Texas 2023 - 88th Regular

Texas Senate Bill SB1613 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R13304 CJD-F
2	2	By: Perry S.B. No. 1613
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of the Texas Multimedia Production
8	8	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 MULTIMEDIA PRODUCTION 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 MULTIMEDIA 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; and
88	88	(4) meet the requirements of Subsection (b).
89	89	(b) Unless the office determines and certifies in writing
90	90	that a sufficient number of qualified crew, actors, and extras are
91	91	not available to a production company at the time principal
92	92	photography begins, at least 25 percent of the total number of
93	93	individuals employed or used as production crew, actors, and extras
94	94	for a moving image project must be Texas residents.
95	95	Sec. 485B.053. AMOUNT OF TAX CREDIT. (a) The office shall
96	96	adopt rules prescribing the method the office will use to calculate
97	97	the amount of credit to list on a certificate of eligibility awarded
98	98	to a production company under this subchapter for a moving image
99	99	project. The office shall publish a written summary of the method
100	100	the office develops to determine the amount of credit before the
101	101	date the office begins to award certificates of eligibility.
102	102	(b) The method adopted by the office under Subsection (a)
103	103	must provide that the amount of credit listed on a certificate of
104	104	eligibility awarded to a production company for a moving image
105	105	project is equal to the sum of:
106	106	(1) subject to Subsection (c), 30 percent of the
107	107	production company's in-state spending for the project, not
108	108	including wages;
109	109	(2) 20 percent of the wages paid by the production
110	110	company to individuals who are not Texas residents while working in
111	111	this state on the project;
112	112	(3) 35 percent of the wages paid by the production
113	113	company to Texas residents who do not reside in underutilized and
114	114	economically distressed areas;
115	115	(4) 38 percent of the wages paid by the production
116	116	company to Texas residents who reside in underutilized and
117	117	economically distressed areas;
118	118	(5) if applicable, 10 percent of the production
119	119	company's in-state spending for an episodic television series of
120	120	three or more episodes for which a completed distribution agreement
121	121	is provided to the office;
122	122	(6) if the production company spends at least 25
123	123	percent of the project's filming days in an underutilized and
124	124	economically distressed area, 2.5 percent of the production
125	125	company's in-state spending for the project; and
126	126	(7) three percent of the production company's in-state
127	127	spending for post-production activities.
128	128	(c) The office may not consider the amount described by
129	129	Subsection (b)(1) when calculating the amount of credit to list on a
130	130	certificate of eligibility awarded to a production company for a
131	131	moving image project under Subsection (b) unless the production
132	132	company provides to the office promotional materials that may be
133	133	used by the office to promote economic development and tourism in
134	134	this state, including a promotional video that:
135	135	(1) uses an image of this state in its end credits; and
136	136	(2) includes at least:
137	137	(A) 30 behind-the-scenes stills of the
138	138	production during principal photography for the project;
139	139	(B) 10 behind-the-scenes stills of the lead
140	140	actors during principal photography for the project; and
141	141	(C) three minutes of behind-the-scenes video
142	142	footage of principal photography for the project.
143	143	Sec. 485B.054. REDUCTION OF TAX CREDIT FOR STATE DEBT.
144	144	Notwithstanding Section 485B.053, the office shall reduce the
145	145	amount of credit listed on a certificate of eligibility awarded to a
146	146	production company by an amount equal to any delinquent amount owed
147	147	by the production company to this state.
148	148	SECTION 2. Chapter 171, Tax Code, is amended by adding
149	149	Subchapter O to read as follows:
150	150	SUBCHAPTER O. TAX CREDIT FOR CERTIFIED TEXAS MULTIMEDIA PRODUCTION
151	151	PROGRAM
152	152	Sec. 171.751. DEFINITIONS. In this subchapter:
153	153	(1) "Certified production" means a media production
154	154	that is the basis for a certificate of eligibility awarded to a
155	155	production company under Chapter 485B, Government Code.
156	156	(2) "Office" means the Music, Film, Television, and
157	157	Multimedia Office.
158	158	(3) "Production company" has the meaning assigned by
159	159	Section 485B.001, Government Code.
160	160	Sec. 171.752. ELIGIBILITY FOR CREDIT. An entity is
161	161	eligible to apply for a credit in the amount and under the
162	162	conditions provided by this subchapter against the tax imposed
163	163	under this chapter.
164	164	Sec. 171.753. QUALIFICATION. (a) An entity qualifies for a
165	165	credit under this subchapter if the entity submits to the
166	166	comptroller with the application required by Section 171.756:
167	167	(1) a certificate of eligibility awarded by the
168	168	office;
169	169	(2) an audited cost report prepared by a certified
170	170	public accountant, as defined by Section 901.002, Occupations Code,
171	171	that itemizes the costs and expenses incurred by a production
172	172	company to make the certified production and on which the amount of
173	173	the credit is based; and
174	174	(3) an attestation from the production company as to
175	175	the total costs and expenses incurred to make the certified
176	176	production.
177	177	(b) An entity that sells or assigns a credit under this
178	178	subchapter to another entity shall provide a copy of the
179	179	certificate of eligibility, audited cost report, and attestation to
180	180	the purchaser or assignee.
181	181	Sec. 171.754. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
182	182	to Subsection (b), the amount of the credit under this subchapter is
183	183	the amount listed by the office on the certificate of eligibility
184	184	awarded to a production company for a certified production.
185	185	(b) The total credit claimed for a report, including the
186	186	amount of any carryforward under Section 171.755, may not exceed
187	187	the amount of franchise tax due for the report after any other
188	188	applicable tax credits.
189	189	(c) An entity may not claim a credit under this subchapter
190	190	on a report that is originally due before September 1, 2025.
191	191	However, before September 1, 2025, an entity may sell or assign a
192	192	credit for which the entity qualifies under Section 171.753.
193	193	Sec. 171.755. CARRYFORWARD. (a) If an entity is eligible
194	194	for a credit that exceeds the limitation under Section 171.754(b),
195	195	the entity may carry the unused credit forward for not more than
196	196	five consecutive reports.
197	197	(b) A carryforward is considered the remaining portion of a
198	198	credit that cannot be claimed in the current year because of the
199	199	limitation under Section 171.754(b).
200	200	Sec. 171.756. APPLICATION FOR CREDIT. (a) An entity must
201	201	apply to the comptroller for a credit under this subchapter on or
202	202	with the report for the period for which the credit is claimed.
203	203	(b) An entity shall submit with an application the
204	204	information required under Section 171.753 and any other
205	205	information the comptroller determines is necessary to determine
206	206	whether the entity qualifies for the credit.
207	207	(c) The burden of establishing eligibility for and the
208	208	amount of the credit is on the entity.
209	209	Sec. 171.757. SALE OR ASSIGNMENT OF CREDIT. (a) An entity
210	210	awarded a certificate of eligibility by the office may sell or
211	211	assign all or part of the credit to one or more entities. An entity
212	212	to which all or part of a credit is sold or assigned may sell or
213	213	assign all or part of the credit to another entity. There is no
214	214	limit on the total number of transactions for sale or assignment of
215	215	all or part of the total credit authorized under this subchapter.
216	216	(b) An entity that sells or assigns a credit under this
217	217	section, and the entity to which the credit is sold or assigned,
218	218	shall jointly submit written notice of the sale or assignment to the
219	219	comptroller on a form prescribed by the comptroller not later than
220	220	the 30th day after the date of the sale or assignment. The notice
221	221	must include:
222	222	(1) the date of the sale or assignment;
223	223	(2) the amount of the credit sold or assigned;
224	224	(3) the names and federal tax identification numbers
225	225	of:
226	226	(A) the entity that sold or assigned the credit
227	227	or part of the credit; and
228	228	(B) the entity to which the credit or part of the
229	229	credit was sold or assigned;
230	230	(4) the amount of the credit owned by the selling or
231	231	assigning entity before the sale or assignment; and
232	232	(5) the amount of the credit the selling or assigning
233	233	entity retained, if any, after the sale or assignment.
234	234	(c) The sale or assignment of a credit under this section
235	235	does not increase the total amount of the credit that may be
236	236	claimed. After an entity claims a credit for a production company
237	237	expenditure that formed the basis for the certificate of
238	238	eligibility awarded by the office, another entity may not use the
239	239	same expenditure as the basis for another certificate of
240	240	eligibility or credit.
241	241	(d) Notwithstanding the requirements of this subchapter, a
242	242	credit earned or purchased by, or assigned to, a partnership,
243	243	limited liability company, S corporation, or other pass-through
244	244	entity may be allocated to the partners, members, or shareholders
245	245	of that entity and claimed under this subchapter in accordance with
246	246	the provisions of any agreement among the partners, members, or
247	247	shareholders, and without regard to the ownership interest of the
248	248	partners, members, or shareholders in the certified production,
249	249	provided that the entity that claims the credit must be subject to
250	250	the tax imposed under this chapter.
251	251	(e) An entity to which all or part of a credit is sold or
252	252	assigned and that is subject to a premium tax imposed under Chapter
253	253	221, 222, 223, or 224, Insurance Code, may claim all or part of the
254	254	credit against that tax. The provisions of this subchapter,
255	255	including provisions relating to the total amount of the credit
256	256	that may be claimed for a report, the carryforward of the credit,
257	257	and the sale or assignment of the credit, apply with respect to a
258	258	credit claimed against a tax imposed under Chapter 221, 222, 223, or
259	259	224, Insurance Code, to the same extent those provisions apply to a
260	260	credit claimed against the tax imposed under this chapter. An
261	261	entity claiming all or part of a credit as authorized by this
262	262	subsection is not required to pay any additional retaliatory tax
263	263	levied under Chapter 281, Insurance Code, as a result of claiming
264	264	that credit.
265	265	Sec. 171.758. RULES. The comptroller shall adopt rules and
266	266	forms necessary to implement this subchapter.
267	267	SECTION 3. Subchapter O, Chapter 171, Tax Code, as added by
268	268	this Act, applies only to a report originally due on or after
269	269	September 1, 2025.
270	270	SECTION 4. This Act takes effect September 1, 2023.