HLS 13RS-62 ORIGINAL
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Regular Session, 2013
HOUSE BILL NO. 695
BY REPRESENTATIVE HENRY
TAX CREDITS: Provides relative to the motion picture investor tax credit program
AN ACT1
To amend and reenact R.S. 47:6007(B), (C)(1)(introductory paragraph), (c)(introductory2
paragraph) and (d), (2)(introductory paragraph), (4)(f)(ii), (D)(1)(a),3
(2)(b)(introductory paragraph), (c), and (d)(introductory paragraph), (3), (6), (7), and4
(8), (E), and (F)(3) and to enact R.S. 47:6007(C)(1)(e), (D)(9), and (F)(4), relative5
to income tax credits; to provide with respect to the motion picture investor tax credit6
program; to provide for definitions; to provide for amounts of tax credits; to provide7
for limitations; to provide for the application and certification process; to provide8
with respect to rulemaking; to provide for effectiveness; and to provide for related9
matters.10
Be it enacted by the Legislature of Louisiana:11
Section 1. R.S. 47:6007(B), (C)(1)(introductory paragraph), (c)(introductory12
paragraph) and (d), (2)(introductory paragraph), (4)(f)(ii), (D)(1)(a), (2)(b)(introductory13
paragraph), (c), and (d)(introductory paragraph), (3), (6), (7), and (8), (E), and (F)(3) are14
hereby amended and reenacted and R.S. 47:6007(C)(1)(e), (D)(9), and (F)(4) are hereby15
enacted to read as follows: 16
ยง6007. Motion picture investor tax credit17
* * *18
B. Definitions. For the purposes of this Section:19
(1) "Base investment" means cash or cash equivalent investment made and20
used for production expenditures in the state for a state-certified production.21 HLS 13RS-62 ORIGINAL
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(2) "Below the line crewmember" means a person employed by a motion1
picture production company for a state-certified production that is not a producer,2
associate producer, coproducer, line producer, executive producer, director, director3
of photography, production designer, writer, actor, stunt performer, or other onscreen4
performer with spoken lines.5
(3) "Box rental" means private property owned by an employee or individual6
contractor and leased to a state-certified production for use in Louisiana on a state-7
certified production, which is designated as additional income on a W-2 or 10998
federal income tax form.9
(3) (4) "Expenditure" means actual cash or cash equivalent exchanged for10
goods or services.11
(2) "Expended (5) "Expenditure in the state" means an expenditure to lease12
immovable property located in the state; an expenditure as compensation for services13
performed in the state; or an expenditure to purchase or lease tangible personal14
property from a source within the state where the transaction is subject to the state15
sales or lease tax provisions of Title 47 of the Louisiana Revised Statutes of 1950.16
A transaction that is subject to the state sales or lease tax provisions of Title 47 of the17
Louisiana Revised Statutes of 1950 shall include transactions which are also subject18
to a statutory exclusion or exemption.19
(4) (6) "Headquartered in Louisiana" means a corporation incorporated in20
Louisiana or a partnership, limited liability company, or other business entity21
domiciled and in Louisiana and having its principal place of business in Louisiana.22
An entity shall not be deemed to be headquartered in Louisiana for the purpose of23
producing nationally or internationally distributed motion pictures as defined in this24
Section. if it is controlled, directly or indirectly, by a nonresident individual or entity.25
(5) (7) "Motion picture" means a nationally or internationally distributed26
feature-length film, video, television pilot, television series, television movie of the27
week, animated feature film, animated television series, or commercial made in28
Louisiana, in whole or in part, for theatrical or television viewing. The term "motion29 HLS 13RS-62 ORIGINAL
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picture" shall not include the production of television coverage of news and athletic1
events.2
(6) (8) "Motion picture production company" means a company engaged in3
the business of producing nationally or internationally distributed motion pictures4
as defined in this Section. Motion picture production company shall not mean or5
include any company owned, affiliated, or controlled, in whole or in part, by any6
company or person which is in default on a loan made by the state or a loan7
guaranteed by the state, nor with any company or person who has ever declared8
bankruptcy under which an obligation of the company or person to pay or repay9
public funds or monies was discharged as a part of such bankruptcy.10
(7) (9) "Office" means the Governor's Office of Film and Television11
Development until August 15, 2006; thereafter, the term "office" means the office12
of entertainment industry development in the Department of Economic Development13
provided for in R.S. 51:938.1.14
(8) (10) "Payroll" means all salary, wages, and other compensation, including15
benefits paid to an employee for services relating to a state-certified production and16
taxable in this state. However, "payroll" for purposes of the additional tax credit for17
Louisiana-resident payroll shall exclude any portion of an individual salary in excess18
of one million dollars.19
(9) (11) "Production expenditures" means preproduction, production, and20
postproduction expenditures in this the state directly relating to a state-certified21
production, including without limitation the following: set construction and22
operation; wardrobes, makeup, accessories, and related services; costs associated23
with photography and sound synchronization, lighting, and related services and24
materials; editing and related services; rental of facilities and equipment; leasing of25
vehicles; costs of food and lodging; digital or tape editing, film processing, transfer26
of film to tape or digital format, sound mixing, special and visual effects; financing27
costs if obtained from a financier headquartered in Louisiana; and payroll. This term28
shall include the cost of customization or custom development of a tangible good29 HLS 13RS-62 ORIGINAL
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specifically designed for use by a state-certified production in Louisiana if the1
customization services are performed in Louisiana. This term shall not include2
expenditures for marketing and distribution, non-production nonproduction related3
overhead, amounts reimbursed by the state or any other governmental entity, costs4
related to the transfer of tax credits, amounts that are paid to persons or entities as5
a result of their participation in profits from the exploitation of the production, the6
application fee, box or kit rentals paid to an individual who is not a Louisiana7
resident for the use of property that does not originate from a source within the state,8
airfare, or state or local taxes.9
(12) "Qualified production facility" means a permanent facility located in the10
state which meets all of the following criteria:11
(a) A facility in which motion pictures are intended to be regularly produced;12
(b) A facility which either contains at least one sound stage with a minimum13
of three thousand square feet of contiguous production space or contains animation14
or visual effects capabilities and employs on average a minimum of twenty full-time15
employees;16
(c) A facility for which there has been expended, excluding the purchase of17
land, at least two million five hundred thousand dollars of private capital for18
construction or improvement of space for the purpose of facilitating film or digital19
media production.20
(13) "Related party transaction" means a transaction between parties that are21
deemed to be related by common ownership or control, under generally accepted22
auditing principles. Related party transaction expenditures may be subject to23
limitations provided by rules promulgated by the department in accordance with the24
Administrative Procedure Act.25
(10) (14) "Resident" or "resident of Louisiana" means a natural person26
domiciled in the state who has a driver's license issued by the state of Louisiana, and27
who can provide either a utility bill or real property lease which indicates the same28
address as that on the driver's license, and which document is dated at least six29 HLS 13RS-62 ORIGINAL
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months and no more than one year prior to employment. A person who maintains1
a permanent place of abode within the state and spends in the aggregate more than2
six months of each year within the state shall be presumed to be domiciled in the3
state.4
(11) (15) "Secretary" means the secretary of the Department of Economic5
Development.6
(12) (16) "Source within the state" means a resident, corporation,7
partnership, limited liability company, or other business entity, or division or8
subsidiary thereof, with a physical facility in Louisiana, operating with posted9
business hours and employing at least one full-time equivalent employee.10
(17) "Special events" means an event that occurs irrespective of filming,11
such as Mardi Gras, music festivals, concerts, or other similarly situated events.12
(18) "Special event production expenditures" means only costs directly13
related to filming the special event shall qualify for tax credits. Costs that are14
indirectly related to filming shall not qualify for tax credits. Such indirect costs shall15
include but not be limited to artist compensation for festival or concert appearances16
or costs associated with the usual activities of a reality show or documentary.17
(13) (19) "State" means the state of Louisiana.18
(14) (20) "State-certified production" shall mean a production approved by19
the office and the secretary which is produced by a motion picture production20
company domiciled and headquartered in Louisiana and which has a viable multi-21
market multimarket commercial distribution plan.22
C. Investor tax credit; specific productions and projects.23
(1) There is hereby authorized a tax credit against state income tax for24
Louisiana taxpayers for investment in state-certified productions. The tax credit25
shall be earned by investors at the time expenditures are made by a motion picture26
production company in a state-certified production. However, credits cannot be27
applied against a tax or transferred until the expenditures are certified by the office28
and the secretary. For state-certified productions, expenditures shall be certified no29 HLS 13RS-62 ORIGINAL
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more than twice during the duration of a state-certified production unless the motion1
picture production company agrees to reimburse the office for the costs of any2
additional certifications. The tax credit shall be calculated as a percentage of the3
total base investment dollars certified per project.4
* * *5
(c) For state-certified productions approved by the office and the secretary6
on or after July 1, 2009 , but before January 1, 2014:7
* * *8
(d) For state-certified productions approved by the office and the secretary9
on or after January 1, 2014:10
(i) If the total base investment is greater than three hundred thousand dollars,11
each motion picture production company shall be allowed a tax credit of thirty12
percent of the base investment made by that motion picture production company13
excluding any portion of the base investment that is expended on payroll for below14
the line crewmembers that are not residents of Louisiana.15
(ii) To the extent that base investment is expended on payroll for Louisiana16
residents employed in connection with a state-certified production, each motion17
picture production company shall be allowed an additional tax credit of five percent18
of such payroll; however, if such payroll contains compensation to any individual19
which exceeds one million dollars, this additional credit shall exclude any20
compensation for that individual that exceeds one million dollars.21
(iii) To the extent that base investment is expended on payroll for below the22
line crewmembers that are not residents of Louisiana employed in connection with23
a state-certified production, each motion picture production company shall be24
allowed a tax credit of twenty percent of such payroll.25
(iv) To the extent that base investment is expended on direct or indirect26
payments to an individual other than a below the line crewmember, the limitations27
established within this Item shall apply. For purposes of this Item, the payment of28
compensation to an individual through a personal service company, loan-out,29 HLS 13RS-62 ORIGINAL
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professional employee organization, or an employee leasing company shall be1
deemed to be an indirect payment to such individual.2
(aa) Except as provided in Subitem (bb) of this Item, no more than three3
million dollars in tax credits shall be allowed in connection with payments to such4
individual.5
(bb) If a state-certified production spends at least ten principal photography6
days at a qualified production facility, no more than six million dollars in tax credits7
shall be allowed in connection with payments to such individual.8
(d) (e) Motion picture investor tax credits associated with a state-certified9
production shall never exceed the total base investment in that production.10
(2) The credit shall be allowed against the income tax for the taxable period11
in which the credit is earned or for the taxable period in which initial certification12
authorizes the credit to be taken. If the tax credit allowed pursuant to this Section13
exceeds the amount of such taxes due for such tax period, then any unused credit14
may be carried forward as a credit against subsequent tax liability for a period not15
to exceed ten years.16
* * *17
(4)18
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(f)20
* * *21
(ii) For projects which receive initial certification on and after July 1, 2009,22
the investor or motion picture production company who earned the motion picture23
investor tax credits pursuant to such certification may transfer the credits to the24
office for eighty-five percent of the face value of the credits in accordance with the25
procedures and requirements of Item (i) of this Subparagraph.26
* * *27 HLS 13RS-62 ORIGINAL
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D. Certification and administration.1
(1)(a) The secretary of the Department of Economic Development and the2
office shall determine through the promulgation of rules the minimum criteria that3
a project must meet in order to qualify according to this Section. The secretary, the4
office, and the division of administration shall determine through the promulgation5
of rules the minimum criteria that a project must meet in order to qualify according6
to this Section. However, rulemaking authority shall not extend to the setting of7
limits with respect to the qualification or proportion of specific production8
expenditures as such term is defined by law. The qualification of production9
expenditures shall be confirmed through the audit process associated with final10
certification as provided for in Subparagraph (2)(d) of this Subsection.11
* * *12
(2)13
* * *14
(b) If the application is incomplete, additional information may be requested15
prior to further action by the office or the secretary of the Department of Economic16
Development. An application fee shall be submitted with the application based on17
the following:18
* * *19
(c) The office and the secretary shall submit their initial certification within20
twenty-one calendar days from the date of receipt of the application for initial21
certification of a project as a state-certified production to investors both the motion22
picture production company and to the secretary of the Department of Revenue23
indicating . The initial certification shall indicate the total base investment which24
shall be expended in the state on the state-certified production. The initial25
certification and shall include a unique identifying number for each state-certified26
production. The twenty-one day period shall be tolled when the office requests27
additional information; however, after the furnishing of the information requested28
by the motion picture production company, the tolling shall cease and the period29 HLS 13RS-62 ORIGINAL
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shall recommence where it stopped. Failure by the office and the secretary to submit1
the initial certification within the time period as required by this Subparagraph shall2
result in the application for an initial certification being deemed approved.3
(d) Prior to any final certification of the state-certified production, the4
motion picture production company shall submit to the office and the secretary an5
audit of the production expenditures certified by an independent certified public6
accountant as determined by rule. The office and the secretary shall review the audit ,7
and the production expense details, and may require make a single request for8
additional information needed to make a determination with respect to the final9
certification within thirty days of receipt of the audit. Upon approval of the audit10
Within sixty calendar days of the office's receipt of any such requested information,11
or within ninety calendar days from the date of receipt of the audit if no additional12
information was requested, the office and the secretary shall issue a final tax credit13
certification letter indicating the amount of tax credits certified for the state-certified14
production to the investors motion picture production company, or shall issue a15
denial of the final certification in whole or in part. The denial of any tax credits shall16
be accompanied by detailed, written reasons for each expenditure so denied. Any17
expenditure not denied shall be deemed approved upon the expiration of the time18
period set forth in this Subparagraph. The rules required by this Subparagraph shall,19
at a minimum, require that:20
* * *21
(3) The secretary of the Department of Revenue, in consultation with the22
office and the secretary of the Department of Economic Development shall23
promulgate such rules and regulations as are necessary to carry out the intent and24
purposes of this Section in accordance with the general guidelines provided herein.25
However, rulemaking authority shall not extend to the setting of limits with respect26
to the qualification or proportion of specific production expenditures as such term27
is defined by law. The qualification of production expenditures shall be confirmed28 HLS 13RS-62 ORIGINAL
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through the audit process associated with final certification as provided for in1
Subparagraph (2)(d) of this Subsection.2
* * *3
(6) Prior to any final certification of a state-certified production, the motion4
picture production company applying for the credit must ensure and be able to5
demonstrate that all taxes related to production expenditures paid to an individual,6
or to a loan out, personal services corporation, professional employer organization,7
or employee leasing company for the services of an individual that are performed in8
this state are withheld and paid to this state pursuant to R.S. 47:112. Any amounts9
so withheld shall be deemed to have been withheld by the loan out, personal services10
corporation, professional employer organization, or employee leasing company on11
wages paid to its employees for services performed in Louisiana.12
(6) (7) With input from the Legislative Fiscal Office, the office shall prepare13
a written report to be submitted to the Senate Committee on Revenue and Fiscal14
Affairs and the House of Representatives Committee on Ways and Means no less15
than sixty days prior to the start of the Regular Session of the Legislature in 2007,16
and every second year thereafter. The report shall include the overall impact of the17
tax credits, the amount of the tax credits issued, the number of net new jobs created,18
the amount of Louisiana payroll created, the economic impact of the tax credits and19
film industry, and any other factors that describe the impact of the program.20
(7) (8) The Department of Economic Development may request an additional21
audit of the expenditures submitted by the motion picture production company at the22
cost of the motion picture production company.23
(8) (9) As a condition for receiving certification of tax credits under this24
Section, state-certified productions may be required to display an animated a state25
brand or logo, or both, which includes a fleur de lis as prescribed by the secretary of26
the Department of Economic Development as long as the animated state brand or27
logo is not contrary to any rule or regulation of the Federal Communications28
Commission.29 HLS 13RS-62 ORIGINAL
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E. Recapture of credits. If the office finds that monies for which an investor1
a motion picture production company received tax credits according to this Section2
are not invested in and expended with respect to a state-certified production within3
twenty-four months of the date that such credits are earned, then the investor's then4
the motion picture production company's state income tax for such taxable period5
shall be increased by such amount necessary for the recapture of credit provided by6
this Section.7
F. Recovery of credits by Department of Revenue. 8
* * *9
(3) No tax credits transferred to another Louisiana taxpayer pursuant to this10
Section shall be subject to recovery or recapture. Once tax credits are granted and11
issued, the office and Department of Revenue shall have no right, except in the case12
of possible material misrepresentation or fraud, to conduct any further or additional13
review, examination, or audit of the production expenditures for which such tax14
credits were granted. The sole and exclusive remedy of the office and Department15
of Revenue shall be to seek collection of the amount of such tax credits from the16
entity that committed the fraud or misrepresentation.17
(3) (4) The provisions of this Subsection are in addition to and shall not limit18
the authority of the secretary of the Department of Revenue to assess or to collect19
under any other provision of law.20
Section 2. This Act shall become effective July 1, 2013.21
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Henry HB No. 695
Abstract: Numerous changes in the motion picture investor tax credit, including the
amount of tax credit which may be earned based on nonresident payroll and above-
the-line talent, and special provisions relating to a "qualified production facility".
Present law authorizes a tax credit against state income tax based on production expenditures
for state-certified productions. The tax credit is calculated as a percentage of the total base
investment dollars certified per project. HLS 13RS-62 ORIGINAL
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Present law authorizes an income tax credit equal to 30% of production expenditures for all
state-certified productions approved after July 1, 2009. Also provided is an additional tax
credit equal to 5% of the base investment expended on payroll for La. residents employed
in connection with all state-certified productions.
Proposed law retains present law with the exception of the following changes which apply
to productions certified after Jan. 1, 2014.
Proposed law changes the definition of "qualified expenditures", and provides for other
definitions for purposes of the tax credit program.
Proposed law changes the value of tax credits based on two types of expenditures:
(1)Expenditures for payroll for below the line crewmembers who are not La. residents
shall earn tax credits at the rate of 20%.
(2)Expenditures for an "individual", who may be commonly referred to as "above-the-
line" talent, shall earn tax credits at the rate of 30%, with the following limitations:
(a)No more than $3 million in tax credits per production may be earned
associated with this type of expenditure.
(b)If the production spends at least 10 days filming at a qualified production
facility, the limit on tax credits associated with such expenditures is $6
million per production.
Proposed law provides requirements relating to the application for initial and final
certification.
Proposed law provides limits on rulemaking.
Proposed law provides that no tax credits transferred to another La. taxpayer shall be subject
to recovery or recapture. Once tax credits are granted and issued, the office and Dept. of
Revenue shall have no right, except in the case of possible material misrepresentation or
fraud, to conduct any further or additional review, examination, or audit of the production
expenditures for which such tax credits were granted. The sole and exclusive remedy of the
office and Dept. of Revenue shall be to seek collection of the amount of such tax credits
from the entity that committed the fraud or misrepresentation.
Effective July 1, 2013.
(Amends R.S. 47:6007(B), (C)(1)(intro. para.), (c)(intro. para.) and (d), (2)(intro. para.),
(4)(f)(ii), (D)(1)(a), (2)(b)(intro. para.), (c), and (d)(intro. para.), (3), (6), (7), and (8), (E),
and (F)(3); Adds R.S. 47:6007(C)(1)(e), (D)(9), and (F)(4))