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OLR Bill Analysis
sHB 6919
AN ACT ESTABLISHING A TAX CREDIT FOR CERTAIN PRE -
BROADWAY AND POST -BROADWAY THEATER PRODUCTIONS.
SUMMARY
This bill establishes a new tax credit for production companies of
eligible pre- and post-Broadway productions performed at qualified
facilities in Connecticut. The credit equals 30% of the production’s
eligible expenditures, including up to $250,000 of payroll per week.
Taxpayers may apply it against the personal income tax or specified
business taxes. The bill caps at $10 million the total amount of these tax
credits allowed per fiscal year.
EFFECTIVE DATE: January 1, 2024, and applicable to income and tax
years starting on or after that date.
QUALIFIED PRODUCTION S AND FACILITIES
Under the bill, to qualify for a credit, the production must be a for-
profit live stage presentation of a pre- or post-Broadway production (in
its original or adapted version) performed at a qualified production
facility (i.e., an “accredited theater production”). A “pre-Broadway
production” is one scheduled to be presented in New York City’s
Broadway theater district within 12 months after its performance in
Connecticut, while a “post-Broadway production” is one that opens its
national tour in Connecticut after a Broadway run.
A “qualified production facility” is a facility located in Connecticut
where live stage presentations are, or are intended to be, exclusively
performed. It must have at least one stage; a seating capacity of at least
1,000 seats; and dressing rooms, storage areas, and other related
amenities needed for an accredited theater production.
ELIGIBLE EXPENDITURE S 2023HB-06919-R000746-BA.DOCX
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Production and Performance Expenditures
Under the bill, only eligible “production and performance
expenditures” count towards the credit’s calculation. The bill defines
these expenditures as the exchange of cash or its equivalent for goods or
services related to developing, producing, or performing an accredited
theater production or for its operating expenditures incurred in
Connecticut. This includes expenditures for the following:
1. design, construction, and operation (e.g., sets, special and visual
effects, costumes, wardrobe, make-up, and accessories);
2. sound, lighting, staging, facility expenses, rentals, per diems, and
accommodations;
3. up to $250,000 per week for salaries, wages, fees, and other
compensation and benefits for services performed in Connecticut
(“payroll”);
4. goods or services related to the production’s national marketing,
public relations, and advertising (i.e., print, electronic, television,
billboard, and other advertising types)(“advertising and public
relations expenditures”); and
5. transportation, as described below.
The bill defines “transportation expenditures” as those for (1)
packing, crating, and transporting, to and from Connecticut, sets,
costumes, and other property and equipment for an accredited theater
production and (2) transporting the production’s cast and crew to and
from here. However, it excludes costs for any of the following:
1. transporting tangible property and equipment used only for
filming and not in an accredited theater production and
2. indirect costs, expenditures reimbursed by a third party, or any
amount paid to an individual or entity for their participation in
the profits from the production’s exploitation.
CREDIT APPLICATION AND APPROVAL PROCES S 2023HB-06919-R000746-BA.DOCX
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Initial Certification
Under the bill, an accredited theater production’s production
company (i.e., person, firm, partnership, trust, estate, or other entity)
may apply to the Department of Economic and Community
Development (DECD) commissioner, as she prescribes, for a
production’s initial certification. (In the case of a partnership, its sole
proprietor, owner, or member may apply.) The application must include
information about the following:
1. the accredited theater production and production company
presenting it,
2. the applicant’s relationship to the production or production
company,
3. the qualified production facility where the production will be
performed, and
4. any other information and data the commissioner deems needed
to evaluate the application.
If the DECD commissioner approves the application, she must issue
an initial certification notice to the production company and
Department of Revenue Services (DRS) commissioner.
Final Certification
Once the accredited theater production’s performance has been
completed, the production company must apply to the DECD
commissioner for a final certification. The application must include a
cost report and a certified public accountant’s certification that this
report, in the accountant’s opinion, is accurate.
The commissioner must, within 30 days after a production company
submits a complete application, determine (1) whether to approve a
final accredited theater production certificate and (2) the credit amount
allowed. Once approved, she must (1) issue the certificate to the
production company and specify the credit amount allowed and (2)
notify the DRS commissioner of this information. 2023HB-06919-R000746-BA.DOCX
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CREDIT CLAIMS AND TRANSFERS
Applicable Taxes and Eligible Claimants
Production companies that receive a final accredited theater
production certificate from DECD may claim the credit against the
personal income, corporation business, insurance premiums, or utility
companies tax, but not the withholding tax. (Withholding tax is income
tax paid on a taxpayer’s behalf by qualifying Connecticut employers.) If
the company is an S corporation or entity treated as a partnership for
federal income tax purposes, its shareholders or partners may claim the
credit. If it is a single member limited liability company (LLC)
disregarded as an entity separate from its owner, the LLC’s owners may
claim it, as long as the owner is subject to the personal income or
corporation business tax.
The credit must be claimed for the income or tax year in which it was
earned. Unused credits may be carried forward for up to three years and
may be sold, assigned, or transferred in whole or part.
Financial Penalty
The bill imposes a financial penalty equal to the credit amount on any
production company that submits information to the DECD
commissioner that it knows to be fraudulent or false. This penalty is in
addition to other penalties provided by law.
Limits on Post-Certification Remedies
The bill (1) exempts any credits sold, assigned, or transferred under
its provisions to a post-certification remedy and (2) limits the DECD and
DRS commissioners’ power to further audit or examine the production
and performance expenditures for which the credit was allowed unless
there is the possibility of material misrepresentation or fraud. The bill
gives the commissioners the sole remedy of recovering the credits from
the production company that committed the fraud or misrepresentation.
Examinations
The bill authorizes the DECD and DRS commissioners to examine the
books, papers, and records related to the information or data an
accredited theater production provided with its final certification 2023HB-06919-R000746-BA.DOCX
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application in order to determine that a credit claim is correct.
REPORTING REQUIREMEN T
Annually, starting by March 1, 2025, the DECD commissioner must
report specified information to the Commerce and Finance, Revenue
and Bonding committees about each production company that applied
in the previous calendar year for an accredited theater production initial
or final certification. Specifically, the report must (1) describe the
production companies and their accredited theater productions and
production facilities and (2) provide the status of their applications and
the amount of any credits allowed.
COMMITTEE ACTION
Finance, Revenue and Bonding Committee
Joint Favorable Substitute
Yea 48 Nay 3 (04/19/2023)