2017 -- S 0135 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO TAXATION -- MOTION PICTURE PRODUCTION TAX CREDITS

     Introduced By: Senator Joshua Miller

     Date Introduced: February 01, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 44-31.2-2 and 44-31.2-11 of the General Laws in Chapter 44-31.2

entitled "Motion Picture Production Tax Credits" are hereby amended to read as follows:

     44-31.2-2. Definitions.

     For the purposes of this chapter:

     (1) "Accountant's certification" as provided in this chapter means a certified audit by a

Rhode Island certified public accountant licensed in accordance with section 5-3.1.

     (2) "Base investment" means the actual investment made and expended by a state-

certified production in the state as production-related costs.

     (3) "Documentary production" means a non-fiction production intended for educational

or commercial distribution that may require out of state principal photography.

     (4) "Domiciled in Rhode Island" means a corporation incorporated in Rhode Island or a

partnership, limited liability company, or other business entity formed under the laws of the state

of Rhode Island for the purpose of producing motion pictures as defined in this section, or an

individual who is a domiciled resident of the state of Rhode Island as defined in chapter 30 of this

title.

     (5) "Final production budget" means and includes the total pre-production, production

and post-production out-of-pocket costs incurred and paid in connection with the making of the

motion picture. The final production budget excludes costs associated with the promotion or

marketing of the motion picture

     (6) "Motion picture" means a feature-length film, documentary production, video, video

games, television series, or commercial made in Rhode Island, in whole or in part, for theatrical

or television viewing or as a television pilot or for educational distribution. The term "motion

picture" shall not include the production of television coverage of news or athletic events, nor

shall it apply to any film, video, television series or commercial or a production for which records

are required under section 2257 of title 18, U.S.C., to be maintained with respect to any performer

in such production or reporting of books, films, etc. with respect to sexually explicit conduct.

     (7) "Motion picture production company" means a corporation, partnership, limited

liability company or other business entity engaged in the business of producing one or more

motion pictures as defined in this section. Motion picture production company shall not mean or

include:

     (a) any company owned, affiliated, or controlled, in whole or in part by any company or

person which is in default:

     (i) on taxes owed to the state; or

     (ii) on a loan made by the state in the application year; or

     (iii) on a loan guaranteed by the state in the application year; or

     (b) any company or person who has discharged an obligation to pay or repay public funds

or monies by:

     (i) filing a petition under any Federal or state bankruptcy or insolvency law;

     (ii) having a petition filed under any Federal or state bankruptcy or insolvency law

against such company or person;

     (iii) consenting to, or acquiescing or joining in, a petition named in (i) or (ii);

     (iv) consenting to, or acquiescing or joining in, the appointment of a custodian, receiver,

trustee, or examiner for such company's or person's property; or

     (v) making an assignment for the benefit of creditors or admitting in writing or in any

legal proceeding its insolvency or inability to pay debts as they become due.

     (8) "Primary locations" means the locations which (1) at least fifty-one percent (51%) of

the motion picture principal photography days are filmed; or (2) at least fifty-one percent (51%)

of the motion picture's final production budget is spent and employs at least five (5) individuals

during the production in this state; or (3) for documentary productions, the location of at least

fifty-one percent (51%) of the total productions days, which shall include pre- production and

post-production locations.

     (9) "Rhode Island film and television office" means an office within the department of

administration that has been established in order to promote and encourage the locating of film

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and television productions within the state of Rhode Island. The office is also referred to within

as the "film office".

     (10) "State-certified production" means a motion picture production approved by the

Rhode Island film office and produced by a motion picture production company domiciled in

Rhode Island, whether or not such company owns or controls the copyright and distribution rights

in the motion picture; provided, that such company has either:

     (a) signed a viable distribution plan; or

     (b) is producing the motion picture for:

     (i) a major motion picture distributor;

     (ii) a major theatrical exhibitor;

     (iii) television network; or

     (iv) cable television programmer.

     (11) "State certified production cost" means any pre-production, production and post-

production cost that a motion picture production company incurs and pays to the extent it occurs

within the state of Rhode Island. Without limiting the generality of the foregoing, "state certified

production costs" include: set construction and operation; wardrobes, make-up, accessories, and

related services; costs associated with photography and sound synchronization, lighting, and

related services and materials; editing and related services, including, but not limited to, film

processing, transfers of film to tape or digital format, sound mixing, computer graphics services,

special effects services, and animation services, salary, wages, and other compensation, including

related benefits, of persons employed, either director or indirectly, in the production of a film

including writer, motion picture director, producer (provided the work is performed in the state of

Rhode Island); rental of facilities and equipment used in Rhode Island; leasing of vehicles; costs

of food and lodging; music, if performed, composed, or recorded by a Rhode Island musician, or

released or published by a person domiciled in Rhode Island; travel expenses incurred to bring

persons employed, either directly or indirectly, in the production of the motion picture, to Rhode

Island (but not expenses of such persons departing from Rhode Island); and legal (but not the

expense of a completion bond or insurance and accounting fees and expenses related to the

production's activities in Rhode Island); provided such services are provided by Rhode Island

licensed attorneys or accountants.

     (12) "Application year" means within the calendar year the motion picture production

company files an application for the tax credit.

     44-31.2-11. Sunset.

     No credits shall be issued on or after July 1, 2021 July 1, 2024, unless the production has

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received initial certification under subsection 44-31.2-6(a) prior to July 1, 2021 July 1, 2024.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- MOTION PICTURE PRODUCTION TAX CREDITS

***

     This act would remove video games from the definition of "motion picture" for the

purposes of the Motion Picture Credit Tax Act, and would extend from July 1, 2021, to July 1,

2024, the date upon which credits would be issued pursuant to the Act, unless the production has

received initial certification prior to July 1, 2024.

     This act would take effect upon passage.

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