Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB1125 Compare Versions

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

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 1125
5	5	March 6, 2024 - Introduced by Representatives ARMSTRONG, CALLAHAN, BILLINGS,
6	6	EMERSON, S. JOHNSON, MURSAU, PALMERI, ROZAR, SCHMIDT, SCHRAA, STEFFEN,
7	7	SWEARINGEN and TITTL, cosponsored by Senators BRADLEY, FEYEN, LARSON,
8	8	QUINN and TESTIN. Referred to Committee on Ways and Means.
9	9	*AUTHORS SUBJECT TO CHANGE*
10	10	AN ACT to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30
11	11	(3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 13.94 (1)
12	12	(zm), 15.448, 20.835 (2) (bm), 41.152, 71.07 (5f), 71.07 (5h), 71.10 (4) (fs), 71.10
13	13	(4) (ft), 71.28 (5f), 71.28 (5h), 71.30 (3) (epr), 71.30 (3) (eps), 71.47 (5f), 71.47 (5h),
14	14	71.49 (1) (epr) and 71.49 (1) (eps) of the statutes; relating to: creating a tax
15	15	credit for expenses related to film production services and for capital
16	16	investments made by a film production company, making an appropriation, and
17	17	granting rule-making authority.
18	18	Analysis by the Legislative Reference Bureau
19	19	This bill creates income and franchise tax credits for film production companies
20	20	and creates a State Film Office, attached to the Department of Tourism, to
21	21	implement the tax credit accreditations and allocations. Under the bill, a film
22	22	production company may claim a credit that is equal to 25 percent of the salary or
23	23	wages paid to the company's employees in the taxable year for services rendered in
24	24	this state to produce a film, video, broadcast advertisement, or television production,
25	25	as approved by the State Film Office, and paid to employees who were residents of
26	26	this state at the time that they were paid. The total amount of the credits that may
27	27	be claimed by a taxpayer may not exceed an amount that is equal to the first $250,000
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37	37	ASSEMBLY BILL 1125
38	38	of salary and wages paid to each of the taxpayer's employees in the taxable year, not
39	39	including the salary or wages paid to the taxpayer's two highest-paid employees in
40	40	the taxable year, for a production with budgeted expenditures of $1,000,000 or more.
41	41	If the total amount of the credits claimed by a taxpayer exceeds the taxpayer's tax
42	42	liability, the state will not issue a refund, but the taxpayer may carry forward any
43	43	remaining credit to subsequent taxable years.
44	44	Under the bill, a film production company may claim an income and franchise
45	45	tax credit in an amount that is equal to 25 percent of the production expenditures
46	46	paid by the company in the taxable year to produce a film, video, broadcast
47	47	advertisement, or television production. If the total amount of the credits claimed
48	48	by the company exceeds the company's tax liability, the state will issue a refund.
49	49	The bill also allows a film production company to claim an income and franchise
50	50	tax credit, for the first three taxable years that the company is doing business in this
51	51	state, in an amount that is equal to 25 percent of the amount that the claimant paid
52	52	in the taxable year to purchase depreciable tangible personal property or to acquire,
53	53	construct, rehabilitate, remodel, or repair real property.
54	54	Under the bill, a film production company may claim an income and franchise
55	55	tax credit that is equal to the amount of sales and use taxes that the claimant paid
56	56	for tangible personal property and taxable services that are used to produce a film,
57	57	video, broadcast advertisement, or television production in this state.
58	58	The bill provides that the State Film Office may not allocate more than
59	59	$5,000,000 in film production and investments tax credits in each fiscal year. The
60	60	bill also requires the State Film Office to annually submit a report to the legislature
61	61	that specifies the number of persons who submitted credit applications in the
62	62	previous year and the amount of the credits allocated to each such applicant and to
63	63	make recommendations on improving the efficiency of the program. Finally, the bill
64	64	requires the Legislative Audit Bureau to biennially prepare a performance
65	65	evaluation audit of the accreditation program implemented by the State Film Office.
66	66	For further information see the state fiscal estimate, which will be printed as
67	67	an appendix to this bill.
68	68	The people of the state of Wisconsin, represented in senate and assembly, do
69	69	enact as follows:
70	70	SECTION 1. 13.94 (1) (zm) of the statutes is created to read:
71	71	13.94 (1) (zm) Biennially, beginning in 2025, prepare a performance evaluation
72	72	audit of the program to accredit productions for purposes of ss. 71.07 (5f) and (5h),
73	73	71.28 (5f) and (5h), and 71.47 (5f) and (5h) by the state film office.
74	74	SECTION 2. 15.448 of the statutes is created to read:
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82	82	SECTION 2
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84	84	15.448 Same; offices. (1) STATE FILM OFFICE. There is created a state film
85	85	office in the department of tourism. The director of the office shall be appointed by
86	86	the secretary of tourism.
87	87	SECTION 3. 20.835 (2) (bm) of the statutes is created to read:
88	88	20.835 (2) (bm) Film production services credit. A sum sufficient to make the
89	89	payments under ss. 71.07 (5f) (d) 2., 71.28 (5f) (d) 2., and 71.47 (5f) (d) 2.
90	90	SECTION 4. 41.152 of the statutes is created to read:
91	91	41.152 Film production tax credits. (1) The state film office shall
92	92	implement a program to accredit productions for purposes of ss. 71.07 (5f) and (5h),
93	93	71.28 (5f) and (5h), and 71.47 (5f) and (5h). Application for accreditation shall be
94	94	made to the office in each taxable year for which accreditation is desired.
95	95	(2) If the state film office accredits a production under sub. (1), the office shall
96	96	determine the amount of the production's production expenditures, as defined in s.
97	97	71.07 (5f) (a) 4. The state film office shall not issue an accreditation under sub. (1)
98	98	without first receiving written confirmation from the applicant that the applicant
99	99	has retained a certified public accountant located in this state to conduct periodic
100	100	audits to ensure compliance with this section and ss. 71.07 (5f) and (5h), 71.28 (5f)
101	101	and (5h), and 71.47 (5f) and (5h), as prescribed by rule by the office. An entity
102	102	applying for a credit under s. 71.07 (5f), 71.28 (5f), or 71.47 (5f) that does not have
103	103	its commercial domicile in this state shall indicate that on its application along with
104	104	the amount of production expenditures it anticipates spending in this state and the
105	105	amount of expenditures, if any, it anticipates spending in another state on the same
106	106	production.
107	107	(3) The state film office shall notify the department of revenue of every
108	108	production accredited under sub. (1), the amount of the production's production
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136	136	expenditures, and the amount of the credits allocated to the applicant for the taxable
137	137	year for which the applicant's claim relates.
138	138	(4) The state film office may not allocate more than $5,000,000 in tax credits
139	139	in each fiscal year and no more than $1,000,000 in tax credits to any single applicant
140	140	in each fiscal year.
141	141	(5) Each applicant who produces an accredited production, as defined in s.
142	142	71.07 (5f) (a) 1., that is eligible for a credit under s. 71.07 (5f), 71.28 (5f), or 71.42 (5f)
143	143	shall include in the finished production an acknowledgment to the state of Wisconsin
144	144	and the state film office as designed by the state film office, including a logo designed
145	145	by the state film office.
146	146	(6) Annually, beginning in 2025, the state film office shall prepare a report
147	147	specifying the number of persons who submitted credit applications in the previous
148	148	year and the amount of the credits allocated to each such applicant. The report shall
149	149	also provide recommendations and suggestions on improving the efficiency of the
150	150	program implemented under this section. The office shall submit the report to the
151	151	legislature, in the manner provided under s. 13.172 (2), no later than April 30 each
152	152	year.
153	153	(7) The department shall promulgate rules to administer this section.
154	154	SECTION 5. 71.05 (6) (a) 15. of the statutes is amended to read:
155	155	71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
156	156	(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5f), (5h),
157	157	(5i), (5j), (5k), (5r), (5rm), (6n), and (10) and not passed through by a partnership,
158	158	limited liability company, or tax-option corporation that has added that amount to
159	159	the partnership's, company's, or tax-option corporation's income under s. 71.21 (4)
160	160	or 71.34 (1k) (g).
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188	188	SECTION 6
189	189	ASSEMBLY BILL 1125
190	190	SECTION 6. 71.07 (5f) of the statutes is created to read:
191	191	71.07 (5f) FILM PRODUCTION SERVICES CREDIT. (a) Definitions. In this subsection:
192	192	1. “Accredited production" means a film, video, broadcast advertisement, or
193	193	television production, as approved by the state film office, for which the aggregate
194	194	salary and wages included in the cost of the production for the period ending 12
195	195	months after the month in which the principal filming or taping of the production
196	196	begins exceeds $100,000 for a production that is 30 minutes or longer or $50,000 for
197	197	a production that is less than 30 minutes. “Accredited production" does not include
198	198	any of the following, regardless of the production costs:
199	199	a. News, current events, or public programming or a program that includes
200	200	weather or market reports.
201	201	b. A talk show.
202	202	c. A production with respect to a questionnaire or contest.
203	203	d. A sports event or sports activity.
204	204	e. A gala presentation or awards show.
205	205	f. A finished production that solicits funds.
206	206	g. A production for which the production company is required under 18 USC
207	207	2257 to maintain records with respect to a performer portrayed in a single media or
208	208	multimedia program.
209	209	h. A production produced primarily for industrial, corporate, or institutional
210	210	purposes.
211	211	2. “Claimant" means a film production company, as defined in sub. (5h) (a) 2.,
212	212	that operates an accredited production in this state, if the company owns the
213	213	copyright in the accredited production or has contracted directly with the copyright
214	214	owner or a person acting on the owner's behalf and if the company has a viable plan,
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241	241	SECTION 6 ASSEMBLY BILL 1125
242	242	as determined by the state film office, for the commercial distribution of the finished
243	243	production.
244	244	3. “Commercial domicile" means the location from which a trade or business
245	245	is principally managed and directed, based on any factors the state film office
246	246	determines are appropriate, including the location where the greatest number of
247	247	employees of the trade or business work, the trade or business has its office or base
248	248	of operations, or from which the employees are directed or controlled.
249	249	4. “Production expenditures" means any expenditure that is incurred in this
250	250	state and directly used to produce an accredited production, including expenditures
251	251	for writing, budgeting, casting, location scouts, set construction and operation,
252	252	wardrobes, makeup, clothing accessories, photography, sound recording, sound
253	253	synchronization, sound mixing, lighting, editing, film processing, film transferring,
254	254	special effects, visual effects, renting or leasing facilities or equipment, renting or
255	255	leasing motor vehicles, food, lodging, and any other similar pre-production,
256	256	production, and post-production expenditure as determined by the state film office.
257	257	“Production expenditures" includes expenditures for music that is performed,
258	258	composed, or recorded by a musician who is a resident of this state or published or
259	259	distributed by an entity that has its commercial domicile in this state; air travel that
260	260	is purchased from a travel agency or company that has its commercial domicile in
261	261	this state; and insurance that is purchased from an insurance agency or company
262	262	that has its commercial domicile in this state. “Production expenditures" does not
263	263	include salary or wages or expenditures for the marketing and distribution of an
264	264	accredited production.
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290	290	SECTION 6
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292	292	(b) Filing claims. Subject to the limitations provided in this subsection, for
293	293	taxable years beginning after December 31, 2023, a claimant may claim as a credit
294	294	against the tax imposed under s. 71.02 any of the following amounts:
295	295	1. An amount equal to 25 percent of the salary or wages paid by the claimant
296	296	to the claimant's employees in the taxable year for services rendered in this state to
297	297	produce an accredited production and paid to employees who were residents of this
298	298	state at the time that they were paid.
299	299	2. An amount equal to 25 percent of the production expenditures paid by the
300	300	claimant in the taxable year to produce an accredited production.
301	301	3. An amount equal to the taxes imposed under ss. 77.52 and 77.53 that the
302	302	claimant paid in the taxable year on the purchase of tangible personal property and
303	303	taxable services that are used directly in producing an accredited production in this
304	304	state, including all stages from the final script stage to the distribution of the finished
305	305	production.
306	306	(c) Limitations. 1. No amount of the salary or wages paid under par. (b) 1. may
307	307	be the basis for a credit under this subsection unless the salary or wages are paid for
308	308	services rendered after December 31, 2023, and directly incurred to produce the
309	309	accredited production.
310	310	2. The total amount of the credits that may be claimed by a claimant under par.
311	311	(b) 1. shall not exceed an amount equal to the first $250,000 of salary or wages paid
312	312	to each of the claimant's employees, as described in par. (b) 1., in the taxable year,
313	313	not including the salary or wages paid to the claimant's 2 highest-paid employees,
314	314	as described in par. (b) 1., in the taxable year, if the claimant's budgeted production
315	315	expenditures are $1,000,000 or more.
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341	341	SECTION 6 ASSEMBLY BILL 1125
342	342	3. No credit may be allowed under this subsection unless the claimant files an
343	343	application with the state film office, at the time and in the manner prescribed by the
344	344	office, and the office approves the application. The claimant shall submit a copy of
345	345	the approved application with the claimant's return.
346	346	4. Partnerships, limited liability companies, and tax-option corporations may
347	347	not claim the credit under this subsection, but the eligibility for, and the amount of,
348	348	the credit are based on their payment of amounts under par. (b). A partnership,
349	349	limited liability company, or tax-option corporation shall compute the amount of
350	350	credit that each of its partners, members, or shareholders may claim and shall
351	351	provide that information to each of them. Partners, members of limited liability
352	352	companies, and shareholders of tax-option corporations may claim the credit in
353	353	proportion to their ownership interest.
354	354	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
355	355	credit under s. 71.28 (4), applies to the credits under this subsection. Section 71.28
356	356	(4) (f), as it applies to the credit under s. 71.28 (4), applies to the credits under par.
357	357	(b) 1. and 3.
358	358	2. If the allowable amount of the claim under par. (b) 2. exceeds the tax
359	359	otherwise due under s. 71.02 or no tax is due under s. 71.02, the amount of the claim
360	360	not used to offset the tax due shall be certified by the department of revenue to the
361	361	department of administration for payment by check, share draft, or other draft
362	362	drawn from the appropriation account under s. 20.835 (2) (bm).
363	363	3. Any person, including a nonprofit entity described in section 501 (c) (3) of the
364	364	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
365	365	in whole or in part, to another person who is subject to the taxes imposed under s.
366	366	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
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394	394	SECTION 6
395	395	ASSEMBLY BILL 1125
396	396	submits with the notification a copy of the transfer documents, and the department
397	397	certifies ownership of the credit. The transferee may first use the credit to offset tax
398	398	of the transferor in the taxable year in which the transfer occurs and may use the
399	399	credit only to offset tax in taxable years in which the credit is otherwise allowed to
400	400	be claimed and carried forward by the original claimant.
401	401	SECTION 7. 71.07 (5h) of the statutes is created to read:
402	402	71.07 (5h) FILM PRODUCTION COMPANY INVESTMENT CREDIT. (a) Definitions. In
403	403	this subsection:
404	404	1. “Claimant" means a person who files a claim under this subsection and who
405	405	does business in this state as a film production company.
406	406	2. “Film production company" means an entity that creates films, videos,
407	407	broadcast advertisement, or television productions, not including the productions
408	408	described under sub. (5f) (a) 1. a. to h.
409	409	3. “Physical work" does not include preliminary activities such as planning,
410	410	designing, securing financing, researching, developing specifications, or stabilizing
411	411	property to prevent deterioration.
412	412	4. “Previously owned property" means real property that the claimant or a
413	413	related person owned during the 2 years prior to doing business in this state as a film
414	414	production company and for which the claimant may not deduct a loss from the sale
415	415	of the property to, or an exchange of the property with, the related person under
416	416	section 267 of the Internal Revenue Code.
417	417	5. “Used exclusively" means used to the exclusion of all other uses except for
418	418	other use not exceeding 5 percent of total use.
419	419	(b) Filing claims. Subject to the limitations provided in this subsection, for
420	420	taxable years beginning after December 31, 2023, a claimant may claim as a credit
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447	447	SECTION 7 ASSEMBLY BILL 1125
448	448	against the tax imposed under s. 71.02, up to the amount of the taxes, for the first
449	449	3 taxable years that the claimant is doing business in this state as a film production
450	450	company, an amount that is equal to 25 percent of the following that the claimant
451	451	paid in the taxable year to establish a film production company in this state:
452	452	1. The purchase price of depreciable, tangible personal property.
453	453	2. The amount expended to acquire, construct, rehabilitate, remodel, or repair
454	454	real property.
455	455	(c) Limitations. 1. A claimant may claim the credit under par. (b) 1., if the
456	456	tangible personal property is purchased after December 31, 2023, and the personal
457	457	property is used exclusively in the claimant's business as a film production company.
458	458	2. A claimant may claim the credit under par. (b) 2. for an amount expended
459	459	to construct, rehabilitate, remodel, or repair real property, if the claimant began the
460	460	physical work of construction, rehabilitation, remodeling, or repair, or any
461	461	demolition or destruction in preparation for the physical work, after December 31,
462	462	2023, or if the completed project is placed in service after December 31, 2023.
463	463	3. A claimant may claim the credit under par. (b) 2. for an amount expended
464	464	to acquire real property, if the property is not previously owned property and if the
465	465	claimant acquires the property after December 31, 2023, or if the completed project
466	466	is placed in service after December 31, 2023.
467	467	4. No claim may be allowed under this subsection unless the state film office
468	468	certifies, in writing, that the credits claimed under this subsection are for expenses
469	469	related to establishing a film production company in this state and the claimant
470	470	submits a copy of the certification with the claimant's return.
471	471	5. Partnerships, limited liability companies, and tax-option corporations may
472	472	not claim the credit under this subsection, but the eligibility for, and the amount of,
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500	500	SECTION 7
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502	502	the credit are based on their payment of amounts under par. (b). A partnership,
503	503	limited liability company, or tax-option corporation shall compute the amount of
504	504	credit that each of its partners, members, or shareholders may claim and shall
505	505	provide that information to each of them. Partners, members of limited liability
506	506	companies, and shareholders of tax-option corporations may claim the credit in
507	507	proportion to their ownership interests.
508	508	(d) Administration. 1. Section 71.28 (4) (e) to (h), as it applies to the credit
509	509	under s. 71.28 (4), applies to the credits under this subsection.
510	510	2. Any person, including a nonprofit entity described in section 501 (c) (3) of the
511	511	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
512	512	in whole or in part, to another person who is subject to the taxes imposed under s.
513	513	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
514	514	submits with the notification a copy of the transfer documents, and the department
515	515	certifies ownership of the credit. The transferee may first use the credit to offset tax
516	516	of the transferor in the taxable year in which the transfer occurs and may use the
517	517	credit only to offset tax in taxable years in which the credit is otherwise allowed to
518	518	be claimed and carried forward by the original claimant.
519	519	SECTION 8. 71.10 (4) (fs) of the statutes is created to read:
520	520	71.10 (4) (fs) Film production company investment credit under s. 71.07 (5h).
521	521	SECTION 9. 71.10 (4) (ft) of the statutes is created to read:
522	522	71.10 (4) (ft) Film production services credit under s. 71.07 (5f) (b) 1. and 3.
523	523	SECTION 10. 71.10 (4) (i) of the statutes is amended to read:
524	524	71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland
525	525	preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and
526	526	beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s.
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552	552	JK:skw
553	553	SECTION 10 ASSEMBLY BILL 1125
554	554	71.07 (3q), business development credit under s. 71.07 (3y), research credit under s.
555	555	71.07 (4k) (e) 2. a., film production services credit under s. 71.07 (5f) (b) 2., veterans
556	556	and surviving spouses property tax credit under s. 71.07 (6e), enterprise zone jobs
557	557	credit under s. 71.07 (3w), electronics and information technology manufacturing
558	558	zone credit under s. 71.07 (3wm), earned income tax credit under s. 71.07 (9e),
559	559	estimated tax payments under s. 71.09, and taxes withheld under subch. X.
560	560	SECTION 11. 71.21 (4) (a) of the statutes is amended to read:
561	561	71.21 (4) (a) The amount of the credits computed by a partnership under s.
562	562	71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n),
563	563	(5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r), (5rm), (6n), and (10) and passed through to
564	564	partners shall be added to the partnership's income.
565	565	SECTION 12. 71.26 (2) (a) 4. of the statutes is amended to read:
566	566	71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
567	567	(1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5f), (5g), (5h), (5i), (5j),
568	568	(5k), (5r), (5rm), (6n), and (10) and not passed through by a partnership, limited
569	569	liability company, or tax-option corporation that has added that amount to the
570	570	partnership's, limited liability company's, or tax-option corporation's income under
571	571	s. 71.21 (4) or 71.34 (1k) (g).
572	572	SECTION 13. 71.28 (5f) of the statutes is created to read:
573	573	71.28 (5f) FILM PRODUCTION SERVICES CREDIT. (a) Definitions. In this subsection:
574	574	1. “Accredited production" means a film, video, broadcast advertisement, or
575	575	television production, as approved by the state film office, for which the aggregate
576	576	salary and wages included in the cost of the production for the period ending 12
577	577	months after the month in which the principal filming or taping of the production
578	578	begins exceeds $100,000 for a production that is 30 minutes or longer or $50,000 for
579	579	1
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606	606	SECTION 13
607	607	ASSEMBLY BILL 1125
608	608	a production that is less than 30 minutes. “Accredited production" does not include
609	609	any of the following, regardless of the production costs:
610	610	a. News, current events, or public programming or a program that includes
611	611	weather or market reports.
612	612	b. A talk show.
613	613	c. A production with respect to a questionnaire or contest.
614	614	d. A sports event or sports activity.
615	615	e. A gala presentation or awards show.
616	616	f. A finished production that solicits funds.
617	617	g. A production for which the production company is required under 18 USC
618	618	2257 to maintain records with respect to a performer portrayed in a single media or
619	619	multimedia program.
620	620	h. A production produced primarily for industrial, corporate, or institutional
621	621	purposes.
622	622	2. “Claimant" means a film production company, as defined in sub. (5h) (a) 2.,
623	623	that operates an accredited production in this state, if the company owns the
624	624	copyright in the accredited production or has contracted directly with the copyright
625	625	owner or a person acting on the owner's behalf and if the company has a viable plan,
626	626	as determined by the state film office, for the commercial distribution of the finished
627	627	production.
628	628	3. “Commercial domicile" means the location from which a trade or business
629	629	is principally managed and directed, based on any factors the state film office
630	630	determines are appropriate, including the location where the greatest number of
631	631	employees of the trade or business work, the trade or business has its office or base
632	632	of operations, or from which the employees are directed or controlled.
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659	659	SECTION 13 ASSEMBLY BILL 1125
660	660	4. “Production expenditures" means any expenditure that is incurred in this
661	661	state and directly used to produce an accredited production, including expenditures
662	662	for writing, budgeting, casting, location scouts, set construction and operation,
663	663	wardrobes, makeup, clothing accessories, photography, sound recording, sound
664	664	synchronization, sound mixing, lighting, editing, film processing, film transferring,
665	665	special effects, visual effects, renting or leasing facilities or equipment, renting or
666	666	leasing motor vehicles, food, lodging, and any other similar pre-production,
667	667	production, and post-production expenditure as determined by the state film office.
668	668	“Production expenditures" includes expenditures for music that is performed,
669	669	composed, or recorded by a musician who is a resident of this state or published or
670	670	distributed by an entity that has its commercial domicile in this state; air travel that
671	671	is purchased from a travel agency or company that has its commercial domicile in
672	672	this state; and insurance that is purchased from an insurance agency or company
673	673	that has its commercial domicile in this state. “Production expenditures" does not
674	674	include salary or wages or expenditures for the marketing and distribution of an
675	675	accredited production.
676	676	(b) Filing claims. Subject to the limitations provided in this subsection, for
677	677	taxable years beginning after December 31, 2023, a claimant may claim as a credit
678	678	against the tax imposed under s. 71.23 any of the following amounts:
679	679	1. An amount equal to 25 percent of the salary or wages paid by the claimant
680	680	to the claimant's employees in the taxable year for services rendered in this state to
681	681	produce an accredited production and paid to employees who were residents of this
682	682	state at the time that they were paid.
683	683	2. An amount equal to 25 percent of the production expenditures paid by the
684	684	claimant in the taxable year to produce an accredited production.
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711	711	JK:skw
712	712	SECTION 13
713	713	ASSEMBLY BILL 1125
714	714	3. An amount equal to the taxes imposed under ss. 77.52 and 77.53 that the
715	715	claimant paid in the taxable year on the purchase of tangible personal property and
716	716	taxable services that are used directly in producing an accredited production in this
717	717	state, including all stages from the final script stage to the distribution of the finished
718	718	production.
719	719	(c) Limitations. 1. No amount of the salary or wages paid under par. (b) 1. may
720	720	be the basis for a credit under this subsection unless the salary or wages are paid for
721	721	services rendered after December 31, 2023, and directly incurred to produce the
722	722	accredited production.
723	723	2. The total amount of the credits that may be claimed by a claimant under par.
724	724	(b) 1. shall not exceed an amount equal to the first $250,000 of salary or wages paid
725	725	to each of the claimant's employees, as described in par. (b) 1., in the taxable year,
726	726	not including the salary or wages paid to the claimant's 2 highest-paid employees,
727	727	as described in par. (b) 1., in the taxable year, if the claimant's budgeted production
728	728	expenditures are $1,000,000 or more.
729	729	3. No credit may be allowed under this subsection unless the claimant files an
730	730	application with the state film office, at the time and in the manner prescribed by the
731	731	office, and the office approves the application. The claimant shall submit a copy of
732	732	the approved application with the claimant's return.
733	733	4. Partnerships, limited liability companies, and tax-option corporations may
734	734	not claim the credit under this subsection, but the eligibility for, and the amount of,
735	735	the credit are based on their payment of amounts under par. (b). A partnership,
736	736	limited liability company, or tax-option corporation shall compute the amount of
737	737	credit that each of its partners, members, or shareholders may claim and shall
738	738	provide that information to each of them. Partners, members of limited liability
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765	765	SECTION 13 ASSEMBLY BILL 1125
766	766	companies, and shareholders of tax-option corporations may claim the credit in
767	767	proportion to their ownership interest.
768	768	(d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
769	769	under sub. (4), applies to the credits under this subsection. Subsection (4) (f), as it
770	770	applies to the credit under sub. (4), applies to the credits under par. (b) 1. and 3.
771	771	2. If the allowable amount of the claim under par. (b) 2. exceeds the tax
772	772	otherwise due under s. 71.23 or no tax is due under s. 71.23, the amount of the claim
773	773	not used to offset the tax due shall be certified by the department of revenue to the
774	774	department of administration for payment by check, share draft, or other draft
775	775	drawn from the appropriation account under s. 20.835 (2) (bm).
776	776	3. Any person, including a nonprofit entity described in section 501 (c) (3) of the
777	777	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
778	778	in whole or in part, to another person who is subject to the taxes imposed under s.
779	779	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
780	780	submits with the notification a copy of the transfer documents, and the department
781	781	certifies ownership of the credit. The transferee may first use the credit to offset tax
782	782	of the transferor in the taxable year in which the transfer occurs and may use the
783	783	credit only to offset tax in taxable years in which the credit is otherwise allowed to
784	784	be claimed and carried forward by the original claimant.
785	785	SECTION 14. 71.28 (5h) of the statutes is created to read:
786	786	71.28 (5h) FILM PRODUCTION COMPANY INVESTMENT CREDIT. (a) Definitions. In
787	787	this subsection:
788	788	1. “Claimant" means a person who files a claim under this subsection and who
789	789	does business in this state as a film production company.
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816	816	SECTION 14
817	817	ASSEMBLY BILL 1125
818	818	2. “Film production company" means an entity that creates films, videos,
819	819	broadcast advertisement, or television productions, not including the productions
820	820	described under sub. (5f) (a) 1. a. to h.
821	821	3. “Physical work" does not include preliminary activities such as planning,
822	822	designing, securing financing, researching, developing specifications, or stabilizing
823	823	property to prevent deterioration.
824	824	4. “Previously owned property" means real property that the claimant or a
825	825	related person owned during the 2 years prior to doing business in this state as a film
826	826	production company and for which the claimant may not deduct a loss from the sale
827	827	of the property to, or an exchange of the property with, the related person under
828	828	section 267 of the Internal Revenue Code.
829	829	5. “Used exclusively" means used to the exclusion of all other uses except for
830	830	other use not exceeding 5 percent of total use.
831	831	(b) Filing claims. Subject to the limitations provided in this subsection, for
832	832	taxable years beginning after December 31, 2023, a claimant may claim as a credit
833	833	against the tax imposed under s. 71.23, up to the amount of the taxes, for the first
834	834	3 taxable years that the claimant is doing business in this state as a film production
835	835	company, an amount that is equal to 25 percent of the following that the claimant
836	836	paid in the taxable year to establish a film production company in this state:
837	837	1. The purchase price of depreciable, tangible personal property.
838	838	2. The amount expended to acquire, construct, rehabilitate, remodel, or repair
839	839	real property.
840	840	(c) Limitations. 1. A claimant may claim the credit under par. (b) 1., if the
841	841	tangible personal property is purchased after December 31, 2023, and the personal
842	842	property is used exclusively in the claimant's business as a film production company.
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868	868	JK:skw
869	869	SECTION 14 ASSEMBLY BILL 1125
870	870	2. A claimant may claim the credit under par. (b) 2. for an amount expended
871	871	to construct, rehabilitate, remodel, or repair real property, if the claimant began the
872	872	physical work of construction, rehabilitation, remodeling, or repair, or any
873	873	demolition or destruction in preparation for the physical work, after December 31,
874	874	2023, or if the completed project is placed in service after December 31, 2023.
875	875	3. A claimant may claim the credit under par. (b) 2. for an amount expended
876	876	to acquire real property, if the property is not previously owned property and if the
877	877	claimant acquires the property after December 31, 2023, or if the completed project
878	878	is placed in service after December 31, 2023.
879	879	4. No claim may be allowed under this subsection unless the state film office
880	880	certifies, in writing, that the credits claimed under this subsection are for expenses
881	881	related to establishing a film production company in this state and the claimant
882	882	submits a copy of the certification with the claimant's return.
883	883	5. Partnerships, limited liability companies, and tax-option corporations may
884	884	not claim the credit under this subsection, but the eligibility for, and the amount of,
885	885	the credit are based on their payment of amounts under par. (b). A partnership,
886	886	limited liability company, or tax-option corporation shall compute the amount of
887	887	credit that each of its partners, members, or shareholders may claim and shall
888	888	provide that information to each of them. Partners, members of limited liability
889	889	companies, and shareholders of tax-option corporations may claim the credit in
890	890	proportion to their ownership interests.
891	891	(d) Administration. 1. Subsection (4) (e) to (h), as it applies to the credit under
892	892	sub. (4), applies to the credits under this subsection.
893	893	2. Any person, including a nonprofit entity described in section 501 (c) (3) of the
894	894	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
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920	920	LRB-4134/1
921	921	JK:skw
922	922	SECTION 14
923	923	ASSEMBLY BILL 1125
924	924	in whole or in part, to another person who is subject to the taxes imposed under s.
925	925	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
926	926	submits with the notification a copy of the transfer documents, and the department
927	927	certifies ownership of the credit. The transferee may first use the credit to offset tax
928	928	of the transferor in the taxable year in which the transfer occurs and may use the
929	929	credit only to offset tax in taxable years in which the credit is otherwise allowed to
930	930	be claimed and carried forward by the original claimant.
931	931	SECTION 15. 71.30 (3) (epr) of the statutes is created to read:
932	932	71.30 (3) (epr) Film production company investment credit under s. 71.28 (5h).
933	933	SECTION 16. 71.30 (3) (eps) of the statutes is created to read:
934	934	71.30 (3) (eps) Film production services credit under s. 71.28 (5f) (b) 1. and 3.
935	935	SECTION 17. 71.30 (3) (f) of the statutes is amended to read:
936	936	71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs
937	937	credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics
938	938	and information technology manufacturing zone credit under s. 71.28 (3wm),
939	939	business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k)
940	940	1., film production services credit under s. 71.28 (5f) (b) 2., and estimated tax
941	941	payments under s. 71.29.
942	942	SECTION 18. 71.34 (1k) (g) of the statutes is amended to read:
943	943	71.34 (1k) (g) An addition shall be made for credits computed by a tax-option
944	944	corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w),
945	945	(3wm), (3y), (4), (5), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r), (5rm), (6n), and (10) and
946	946	passed through to shareholders.
947	947	SECTION 19. 71.45 (2) (a) 10. of the statutes is amended to read:
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973	973	SECTION 19 ASSEMBLY BILL 1125
974	974	71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
975	975	computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5f), (5g),
976	976	(5h), (5i), (5j), (5k), (5r), (5rm), (6n), and (10) and not passed through by a
977	977	partnership, limited liability company, or tax-option corporation that has added that
978	978	amount to the partnership's, limited liability company's, or tax-option corporation's
979	979	income under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under
980	980	s. 71.47 (3), (3t), (4), (4m), and (5).
981	981	SECTION 20. 71.47 (5f) of the statutes is created to read:
982	982	71.47 (5f) FILM PRODUCTION SERVICES CREDIT. (a) Definitions. In this subsection:
983	983	1. “Accredited production" means a film, video, broadcast advertisement, or
984	984	television production, as approved by the state film office, for which the aggregate
985	985	salary and wages included in the cost of the production for the period ending 12
986	986	months after the month in which the principal filming or taping of the production
987	987	begins exceeds $100,000 for a production that is 30 minutes or longer or $50,000 for
988	988	a production that is less than 30 minutes. “Accredited production" does not include
989	989	any of the following, regardless of the production costs:
990	990	a. News, current events, or public programming or a program that includes
991	991	weather or market reports.
992	992	b. A talk show.
993	993	c. A production with respect to a questionnaire or contest.
994	994	d. A sports event or sports activity.
995	995	e. A gala presentation or awards show.
996	996	f. A finished production that solicits funds.
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1022	1022	SECTION 20
1023	1023	ASSEMBLY BILL 1125
1024	1024	g. A production for which the production company is required under 18 USC
1025	1025	2257 to maintain records with respect to a performer portrayed in a single media or
1026	1026	multimedia program.
1027	1027	h. A production produced primarily for industrial, corporate, or institutional
1028	1028	purposes.
1029	1029	2. “Claimant" means a film production company, as defined in sub. (5h) (a) 2.,
1030	1030	that operates an accredited production in this state, if the company owns the
1031	1031	copyright in the accredited production or has contracted directly with the copyright
1032	1032	owner or a person acting on the owner's behalf and if the company has a viable plan,
1033	1033	as determined by the state film office, for the commercial distribution of the finished
1034	1034	production.
1035	1035	3. “Commercial domicile" means the location from which a trade or business
1036	1036	is principally managed and directed, based on any factors the state film office
1037	1037	determines are appropriate, including the location where the greatest number of
1038	1038	employees of the trade or business work, the trade or business has its office or base
1039	1039	of operations, or from which the employees are directed or controlled.
1040	1040	4. “Production expenditures" means any expenditure that is incurred in this
1041	1041	state and directly used to produce an accredited production, including expenditures
1042	1042	for writing, budgeting, casting, location scouts, set construction and operation,
1043	1043	wardrobes, makeup, clothing accessories, photography, sound recording, sound
1044	1044	synchronization, sound mixing, lighting, editing, film processing, film transferring,
1045	1045	special effects, visual effects, renting or leasing facilities or equipment, renting or
1046	1046	leasing motor vehicles, food, lodging, and any other similar pre-production,
1047	1047	production, and post-production expenditure as determined by the state film office.
1048	1048	“Production expenditures" includes expenditures for music that is performed,
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1075	1075	SECTION 20 ASSEMBLY BILL 1125
1076	1076	composed, or recorded by a musician who is a resident of this state or published or
1077	1077	distributed by an entity that has its commercial domicile in this state; air travel that
1078	1078	is purchased from a travel agency or company that has its commercial domicile in
1079	1079	this state; and insurance that is purchased from an insurance agency or company
1080	1080	that has its commercial domicile in this state. “Production expenditures" does not
1081	1081	include salary or wages or expenditures for the marketing and distribution of an
1082	1082	accredited production.
1083	1083	(b) Filing claims. Subject to the limitations provided in this subsection, for
1084	1084	taxable years beginning after December 31, 2023, a claimant may claim as a credit
1085	1085	against the tax imposed under s. 71.43 any of the following amounts:
1086	1086	1. An amount equal to 25 percent of the salary or wages paid by the claimant
1087	1087	to the claimant's employees in the taxable year for services rendered in this state to
1088	1088	produce an accredited production and paid to employees who were residents of this
1089	1089	state at the time that they were paid.
1090	1090	2. An amount equal to 25 percent of the production expenditures paid by the
1091	1091	claimant in the taxable year to produce an accredited production.
1092	1092	3. An amount equal to the taxes imposed under ss. 77.52 and 77.53 that the
1093	1093	claimant paid in the taxable year on the purchase of tangible personal property and
1094	1094	taxable services that are used directly in producing an accredited production in this
1095	1095	state, including all stages from the final script stage to the distribution of the finished
1096	1096	production.
1097	1097	(c) Limitations. 1. No amount of the salary or wages paid under par. (b) 1. may
1098	1098	be the basis for a credit under this subsection unless the salary or wages are paid for
1099	1099	services rendered after December 31, 2023, and directly incurred to produce the
1100	1100	accredited production.
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1128	1128	SECTION 20
1129	1129	ASSEMBLY BILL 1125
1130	1130	2. The total amount of the credits that may be claimed by a claimant under par.
1131	1131	(b) 1. shall not exceed an amount equal to the first $250,000 of salary or wages paid
1132	1132	to each of the claimant's employees, as described in par. (b) 1., in the taxable year,
1133	1133	not including the salary or wages paid to the claimant's 2 highest-paid employees,
1134	1134	as described in par. (b) 1., in the taxable year, if the claimant's budgeted production
1135	1135	expenditures are $1,000,000 or more.
1136	1136	3. No credit may be allowed under this subsection unless the claimant files an
1137	1137	application with the state film office, at the time and in the manner prescribed by the
1138	1138	office, and the office approves the application. The claimant shall submit a copy of
1139	1139	the approved application with the claimant's return.
1140	1140	4. Partnerships, limited liability companies, and tax-option corporations may
1141	1141	not claim the credit under this subsection, but the eligibility for, and the amount of,
1142	1142	the credit are based on their payment of amounts under par. (b). A partnership,
1143	1143	limited liability company, or tax-option corporation shall compute the amount of
1144	1144	credit that each of its partners, members, or shareholders may claim and shall
1145	1145	provide that information to each of them. Partners, members of limited liability
1146	1146	companies, and shareholders of tax-option corporations may claim the credit in
1147	1147	proportion to their ownership interest.
1148	1148	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
1149	1149	credit under s. 71.28 (4), applies to the credits under this subsection. Section 71.28
1150	1150	(4) (f), as it applies to the credit under s. 71.28 (4), applies to the credits under par.
1151	1151	(b) 1. and 3.
1152	1152	2. If the allowable amount of the claim under par. (b) 2. exceeds the tax
1153	1153	otherwise due under s. 71.43 or no tax is due under s. 71.43, the amount of the claim
1154	1154	not used to offset the tax due shall be certified by the department of revenue to the
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1181	1181	SECTION 20 ASSEMBLY BILL 1125
1182	1182	department of administration for payment by check, share draft, or other draft
1183	1183	drawn from the appropriation account under s. 20.835 (2) (bm).
1184	1184	3. Any person, including a nonprofit entity described in section 501 (c) (3) of the
1185	1185	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
1186	1186	in whole or in part, to another person who is subject to the taxes imposed under s.
1187	1187	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
1188	1188	submits with the notification a copy of the transfer documents, and the department
1189	1189	certifies ownership of the credit. The transferee may first use the credit to offset tax
1190	1190	of the transferor in the taxable year in which the transfer occurs and may use the
1191	1191	credit only to offset tax in taxable years in which the credit is otherwise allowed to
1192	1192	be claimed and carried forward by the original claimant.
1193	1193	SECTION 21. 71.47 (5h) of the statutes is created to read:
1194	1194	71.47 (5h) FILM PRODUCTION COMPANY INVESTMENT CREDIT. (a) Definitions. In
1195	1195	this subsection:
1196	1196	1. “Claimant" means a person who files a claim under this subsection and who
1197	1197	does business in this state as a film production company.
1198	1198	2. “Film production company" means an entity that creates films, videos,
1199	1199	broadcast advertisement, or television productions, not including the productions
1200	1200	described under sub. (5f) (a) 1. a. to h.
1201	1201	3. “Physical work" does not include preliminary activities such as planning,
1202	1202	designing, securing financing, researching, developing specifications, or stabilizing
1203	1203	property to prevent deterioration.
1204	1204	4. “Previously owned property" means real property that the claimant or a
1205	1205	related person owned during the 2 years prior to doing business in this state as a film
1206	1206	production company and for which the claimant may not deduct a loss from the sale
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1234	1234	SECTION 21
1235	1235	ASSEMBLY BILL 1125
1236	1236	of the property to, or an exchange of the property with, the related person under
1237	1237	section 267 of the Internal Revenue Code.
1238	1238	5. “Used exclusively" means used to the exclusion of all other uses except for
1239	1239	other use not exceeding 5 percent of total use.
1240	1240	(b) Filing claims. Subject to the limitations provided in this subsection, for
1241	1241	taxable years beginning after December 31, 2023, a claimant may claim as a credit
1242	1242	against the tax imposed under s. 71.43, up to the amount of the taxes, for the first
1243	1243	3 taxable years that the claimant is doing business in this state as a film production
1244	1244	company, an amount that is equal to 25 percent of the following that the claimant
1245	1245	paid in the taxable year to establish a film production company in this state:
1246	1246	1. The purchase price of depreciable, tangible personal property.
1247	1247	2. The amount expended to acquire, construct, rehabilitate, remodel, or repair
1248	1248	real property.
1249	1249	(c) Limitations. 1. A claimant may claim the credit under par. (b) 1., if the
1250	1250	tangible personal property is purchased after December 31, 2023, and the personal
1251	1251	property is used exclusively in the claimant's business as a film production company.
1252	1252	2. A claimant may claim the credit under par. (b) 2. for an amount expended
1253	1253	to construct, rehabilitate, remodel, or repair real property, if the claimant began the
1254	1254	physical work of construction, rehabilitation, remodeling, or repair, or any
1255	1255	demolition or destruction in preparation for the physical work, after December 31,
1256	1256	2023, or if the completed project is placed in service after December 31, 2023.
1257	1257	3. A claimant may claim the credit under par. (b) 2. for an amount expended
1258	1258	to acquire real property, if the property is not previously owned property and if the
1259	1259	claimant acquires the property after December 31, 2023, or if the completed project
1260	1260	is placed in service after December 31, 2023.
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1287	1287	SECTION 21 ASSEMBLY BILL 1125
1288	1288	4. No claim may be allowed under this subsection unless the state film office
1289	1289	certifies, in writing, that the credits claimed under this subsection are for expenses
1290	1290	related to establishing a film production company in this state and the claimant
1291	1291	submits a copy of the certification with the claimant's return.
1292	1292	5. Partnerships, limited liability companies, and tax-option corporations may
1293	1293	not claim the credit under this subsection, but the eligibility for, and the amount of,
1294	1294	the credit are based on their payment of amounts under par. (b). A partnership,
1295	1295	limited liability company, or tax-option corporation shall compute the amount of
1296	1296	credit that each of its partners, members, or shareholders may claim and shall
1297	1297	provide that information to each of them. Partners, members of limited liability
1298	1298	companies, and shareholders of tax-option corporations may claim the credit in
1299	1299	proportion to their ownership interests.
1300	1300	(d) Administration. 1. Section 71.28 (4) (e) to (h), as it applies to the credit
1301	1301	under s. 71.28 (4), applies to the credits under this subsection.
1302	1302	2. Any person, including a nonprofit entity described in section 501 (c) (3) of the
1303	1303	Internal Revenue Code, may sell or otherwise transfer a credit under this subsection,
1304	1304	in whole or in part, to another person who is subject to the taxes imposed under s.
1305	1305	71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and
1306	1306	submits with the notification a copy of the transfer documents, and the department
1307	1307	certifies ownership of the credit. The transferee may first use the credit to offset tax
1308	1308	of the transferor in the taxable year in which the transfer occurs and may use the
1309	1309	credit only to offset tax in taxable years in which the credit is otherwise allowed to
1310	1310	be claimed and carried forward by the original claimant.
1311	1311	SECTION 22. 71.49 (1) (epr) of the statutes is created to read:
1312	1312	71.49 (1) (epr) Film production company investment credit under s. 71.47 (5h).
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1340	1340	SECTION 23
1341	1341	ASSEMBLY BILL 1125
1342	1342	SECTION 23. 71.49 (1) (eps) of the statutes is created to read:
1343	1343	71.49 (1) (eps) Film production services credit under s. 71.47 (5f) (b) 1. and 3.
1344	1344	SECTION 24. 71.49 (1) (f) of the statutes is amended to read:
1345	1345	71.49 (1) (f) The total of farmland preservation credit under subch. IX, jobs
1346	1346	credit under s. 71.47 (3q), enterprise zone jobs credit under s. 71.47 (3w), business
1347	1347	development credit under s. 71.47 (3y), research credit under s. 71.47 (4) (k) 1., film
1348	1348	production services credit under s. 71.47 (5f) (b) 2., and estimated tax payments
1349	1349	under s. 71.48.
1350	1350	(END)
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