Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H2773 Compare Versions

Only one version of the bill is available at this time.

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1	1	1 of 1
2	2	HOUSE DOCKET, NO. 3991 FILED ON: 1/20/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 2773
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Daniel M. Donahue
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act providing incentives to the digital interactive media/entertainment industries.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Daniel M. Donahue16th Worcester1/20/2023 1 of 8
16	16	HOUSE DOCKET, NO. 3991 FILED ON: 1/20/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 2773
18	18	By Representative Donahue of Worcester, a petition (accompanied by bill, House, No. 2773) of
19	19	Daniel M. Donahue relative to providing tax incentives to the digital interactive
20	20	media/entertainment industries. Revenue.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act providing incentives to the digital interactive media/entertainment industries.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. Subsection (l)(1) of Section 6 of chapter 62 of the General Laws is hereby
30	30	2amended by adding the following definitions:-
31	31	3 “Digital interactive media/Interactive Entertainment” means products or platforms that
32	32	4are intended for commercial production, use, or distribution; that contain at least two of the
33	33	5following types of data: text, sound, fixed images, animated images, video, video effects or 3D
34	34	6geometry; and that have all of the following three characteristics:
35	35	7 (i)“Digital” means a system that uses discrete (discontinuous) values ordinarily
36	36	8symbolized numerically to represent information for input, processing, transmission, and storage.
37	37	9A digital system would be contrasted with an “analog” system, which uses a continuous range of
38	38	10values to represent information. The term “digital” includes, but is not limited to information
39	39	11input, processed, transmitted and stored via the Internet. 2 of 8
40	40	12 (ii)“Interactive” means a digital media system for inputting, processing, transmitting,
41	41	13or storing information or data in which users of the system are able to respond to the digital
42	42	14media system by inputting, transmitting, processing, or storing information or data in response to
43	43	15the information or data provided to them through the digital media system. “Digital media
44	44	16system” means communications delivered via electronic energy where the information stored,
45	45	17transmitted, or received is in digital form.
46	46	18 (iii)“Media” means communication tools used to store, transmit, distribute, and
47	47	19deliver information and data. The term "media" includes methods and mechanisms for
48	48	20information distribution through, but not limited to distributed networks, such as the Internet, and
49	49	21through physical media such as compact disc, CD-ROM, various types of DVD, and other
50	50	22removable storage drives and devices.
51	51	23 Digital interactive media/Interactive Entertainment shall not include: (i) software
52	52	24development designed and developed primarily for internal or operational purposes of the
53	53	25company, (ii) largely static Internet sites designed to provide information about a person,
54	54	26business, company, or firm, or (iii) products regulated under the applicable gambling law.
55	55	27 “Digital Interactive Media Production Company” means a company including any
56	56	28subsidiaries engaged in the business of producing Digital Interactive Media.
57	57	29 The term “digital interactive media production company” shall not mean or include any
58	58	30company which is more than 25 per cent owned, affiliated, or controlled, by any company or
59	59	31person which is in default on a loan made by the commonwealth or a loan guaranteed by the
60	60	32commonwealth. 3 of 8
61	61	33 “Digital Interactive Media Production expense” means all expenditures in the state
62	62	34directly relating to including without limitation the following: testing software, source code
63	63	35development, patches, updates, sprites, three-dimensional models, engine development and other
64	64	36back-end programming activities, performance and motion capture, audio production, tool
65	65	37development, original scoring, and level design; costs associated with photography and sound
66	66	38synchronization, lighting and related services; live operations, information technology support,
67	67	39data analysis and activities related to a community of users; rental of facilities and equipment;
68	68	40purchase of prepackaged audio files, video files, photographic, or libraries; purchase of licenses
69	69	41to use pre-recorded audio files, video, or photographic files; development costs associated with
70	70	42producing audio files and video files to be used in the production of the end product under
71	71	43development. This shall include all professionals whose work is directly related to the digital
72	72	44interactive media including accountants and lawyers.
73	73	45 Digital Interactive Media Production expenses shall not include any of the following: (i)
74	74	46expenditures for or related to marketing, promotion and distribution, (ii) administrative, payroll,
75	75	47and management services which are not directly related to digital interactive media management
76	76	48or production, (iii) amounts that are later reimbursed by the state, (iv) costs related to the transfer
77	77	49of tax credits and (v) amounts that are paid to persons or entities as a result of their participation
78	78	50in profits from the exploitation of the production.
79	79	51 Subsection (l)(1) of Section 6 of chapter 62 of the General Laws is hereby further
80	80	52amended by amending the following definitions:-
81	81	53 4 of 8
82	82	54 “Massachusetts production expense”, a Motion Picture Production Expense or Digital
83	83	55Interactive Media Production Expense that was clearly and demonstrably incurred in the
84	84	56commonwealth.
85	85	57 SECTION 2. Subsection (l)(2) of Section 6 of chapter 62 of the General Laws is hereby
86	86	58amended by adding after “is equal to or greater than $1,000,000” the following:-
87	87	59
88	88	60 A taxpayer engaged in the making of Digital Interactive Media shall be allowed a credit
89	89	61against the taxes imposed by this chapter for the employment of persons within the
90	90	62commonwealth in connection with the production in the commonwealth within any consecutive
91	91	6312 month period. The credit shall be equal to 25 per cent of the total aggregate payroll paid by a
92	92	64Digital Interactive Media production company that constitutes Massachusetts source income,
93	93	65when total production costs incurred in the commonwealth equal or exceed $50,000 during the
94	94	66taxable year. For purposes of this subsection, the term “total aggregate payroll” shall not include
95	95	67the salary of any employee whose salary is equal to or greater than $1,000,000.
96	96	68 SECTION 3. Subsection (l)(3) of Section 6 of chapter 62 of the General Laws is hereby
97	97	69amended by adding after “total principal photography days of the film take place in the
98	98	70commonwealth” the following:-
99	99	71 A taxpayer shall be allowed an additional credit against the taxes imposed by this chapter
100	100	72equal to 25 per cent of all Massachusetts production expenses, where the production takes place
101	101	73in a gateway municipality. 5 of 8
102	102	74 SECTION 4. Subsection (l)(5)(ii) of Section 6 of chapter 62 of the General Laws is
103	103	75hereby amended by adding after “in connection with any motion picture” the following:- “or
104	104	76digital interactive media”.
105	105	77 SECTION 5. Subsection (l)(7) of Section 6 of chapter 62 of the General Laws is hereby
106	106	78amended by adding after “the administration of this subsection.” the following:- “There shall be
107	107	79within the Massachusetts Film Office a division to manage, oversee, and administer the Digital
108	108	80Interactive Media/Interactive Entertainment programs and to encourage digital interactive media
109	109	81management and production in the state.
110	110	82 SECTION 6. Section 38X of Chapter 63 of the General Laws is hereby amended in
111	111	83subsection (a) by striking the definition of “Massachusetts production expense” and inserting in
112	112	84place thereof the following:-
113	113	85 “Massachusetts production expense”, a production expense for the motion picture or
114	114	86digital interactive media clearly and demonstrably incurred in the commonwealth.
115	115	87 Said section is further amended in subsection (b) by adding the following:-
116	116	88 A taxpayer engaged in the making of Digital Interactive Media shall be allowed a credit
117	117	89against the taxes imposed by this chapter for the employment of persons within the
118	118	90commonwealth in connection with the production in the commonwealth within any consecutive
119	119	9112 month period. The credit shall be equal to 25 per cent of the total aggregate payroll paid by a
120	120	92Digital Interactive Media production company that constitutes Massachusetts source income,
121	121	93when total production costs incurred in the commonwealth equal or exceed $50,000 during the
122	122	94taxable year. For purposes of this subsection, the term “total aggregate payroll” shall not include
123	123	95the salary of any employee whose salary is equal to or greater than $1,000,000. 6 of 8
124	124	96 Said section is further amended in subsection (c) by adding the following:-
125	125	97 A taxpayer shall be allowed an additional credit against the taxes imposed by this chapter
126	126	98equal to 25 per cent of all Massachusetts production expenses, where the production takes place
127	127	99in a gateway municipality.
128	128	100
129	129	101 SECTION 7. Section 6 of chapter 64H is hereby amended by striking subsection (ww)
130	130	102and inserting in place thereof the following:-
131	131	103 (ww) Sales of tangible personal property to a qualifying motion picture production
132	132	104company, Digital Interactive Media Company or to an accredited film school student or Digital
133	133	105Interactive Media school student for the production expenses related to a school film project or
134	134	106Digital Interactive Media project.
135	135	107 For the purposes of this paragraph a qualifying motion picture production company must
136	136	108expend in the aggregate not less than $50,000 within the commonwealth in connection with the
137	137	109filming or production of one or more motion pictures in the commonwealth within any
138	138	110consecutive 12 month period and have the approval of the secretary of economic development
139	139	111and the commissioner.
140	140	112 For the purposes of this paragraph a qualifying Digital Interactive Media production
141	141	113company must expend in the aggregate not less than $50,000 within the commonwealth in
142	142	114connection with the production in the commonwealth within any consecutive 12 month period
143	143	115and have the approval of the secretary and the commissioner. 7 of 8
144	144	116 Any motion picture production company that intends to film all, or parts of, a motion
145	145	117picture or television program in the commonwealth and qualify for the exemption provided by
146	146	118this paragraph shall provide an estimate of total expenditures to be made in the commonwealth in
147	147	119connection with the filming or production of such motion picture or television program and shall
148	148	120designate a member or representative of the motion picture production company as a primary
149	149	121liaison with the commissioner for the purpose of facilitating the proper reporting of expenditures
150	150	122and other information as required by the commissioner. Said estimate of expenditures shall be
151	151	123filed prior to the commencement of filming in the commonwealth. Any qualifying motion picture
152	152	124production company that has been approved which fails to expend $50,000 within a consecutive
153	153	12512 month period shall be liable for the sales taxes that would have been paid had the approval not
154	154	126been granted. The sales taxes shall be considered due as of the date that taxable expenditures
155	155	127were made.
156	156	128
157	157	129 Any Digital Interactive Media Production Company that intends to produce all, or parts
158	158	130of, a Digital Interactive Media production in the commonwealth and qualify for the exemption
159	159	131provided by this paragraph shall provide an estimate of total expenditures to be made in the
160	160	132commonwealth in connection with the production Digital Interactive Media and shall designate a
161	161	133member or representative of the Digital Interactive Media production company as a primary
162	162	134liaison with the commissioner for the purpose of facilitating the proper reporting of expenditures
163	163	135and other information as required by the commissioner. Said estimate of expenditures shall be
164	164	136filed no sooner than the beginning of the tax year for the qualified Digital Interactive Media
165	165	137production company or within 90 days of the start of Digital Interactive Media Production
166	166	138expenses and before the end of Digital Interactive Media Production expenses or within one year 8 of 8
167	167	139after the end of tax year for the qualified Digital Interactive Media production company claiming
168	168	140the tax credit. Any qualifying Digital Interactive production company that has been approved
169	169	141which fails to expend $50,000 within a consecutive 12 month period shall be liable for the sales
170	170	142taxes that would have been paid had the approval not been granted. The sales taxes shall be
171	171	143considered due as of the date that taxable expenditures were made.
172	172	144 The commissioner shall promulgate rules for the implementation of this paragraph.