EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
Italics indicate opposite chamber/conference committee amendments.
*sb0452*
SENATE BILL 452
Q3 (3lr1286)
ENROLLED BILL
— Budget and Taxation/Ways and Means —
Introduced by Senators Griffith, Corderman, Elfreth, Guzzone, Jackson, King,
Klausmeier, Muse, Salling, M. Washington, and Watson Watson, Bailey,
Benson, Hester, Hettleman, McCray, Rosapepe, and Zucker
Read and Examined by Proofreaders:
_______________________________________________
Proofreader.
_______________________________________________
Proofreader.
Sealed with the Great Seal and presented to the Governor, for his approval this
_______ day of _______________ at ________________________ o’clock, ________M.
______________________________________________
President.
CHAPTER ______
AN ACT concerning 1
Income Tax – Film Production Activity Income Tax Credit – Alterations and 2
Maryland Entertainment Council 3
FOR the purpose of expanding eligibility for the credit against the State income tax for 4
certain film production activities to include documentaries and talk, reality, and 5
game shows; altering the definition of “total direct costs” to include certain 6
compensation for certain individuals; increasing the percentages of total direct costs 7
that qualify for the tax credit; establishing the Maryland Entertainment Council to 8
study and make recommendations regarding Maryland’s film, television, and 9
entertainment industry; altering the aggregate amount of tax credit certificates that 10
the Secretary of Commerce may issue each fiscal year; and generally relating to the 11
film production activity tax credit and the Maryland Entertainment Council. 12
2 SENATE BILL 452
BY repealing and reenacting, with amendments, 1
Article – Tax – General 2
Section 10–730 3
Annotated Code of Maryland 4
(2022 Replacement Volume) 5
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
That the Laws of Maryland read as follows: 7
Article – Tax – General 8
10–730. 9
(a) (1) In this section the following words have the meanings indicated. 10
(2) “Department” means the Department of Commerce. 11
(3) “Digital animation project” means the creation, development, and 12
production of computer–generated animation content for distribution or exhibition to the 13
general public. 14
(4) (i) “Film production activity” means: 15
1. the production of a film or video project that is intended 16
for nationwide commercial distribution; and 17
2. for a television series, each season of the television series. 18
(ii) “Film production activity” includes the production of: 19
1. a feature film; 20
2. a television project; 21
3. a commercial; 22
4. a corporate film; 23
5. a music video; [or] 24
6. a digital animation project; 25
7. A DOCUMENTARY ; OR OR 26
8. A TALK, REALITY, OR GAME SHOW ; OR 27
SENATE BILL 452 3
9. A LIVE TO TAPE EVENT . 1
(iii) “Film production activity” does not include production of: 2
1. a student film; 3
2. a noncommercial personal video; 4
3. a sports broadcast; 5
4. a broadcast of a live event; 6
5. [a talk show; 7
6.] a video, computer, or social networking game; 8
[7.] 6. pornography; 9
[8.] 7. an infomercial; 10
[9.] 8. a digital project or an animation project other than a 11
digital animation project; or 12
[10.] 9. a multimedia project. 13
(5) “Maryland small or independent film entity” means a qualified film 14
production entity that: 15
(i) has been incorporated in Maryland for at least 3 months; 16
(ii) is independently owned and operated; 17
(iii) is not a subsidiary of another entity; 18
(iv) is not dominant in its field of operation; 19
(v) employs 25 or fewer full–time employees; and 20
(vi) employs Maryland residents as at least 40% of its workforce in 21
the film production activity. 22
(6) “Pornography” means any production for which records are required to 23
be maintained under § 2257 of Title 18, U.S.C., with respect to any performer in such 24
production engaging in sexually explicit conduct. 25
(7) “Qualified film production entity” means an entity that: 26 4 SENATE BILL 452
(i) is carrying out a film production activity; and 1
(ii) the Secretary determines to be eligible for the tax credit under 2
this section in accordance with subsection (c) of this section. 3
(8) “Secretary” means the Secretary of Commerce. 4
(9) “Television series” means a group of program episodes intended for 5
television broadcast or transmission with a common series title, with or without a 6
predetermined number of episodes, and shall include a miniseries and a pilot episode 7
produced for an intended television series. 8
(10) (i) “Total direct costs”, with respect to a film production activity, 9
means the total costs incurred in the State that are necessary to carry out the film 10
production activity. 11
(ii) “Total direct costs” includes costs incurred for: 12
1. employee wages and benefits; 13
2. fees for services; 14
3. acquiring or leasing property; [and] 15
4. SALARIES, WAGES, OR OTHER COMPENSATIO N FOR 16
WRITERS, DIRECTORS, OR PRODUCERS DOMICILED IN THE STATE; AND 17
[4.] 5. any other expense necessary to carry out a film 18
production activity, including costs associated with: 19
A. set construction and operation; 20
B. wardrobe, makeup, and related services; 21
C. photography and sound synchronization, lighting, and 22
related services and materials; 23
D. editing and related services, including film processing, 24
transfers of film to tape or digital format, sound mixing, computer graphic services, special 25
effects services, and animation services; 26
E. salary, wages, and other compensation including related 27
benefits, for work performed in the State, paid to persons employed in the production; 28
SENATE BILL 452 5
F. rental of facilities in the State and equipment used in the 1
State; 2
G. leasing of vehicles; 3
H. food and lodging; 4
I. music, if performed, composed, or recorded by a Maryland 5
musician or published by a person or company domiciled in Maryland; 6
J. travel expenses incurred to bring persons employed, either 7
directly or indirectly, in the production of the project to Maryland, but not including 8
expenses of these persons departing from Maryland; and 9
K. legal and accounting services performed by attorneys or 10
accountants licensed in Maryland. 11
(iii) “Total direct costs” does not include any salary, wages, or other 12
compensation for: 13
1. personal services of an individual who receives more than 14
$500,000 in salary, wages, or other compensation for personal services in connection with 15
any film production activity; or 16
2. EXCEPT AS PROVIDED IN S UBPARAGRAPH (II) OF THIS 17
PARAGRAPH , writers, directors, or producers. 18
(b) (1) A qualified film production entity may claim a credit against the State 19
income tax for film production activities in the State in an amount equal to the amount 20
stated in the final tax credit certificate approved by the Secretary for film production 21
activities. 22
(2) If the tax credit allowed under this section in any taxable year exceeds 23
the total tax otherwise payable by the qualified film production entity for that taxable year, 24
the qualified film production entity may claim a refund in the amount of the excess. 25
(c) (1) Before beginning a film production activity, a film production entity 26
shall submit to the Department an application to qualify as a film production entity. 27
(2) The application shall describe the anticipated film production activity, 28
including: 29
(i) the projected total budget; 30
(ii) the estimated number of Maryland resident and out–of–state 31
employees and total wages to be paid; and 32
6 SENATE BILL 452
(iii) the anticipated dates for carrying out the major elements of the 1
film production activity. 2
(3) Except as provided in subsection (h) of this section, to qualify as a film 3
production entity, the estimated total direct costs incurred in the State must exceed 4
$250,000. 5
(4) The application shall include any other information required by the 6
Secretary. 7
(5) For a film production entity with total direct costs that exceed $250,000, 8
the Secretary may require the information provided in an application to be verified by an 9
independent auditor selected and paid for by the film production entity seeking 10
certification. 11
(6) The Secretary shall: 12
(i) determine if the film production entity qualifies for the credit 13
under this section; and 14
(ii) notify the Comptroller of the estimated amount of total direct 15
costs and the taxable year the credit will be claimed. 16
(d) (1) After completion of the film production activity, a qualified film 17
production entity shall apply to the Department for a tax credit certificate. 18
(2) The application shall be on a form required by the Secretary and shall 19
include: 20
(i) proof of the total direct costs that qualify for the tax credit; and 21
(ii) the number of employees hired and wages paid. 22
(3) Subject to subsections (f) and (h) of this section, the Secretary shall 23
determine the total direct costs that qualify for the tax credit and issue a tax credit 24
certificate for: 25
(i) except as provided in item (ii) of this paragraph, [25%] 28% of 26
the total direct costs that qualify for the tax credit; and 27
(ii) for a television series, [27%] 30% of the total direct costs that 28
qualify for the tax credit. 29
(e) In accordance with § 2.5–109 of the Economic Development Article, the 30
Department shall submit a report on film production activity in the State and the economic 31
benefits to the State resulting from film production activity during the reporting period. 32
SENATE BILL 452 7
(f) (1) Except as provided in paragraph (2) of this subsection, the Secretary 1
may not issue tax credit certificates for credit amounts in the aggregate totaling more than: 2
(i) for fiscal year 2014, $25,000,000; 3
(ii) for fiscal year 2015, $7,500,000; 4
(iii) for fiscal year 2016, $7,500,000; 5
(iv) for fiscal year 2019, $8,000,000; 6
(v) for fiscal year 2020, $11,000,000; [and] 7
(vi) for fiscal [year] YEARS 2021 [and each fiscal year thereafter] 8
THROUGH 2023 2024 2023, $12,000,000; 9
(VII) FOR FISCAL YEAR 2024, $15,000,000; 10
(VIII) FOR FISCAL YEAR 2025, $17,500,000; 11
(VII) (IX) FOR FISCAL YEAR 2024 YEARS 2025 THROUGH 2028 12
YEAR 2026, $25,000,000 $20,000,000; AND 13
(VIII) (X) FOR FISCAL YEAR 2025 2029 2027 AND EACH FISCAL 14
YEAR THEREAFTER , $50,000,000 $12,000,000. 15
(2) If the aggregate credit amounts under the tax credit certificates issued 16
by the Secretary total less than the maximum provided under paragraph (1) of this 17
subsection in any fiscal year, any excess amount may be carried forward and issued under 18
tax credit certificates in a subsequent fiscal year. 19
(3) The Secretary may not issue tax credit certificates for credit amounts 20
totaling more than $10,000,000 in the aggregate for a single film production activity. 21
(4) (i) For fiscal year 2019 and each fiscal year thereafter, the Secretary 22
shall make 10% of the credit amount authorized under paragraph (1) of this subsection 23
available for Maryland small or independent film entities. 24
(ii) If the total amount of credits applied for by Maryland small or 25
independent film entities is less than the amount made available under subparagraph (i) 26
of this paragraph, the Secretary shall make available the unused amount of credits for use 27
by qualified film production entities. 28
(g) (1) Except as provided in paragraph (2) of this subsection, a qualified film 29
production entity that receives a tax credit certificate under this section for a film 30
production activity shall include: 31 8 SENATE BILL 452
(i) for a feature film project, a 5–second long static or animated logo 1
that promotes the State in the end credits before the below–the–line crew crawl for the life 2
of the project and a link to the State’s website on the project’s website; 3
(ii) for a television series project, an embedded 5–second long static 4
or animated logo that promotes the State during each broadcast worldwide for the life of 5
the project and a link to the State’s website on the project’s website; or 6
(iii) for any other project, the State logo at the end of each project and 7
in online promotions. 8
(2) In lieu of including a State logo as required under paragraph (1) of this 9
subsection, the qualified film production entity may offer alternative marketing 10
opportunities to be evaluated by the Department to ensure that those opportunities offer 11
equal or greater promotional value to the State. 12
(h) (1) For a Maryland small or independent film entity to qualify as a film 13
production entity: 14
(i) the estimated total direct costs incurred in the State shall exceed 15
$25,000; and 16
(ii) at least 50% of the filming of the film production activity must 17
occur within the State. 18
(2) The Secretary shall determine the total direct costs that qualify for the 19
tax credit and issue a tax credit certificate to a Maryland small or independent film entity 20
for [25%] 28% of the total direct costs that qualify for the tax credit, not to exceed $125,000. 21
(i) The Department and the Comptroller jointly shall adopt regulations to carry 22
out the provisions of this section and to specify criteria and procedures for the application 23
for, approval of, and monitoring of continuing eligibility for the tax credit under this section. 24
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 25
1, 2023, and shall be applicable to all taxable years beginning after December 31, 2022. 26
SECTION 2. AND BE IT FURTHER ENACTED, That: 27
(a) There is a Maryland Entertainment Council. 28
(b) (1) Subject to paragraph (2) of this subsection, the Council consists of: 29
(i) one member of the Senate of Maryland, appointed by the 30
President of the Senate; 31
SENATE BILL 452 9
(ii) one member of the House of Delegates, appointed by the Speaker 1
of the House; 2
(iii) the Governor’s appointed Senior Advisor on Film, Television, and 3
Entertainment; and 4
(iv) the following members, appointed by the Governor: 5
1. one expert in the business of the film, television, and 6
entertainment industry, such as an executive, producer, studio representative, or an 7
individual holding a leadership role within the industry; 8
2. one expert in workforce development or higher education 9
related to the film, television, and entertainment industry; 10
3. one expert in emerging technologies or specialties of the 11
film, television, and entertainment industry, such as an expert in gaming, artificial 12
intelligence, visual effects, animation, post–production, or another related specialty; 13
4. one expert in legal or policy fields specific to the film, 14
television, and entertainment industry; 15
5. one representative of the independent film and television 16
community; 17
6. one representative of nongovernmental entities or 18
philanthropic institutions that support film, television, or entertainment directly or 19
creative economies more broadly; and 20
7. one representative of organized labor in the entertainment 21
industry. 22
(2) The Governor may appoint up to three additional individuals as 23
honorary cochairs of the Council who are: 24
(i) individuals with extraordinary cultural capital and commanding 25
significant influence within the film, television, and entertainment industry; 26
(ii) business leaders commanding a significant stake within the film, 27
television, and entertainment industry; or 28
(iii) individuals who have defined the current cultural brand of the 29
film, television, and entertainment industry within the State. 30
(3) An individual appointed as an honorary cochair of the Council shall be 31
a nonvoting member of the Council whose responsibilities shall be limited to the promotion 32
and business development of Maryland’s film, television, and entertainment industry. 33 10 SENATE BILL 452
(c) The Senior Advisor on Film, Television, and Entertainment shall chair the 1
Council. 2
(d) The Department of Commerce shall provide staff for the Council. 3
(e) A member of the Council: 4
(1) may not receive compensation as a member of the Council; but 5
(2) is entitled to reimbursement for expenses under the Standard State 6
Travel Regulations, as provided in the State budget. 7
(f) The Council shall: 8
(1) assess Maryland’s existing assets, opportunities, and competitive 9
position within the film, television, and entertainment industry; 10
(2) study: 11
(i) Maryland’s State, local, and private assets that currently 12
support Maryland’s film, television, and entertainment industry, including key 13
infrastructure, existing workforce, workforce pipelines, scenic profile, emerging specialties, 14
and independent creative communities; 15
(ii) existing State programs, agencies, offices, grant programs, and 16
commissions across State agencies that support the film, television, and entertainment 17
industry; 18
(iii) models, competitive profiles, methods, and legislation that states 19
have utilized to incentivize necessary infrastructure and workforce to support the film, 20
television, and entertainment industry; 21
(iv) industry needs, disruptive trends, and emerging technologies 22
within the film, television, and entertainment industry; and 23
(v) complementary industries, aligned businesses, and potential 24
corporate, philanthropic, and other partners for the film, television, and entertainment 25
industry; and 26
(3) make recommendations on the development of a coordinated, 27
comprehensive strategic plan to position Maryland as an emerging leader in the film, 28
television, and entertainment industry. 29
(g) On or before December 1, 2023, the Council shall submit a preliminary report 30
to the Governor, the Secretary of Commerce, and, in accordance with § 2–1257 of the State 31
Government Article, the General Assembly that includes: 32 SENATE BILL 452 11
(1) an assessment of Maryland’s existing infrastructure, creative profile, 1
and core structural advantages that the State is uniquely positioned to leverage; 2
(2) recommendations on how to best utilize existing State offices, 3
commissions, and programs to advance Maryland’s film, television, and entertainment 4
industry and what, if any, additional investments should be made to support these State 5
functions; 6
(3) a clear definition of Maryland’s creative and competitive profile; and 7
(4) recommendations to measure the economic impact of additional 8
investment in the film, television, and entertainment industry. 9
(h) On or before September 1, 2024, the Council shall submit its final report to 10
the Governor, the Secretary of Commerce, and, in accordance with § 2–1257 of the State 11
Government Article, the General Assembly on: 12
(1) the matters included in the Council’s preliminary report; 13
(2) recommendations regarding the expansion of eligibility for film 14
production incentives, including with respect to live to tape events, and the potential 15
economic impact from that expansion; 16
(2) (3) recommendations to strengthen the structure and funding of the State’s 17
existing film and theatrical production incentives to ensure a greater return on investment 18
on Maryland’s investment in the film, television, and entertainment industry; 19
(3) (4) recommendations for additional State investment to bolster identified 20
specialties and high–leverage growth opportunities in the film, television, and 21
entertainment industry; 22
(4) (5) recommendations to support and grow Maryland’s independent 23
creative community and incentivize export promotions of Maryland–based talent; 24
(5) (6) methods to bolster film–, television–, and entertainment–related 25
business development and identify potential industry partnerships; 26
(6) (7) methods to sustainably grow the film, television, and entertainment 27
workforce and identify potential workforce development and higher education partners; 28
and 29
(7) (8) other recommendations, as appropriate, to support and grow the 30
economic impact of Maryland’s film, television, and entertainment industry. 31
SECTION 3. AND BE IT FURTHER ENACTED, That it is the intent of the General 32
Assembly that the Department of Commerce encourage Maryland–based film entities to 33 12 SENATE BILL 452
apply for the credit authorized under § 10–730 of the Tax – General Article, as enacted by 1
Section 1 of this Act. 2
SECTION 3. 4. AND BE IT FURTHER ENACTED, That Section 1 of this Act shall 3
be applicable to all taxable years beginning after December 31, 2022. 4
SECTION 4. 5. AND BE IT FURTHER ENACTED, That this Act shall take effect 5
July 1, 2023. Section 2 of this Act shall remain effective for a period of 2 years and, at the 6
end of June 30, 2025, Section 2 of this Act, with no further action required by the General 7
Assembly, shall be abrogated and of no further force and effect. 8
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.