Rule-Making Notices
Notice of Hearing
Commerce
Financial Resources for Businesses and Communities, Chs.
Comm 100—
NOTICE IS HEREBY GIVEN that pursuant to section
560.206 (4) of the Statutes, the Department of Commerce will hold a public hearing on proposed rule changes in Chapter
Comm 133, relating to tax credits for film production services and film production company investments, and affecting small businesses.
Hearing Information
Date and Time:
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Location:
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Wednesday
October 27, 2010
10:00 a.m.
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Thompson Commerce Center Third Floor, Room 3B
201 West Washington Avenue
Madison, WI
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This hearing will be held in an accessible facility. If you have special needs or circumstances that may make communication or accessibility difficult at the hearing, please call Sam Rockweiler at (608) 266-0797 or at Contact Through Relay at least 10 days prior to the hearing date. Accommodations such as interpreters, English translators, or materials in audio tape format will, to the fullest extent possible, be made available upon a request from a person with a disability.
Submittal of Written Comments
Interested persons are invited to appear at the hearing and present comments on the proposed rules. Persons making oral presentations are requested to submit their comments in writing, via e-mail. Persons submitting comments will not receive individual responses. The hearing record on this rulemaking will remain open until
October 29, 2010, to permit submittal of written comments from persons who are unable to attend the hearing or who wish to supplement testimony offered at the hearing. E-mail comments should be sent to
sam.rockweiler@wi.gov. If e-mail submittal is not possible, written comments may be submitted to Sam Rockweiler, Department of Commerce, Division of Environmental and Regulatory Services, P.O. Box 14427, Madison, WI 53708-0427.
Copies of Proposed Rules
Paper copies may be obtained without cost from Sam Rockweiler at the Department of Commerce, Division of Environmental and Regulatory Services, P.O. Box 14427, Madison, WI 53707, or at
sam.rockweiler@wi.gov, or at telephone (608) 266-0797, or at Contact Through Relay. Copies will also be available at the public hearing.
Analysis Prepared by Department of Commerce
Statutes interpreted
Statutory authority
Explanation of agency authority
Section
560.206 (4) of the Statutes requires the Department to promulgate rules for administering a program to accredit film productions for the purposes of sections
71.07 (5f) and
(5h),
71.28 (5f) and
(5h), and
71.47 (5f) and
(5h) of the Statutes. Section
227.11 (2) (a) of the Statutes authorizes the Department to promulgate rules interpreting the provisions of any Statute administered by the Department.
Related statute or rule
The Department has rules for several other programs associated with tax credits, but none of those rules specifically relate to accrediting film productions and to establishing or operating film production companies.
Plain language analysis
The proposed rule changes would update chapter Comm 133 to make it consistent with the portions of
2007 Wisconsin Act 20 and
2009 Wisconsin Act 28 that relate to tax credits for film production services and film production company investments. The changes include (1) modifying the definition of previously owned property; (2) extending the tax credits to operating a film production company, rather than only establishing it; (3) modifying the definition of claimant; (4) clarifying which expenses are ineligible; (4) requiring spending at least 35 percent of the total budget for an accredited production in Wisconsin; (5) requiring the purchase of tangible personal property or items, property, or goods to be sourced to Wisconsin; (6) requiring an application fee of 2 percent of the production expenditures or $5,000, whichever is less; and (7) capping the total annual, aggregated credit at $500,000.
Comparison with federal regulations
A federal tax incentive program for film and television productions is available under Section
181 of the Internal Revenue Code. Under the program, investors in qualifying film and television productions may elect to immediately deduct the cost of qualifying film expenditures in the year the expenditures occur. The program is in effect for qualifying productions commencing before January 1, 2009. The federal deduction applies to qualifying productions up to $15 million, or up to $20 million if the production occurs in a qualifying distressed area. The incentive can be used in conjunction with any state film incentive. The Web site reference for the section in the Code is:
http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000181----000-.html.
Comparison with rules in adjacent states
Michigan:
Michigan has a 40 percent refundable tax credit, across the board on Michigan expenditures. Claimants can claim an extra 2 percent if filming in one of the core communities in the state. The claimant must spend at least $50,000 in Michigan to be eligible. There is also a 30 percent tax credit for non-resident, below-the-line crew members. There is a $2,000,000 salary cap per employee per production. There is no other cap and no sunset. No corresponding administrative rules were found, but the corresponding Web site is
http://www.michiganfilmoffice.org/For-Producers/Incentives/Default.aspx.
Minnesota:
Minnesota offers a reimbursement of up to 15 percent of production costs incurred in Minnesota by eligible productions that spend $5,000,000 or less in Minnesota within 12 months from the date of project certification, and up to 20 percent for productions that spend in excess of $5,000,000 in Minnesota within 12 months of project certification. Reimbursement of up to 20 percent of film production costs are made to productions that either (1) shoot 60 percent of production days outside of the metropolitan area as defined in section 473.121, subdivision 2 of the statutes within 12 months from the date of project certification; or (2) spend at least 60 percent of the total production budget outside of the metropolitan area as defined in section 473.121, subdivision 2 within 12 months from the date of project certification. No corresponding administrative rules were found, but the corresponding Web site is
http://www.mnfilmtv.org/incentives.
Iowa:
Iowa has suspended the Iowa Film Program until July 1, 2013, and does not have financial assistance or tax credits available for film projects. The corresponding Web site is
http://www.iowalifechanging.com/film/.
Illinois:
In December of 2008, Illinois passed the Illinois Film Production Tax Credit Act, which offers producers a credit of 30 percent of all qualified expenditures, including post-production, and has no sunset. This includes a 30 percent credit on Illinois salaries up to $100,000 per worker. Applicants can receive an additional 15 percent tax credit on the salaries of individuals who live in an economically disadvantaged area. Illinois Production Spending includes tangible, personal property and services purchased from Illinois vendors, and compensation paid to Illinois resident employees. The claimant must spend at least $50,000 in Illinois Production Spending for a project 29 minutes or under. The claimant must spend at least $100,000 in Illinois Production Spending for a project 30 minutes or over. The corresponding Web site is:
http://www.illinoisfilm.biz/ Administrative rules are at:
http://www.illinoisfilm.biz/IFO/tax/2007TaxCreditRules.pdf.
Summary of factual data and analytical methodologies
The data and methodology for developing these rules were derived from and consisted of (1) incorporating the applicable criteria in
2007 Wisconsin Act 20 and in
2009 Wisconsin Act 28; (2) soliciting input from the Department of Revenue; and (3) reviewing Internet-based sources of related federal, state, and private-sector information.
Analysis and supporting documents used to determine effect on small business
The primary documents that were used to determine the effect of the proposed rules on small business were
2007 Wisconsin Act 20 and
2009 Wisconsin Act 28. These Acts modified several provisions of sections
71.07 (5f) and
(5h),
71.28 (5f) and
(5h), and
71.47 (5f) and
(5h) of the Statutes that relate to the Department's film production accreditation program. These Acts apply their private-sector requirements only to film productions and to film production companies, for which a corresponding tax credit is desired.
Small Business Impact
The proposed rules are not expected to impose significant costs or other impacts on small businesses because the rules address submittal of documentation only by businesses that choose to pursue tax credits for producing film productions or for establishing or operating film production companies.
Any inquiries for the small business regulatory coordinator for the Department of Commerce can be directed to Sam Rockweiler, as listed above.
Initial regulatory flexibility analysis
Types of small businesses that will be affected by the rules.
Any entity which chooses to apply for tax credits relating to film production services or film production company investments, as established in sections
71.07 (5f) and
(5h),
71.28 (5f) and
(5h), and
71.47 (5f) and
(5h) of the Statutes.
Reporting, bookkeeping and other procedures required for compliance with the rules.
Applicants will need to newly submit verification of (1) purchasing corresponding tangible personal property and other items, property, and goods from Wisconsin-based sources, and (2) spending at least 35 percent of the total budget for an accredited production, in Wisconsin.
Types of professional skills necessary for compliance with the rules.
No new professional skills are necessary for compliance with the rules.
Rules have a significant economic impact on small businesses.
No.
Environmental Analysis
The Department has considered the environmental impact of the proposed rules. In accordance with chapter Comm 1, the proposed rules are a Type III action. A Type III action normally does not have the potential to cause significant environmental effects and normally does not involve unresolved conflicts in the use of available resources. The Department has reviewed these rules and finds no reason to believe that any unusual conditions exist. At this time, the Department has issued this notice to serve as a finding of no significant impact.
Fiscal Estimate
Assumptions used in arriving at fiscal estimate
Although the proposed rules will result in review of some new documentation relating to tax credits for producing film productions or for establishing or operating film production companies, the extent of this review is expected to be too small to result in significant changes in the Department's costs for administering its business development programs. Therefore, the proposed rules are not expected to have any significant fiscal effect on the Department.
The proposed rules are not expected to impose any significant costs on the private sector, because the rules address only voluntary submittal of documentation relating to tax credits for producing film productions or for establishing or operating film production companies.
State fiscal effect
No state fiscal effect.
Local government fiscal effect
No local government costs.
Long-range fiscal implications
None known.
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