N.Y. Tax Law § 28: Empire state commercial production credit

* § 28. Empire state commercial production credit. (a) Allowance of

credit. (1) A taxpayer which is a qualified commercial production

company, or which is a sole proprietor of a qualified commercial

production company, and which is subject to tax under article 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 provided in this section. Provided, however,

to be eligible for such credit, at least seventy-five percent of the

production costs (excluding post production costs) paid or incurred

directly and predominantly in the actual filming or recording of the

qualified commercial must be costs incurred in New York state. The tax

credit allowed pursuant to this section shall apply to taxable years

beginning before January first, two thousand twenty-nine.

(2) The state has annually seven million dollars in total tax credits

to disburse to all eligible commercial production companies. The seven

million dollars in total tax credits shall be allocated according to

subparagraphs (i) and (ii) of this paragraph:

(i) The state annually will disburse four million of the total seven

million in tax credits to all eligible production companies who film or

record qualified commercials within the metropolitan commuter

transportation district as defined in section twelve hundred sixty-two

of the public authorities law. 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 twenty percent of the qualified production costs paid or

incurred in the production of a qualified commercial, provided that the

qualified production costs paid or incurred are attributable to the use

of tangible property or the performance of services within the state in

the production of such qualified commercial. To be eligible for said

credit the total qualified production costs of a qualified production

company must be greater than five hundred thousand dollars in the

aggregate during the calendar year. Such credit will be applied to

qualified production costs exceeding five hundred thousand dollars in a

calendar year.

(ii) The state annually will disburse three million of the total seven

million in tax credits to all eligible production companies who film or

record a qualified commercial outside of the metropolitan commuter

transportation district as defined in section twelve hundred sixty-two

of the public authorities law; provided, however, that if, after July

thirty-first the state reviews all applications from eligible production

companies who film or record a qualified commercial outside of the

metropolitan commuter district for a given year, tax credits remain

unallocated under this subparagraph, those credits shall be allotted to

the credits set forth in subparagraph (i) of this paragraph for use

consistent with the purposes of such subparagraph. 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 of the qualified

production costs paid or incurred in the production of a qualified

commercial, provided that the qualified production costs paid or

incurred are attributable to the use of tangible property or the

performance of services within the state in the production of such

qualified commercial. To be eligible for said credit the total qualified

production costs of a qualified production company must be greater than

one hundred thousand dollars in the aggregate during the calendar year.

Such credit will be applied to all qualified production costs in a

calendar year.

(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 any provisions of this section to the contrary, a

corporation or partnership, which otherwise qualifies as a qualified

commercial production company, and is similar in operation and in

ownership to a business entity or entities taxable, or previously

taxable, under section one hundred eighty-three or one hundred

eighty-four or former section one hundred eighty-five of article nine;

article nine-A or thirty-three of this chapter or which would have been

subject to tax under article twenty-three of this chapter (as such

article was in effect on January first, nineteen hundred eighty) or

which would have been subject to tax under article thirty-two of this

chapter (as such article was in effect on December thirty-first, two

thousand fourteen) or the income or losses of which is or was includable

under article twenty-two of this chapter shall not be deemed a new or

separate business, and therefore shall not be eligible for empire state

commercial production benefits, if it was not formed for a valid

business purpose, as such term is defined in clause (D) of subparagraph

one of paragraph (o) of subdivision nine of section two hundred eight of

this chapter and was formed solely to gain empire state commercial

production credit benefits.

(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 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 commercial.

(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

commercial. "Production costs" shall not include (i) costs for a story,

script or scenario to be used for a qualified commercial and (ii) wages

or salaries or other compensation for writers, directors, including

music directors, producers and performers (other than background actors

with no scripted lines who are employed by a qualified company and

musicians). "Production costs" generally include technical and crew

production costs, such as expenditures for commercial production

facilities and/or location costs, or any part thereof, film, audiotape,

videotape or digital medium, props, makeup, wardrobe, commercial

processing, camera, sound recording, scoring, set construction,

lighting, shooting, editing and meals. For purposes of this section,

"post production costs" include the production of original content for a

qualified commercial employing techniques traditionally used in

post-production for visual effects, graphic design, animation, and

musical composition. However, where the commercial consists in its

entirety of techniques such as visual effects, graphic design, or

animation, such costs incurred in the production of the commercial, when

occurring in New York, shall be deemed qualified production costs for

the purposes of this section. Provided further, however, that "post

production costs" shall not include the editing of previously produced

content for a qualified commercial.

(3) "Qualified commercial" means an advertisement of any length that

is recorded on film, audiotape, videotape or digital medium in New York

for multi-market distribution by way of radio, television networks,

cable, satellite, motion picture theaters or internet. "Qualified

commercial" shall not include (i) news or current affairs program,

interview or talk program, network promos, i.e., commercials promoting

television series or movies, "how-to" (i.e., instructional) commercial

or program, commercial or program consisting entirely of stock footage,

trailers promoting theatrical films, sporting event or sporting program,

game show, award ceremony, daytime drama (i.e., daytime "soap opera"),

or "reality" program, or (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, commercials, etc. with respect to sexually explicit conduct).

(4) "Qualified commercial production company" is a corporation,

partnership, limited partnership, or other entity or individual which or

who is principally engaged in the production of a qualified commercial

and controls the production of the qualified commercial and is not the

distributor, or the contracting entity for production of such

commercial, nor is a variable interest entity of such distributor or

contracting entity.

(c) The department of economic development shall submit, on or before

December first of each year, to the governor, the director of the

division of the budget, the temporary president of the senate, and the

speaker of the assembly an annual report including, but not limited to,

the following information regarding the previous calendar year:

(1) the total dollar amount of credits allocated, the name and address

of each qualified commercial production company allocated credits under

this section, the total amount of credits allocated to each qualified

commercial production company, the total amount of qualified production

costs and production costs for each qualified commercial production

company, and the estimated number of employees, credit-eligible man

hours, and credit-eligible wages associated with each qualified

commercial production company allocated credits under this section;

(2) for qualified commercial production companies that were allocated

credit pursuant to subparagraph (i) of paragraph two of subdivision (a)

of this section: the name and address of each qualified commercial

production company, the total dollar amount of credits allocated, the

total amount of credits allocated to each qualified commercial

production company, total qualified production costs and production

costs for each qualified production company, and the estimated number of

employees, credit-eligible man hours, and credit-eligible wages

associated with each qualified commercial production company that filmed

or recorded a qualified commercial within the district;

(3) for qualified commercial production companies that were allocated

credit pursuant to subparagraph (ii) of paragraph two of subdivision (a)

of this section: the name and address of each qualified commercial

production company, the total dollar amount of credits allocated, the

total amount of credits allocated to each qualified commercial

production company, total qualified production costs and production

costs for each qualified production company, and the estimated number of

employees, credit-eligible man hours, and credit-eligible wages

associated with each qualified commercial production company that filmed

or recorded a qualified commercial outside the district; and

(4) the amount of credits reallocated to all eligible qualified

commercial production companies pursuant to subparagraph (ii) of

paragraph two of subdivision (a) of this section.

(5) The report may also include any recommendations for changes in the

calculation or administration of the credit, recommendations regarding

continuing modification or repeal of this credit, and any other

information regarding this credit as may be useful and appropriate.

(d) Cross-references. For application of the credit provided for in

this section, see the following provision of this chapter:

(1) article 9-A: section 210-B: subdivision 23.

(2) article 22: section 606: subsection (jj).

* NB There are 2 § 28's