N.Y. Tax Law § 24-d: Empire state independent film production credit

§ 24-d. Empire state independent film production credit. (a) (1)

Allowance of credit. A taxpayer which is a qualified independent film

production company, or which is a sole proprietor of or a member of a

partnership which is a qualified independent film production company,

and which is subject to tax under articles nine-A or twenty-two of this

chapter, shall be allowed a credit against such tax, pursuant to the

provisions referenced in subdivision (c) of this section, to be computed

as hereinafter provided.

(2) (i) 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

thirty percent and the qualified production costs paid or incurred in

the production of a qualified film, provided that the qualified

production costs (excluding post production costs) paid or incurred

which are attributable to the use of tangible property or the

performance of services at a qualified film production facility in the

production of such qualified film equal or exceed seventy-five percent

of the production costs (excluding post production costs) paid or

incurred which are attributable to the use of tangible property or the

performance of services at any film production facility within and

without the state in the production of such qualified film. However, if

the qualified production costs (excluding post production costs) which

are attributable to the use of tangible property or the performance of

services at a qualified film production facility in the production of

such qualified film is less than three million dollars, then the portion

of the qualified production costs attributable to the use of tangible

property or the performance of services in the production of such

qualified film outside of a qualified film production facility shall be

allowed only if the shooting days spent in New York outside of a film

production facility in the production of such qualified film equal or

exceed seventy-five percent of the total shooting days spent within and

without the state outside of a film production facility in the

production of such qualified film. The credit shall be allowed for the

taxable year in which the production of such qualified film is

completed. A taxpayer shall not be eligible for a tax credit established

by this section for the production of more than two qualified films per

calendar year.

(ii) In addition to the amount of credit established in subparagraph

(i) of this paragraph, a taxpayer shall be allowed a credit equal to (A)

the product (or pro rata share of the product, in the case of a member

of a partnership) of ten percent and the wages, salaries or other

compensation constituting qualified production costs as defined in

paragraph one of subdivision (b) of this section, paid to individuals

directly employed by a qualified independent film production company for

services performed by those individuals in one of the counties specified

in this subparagraph in connection with a qualified independent film

with a minimum budget of five hundred thousand dollars, and (B) the

product (or pro rata share of the product, in the case of a member of a

partnership) of ten percent and the qualified production costs

(excluding wages, salaries or other compensation) paid or incurred in

the production of a qualified film where the property constituting such

qualified production costs was used, and the services constituting such

qualified production costs were performed in any of the counties

specified in this subparagraph in connection with a qualified film with

a minimum budget of five hundred thousand dollars where the majority of

principal photography shooting days in the production of such film were

shot in any of the counties specified in this paragraph. Provided,

however, that the aggregate total eligible qualified production costs

constituting wages, salaries or other compensation, for writers,

directors, composers, producers, and performers shall not exceed forty

percent of the aggregate sum total of all other qualified production

costs. For purposes of the credit, the services must be performed and

the property must be used in one or more of the following counties:

Albany, Allegany, Broome, Cattaraugus, Cayuga, Chautauqua, Chemung,

Chenango, Clinton, Columbia, Cortland, Delaware, Dutchess, Erie, Essex,

Franklin, Fulton, Genesee, Greene, Hamilton, Herkimer, Jefferson, Lewis,

Livingston, Madison, Monroe, Montgomery, Niagara, Oneida, Onondaga,

Ontario, Orange, Orleans, Oswego, Otsego, Putnam, Rensselaer, Saratoga,

Schenectady, Schoharie, Schuyler, Seneca, St. Lawrence, Steuben,

Sullivan, Tioga, Tompkins, Ulster, Warren, Washington, Wayne, Wyoming,

or Yates and (C) qualified production costs that are attributable to

scoring shall be eligible for an additional ten percent credit on such

scoring costs when incurred within the state and when such scoring costs

include payment to a minimum of five musicians.

(3) No qualified 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.

(4) Notwithstanding the foregoing provisions of this subdivision, a

qualified independent film production company that has applied for

credit under the provisions of this section, agrees as a condition for

the granting of the credit: (i) to include in each qualified film

distributed by DVD, or other media for the secondary market, a New York

promotional video approved by the governor's office of motion picture

and television development or to include in the end credits of each

qualified film "Filmed With the Support of the New York State Governor's

Office of Motion Picture and Television Development" and a logo provided

by the governor's office of motion picture and television development,

and (ii) to certify that it will purchase taxable tangible property and

services, defined as qualified production costs pursuant to paragraph

one of subdivision (b) of this section, only from companies registered

to collect and remit state and local sales and use taxes pursuant to

articles twenty-eight and twenty-nine of this chapter.

(b) Definitions. As used in this section, the following terms shall

have the following meanings:

(1) "Qualified production costs" means production costs only to the

extent such costs, excluding labor costs, do not exceed sixty million

dollars and are attributable to the use of tangible property or the

performance of services within the state directly and predominantly in

the production (including pre-production and post production) of a

qualified film. In the case of an eligible relocated television series,

the term "qualified production costs" shall include, in the first season

that the eligible relocated television series is produced in New York

after relocation, qualified relocation costs. Provided, however, that

the aggregate total eligible qualified production costs for producers,

writers, directors, performers (other than background actors with no

scripted lines), and composers shall not exceed forty percent of the

aggregate sum total of all other qualified production costs.

(2) "Production costs" means any costs for tangible property used and

services performed directly and predominantly in the production

(including pre-production and post production) of a qualified film.

"Production costs" shall not include costs for a story, script or

scenario to be used for a qualified film. "Production costs" generally

include writers, directors, composers and performers, technical and crew

production costs, such as expenditures for film production facilities,

or any part thereof, props, makeup, wardrobe, film processing, camera,

sound recording, scoring, set construction, lighting, shooting, editing

and meals.

(3) "Qualified film" means a scripted narrative feature-length film,

television film, relocated television series or television series,

regardless of the medium by means of which the film or series is created

or conveyed. For the purposes of the credit provided by this section

only, a "qualified film" whose majority of principal photography

shooting days in the production of the qualified film are shot in

Westchester, Rockland, Nassau, or Suffolk county or any of the five New

York City boroughs shall have a minimum budget of one million dollars. A

"qualified film", whose majority of principal photography shooting days

in the production of the qualified film are shot in any other county of

the state than those listed in the preceding sentence shall have a

minimum budget of two hundred fifty thousand dollars. "Qualified film"

shall not include: (i) a television pilot, documentary film, news or

current affairs program, interview or talk program, "how-to" (i.e.,

instructional) film or program, film or program consisting primarily of

stock footage, sporting event or sporting program, game show, award

ceremony, film or program intended primarily for industrial, corporate

or institutional end-users, fundraising film or program, daytime drama

(i.e., daytime "soap opera"), commercials, music videos or "reality"

program; (ii) a production for which records are required under section

2257 of title 18, United States code, to be maintained with respect to

any performer in such production (reporting of books, films, etc. with

respect to sexually explicit conduct); or (iii) a television series

commonly known as variety entertainment, variety sketch and variety

talk, i.e., a program with components of improvisational or scripted

content (monologues, sketches, interviews), either exclusively or in

combination with other entertainment elements such as musical

performances, dancing, cooking, crafts, pranks, stunts, and games and

which may be further defined in regulations of the commissioner of

economic development.

(4) "Film production facility" shall mean a building and/or complex of

buildings and their improvements and associated back-lot facilities in

which films are or are intended to be regularly produced and which

contain at least one sound stage, provided, however, that an armory

owned by the state or city of New York located in the city of New York

shall not be considered to be a "film production facility" unless such

facility is used by a qualified independent film production company.

(5) "Qualified film production facility" shall mean a film production

facility in the state, which contains at least one sound stage having a

minimum of seven thousand square feet of contiguous production space.

(6) "Qualified independent film production company" is a corporation,

partnership, limited partnership, or other entity or individual, that or

who (i) is principally engaged in the production of a qualified film,

(ii) is not publicly traded, and (iii) is not majority owned, fifty-one

percent or more, by a company publicly traded on a United States stock

exchange.

(7) "Relocated television series" shall mean the first two years of a

regularly occurring production intended to run in its initial broadcast,

regardless of the medium or mode of its distribution, in a series of

narrative and/or thematically related episodes, each of which has a

running time of at least thirty minutes in length (inclusive of

commercial advertisement and interstitial programming, if any), which

had filmed a minimum of six episodes of the television series outside

the state immediately prior to relocating to the state, where the

television series had a total minimum budget of at least one million

dollars per episode. For the purposes of this definition only, a

television series produced by and for media services providers described

as streaming services and/or digital platforms (and excluding

network/cable) shall mean a regularly occurring production intended to

run in its initial release in a series of narrative and/or thematically

related episodes, the aggregate length of which is at least seventy-five

minutes, although the episodes themselves may vary in duration from the

thirty minutes specified for network/cable production.

(8) "Qualified relocation costs" means the costs incurred, excluding

wages, salaries and other compensation, in the first season that a

relocated television series relocates to New York, including such costs

incurred to transport sets, props and wardrobe to New York and other

costs as determined by the department of economic development to the

extent such costs do not exceed six million dollars.

(9) If the total amount of allocated credits applied for in any

particular year is less than the aggregate amount of tax credits allowed

for such year under this section, any unused portion may be carried over

and added to the aggregate amount of credits allowed in the next

succeeding taxable year or years.

(c) 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-B: subdivision 20-a.

(2) article 22: section 606: subsection (gg-1).

(d) Notwithstanding any provision of this chapter, employees and

officers of the governor's office of motion picture and television

development and the department shall be allowed and are directed to

share and exchange information regarding the credits applied for,

allowed, or claimed pursuant to this section and taxpayers who are

applying for credits or who are claiming credits, including information

contained in or derived from credit claim forms submitted to the

department and applications for credit submitted to the governor's

office of motion picture and television development.

(e) Allocation of credit. The aggregate amount of tax credits allowed

under this section, subdivision twenty-a of section two hundred ten and

subsection (gg-1) of section six hundred six of this chapter in any

calendar year shall be (1) twenty million dollars for qualified films

with a budget of less than ten million dollars of qualified production

costs; and (2) eighty million dollars for qualified films with a budget

of ten million dollars or more of qualified production costs. There

shall be at least two application periods each year; such aggregate

amount of credits shall be allocated by the governor's office for motion

picture and television development among taxpayers in order of priority

based upon the date of filing of an application for allocation of the

independent film production credit with such office within each

application period. If the commissioner of economic development

determines that the aggregate amount of tax credits available for an

application period under paragraph one of this subdivision have been

previously allocated, and determines that the pending applications from

eligible applicants for the other application period in such calendar

year is insufficient to utilize the balance of unallocated tax credits

for such period, then such commissioner may allocate to productions

eligible under such paragraph any credits that remain unallocated for

such period pursuant to paragraph two of this subdivision. Provided,

however, the total amount of allocated credits applied in any calendar

year shall not exceed the aggregate amount of tax credits allowed for

such year under this section.

(f) (1) The commissioner of economic development shall reduce by

one-half of one percent the amount of credit allowed to a taxpayer and

this reduced amount shall be reported on a certificate of tax credit

issued pursuant to this section and the regulations promulgated by the

commissioner of economic development to implement this credit program.

(2) By January thirty-first of each year, the commissioner of economic

development shall report to the comptroller the total amount of such

reductions of tax credit during the immediately preceding calendar year.

On or before March thirty-first of each year, the comptroller shall

transfer without appropriations from the general fund to the empire

state entertainment diversity job training development fund established

under section ninety-seven-ff of the state finance law an amount equal

to the total amount of such reductions reported by the commissioner of

economic development for the immediately preceding calendar year.

(g) Credit recapture. If a certificate of tax credit issued by the

department of economic development pursuant to this section is revoked

by such department because the taxpayer does not meet the eligibility

requirements of this section, the amount of credit described in this

section and claimed by the taxpayer prior to that revocation shall be

added back to tax in the taxable year in which any such revocation

becomes final.