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