N.Y. Tax Law § 45: Empire state digital gaming media production credit

§ 45. Empire state digital gaming media production credit. (a)

Allowance of credit. (1) A taxpayer which is a digital gaming media

production entity engaged in qualified digital gaming media production,

or who is a sole proprietor of or a member of a partnership, which is a

digital gaming media production entity engaged in qualified digital

gaming media production, and is subject to tax under article nine-A or

twenty-two of this chapter, shall be allowed a credit against such tax

to be computed as provided herein for taxable years beginning on or

after January first, two thousand twenty-three and before January first,

two thousand twenty-eight.

(2) The amount of the credit shall be the product (or pro rata share

of the product, in the case of a taxpayer who is a partner in a

partnership, member of a limited liability company or shareholder in a

subchapter S corporation) of twenty-five percent and the qualified

digital gaming media production costs of one or more qualified digital

gaming media productions.

(3) Qualified digital gaming media production costs for a qualified

digital gaming media production incurred and paid in this state but

outside such metropolitan commuter transportation district as defined in

section twelve hundred sixty-two of the public authorities law shall be

eligible for a credit of ten percent of such eligible production costs

in addition to the credit specified in paragraph two of this

subdivision.

(4) All applicants to this program are required, as a condition of

receiving the credit, to include in the credits of each digital game

development media production language and a logo to be provided by the

governor's office of motion picture and television development

acknowledging the state's role in the creation of the production.

(5) A qualified digital gaming media production that has applied for

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

the granting of the credit, file a diversity plan with the department of

economic development outlining specific goals for hiring a diverse

workforce. The commissioner of economic development shall promulgate

regulations implementing the requirements of this paragraph, which,

notwithstanding any provisions to the contrary in the state

administrative procedure act, may be adopted on an emergency basis, to

ensure compliance with the provisions of this paragraph. The department

of economic development shall review each submitted plan as to whether

it meets the requirements established by the commissioner of economic

development, and shall verify that the applicant has met or made

good-faith efforts in achieving these goals.

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

under this section, subdivision fifty-five of section two hundred ten-B

and subsection (nnn) of section six hundred six of this chapter in any

taxable year shall be five million dollars. Such credit shall be

allocated by the department of economic development in order of priority

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

gaming media production credit with such office. If the total amount of

allocated credits applied for in any particular year exceeds the

aggregate amount of tax credits allowed for such year under this

section, such excess shall be treated as having been applied for on the

first day of the subsequent taxable year. Provided, however, that for

taxable years beginning on or after January first, two thousand

twenty-three, 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) Definitions. As used in this section:

(1) "Qualified digital gaming media production" means: (i) a website,

the digital media production costs of which are paid or incurred

predominately in connection with (A) video simulation, animation, text,

audio, graphics or similar gaming related property embodied in digital

format, and (B) interactive features of digital gaming (e.g., links,

message boards, communities or content manipulation); (ii) video or

interactive games produced primarily for distribution over the internet,

wireless network or successors thereto; and (iii) animation, simulation

or embedded graphics digital gaming related software intended for

commercial distribution regardless of medium; provided, however, that

the qualified digital game development media productions described in

subparagraphs (i) through (iii) of this paragraph must have digital

media production costs equal to or in excess of fifty thousand dollars

per production. A qualified digital gaming media production does not

include a website, video, interactive game or software that is used

predominately for: electronic commerce (retail or wholesale purposes

other than the sale of video interactive games), gambling (including

activities regulated by a New York gaming agency), or political advocacy

purposes.

(2) "Digital gaming media production costs" means any costs for wages

or salaries paid to individuals, other than actors or writers, directly

employed for services performed by those individuals directly and

predominantly in the creation of a digital gaming media production or

productions. Up to two hundred thousand dollars in wages and salaries

paid to such employees, other than actors and writers, directly employed

shall be used in the calculation of this credit. Digital gaming media

production costs include but shall not be limited to payments for

services performed directly and predominantly in the development

(including concept and prototype creation), design (including narrative

direction and sound design), production (including testing and

encoding), editing (including bug fixing) and compositing (including the

integration of digital files for interaction by end users) of digital

gaming media. Digital gaming media production costs shall not include

expenses incurred for the distribution, marketing, promotion, or

advertising content generated by end users, other costs not directly

related to the creation, production or modification of digital gaming

media or costs used by the taxpayer as a basis of the calculation of any

other tax credit allowed under this chapter. In addition, wages related

to the creation of digital gaming media for any person who predominantly

serves in a corporate capacity in the role of chief executive officer,

chief financial officer, president, treasurer or similar corporate

position shall not be included as digital gaming media production costs

if the digital gaming media production entity has more than ten

employees. Wages paid to a person serving in such a role for the digital

gaming media production entity shall also not be included if the person

was employed by a related person of the digital gaming media production

entity within sixty months of the date the digital gaming media

production entity applied for the tax credit certificate described in

subdivision (d) of this section. For purposes of the preceding sentence,

a related person shall have the same meaning as the term "related

person" in section four hundred sixty-five of the internal revenue code.

Furthermore, any income or other distribution to any individual

including, but not limited to, licensing or royalty fees, who holds an

ownership interest in a digital gaming media production entity, whether

or not such individual is serving in the role of chief executive

officer, chief financial officer, president, treasurer or similar

position for such an entity, shall not be included as digital gaming

media production costs. Up to five million dollars in qualified digital

gaming media production costs per production shall be used in the

calculation of this credit. Digital gaming media production costs shall

not include those costs used by the taxpayer or another taxpayer as the

basis calculation of any other tax credit allowed under this chapter.

(3) "Qualified digital gaming media production costs" means digital

gaming media production costs only to the extent such costs are

attributable to the use of property or the performance of services by

any persons within the state directly and predominantly in the creation,

production or modification of digital gaming related media. Such total

production costs incurred and paid in this state shall be equal to or

exceed fifty-one percent of total cost of an eligible production

incurred and paid within and without this state.

(4) "Digital gaming media production entity" means a corporation,

partnership, limited partnership or other entity or individual engaged

in qualified digital game development media production.

(d) To be eligible for the empire state digital gaming media

production credit, the taxpayer shall have been issued a certificate of

tax credit by the department of economic development, which certificate

shall set forth the amount of the credit that may be claimed and the

taxable year in which it shall be claimed. The taxpayer shall be allowed

to claim only the amount listed on the certificate of tax credit for

that taxable year. In order to properly administer this credit, the

department shall be allowed to exchange information with the department

of economic development about the taxpayers claiming this credit,

including information about the tax credits claimed. A taxpayer that is

a partner in a partnership, member of a limited liability company or

shareholder in a subchapter S corporation that has received a

certificate of tax credit shall be allowed its pro rata share of the

credit earned by the partnership, limited liability company or

subchapter S corporation. The taxpayer shall claim the tax credit in the

taxable year that begins in the year for which it is allocated credit

under this section.

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

this section, see the following provisions of this chapter:

(1) Article nine-A: section two hundred ten-B, subdivision fifty-five.

(2) Article twenty-two: section six hundred six, subsection (i),

paragraph one, subparagraph (B), clause (xlvi).

(3) Article twenty-two: section six hundred six, subsection (nnn).