification of the accredited theater production and the resultant tax credits. |
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(3) Upon determination that the company qualifies for final certification and the resultant |
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tax credits, the film office shall issue to the company: (i) An Accredited Theater Production |
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Certificate; and (ii) A tax credit certificate in an amount in accordance with this section (b) |
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hereof. All documents that are issued by the film office pursuant to this section shall reference the |
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identification number that was issued to the production as part of its initial certification. |
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(4) The director of the film office, in consultation as needed with the tax administrator, |
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shall promulgate such rules and regulations as are necessary to carry out the intent and purposes |
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of this chapter in accordance with the general guidelines provided herein for the certification of |
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the production and the resultant production credit. |
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(5) Notwithstanding any provisions of the general laws or regulations adopted thereunder |
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to the contrary, the film office and the division of taxation are hereby expressly authorized and |
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empowered to enter into contracts with persons, firms, partnerships, trusts, estates, limited |
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liability companies, corporations or other business entities that incur production and performance |
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expenditures and transportation expenditures for accredited theater productions. |
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(6) Simultaneously with payment of the fee, the film office shall, on behalf of the state of |
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Rhode Island, guaranty the deliver of one hundred percent (100%) of the tax credit and use of one |
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hundred percent (100%) of the tax credit in the tax year the last production and performance |
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expenditures and transportation expenditures for accredited theater productions. |
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(7) Any contract executed pursuant to this chapter by a company that incurs production |
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and performance expenditures and transportation expenditures for accredited theater productions |
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shall be assignable to: (i) An affiliate thereof without any consent from the division of taxation or |
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the film office; or (ii) Or a person, firm, partnership, trust, estate, limited liability company, |
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corporation (whether for profit or non-profit) or other business entity approved by the film office, |
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which approval shall not be unreasonably withheld. For purposes of this subsection, “affiliate” |
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shall be defined as any entity controlling, controlled by or under common control with such |
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person, firm, partnership, trust, estate, limited liability company, corporation (whether for profit |
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or non-profit) or other business entity. |
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(8) If information comes to the attention of the film office that is materially inconsistent |
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with representations made in an application, the film office may deny the requested certification. |
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In the event that tax credits or a portion of tax credits are subject to recapture for ineligible costs |
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and such tax credits have been transferred, assigned and/or allocated, the state will pursue its |
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recapture remedies and rights against the applicant of the theater production tax credits. No |
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redress shall be sought against assignees, sellers, transferees or allocates of such credits. |
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(d) Information requests. The tax administrator and his or her agents, for the purpose of |
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ascertaining the correctness of any credit claimed under the provisions of this chapter, may |
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examine any books, paper, records, or memoranda bearing upon the matters required to be |
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included in the return, report, or other statement, and may require the attendance of the person |
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executing the return, report, or other statement, or of any officer or employee of any taxpayer, or |
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the attendance of any other person, and may examine the person under oath respecting any matter |
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which the tax administrator or his or her agent deems pertinent or material in determining the |
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eligibility for credits claimed. |
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SECTION 2. Section 44-31.2-2 of the General Laws in Chapter 44-31.2 entitled "Motion |
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Picture Production Tax Credits" is hereby amended to read as follows: |
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44-31.2-2. Definitions. -- For the purposes of this chapter: |
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(1) "Accountant's certification" as provided in this chapter means a certified audit by a |
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Rhode Island certified public accountant licensed in accordance with section 5-3.1. |
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(2) "Base investment" means the actual investment made and expended by a state- |
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certified production in the state as production-related costs. |
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(3) "Domiciled in Rhode Island" means a corporation incorporated in Rhode Island or a |
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partnership, limited liability company, or other business entity formed under the laws of the state |
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of Rhode Island for the purpose of producing motion pictures as defined in this section, or an |
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individual who is a domiciled resident of the state of Rhode Island as defined in chapter 30 of this |
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title. |
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(4) "Motion picture" means a feature-length film, video, video games, television series, |
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or commercial made in Rhode Island, in whole or in part, for theatrical or television viewing or as |
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a television pilot. The term "motion picture" shall not include the production of television |
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coverage of news or athletic events, nor shall it apply to any film, video, television series or |
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commercial or a production for which records are required under section 2257 of title 18, U.S.C., |
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to be maintained with respect to any performer in such production or reporting of books, films, |
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etc. with respect to sexually explicit conduct. |
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(5) "Motion picture production company" means a corporation, partnership, limited |
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liability company or other business entity engaged in the business of producing one or more |
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motion pictures as defined in this section. Motion picture production company shall not mean or |
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include: (a) any company owned, affiliated, or controlled, in whole or in part by any company or |
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person which is in default: (i) on taxes owed to the state; or (ii) on a loan made by the state; or |
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(iii) a loan guaranteed by the state; nor (iv) any company or person who has even declared |
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bankruptcy under which an obligation of the company or person to pay or repay public funds or |
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monies was discharged as a part of such bankruptcy. |
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(6) "Primary locations" means the locations within which at least fifty-one percent (51%) |
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of the motion picture principal photography days are filmed. |
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(7) "Rhode Island film and television office" means an office within the Rhode Island |
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state council on the arts that has been established in order to promote and encourage the locating |
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of film and television productions within the state of Rhode Island. The office is also referred to |
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within as the "film office". |
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(8) "State-certified production" means a motion picture production approved by the |
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Rhode Island film office and produced by a motion picture production company domiciled in |
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Rhode Island, whether or not such company owns or controls the copyright and distribution rights |
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in the motion picture; provided, that such company has either: (a) signed a viable distribution |
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plan; or (b) is producing the motion picture for: (i) a major motion picture distributor; (ii) a major |
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theatrical exhibitor; (iii) television network; or (iv) cable television programmer. |
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(9) "State certified production costs" means any pre-production, production and post- |
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production cost that a motion picture production company incurs and pays to the extent it occurs |
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within the State of Rhode of Island and specifically excluding costs associated with the promotion |
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or marketing of the motion picture. Without limiting the generality of the foregoing, "state |
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certified production costs" include: set construction and operation; wardrobes, make-up, |
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accessories, and related services; costs associated with photography and sound synchronization, |
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lighting, and related services and materials; editing and related services, including, but not limited |
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to, film processing, transfers of film to tape or digital format, sound mixing, computer graphics |
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services, special effects services, and animation services, salary, wages, and other compensation, |
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including related benefits, of persons employed, either directly or indirectly, in the production of |
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a film including writer, motion picture director, producer (provided the work is performed in the |
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state of Rhode Island); rental of facilities and equipment used in Rhode Island; leasing of |
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vehicles; costs of food and lodging; music, if performed, composed, or recorded by a Rhode |
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Island musician, or released or published by a person domiciled in Rhode Island; travel expenses |
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incurred to bring persons employed, either directly or indirectly, in the production of the motion |
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picture, to Rhode Island; legal fees, accounting fees and expenses; and completion bond and |
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insurance costs related to the production's activities in Rhode Island; provide such services are |
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provided by Rhode Island licensed attorneys, accountants or insurance companies and such |
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insurance companies maintain an office domiciled in Rhode Island; and finance fees, provided |
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that the finance company is domiciled in Rhode Island and has at least one full-time equivalent |
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employee which means a person who works a minimum of thirty (30) hours per week within the |
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State of Rhode Island and earns no less than two hundred percent (200%) of the hourly minimum |
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wage prescribed by Rhode Island law and such finance company is not an equity investor in the |
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motion picture. |
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SECTION 3. Section 44-31.2-5 of the General Laws in Chapter 44-31.2 entitled "Motion |
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Picture Production Tax Credits" is hereby amended to read as follows: |
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44-31.2-5. Motion picture production company tax credit. -- |
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(a) A motion picture production company shall be allowed a credit to be computed as |
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provided in this chapter against tax imposed by chapters 11, 14, 17 and 30 of this title. The |
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amount of the credit shall be twenty-five percent (25%) of the state certified production costs |
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incurred directly attributable to activity within the state, provided that the primary locations are |
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within the state of Rhode Island and the total production budget as defined herein is a minimum |
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of three hundred thousand dollars ($300,000). The credit shall be earned in the taxable year in |
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which production in Rhode Island is completed, as determined by the film office in final |
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certification pursuant to subsection 44-31.2-6(c). To the extent that motion picture production |
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company incurs any costs on payroll for a Rhode Island resident employed for such accredited |
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theater production, such person, firm, partnership, trust, estate or other entity shall be allowed an |
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additional tax credit of five percent (5%) of such payroll. |
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(b) For the purposes of this section: "total production budget" means and includes the |
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motion picture production company's pre-production, production and post-production costs |
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incurred for the production activities of the motion picture production company in Rhode Island |
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in connection with the production of a state-certified production. The budget shall not include |
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costs associated with the promotion or marketing of the film, video or television product. |
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(c) The credit shall not exceed the total production budget and shall be allowed against |
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the tax for the taxable period in which the credit is earned and can be carried forward for not |
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more than three (3) succeeding tax years. |
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(d) Credits allowed to a motion picture production company, which is a subchapter S |
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corporation, partnership, or a limited liability company that is taxed as a partnership, shall be |
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passed through respectively to persons designated as partners, members or owners on a pro rata |
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basis or pursuant to an executed agreement among such persons designated as subchapter S |
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corporation shareholders, partners, or members documenting an alternate distribution method |
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10-7 |
without regard to their sharing of other tax or economic attributes of such entity. |
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10-8 |
(e) No more than fifteen million dollars ($15,000,000) may be issued for any tax year |
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10-9 |
beginning after December 31, 2007; provided, however that two million five hundred thousand |
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10-10 |
dollars ($2,500,000) of such amount shall be set aside and dedicated for the musical and theatrical |
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10-11 |
production tax credits pursuant to section 44-31.3. |
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10-12 |
SECTION 4. This act shall take effect upon passage. |
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LC00188 | |
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EXPLANATION | |
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BY THE LEGISLATIVE COUNCIL | |
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OF | |
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A N A C T | |
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RELATING TO TAXATION -- MUSICAL AND THEATRICAL PRODUCTION AND | |
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MOTION PICTURE PRODUCTION TAX CREDITS | |
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11-1 |
This act would establish a tax credit for qualified musical and theatrical productions, and |
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11-2 |
makes certain changes to existing law governing motion picture production tax credits. |
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11-3 |
This act would take effect upon passage. |
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LC00188 | |
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