LRB-4176/1
JK:lmk:ch
2005 - 2006 LEGISLATURE
February 3, 2006 - Introduced by Senators Kanavas, Darling, Kedzie, Lassa,
Risser and Plale, cosponsored by Representatives Gielow, Wasserman,
Zepnick, Kerkman, F. Lasee, Vos, Loeffelholz, Strachota, Sherman, Lehman,
Stone, Fields, Berceau, Sheridan, Pettis, Newcomer, Cullen, Seidel,
Molepske, Toles, Pope-Roberts and Kleefisch. Referred to Committee on
Job Creation, Economic Development and Consumer Affairs.
SB563,1,8
1An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.10 (4) (i), 71.21 (4), 71.26
2(2) (a), 71.34 (1) (g), 71.45 (2) (a) 10. and 77.92 (4); and
to create 20.835 (2) (bm),
371.07 (5f), 71.07 (5h), 71.10 (4) (en), 71.28 (5f), 71.28 (5h), 71.30 (3) (epp), 71.30
4(3) (epr), 71.47 (5f), 71.47 (5h), 71.49 (1) (epp) and 71.49 (1) (epr) of the statutes;
5relating to: creating income and franchise tax credits for expenses related to
6film production services and for capital investments made by a film production
7company, requiring the exercise of rule-making authority, and making an
8appropriation.
Analysis by the Legislative Reference Bureau
This bill creates income and franchise tax credits for film production
companies. Under the bill, a film production company may claim a credit that is
equal to 25 percent of the salary or wages paid to the company's employees in the
taxable year for services rendered in this state to produce a film, video, electronic
game, broadcast advertisement, or television production, as approved by the
Department of Commerce (Commerce), and paid to employees who were residents
of this state at the time that they were paid. The total amount of the credits that may
be claimed by a taxpayer may not exceed an amount that is equal to the first $25,000
of salary and wages paid to each of the taxpayer's employees in the taxable year, not
including the salary or wages paid to the taxpayer's two highest paid employees in
the taxable year. If the total amount of the credits claimed by a taxpayer exceeds the
taxpayer's tax liability, the state will not issue a refund, but the taxpayer may carry
forward any remaining credit to subsequent taxable years.
Under the bill, a film production company may claim an income and franchise
tax credit in an amount that is equal to 25 percent of the production expenditures
paid by the company in the taxable year to produce a film, video, electronic game,
broadcast advertisement, or television production. If the total amount of the credits
claimed by the company exceeds the company's tax liability, the state will issue a
refund.
The bill also allows a film production company to claim an income and franchise
tax credit, for the first 3 taxable years that the company is doing business in this
state, in an amount that is equal to 15 percent of the amount that the claimant paid
in the taxable year to purchase depreciable tangible personal property or to acquire,
construct, rehabilitate, remodel, or repair real property.
Under the bill, a film production company may claim an income and franchise
tax credit that is equal to the amount of sales and use taxes that the claimant paid
for tangible personal property and taxable services that are used to produce a film,
video, electronic game, broadcast advertisement, or television production in this
state.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB563, s. 1
1Section
1. 20.835 (2) (bm) of the statutes is created to read:
SB563,2,32
20.835
(2) (bm)
Film production services credit. A sum sufficient to make the
3payments under ss. 71.07 (5f) (d) 2., 71.28 (5f) (d) 2., and 71.47 (5f) (d) 2.
SB563, s. 2
4Section
2. 71.05 (6) (a) 15. of the statutes is amended to read:
SB563,2,95
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
6(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b),
and (5d)
, (5f),
7and (5h) and not passed through by a partnership, limited liability company, or
8tax-option corporation that has added that amount to the partnership's, company's,
9or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).
SB563, s. 3
10Section
3. 71.07 (5f) of the statutes is created to read:
SB563,3,1
171.07
(5f) Film production services credit. (a)
Definitions. In this subsection:
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1. "Accredited production" means a film, video, electronic game, broadcast
3advertisement, or television production, as approved by the department of
4commerce, for which the aggregate salary and wages included in the cost of the
5production for the period ending 12 months after the month in which the principal
6filming or taping of the production begins exceeds $100,000 for a production that is
730 minutes or longer or $50,000 for a production that is less than 30 minutes.
8"Accredited production" does not include any of the following, regardless of the
9production costs:
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a. News, current events, or public programming or a program that includes
11weather or market reports.
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b. A talk show.
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c. A production with respect to a questionnaire or contest.
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d. A sports event or sports activity.
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e. A gala presentation or awards show.
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f. A finished production that solicits funds.
SB563,3,1917g. A production for which the production company is required under
18 USC
182257 to maintain records with respect to a performer portrayed in a single media or
19multimedia program.
SB563,3,2120
h. A production produced primarily for industrial, corporate, or institutional
21purposes.
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2. "Claimant" means a film production company that operates an accredited
23production in this state, if the company owns the copyright in the accredited
24production or has contracted directly with the copyright owner or a person acting on
1the owner's behalf and if the company has a viable plan, as determined by the
2department of commerce, for the commercial distribution of the finished production.
SB563,4,163
3. "Production expenditures" means any expenditures that are incurred in this
4state and directly used to produce an accredited production, including expenditures
5for set construction and operation, wardrobes, make-up, clothing accessories,
6photography, sound recording, sound synchronization, sound mixing, lighting,
7editing, film processing, film transferring, special effects, visual effects, renting or
8leasing facilities or equipment, renting or leasing motor vehicles, food, lodging, and
9any other similar expenditure as determined by the department of commerce.
10"Production expenditures" include expenditures for music that is performed,
11composed, or recorded by a musician who is a resident of this state or published or
12distributed by an entity that has its headquarters in this state; air travel that is
13purchased from a travel agency or company that has its headquarters in this state;
14and insurance that is purchased from an insurance agency or company that has its
15headquarters in this state. "Production expenditures" do not include expenditures
16for the marketing and distribution of an accredited production.
SB563,4,1917
(b)
Filing claims. Subject to the limitations provided in this subsection, for
18taxable years beginning after December 31, 2005, a claimant may claim as a credit
19against the tax imposed under s. 71.02 any of the following amounts:
SB563,4,2320
1. An amount equal to 25 percent of the salary or wages paid by the claimant
21to the claimant's employees in the taxable year for services rendered in this state to
22produce an accredited production and paid to employees who were residents of this
23state at the time that they were paid.
SB563,4,2524
2. An amount equal to 25 percent of the production expenditures paid by the
25claimant in the taxable year to produce an accredited production.
SB563,5,5
13. An amount equal to the taxes imposed under ss. 77.52 and 77.53 that the
2claimant paid in the taxable year on the purchase of tangible personal property and
3taxable services that are used directly in producing an accredited production in this
4state, including all stages from the final script stage to the distribution of the finished
5production.
SB563,5,96
(c)
Limitations. 1. No amount of the salary or wages paid under par. (b) 1. may
7be the basis for a credit under this subsection unless the salary or wages are paid for
8services rendered after December 31, 2005, and directly incurred to produce the
9accredited production.
SB563,5,1410
2. The total amount of the credits that may be claimed by a claimant under par.
11(b) 1. shall not exceed an amount equal to the first $25,000 of salary or wages paid
12to each of the claimant's employees, as described in par. (b), in the taxable year, not
13including the salary or wages paid to the claimant's 2 highest paid employees, as
14described in par. (b), in the taxable year.
SB563,5,1815
3. No credit may be allowed under this subsection unless the claimant files an
16application with the department of commerce, at the time and in the manner
17prescribed by the department of commerce, and the department of commerce
18approves the application.
SB563,6,219
4. Partnerships, limited liability companies, and tax-option corporations may
20not claim the credit under this subsection, but the eligibility for, and the amount of,
21the credit are based on their payment of wages and salaries. A partnership, limited
22liability company, or tax-option corporation shall compute the amount of credit that
23each of its partners, members, or shareholders may claim and shall provide that
24information to each of them. Partners, members of limited liability companies, and
1shareholders of tax-option corporations may claim the credit in proportion to their
2ownership interest.
SB563,6,63
(d)
Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
4credit under s. 71.28 (4), applies to the credits under this subsection. Section 71.28
5(4) (f), as it applies to the credit under s. 71.28 (4), applies to the credits under par.
6(b) 1. and 3.
SB563,6,117
2. If the allowable amount of the claim under par. (b) 2. exceeds the tax
8otherwise due under s. 71.02 or no tax is due under s. 71.02, the amount of the claim
9not used to offset the tax due shall be certified by the department of revenue to the
10department of administration for payment by check, share draft, or other draft
11drawn from the appropriation account under s. 20.835 (2) (bm).
SB563, s. 4
12Section
4. 71.07 (5h) of the statutes is created to read:
SB563,6,1413
71.07
(5h) Film production company investment credit. (a)
Definitions. In
14this subsection:
SB563,6,1615
1. "Claimant" means a person who files a claim under this subsection and who
16does business in this state as a film production company.
SB563,6,1917
2. "Film production company" means an entity that creates films, videos,
18electronic games, broadcast advertisement, or television productions, not including
19the productions described under s. 71.07 (5f) (a) 1. a. to h.
SB563,6,2220
3. "Physical work" does not include preliminary activities such as planning,
21designing, securing financing, researching, developing specifications, or stabilizing
22property to prevent deterioration.
SB563,7,223
4. "Previously owned property" means real property that the claimant or a
24related person owned during the 2 years prior to doing business in this state as a film
25production company and for which the claimant may not deduct a loss from the sale
1of the property to, or an exchange of the property with, the related person under
2section
267 of the Internal Revenue Code.
SB563,7,83
(b)
Filing claims. Subject to the limitations provided in this subsection, for
4taxable years beginning after December 31, 2005, a claimant may claim as a credit
5against the tax imposed under s. 71.02, up to the amount of the taxes, for the first
63 taxable years that the claimant is doing business in this state as a film production
7company, an amount that is equal to 15 percent of the following that the claimant
8paid in the taxable year to establish a film production company in this state:
SB563,7,99
1. The purchase price of depreciable, tangible personal property.
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2. The amount expended to acquire, construct, rehabilitate, remodel, or repair
11real property.
SB563,7,1512
(c)
Limitations. 1. A claimant may claim the credit under par. (b) 1., if the
13tangible personal property is purchased after December 31, 2005, and the personal
14property is used for at least 50 percent of its use in the claimant's business as a film
15production company.
SB563,7,2016
2. A claimant may claim the credit under par. (b) 2. for an amount expended
17to construct, rehabilitate, remodel, or repair real property, if the claimant began the
18physical work of construction, rehabilitation, remodeling, or repair, or any
19demolition or destruction in preparation for the physical work, after December 31,
202005, or if the completed project is placed in service after December 31, 2005.
SB563,7,2421
3. A claimant may claim the credit under par. (b) 2. for an amount expended
22to acquire real property, if the property is not previously owned property and if the
23claimant acquires the property after December 31, 2005, or if the completed project
24is placed in service after December 31, 2005.
SB563,8,4
14. No claim may be allowed under this subsection unless the department of
2commerce certifies, in writing, that the credits claimed under this subsection are for
3expenses related to establishing a film production company in this state and the
4claimant submits a copy of the certification with the claimant's return.
SB563,8,125
5. Partnerships, limited liability companies, and tax-option corporations may
6not claim the credit under this subsection, but the eligibility for, and the amount of,
7the credit are based on their payment of amounts under par. (b). A partnership,
8limited liability company, or tax-option corporation shall compute the amount of
9credit that each of its partners, members, or shareholders may claim and shall
10provide that information to each of them. Partners, members of limited liability
11companies, and shareholders of tax-option corporations may claim the credit in
12proportion to their ownership interests.