2017 NC H 537, Introduced

Transcription

1 2017 NC H 537, Introduced North Carolina SUMMARY: Makes base budget appropriations for current operations of state departments, institutions, and agencies, and for other purposes.~same AS: NC S 430# Legislative History and Analysis Changes in Bill text reflected as: Text Deleted Text Added Text Vetoed Current Legislative Status 03/29/2017 FILED. 03/30/2017 INTRODUCED. 03/30/2017 To HOUSE Committee on APPROPRIATIONS. ~ session: North Carolina General Assembly of North Carolina - Session of 2017 cite: 2017 NC H 537 Introduced March 30, 2017 Dollar GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2017 H 1 HOUSE BILL 537* (Public) Short Title: 2017 Governor's Budget. Sponsors: Representatives Dollar, Johnson, McGrady, and Lambeth (Primary Sponsors). For a complete list of sponsors, refer to the North Carolina General Assembly web site. Referred to: Appropriations, if favorable, Finance March 30, 2017 A BILL TO BE ENTITLED AN ACT TO MAKE BASE BUDGET APPROPRIATIONS FOR CURRENT OPERATIONS OF STATE DEPARTMENTS, INSTITUTIONS, AND AGENCIES, AND FOR OTHER PURPOSES. The General Assembly of North Carolina enacts: PART I. INTRODUCTION AND TITLE OF ACT TITLE OF ACT SECTION 1.1. This act shall be known as the Current Operations and Capital Improvements Appropriations Act of INTRODUCTION SECTION 1.2. The appropriations made in this act are for maximum amounts necessary to 1

2 provide the services and accomplish the purposes described in the budget. Savings shall be effected where the total amounts appropriated are not required to perform these services and accomplish these purposes and, except as allowed by the State Budget Act or this act, the savings shall revert to the appropriate fund at the end of each fiscal year. PART II. CURRENT OPERATIONS AND EXPANSION GENERAL FUND GENERAL FUND AVAILABILITY STATEMENT SECTION 2.2.(a) The General Fund availability used in developing the budget is shown below: FY FY Total General Fund Availability $ 23,486,185,739 $24,155,400,000 Adjustments to Availability: Film & Entertainment Tax Incentive 0 (20,000,000) FILM AND ENTERTAINMENT TAX INCENTIVE SECTION 38.2.(a) G.S. 143B A is repealed. SECTION 38.2.(b) G.S. 150B-1(d)(18a) is repealed. SECTION 38.2.(c)G.S is reenacted as it existed immediately before its repeal and reads as rewritten: Section Credit for qualifying expenses of a production company. (a) Definitions. - The following definitions apply in this section: (1) Award show. - An awards show is television programming involving the filming of a ceremony in which individuals, groups, or organizations are given an award. (2) Employee. - A person who is employed for consideration and whose wages are subject to withholding under Article 4A of Chapter 105 of the General Statutes. (1) (3) Highly compensated individual. - An individual who directly or indirectly receives compensation in excess of one million dollars ($1,000,000) for personal services with respect to a single production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual. (2) (4) Live sporting event. - A scheduled sporting competition, game, or race that is not originated by a production company, but originated solely by an amateur, collegiate, or professional organization, institution, or association for live or tape-delayed television or satellite broadcast. A live sporting event does not include commercial advertising, an episodic television series, a television pilot, a music video, a motion picture, or a documentary production in which sporting events are presented through archived historical footage or similar footage taken at least 2

3 30 days before it is used. (5) Loan-out company. - A personal service corporation that employs an individual who is hired by a film or digital media production company. (6) Production. - Any of the following: a. A motion picture intended for commercial distribution to a motion picture theater or directly to the consumer viewing market that has a running time of at least 75 minutes. b. A television series or a commercial for theatrical or television viewing, made-for-television movie, or production intended for on-line distribution. For video and television series, one production is all of the episodes of the series produced for a single season. (3) (7) Production company. - Defined in G.S (4) (8) Qualifying expenses. - The sum of the following amounts spent in this State by a production company in connection with a production, less the amount in excess of one million dollars ($1,000,000) paid to a highly compensated individual: a. Goods and services leased or purchased. For goods with a purchase price of twenty-five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed. Goods and services includes the costs of tangible and intangible property used for, and services performed primarily and customarily in, production, including preproduction and postproduction and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. Goods and services exclude costs for development, marketing, and distribution; costs of financing for the production, of bonding related to the production, of production-related insurance coverage obtained on the production; and expenses for insurance coverage purchased from a related member. b. Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter. Payments made to a loan-out company for services provided in North Carolina shall be subject to gross income tax withholding at the applicable rate under the Article 4 of this Chapter. c. The cost of production-related insurance coverage obtained on the production. Expenses for insurance coverage purchased from a related member are not qualifying expenses. d. c. Employee fringe contributions, including health, pension, and welfare contributions. e. d. Per diems, stipends, and living allowances paid for work being performed in this State. (5) (9) Related member. - Defined in G.S A. (b) Credit. - A taxpayer that is a production company and has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) as set out in this subsection with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production company's qualifying expenses. For the purposes of this section, in the case of an episodic television series, an entire season of episodes is one production. The qualifying expenses are at least the following: (1) For a feature-length film, five million dollars ($5,000,000). (2) For a television series, one million dollars ($1,000,000) per episode. (3) For a commercial for theatrical or television viewing or on-line distribution, two hundred fifty thousand dollars ($250,000). The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year. (b1) Repealed by Session Laws , s. 1, effective January 1, (c) Pass-Through Entity. - Notwithstanding the provisions of G.S and G.S , a pass-through entity that qualifies for a credit provided in this section does not 3

4 distribute the credit among any of its owners. The pass-through entity is considered the taxpayer for purposes of claiming a credit allowed by this section. If a return filed by a pass-through entity indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under this section does not affect the entity's payment of tax on behalf of its owners. (d) Return. - A taxpayer may claim a credit allowed by this section on a return filed for the taxable year in which the production activities are completed. The return must state the name of the production, and the taxpayer must provide a description of the production, production and a detailed accounting of the qualifying expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit by the Secretary before the credit is allowed. (e) Credit Refundable. - If a credit allowed by this section exceeds the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer. The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are subtracted before refundable credits. (f) Limitations. - The amount of credit allowed under this section with respect to a per production that is a feature film may not exceed twenty million dollars ($20,000,000). shall not exceed the following amounts: (1) For a feature-length film, twelve million dollars ($12,000,000). (2) For a television series, nine million dollars ($9,000,000) per season. (3) For a commercial for theatrical or television viewing or on-line distribution, two hundred fifty thousand dollars ($250,000). No credit is allowed under this section for any production that satisfies one or more of the following conditions: (1) It is has the primary purpose of political advertising. advertising, fundraising, or marketing of a product or service other than by commercial. (2) It is a television production of a news program or live sporting event. program, including weather, financial market, and current events reports. (3) It is a live sporting event, including pre-event and post-event coverage and scripted sports entertainment. (4) It is a talk, game, or awards show or a gala event. (3) (5) It contains material that is obscene, obscene, as defined in G.S G.S , or that is harmful to minors, as defined in G.S (4) (6) It is a radio production. (7) It fails to contain in the end credits of the production a statement that the production was Filmed in North Carolina, a logo provided by the North Carolina Film Office, and an acknowledgement of the regional film office responsible for the geographic area in which the filming of the production occurred. (8) It has received a grant from the Film and Entertainment Grant Fund set out in G.S. 143B A. (g) Substantiation. - A taxpayer allowed a credit under this section must maintain and make available for inspection any information or records required by the Secretary of Revenue. The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The Secretary may consult with the North Carolina Film Office of the Department of Commerce and the regional film commissions in order to determine the amount of qualifying expenses. (h) Report. - The Department must include in the economic incentives report required by G.S the following information, itemized by taxpayer: (1) The location of sites used in a production for which a credit was taken. (2) The qualifying expenses for which a credit was taken, classified by whether the expenses 4

5 were for goods, services, or compensation paid by the production company. (3) The number of people employed in the State with respect to credits taken. (4) The total cost to the General Fund of the credits taken. (i) Repealed by Session Laws , s. 2, effective for taxable years beginning on or after January 1, (j) NC Film Office. Notification. - To claim a credit under this section, a taxpayer must notify the Department of Commerce North Carolina Film Office of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Department. For productions that have production credits, a taxpayer claiming a credit under this section must acknowledge in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the production occurred. Office. Additionally, the production company must offer marketing opportunities to be evaluated by the North Carolina Film Office to ensure that they offer promotional value to the State. (k) Sunset. - This section is repealed for qualifying expenses occurring on or after January 1, SECTION 38.2.(d) G.S is reenacted as it existed immediately before its repeal and reads as rewritten: Section Credit for qualifying expenses of a production company. (a) Definitions. - The following definitions apply in this section: (1) Award show. - An awards show is television programming involving the filming of a ceremony in which individuals, groups, or organizations are given an award. (2) Employee. - A person who is employed for consideration and whose wages are subject to withholding under Article 4A of Chapter 105 of the General Statutes. (1) (3) Highly compensated individual. - An individual who directly or indirectly receives compensation in excess of one million dollars ($1,000,000) for personal services with respect to a single production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual. (2) (4) Live sporting event. - A scheduled sporting competition, game, or race that is not originated by a production company, but originated solely by an amateur, collegiate, or professional organization, institution, or association for live or tape-delayed television or satellite broadcast. A live sporting event does not include commercial advertising, an episodic television series, a television pilot, a music video, a motion picture, or a documentary production in which sporting events are presented through archived historical footage or similar footage taken at least 30 days before it is used. (5) Loan-out company. - A personal service corporation that employs an individual who is hired by a film or digital media production company. (6) Production. - Any of the following: a. A motion picture intended for commercial distribution to a motion picture theater or directly to the consumer viewing market that has a running time of at least 75 minutes. b. A television series or a commercial for theatrical or television viewing, made-for-television movie, or production intended for on-line distribution. For video and television series, one production is all of the episodes of the series produced for a single season. (3) (7) Production company. - Defined in G.S (4) (8) Qualifying expenses. - The sum of the following amounts spent in this State by a production company in connection with a production, less the amount paid in excess of one 5

6 million dollars ($1,000,000) to a highly compensated individual: a. Goods and services leased or purchased. For goods with a purchase price of twenty-five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed. Goods and services includes the costs of tangible and intangible property used for, and services performed primarily and customarily in, production, including preproduction and postproduction and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. Goods and services exclude costs for development, marketing, and distribution; costs of financing for the production, of bonding related to the production, of production-related insurance coverage obtained on the production; and expenses for insurance coverage purchased from a related member. b. Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter. Payments made to a loan-out company for services provided in North Carolina shall be subject to gross income tax withholding at the applicable rate under the Article 4 of this Chapter. c. The cost of production-related insurance coverage obtained on the production. Expenses for insurance coverage purchased from a related member are not qualifying expenses. d. c. Employee fringe contributions, including health, pension, and welfare contributions. e. d. Per diems, stipends, and living allowances paid for work being performed in this State. (5) (9) Related member. - Defined in G.S A. (b) Credit. - A taxpayer that is a production company and has qualifying expenses of at least two hundred fifty thousand dollars ($250,000) as set out in this subsection with respect to a production is allowed a credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production company's qualifying expenses. For the purposes of this section, in the case of an episodic television series, an entire season of episodes is one production. The qualifying expenses are at least the following: (1) For a feature-length film, five million dollars ($5,000,000). (2) For a television series, one million dollars ($1,000,000) per episode. (3) For a commercial for theatrical or television viewing or on-line distribution, two hundred fifty thousand dollars ($250,000). The credit is computed based on all of the taxpayer's qualifying expenses incurred with respect to the production, not just the qualifying expenses incurred during the taxable year. (b1) Repealed by Session Laws , s. 2, effective January 1, (c) Pass-Through Entity. - Notwithstanding the provisions of G.S and G.S , a pass-through entity that qualifies for a credit provided in this section does not distribute the credit among any of its owners. The pass-through entity is considered the taxpayer for purposes of claiming a credit allowed by this section. If a return filed by a pass-through entity indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under this section does not affect the entity's payment of tax on behalf of its owners. (d) Return. - A taxpayer may claim a credit allowed by this section on a return filed for the taxable year in which the production activities are completed. The return must state the name of the production, and the taxpayer must provide a description of the production, production and a detailed accounting of the qualifying expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit by the Secretary before the credit is allowed. (e) Credit Refundable. - If a credit allowed by this section exceeds the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary must refund the excess to the taxpayer. The refundable excess is governed by the provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In computing the amount of tax against which multiple credits are allowed, nonrefundable credits are 6

7 subtracted before refundable credits. (f) Limitations. - The amount of credit allowed under this section with respect to a per production that is a feature film may not exceed twenty million dollars ($20,000,000). shall not exceed the following amounts: (1) For a feature-length film, twelve million dollars ($12,000,000). (2) For a television series, nine million dollars ($9,000,000) per season. (3) For a commercial for theatrical or television viewing or on-line distribution, two hundred fifty thousand dollars ($250,000). No credit is allowed under this section for any production that satisfies one or more of the following conditions: (1) It is has the primary purpose of political advertising. advertising, fundraising, or marketing, other than by commercial, a product, or services. (2) It is a television production of a news program or live sporting event. program, including weather, financial market, and current events reports. (3) It is a live sporting event, including pre-event and post-event coverage and scripted sports entertainment. (4) It is a talk, game, or awards show or a gala event. (3) (5) It contains material that is obscene, obscene, as defined in G.S G.S , or that is harmful to minors, as defined in G.S (4) (6) It is a radio production. (7) It fails to contain in the end credits of the production a statement that the production was Filmed in North Carolina, a logo provided by the North Carolina Film Office, and an acknowledgement of the regional film office responsible for the geographic area in which the filming of the production occurred. (8) It has received a grant from the Film and Entertainment Grant Fund set out in G.S. 143B A. (g) Substantiation. - A taxpayer allowed a credit under this section must maintain and make available for inspection any information or records required by the Secretary of Revenue. The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The Secretary may consult with the North Carolina Film Office of the Department of Commerce and the regional film commissions in order to determine the amount of qualifying expenses. (h) Report. - The Department must include in the economic incentives report required by G.S the following information itemized by taxpayer: (1) The location of sites used in a production for which a credit was taken. (2) The qualifying expenses for which a credit was taken, classified by whether the expenses were for goods, services, or compensation paid by the production company. (3) The number of people employed in the State with respect to credits taken. (4) The total cost to the General Fund of the credits taken. (i) Repealed by Session Laws , s. 4, effective for taxable years beginning on and after January 1, (j) NC Film Office. Notification. - To claim a credit under this section, a taxpayer must notify the Department of Commerce North Carolina Film Office of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Department. For productions that have production credits, a taxpayer claiming a credit under this section must acknowledge in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area 7

8 in which the filming of the production occurred. Office. Additionally, the production company must offer marketing opportunities to be evaluated by the North Carolina Film Office to ensure that they offer promotional value to the State. (k) Sunset. - This section is repealed for qualifying expenses occurring on or after January 1, SECTION 38.2.(e) This section becomes effective January 1, 2018, and applies to productions with qualifying expenses occurring on or after January 1,