Texas 2023 - 88th Regular

Texas House Bill HB3472 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R4348 CJD-F
2	2	By: Price H.B. No. 3472
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of the Texas Media Production
8	8	Enticement Program; providing tax credits; authorizing fees.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle F, Title 4, Government Code, is amended
11	11	by adding Chapter 485B to read as follows:
12	12	CHAPTER 485B. TEXAS MEDIA PRODUCTION ENTICEMENT PROGRAM
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 485B.001. DEFINITIONS. (a) Except as otherwise
15	15	provided by this chapter, terms used in this chapter have the
16	16	meanings assigned by Chapters 485 and 485A, and rules adopted under
17	17	those chapters, as those chapters and rules existed on January 1,
18	18	2022.
19	19	(b) In this chapter:
20	20	(1) "Moving image project" means a visual and sound
21	21	production, including a film, television program, national or
22	22	multistate commercial, or education or instructional video. The
23	23	term does not include a production that is obscene, as defined by
24	24	Section 43.21, Penal Code.
25	25	(2) "Production company" means a film production
26	26	company, television production company, or film and television
27	27	production company.
28	28	SUBCHAPTER B. TAX CREDIT FOR CERTAIN MEDIA PRODUCTIONS
29	29	Sec. 485B.051. TAX CREDIT PROGRAM. (a) The office shall
30	30	implement and administer a tax credit program for production
31	31	companies that produce moving image projects in this state.
32	32	(b) The office shall develop a procedure by which a
33	33	production company may apply to the office for a certificate of
34	34	eligibility for the tax credit program authorized by this
35	35	subchapter. The procedure must:
36	36	(1) specify the method by which an applicant must
37	37	demonstrate that an individual is a Texas resident; and
38	38	(2) require the submission, before production of a
39	39	moving image project begins, of:
40	40	(A) an estimate of the applicant's total in-state
41	41	spending related to the project;
42	42	(B) the shooting script or story board, as
43	43	applicable, for the project;
44	44	(C) the estimated number of jobs for cast and
45	45	production crew during the production and completion of the
46	46	project; and
47	47	(D) any other information required by the office
48	48	to determine the amount of in-state spending by the applicant.
49	49	(c) The office may award a certificate of eligibility to a
50	50	production company based only on in-state spending by the company
51	51	that has been verified by the office.
52	52	(d) The office is not required to act on an application, and
53	53	shall deny an application, for a production that the office finds to
54	54	be obscene, as defined by Section 43.21, Penal Code. The office
55	55	must provide written notice of the finding to the applicant not
56	56	later than the seventh business day after the date the office makes
57	57	the finding.
58	58	(e) The office may not award a certificate of eligibility
59	59	under this subchapter unless the office:
60	60	(1) reviews a copy of the final script of the moving
61	61	image project to which the certificate of eligibility relates; and
62	62	(2) determines whether a substantial change occurred
63	63	during production of the moving image project such that the
64	64	production is ineligible for the certificate under Subsection (d).
65	65	(f) The office shall include the amount of the tax credit,
66	66	as determined under Sections 485B.053 and 485B.054, on the face of a
67	67	certificate of eligibility. An applicant who receives a
68	68	certificate of eligibility must provide the certificate to the
69	69	comptroller, along with any other information required by the
70	70	comptroller, to receive a tax credit under Subchapter O, Chapter
71	71	171, Tax Code.
72	72	(g) The office by rule may impose an application fee in an
73	73	amount sufficient to offset the administrative costs to the office
74	74	and to the comptroller in administering this chapter.
75	75	Sec. 485B.052. QUALIFICATION. (a) To qualify for a
76	76	certificate of eligibility under this subchapter for a moving image
77	77	project, a production company must:
78	78	(1) demonstrate to the office that the production
79	79	company made at least $15 million in in-state spending for the
80	80	project;
81	81	(2) film at least 25 percent of the project in this
82	82	state, including additional pick-up days and second unit days;
83	83	(3) submit to the office a ledger of expenses, in a
84	84	format prescribed by the office, that lists all in-state spending
85	85	and includes all receipts, invoices, pay orders, and other
86	86	documentation required by the office to determine the amount of the
87	87	production company's in-state spending;
88	88	(4) meet the requirements of Section 485B.055; and
89	89	(5) meet the requirements of Subsection (b).
90	90	(b) Unless the office determines and certifies in writing
91	91	that a sufficient number of qualified crew, actors, and extras are
92	92	not available to a production company at the time principal
93	93	photography begins:
94	94	(1) for the first 12 months of production, at least 25
95	95	percent of the total number of individuals employed or used as
96	96	production crew, actors, and extras for a moving image project must
97	97	be Texas residents;
98	98	(2) for the 12 months of production following the
99	99	period described by Subdivision (1), at least 50 percent of the
100	100	total number of individuals employed or used as production crew,
101	101	actors, and extras for a moving image project must be Texas
102	102	residents; and
103	103	(3) for any period of production following the period
104	104	described by Subdivision (2), at least 70 percent of the total
105	105	number of individuals employed or used as production crew, actors,
106	106	and extras for a moving image project must be Texas residents.
107	107	Sec. 485B.053. AMOUNT OF TAX CREDIT. (a) The office shall
108	108	adopt rules prescribing the method the office will use to calculate
109	109	the amount of credit to list on a certificate of eligibility awarded
110	110	to a production company under this subchapter for a moving image
111	111	project. The office shall publish a written summary of the method
112	112	the office develops to determine the amount of credit before the
113	113	date the office begins to award certificates of eligibility.
114	114	(b) The method adopted by the office under Subsection (a)
115	115	must provide that the amount of credit listed on a certificate of
116	116	eligibility awarded to a production company for a moving image
117	117	project is equal to the sum of:
118	118	(1) subject to Subsection (c), 20 percent of the
119	119	production company's in-state spending for the project, not
120	120	including wages;
121	121	(2) 25 percent of the wages paid by the production
122	122	company to individuals who are not Texas residents while working in
123	123	this state on the project;
124	124	(3) 35 percent of the wages paid by the production
125	125	company to Texas residents who do not reside in underutilized and
126	126	economically distressed areas;
127	127	(4) 38 percent of the wages paid by the production
128	128	company to Texas residents who reside in underutilized and
129	129	economically distressed areas;
130	130	(5) if applicable, 10 percent of the production
131	131	company's in-state spending for an episodic television pilot and
132	132	series; and
133	133	(6) if the production company spends at least 25
134	134	percent of the project's filming days in an underutilized and
135	135	economically distressed area, 2.5 percent of the production
136	136	company's in-state spending for the project.
137	137	(c) The office may not consider the amount described by
138	138	Subsection (b)(1) when calculating the amount of credit to list on a
139	139	certificate of eligibility awarded to a production company for a
140	140	moving image project under Subsection (b) unless the production
141	141	company provides to the office promotional materials that may be
142	142	used by the office to promote economic development and tourism in
143	143	this state, including a promotional video that:
144	144	(1) uses an image of this state in its end credits; and
145	145	(2) includes at least:
146	146	(A) 30 behind-the-scenes stills of the
147	147	production during principal photography for the project;
148	148	(B) 10 behind-the-scenes stills of the lead
149	149	actors during principal photography for the project; and
150	150	(C) three minutes of behind-the-scenes video
151	151	footage of principal photography for the project.
152	152	Sec. 485B.054. REDUCTION OF TAX CREDIT FOR STATE DEBT.
153	153	Notwithstanding Section 485B.053, the office shall reduce the
154	154	amount of credit listed on a certificate of eligibility awarded to a
155	155	production company by an amount equal to any delinquent amount owed
156	156	by the production company to this state.
157	157	Sec. 485B.055. TRAINEE PROGRAM. (a) The office shall
158	158	collaborate with an industry coalition to develop a media trainee
159	159	program in cooperation with the Texas Workforce Commission.
160	160	(b) In addition to any other requirement imposed by this
161	161	chapter, to receive a certificate of eligibility under this chapter
162	162	a production company must participate in the program developed
163	163	under this section and agree to meet the requirements of Subsection
164	164	(c).
165	165	(c) A production company that demonstrates in-state
166	166	spending for a moving image project in an amount that is:
167	167	(1) at least $15 million but less than $20 million must
168	168	hire at least 10 Texas residents for entry-level positions in
169	169	various departments for the entirety of principal photography for
170	170	the project;
171	171	(2) at least $20 million but less than $50 million must
172	172	hire at least 15 Texas residents for entry-level positions in
173	173	various departments for the entirety of principal photography for
174	174	the project; or
175	175	(3) at least $50 million must hire at least 20 Texas
176	176	residents for entry-level positions in various departments for the
177	177	entirety of principal photography for the project.
178	178	SECTION 2. Chapter 171, Tax Code, is amended by adding
179	179	Subchapter O to read as follows:
180	180	SUBCHAPTER O. TAX CREDIT FOR CERTIFIED TEXAS MEDIA PRODUCTION
181	181	ENTICEMENT PROGRAM
182	182	Sec. 171.751. DEFINITIONS. In this subchapter:
183	183	(1) "Certified production" means a media production
184	184	that is the basis for a certificate of eligibility awarded to a
185	185	production company under Chapter 485B, Government Code.
186	186	(2) "Office" means the Music, Film, Television, and
187	187	Multimedia Office.
188	188	(3) "Production company" has the meaning assigned by
189	189	Section 485B.001, Government Code.
190	190	Sec. 171.752. ELIGIBILITY FOR CREDIT. An entity is
191	191	eligible to apply for a credit in the amount and under the
192	192	conditions provided by this subchapter against the tax imposed
193	193	under this chapter.
194	194	Sec. 171.753. QUALIFICATION. (a) An entity qualifies for a
195	195	credit under this subchapter if the entity submits to the
196	196	comptroller with the application required by Section 171.756:
197	197	(1) a certificate of eligibility awarded by the
198	198	office;
199	199	(2) an audited cost report prepared by a certified
200	200	public accountant, as defined by Section 901.002, Occupations Code,
201	201	that itemizes the costs and expenses incurred by a production
202	202	company to make the certified production and on which the amount of
203	203	the credit is based; and
204	204	(3) an attestation from the production company as to
205	205	the total costs and expenses incurred to make the certified
206	206	production.
207	207	(b) An entity that sells or assigns a credit under this
208	208	subchapter to another entity shall provide a copy of the
209	209	certificate of eligibility, audited cost report, and attestation to
210	210	the purchaser or assignee.
211	211	Sec. 171.754. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
212	212	to Subsection (b), the amount of the credit under this subchapter is
213	213	the amount listed by the office on the certificate of eligibility
214	214	awarded to a production company for a certified production.
215	215	(b) The total credit claimed for a report, including the
216	216	amount of any carryforward under Section 171.755, may not exceed
217	217	the amount of franchise tax due for the report after any other
218	218	applicable tax credits.
219	219	(c) An entity may not claim a credit under this subchapter
220	220	on a report that is originally due before September 1, 2025.
221	221	Sec. 171.755. CARRYFORWARD. (a) If an entity is eligible
222	222	for a credit that exceeds the limitation under Section 171.754(b),
223	223	the entity may carry the unused credit forward for not more than
224	224	five consecutive reports.
225	225	(b) A carryforward is considered the remaining portion of a
226	226	credit that cannot be claimed in the current year because of the
227	227	limitation under Section 171.754(b).
228	228	Sec. 171.756. APPLICATION FOR CREDIT. (a) An entity must
229	229	apply to the comptroller for a credit under this subchapter on or
230	230	with the report for the period for which the credit is claimed.
231	231	(b) An entity shall submit with an application the
232	232	information required under Section 171.753 and any other
233	233	information the comptroller determines is necessary to determine
234	234	whether the entity qualifies for the credit.
235	235	(c) The burden of establishing eligibility for and the
236	236	amount of the credit is on the entity.
237	237	Sec. 171.757. SALE OR ASSIGNMENT OF CREDIT. (a) An entity
238	238	awarded a certificate of eligibility by the office may sell or
239	239	assign all or part of the credit to one or more entities. An entity
240	240	to which all or part of a credit is sold or assigned may sell or
241	241	assign all or part of the credit to another entity. There is no
242	242	limit on the total number of transactions for sale or assignment of
243	243	all or part of the total credit authorized under this subchapter.
244	244	(b) An entity that sells or assigns a credit under this
245	245	section, and the entity to which the credit is sold or assigned,
246	246	shall jointly submit written notice of the sale or assignment to the
247	247	comptroller on a form prescribed by the comptroller not later than
248	248	the 30th day after the date of the sale or assignment. The notice
249	249	must include:
250	250	(1) the date of the sale or assignment;
251	251	(2) the amount of the credit sold or assigned;
252	252	(3) the names and federal tax identification numbers
253	253	of:
254	254	(A) the entity that sold or assigned the credit
255	255	or part of the credit; and
256	256	(B) the entity to which the credit or part of the
257	257	credit was sold or assigned;
258	258	(4) the amount of the credit owned by the selling or
259	259	assigning entity before the sale or assignment; and
260	260	(5) the amount of the credit the selling or assigning
261	261	entity retained, if any, after the sale or assignment.
262	262	(c) The sale or assignment of a credit under this section
263	263	does not increase the total amount of the credit that may be
264	264	claimed. After an entity claims a credit for a production company
265	265	expenditure that formed the basis for the certificate of
266	266	eligibility awarded by the office, another entity may not use the
267	267	same expenditure as the basis for another certificate of
268	268	eligibility or credit.
269	269	(d) Notwithstanding the requirements of this subchapter, a
270	270	credit earned or purchased by, or assigned to, a partnership,
271	271	limited liability company, S corporation, or other pass-through
272	272	entity, may be allocated to the partners, members, or shareholders
273	273	of that entity and claimed under this subchapter in accordance with
274	274	the provisions of any agreement among the partners, members, or
275	275	shareholders, and without regard to the ownership interest of the
276	276	partners, members, or shareholders in the certified production,
277	277	provided that the entity that claims the credit must be subject to
278	278	the tax imposed under this chapter.
279	279	(e) An entity to which all or part of a credit is sold or
280	280	assigned and that is subject to a premium tax imposed under Chapter
281	281	221, 222, 223, or 224, Insurance Code, may claim all or part of the
282	282	credit against that tax. The provisions of this subchapter,
283	283	including provisions relating to the total amount of the credit
284	284	that may be claimed for a report, the carryforward of the credit,
285	285	and the sale or assignment of the credit, apply with respect to a
286	286	credit claimed against a tax imposed under Chapter 221, 222, 223, or
287	287	224, Insurance Code, to the same extent those provisions apply to a
288	288	credit claimed against the tax imposed under this chapter. An
289	289	entity claiming all or part of a credit as authorized by this
290	290	subsection is not required to pay any additional retaliatory tax
291	291	levied under Chapter 281, Insurance Code, as a result of claiming
292	292	that credit.
293	293	Sec. 171.758. RULES. The comptroller shall adopt rules and
294	294	forms necessary to implement this subchapter.
295	295	SECTION 3. Subchapter O, Chapter 171, Tax Code, as added by
296	296	this Act, applies only to a report originally due on or after
297	297	September 1, 2025.
298	298	SECTION 4. This Act takes effect September 1, 2023.