It is enacted by the General Assembly as follows

SECTION 1. Section 44-18-30B of the General Laws in Chapter 44-18 entitled "Sales and Use Taxes -- Liability and Computation" is hereby amended to read as follows:

44-18-30B. Exemption from sales tax for sales by writers, composers, artists. -- (Effecting January 1, 1997.) -- Findings. -- The general assembly makes the following findings of facts:

(i) The downtown area of the city of Providence has been characterized by blighted areas, and dilapidated and abandoned structures;

(ii) As a result, the downtown area has been designated an economic development zone in order to stop the deterioration and stimulate economic activity;

(iii) The capitol center area of the city of Providence has become an attractive location, especially with the construction of the Providence Place Mall;

(iv) In order to promote, revitalize and redevelop the "Old Downtown" area of the city of Providence it is necessary to provide tax exemptions for a specified period of time available to this area as it has been designated as an economic development zone;

(v) The development of an active artistic community, including "artists in residence", in this area would promote economic development, revitalization, tourism, employment opportunities and encourage business development by providing alternative commercial enterprises while creating a link between the Old Downtown and the Capital Center Area.

(A) This section shall only apply to sales by writers, composers and artists residing in and conducting a business within a section of the defined economic development zone in the city of Providence. For the purposes of this section, a "work" shall mean an original and creative work, whether written, composed or executed for "one-of-a-kind limited" production and which falls into one (1) of the following categories:

(1) a book or other writing;

(2) a play or the performance of said play;

(3) a musical composition or the performance of said composition;

(4) a painting or other like picture;

(5) a sculpture;

(6) traditional and fine crafts;

(7) the creation of a film or the acting within said film;

(8) the creation of a dance or the performance of said dance.

For the purposes of this section, a "work" shall include any product generated as a result of any of the above categories.

For the purposes of this section, a "work" shall not apply to any piece or performance created or executed for industry oriented or related production.

(B)(1) This section shall apply to sales by any individual:

(a) who is a resident of and has a principal place of business situated in the section of the economic development zone designated as the arts and entertainment district in the downtown area of the city of Providence. For the purposes of this section, the arts and entertainment district is defined as the area bounded by Pine Street to the southeast, Dorrance Street to the northeast, Sabin Street to the northwest and Empire Street to the southwest. The abovementioned streets shall be included in the district; and

(b) who is determined by the tax administrator, after consideration of any evidence she/he deems necessary or which is submitted to him/her by the individual, to have written, composed or executed, either solely or jointly, a work or works which would fall into one (1) of the categories listed in section (A) above.

(2) The tax administrator shall not make a determination unless:

(a) the individual(s) concerned duly make(s) an application to the tax administrator for the sales tax exemption which shall apply to the works defined in this section; and

(b) the individual has complied and continues to comply with any and all requests made by the tax administrator.

(C) Any individual to whom this section applies and who makes an application to the tax administrator shall be entitled to a sales tax exemption for the sale of a work or works sold from the individual's business located in the economic development zone which would, apart from this section, be subject to the tax rate imposed by the state of Rhode Island. {DEL This exemption shall be in effect until December 31, 2000. DEL}

(D) When an individual makes a request for such an exemption, the tax administrator shall be entitled to the following information:

(1) All books, documents or other evidence relating to the publication, production or creation of the works as may be deemed necessary by the tax administrator for the purposes of the exemption. The time period in which to provide said information shall be in the sole discretion of the tax administrator and specified in the notice.

(E) In addition to the information required in subsection (D), the tax administrator may require the individual(s) to submit an annual certified accounting of the numbers of works sold, the type of work sold and the date of the sale. Failure to file this report may, in the sole discretion of the tax administrator, terminate his/her eligibility for the exemption.

(F) Any person storing, using or otherwise consuming in this state any work or works which is deemed to be exempt from the sales tax pursuant to this section shall not be liable for the use tax on such work or works.

(G) Notwithstanding the provisions of this section, any individual to whom this section may apply shall comply with all the administration, collection and other provisions of chapter 18 and 19 of this title.

SECTION 2. Section 44-30-1.1 of the General Laws in Chapter 44-30 entitled "Personal Income Tax" is hereby amended to read as follows:

44-30-1.1. Exemption for tax for writers, composers and artists. -- (Effective January 1, 1997.) -- (A) This section shall only apply to writers, composers and artists residing within a section of the defined economic development zone within the city of Providence and who create such work while residing in the zone. For the purposes of this section, a "work" shall mean an original and creative work, whether written, composed, created or executed for "one-of-a-kind, limited" production, before or after the passing of this section, which falls into one (1) of the following categories:

(1) a book or other writing;

(2) a play or the performance of said play;

(3) a musical composition or the performance of said composition;

(4) a painting or other like picture;

(5) a sculpture;

(6) traditional and fine crafts;

(7) the creation of a film or the acting of said film;

(8) the creation of a dance or the performance of said dance;

For purposes of this section, a "work" does not apply to any piece or performance created or executed for industry oriented or related production.

(B)(1) This section shall apply to any individual:

(a) who is a resident within the section of the economic development zone designated as the Arts and Entertainment District in the downtown area of the city of Providence and deriving the income exempted from within said district while a resident of said zone. For the purposes of this section, the arts and entertainment district is defined as the area bounded by Pine Street to the southeast, Dorrance Street to the northeast, Sabin Street to the northwest and Empire Street to the southwest. The abovementioned streets shall be included in the district; and

(b) Who is determined by the tax administrator, after consideration of any evidence in relation to the matter which the individual submits to him or her and after such consultation as may seem to him or her to be necessary with such person or body of persons as in his or her opinion may be of assistance to him or her, to have written, composed or executed either solely or jointly with another individual, a work or works which would fall into one (1) of the categories listed in section (A) above.

(C)(1) An individual to whom this section applies and who duly makes a claim to the tax administrator in that behalf shall, subject to paragraph (2) below, be entitled to have the profits or gains arising to him or her from the publication, production or sale of a work or works in relation to which the tax administrator has made a determination under subsection (B)(1)(b) to be taken as a modification reducing federal adjusted gross income. {DEL The modification adjusting federal adjusted gross income shall be in effect until December 31, 2000. DEL}

(2) The modification authorized by this section shall apply to the year in which the profit or gain from the publication, production or sale of a work is realized.

(D) The tax administrator may serve on an individual who makes a claim under this subsection a notice or notices in writing requiring him or her to make available within such time as may be specified in the notice of all such books, accounts and documents in his or her possession or power as may be requested, being books, accounts and documents relating to the publication, production or sale of the work in respect of the profits or gains of which exemption is claimed.

(E) For the purpose of determining the amount of profits or gains subject to modification under this section, the tax administrator may make such apportionment of receipts and expenses as may be necessary.

(F) Notwithstanding any other provisions of this chapter, any individual seeking relief under this section shall file a Rhode Island personal income tax return listing the modification reducing federal adjusted gross income relating to profits or gains realized from the works as defined herein.

SECTION 3. This act shall take effect upon passage.