N.Y. Tax Law § 28 — Empire state commercial production credit

* § 28. Empire state commercial production credit. (a) Allowance of\ncredit. (1) A taxpayer which is a qualified commercial production\ncompany, or which is a sole proprietor of a qualified commercial\nproduction company, and which is subject to tax under article nine-A or\ntwenty-two of this chapter, shall be allowed a credit against such tax,\npursuant to the provisions referenced in subdivision (c) of this\nsection, to be computed as provided in this section. Provided, however,\nto be eligible for such credit, at least seventy-five percent of the\nproduction costs (excluding post production costs) paid or incurred\ndirectly and predominantly in the actual filming or recording of the\nqualified commercial must be costs incurred in New York state. The tax\ncredit allowed pursuant to this section shall apply to taxable years\nbeginning before January first, two thousand twenty-nine.\n (2) The state has annually seven million dollars in total tax credits\nto disburse to all eligible commercial production companies. The seven\nmillion dollars in total tax credits shall be allocated according to\nsubparagraphs (i) and (ii) of this paragraph:\n (i) The state annually will disburse four million of the total seven\nmillion in tax credits to all eligible production companies who film or\nrecord qualified commercials within the metropolitan commuter\ntransportation district as defined in section twelve hundred sixty-two\nof the public authorities law. The amount of the credit shall be the\nproduct (or pro rata share of the product, in the case of a member of a\npartnership) of twenty percent of the qualified production costs paid or\nincurred in the production of a qualified commercial, provided that the\nqualified production costs paid or incurred are attributable to the use\nof tangible property or the performance of services within the state in\nthe production of such qualified commercial. To be eligible for said\ncredit the total qualified production costs of a qualified production\ncompany must be greater than five hundred thousand dollars in the\naggregate during the calendar year. Such credit will be applied to\nqualified production costs exceeding five hundred thousand dollars in a\ncalendar year.\n (ii) The state annually will disburse three million of the total seven\nmillion in tax credits to all eligible production companies who film or\nrecord a qualified commercial outside of the metropolitan commuter\ntransportation district as defined in section twelve hundred sixty-two\nof the public authorities law; provided, however, that if, after July\nthirty-first the state reviews all applications from eligible production\ncompanies who film or record a qualified commercial outside of the\nmetropolitan commuter district for a given year, tax credits remain\nunallocated under this subparagraph, those credits shall be allotted to\nthe credits set forth in subparagraph (i) of this paragraph for use\nconsistent with the purposes of such subparagraph. The amount of the\ncredit shall be the product (or pro rata share of the product, in the\ncase of a member of a partnership) of thirty percent of the qualified\nproduction costs paid or incurred in the production of a qualified\ncommercial, provided that the qualified production costs paid or\nincurred are attributable to the use of tangible property or the\nperformance of services within the state in the production of such\nqualified commercial. To be eligible for said credit the total qualified\nproduction costs of a qualified production company must be greater than\none hundred thousand dollars in the aggregate during the calendar year.\nSuch credit will be applied to all qualified production costs in a\ncalendar year.\n (3) No qualified production costs used by a taxpayer either as the\nbasis for the allowance of the credit provided for under this section or\nused in the calculation of the credit provided for under this section\nshall be used by such taxpayer to claim any other credit allowed\npursuant to this chapter.\n (4) Notwithstanding any provisions of this section to the contrary, a\ncorporation or partnership, which otherwise qualifies as a qualified\ncommercial production company, and is similar in operation and in\nownership to a business entity or entities taxable, or previously\ntaxable, under section one hundred eighty-three or one hundred\neighty-four or former section one hundred eighty-five of article nine;\narticle nine-A or thirty-three of this chapter or which would have been\nsubject to tax under article twenty-three of this chapter (as such\narticle was in effect on January first, nineteen hundred eighty) or\nwhich would have been subject to tax under article thirty-two of this\nchapter (as such article was in effect on December thirty-first, two\nthousand fourteen) or the income or losses of which is or was includable\nunder article twenty-two of this chapter shall not be deemed a new or\nseparate business, and therefore shall not be eligible for empire state\ncommercial production benefits, if it was not formed for a valid\nbusiness purpose, as such term is defined in clause (D) of subparagraph\none of paragraph (o) of subdivision nine of section two hundred eight of\nthis chapter and was formed solely to gain empire state commercial\nproduction credit benefits.\n (b) Definitions. As used in this section, the following terms shall\nhave the following meanings:\n (1) "Qualified production costs" means production costs only to the\nextent such costs are attributable to the use of tangible property or\nthe performance of services within the state directly and predominantly\nin the production (including pre-production and post-production) of a\nqualified commercial.\n (2) "Production costs" means any costs for tangible property used and\nservices performed directly and predominantly in the production\n(including pre-production and post-production) of a qualified\ncommercial. "Production costs" shall not include (i) costs for a story,\nscript or scenario to be used for a qualified commercial and (ii) wages\nor salaries or other compensation for writers, directors, including\nmusic directors, producers and performers (other than background actors\nwith no scripted lines who are employed by a qualified company and\nmusicians). "Production costs" generally include technical and crew\nproduction costs, such as expenditures for commercial production\nfacilities and/or location costs, or any part thereof, film, audiotape,\nvideotape or digital medium, props, makeup, wardrobe, commercial\nprocessing, camera, sound recording, scoring, set construction,\nlighting, shooting, editing and meals. For purposes of this section,\n"post production costs" include the production of original content for a\nqualified commercial employing techniques traditionally used in\npost-production for visual effects, graphic design, animation, and\nmusical composition. However, where the commercial consists in its\nentirety of techniques such as visual effects, graphic design, or\nanimation, such costs incurred in the production of the commercial, when\noccurring in New York, shall be deemed qualified production costs for\nthe purposes of this section. Provided further, however, that "post\nproduction costs" shall not include the editing of previously produced\ncontent for a qualified commercial.\n (3) "Qualified commercial" means an advertisement of any length that\nis recorded on film, audiotape, videotape or digital medium in New York\nfor multi-market distribution by way of radio, television networks,\ncable, satellite, motion picture theaters or internet. "Qualified\ncommercial" shall not include (i) news or current affairs program,\ninterview or talk program, network promos, i.e., commercials promoting\ntelevision series or movies, "how-to" (i.e., instructional) commercial\nor program, commercial or program consisting entirely of stock footage,\ntrailers promoting theatrical films, sporting event or sporting program,\ngame show, award ceremony, daytime drama (i.e., daytime "soap opera"),\nor "reality" program, or (ii) a production for which records are\nrequired under section 2257 of title 18, United States code, to be\nmaintained with respect to any performer in such production (reporting\nof books, commercials, etc. with respect to sexually explicit conduct).\n (4) "Qualified commercial production company" is a corporation,\npartnership, limited partnership, or other entity or individual which or\nwho is principally engaged in the production of a qualified commercial\nand controls the production of the qualified commercial and is not the\ndistributor, or the contracting entity for production of such\ncommercial, nor is a variable interest entity of such distributor or\ncontracting entity.\n (c) The department of economic development shall submit, on or before\nDecember first of each year, to the governor, the director of the\ndivision of the budget, the temporary president of the senate, and the\nspeaker of the assembly an annual report including, but not limited to,\nthe following information regarding the previous calendar year:\n (1) the total dollar amount of credits allocated, the name and address\nof each qualified commercial production company allocated credits under\nthis section, the total amount of credits allocated to each qualified\ncommercial production company, the total amount of qualified production\ncosts and production costs for each qualified commercial production\ncompany, and the estimated number of employees, credit-eligible man\nhours, and credit-eligible wages associated with each qualified\ncommercial production company allocated credits under this section;\n (2) for qualified commercial production companies that were allocated\ncredit pursuant to subparagraph (i) of paragraph two of subdivision (a)\nof this section: the name and address of each qualified commercial\nproduction company, the total dollar amount of credits allocated, the\ntotal amount of credits allocated to each qualified commercial\nproduction company, total qualified production costs and production\ncosts for each qualified production company, and the estimated number of\nemployees, credit-eligible man hours, and credit-eligible wages\nassociated with each qualified commercial production company that filmed\nor recorded a qualified commercial within the district;\n (3) for qualified commercial production companies that were allocated\ncredit pursuant to subparagraph (ii) of paragraph two of subdivision (a)\nof this section: the name and address of each qualified commercial\nproduction company, the total dollar amount of credits allocated, the\ntotal amount of credits allocated to each qualified commercial\nproduction company, total qualified production costs and production\ncosts for each qualified production company, and the estimated number of\nemployees, credit-eligible man hours, and credit-eligible wages\nassociated with each qualified commercial production company that filmed\nor recorded a qualified commercial outside the district; and\n (4) the amount of credits reallocated to all eligible qualified\ncommercial production companies pursuant to subparagraph (ii) of\nparagraph two of subdivision (a) of this section.\n (5) The report may also include any recommendations for changes in the\ncalculation or administration of the credit, recommendations regarding\ncontinuing modification or repeal of this credit, and any other\ninformation regarding this credit as may be useful and appropriate.\n (d) Cross-references. For application of the credit provided for in\nthis section, see the following provision of this chapter:\n (1) article 9-A: section 210-B: subdivision 23.\n (2) article 22: section 606: subsection (jj).\n * NB There are 2 § 28's\n