N.Y. Tax Law § 45 — Empire state digital gaming media production credit

§ 45. Empire state digital gaming media production credit. (a)\nAllowance of credit. (1) A taxpayer which is a digital gaming media\nproduction entity engaged in qualified digital gaming media production,\nor who is a sole proprietor of or a member of a partnership, which is a\ndigital gaming media production entity engaged in qualified digital\ngaming media production, and is subject to tax under article nine-A or\ntwenty-two of this chapter, shall be allowed a credit against such tax\nto be computed as provided herein for taxable years beginning on or\nafter January first, two thousand twenty-three and before January first,\ntwo thousand twenty-eight.\n (2) The amount of the credit shall be the product (or pro rata share\nof the product, in the case of a taxpayer who is a partner in a\npartnership, member of a limited liability company or shareholder in a\nsubchapter S corporation) of twenty-five percent and the qualified\ndigital gaming media production costs of one or more qualified digital\ngaming media productions.\n (3) Qualified digital gaming media production costs for a qualified\ndigital gaming media production incurred and paid in this state but\noutside such metropolitan commuter transportation district as defined in\nsection twelve hundred sixty-two of the public authorities law shall be\neligible for a credit of ten percent of such eligible production costs\nin addition to the credit specified in paragraph two of this\nsubdivision.\n (4) All applicants to this program are required, as a condition of\nreceiving the credit, to include in the credits of each digital game\ndevelopment media production language and a logo to be provided by the\ngovernor's office of motion picture and television development\nacknowledging the state's role in the creation of the production.\n (5) A qualified digital gaming media production that has applied for\ncredit under the provisions of this section shall, as a condition for\nthe granting of the credit, file a diversity plan with the department of\neconomic development outlining specific goals for hiring a diverse\nworkforce. The commissioner of economic development shall promulgate\nregulations implementing the requirements of this paragraph, which,\nnotwithstanding any provisions to the contrary in the state\nadministrative procedure act, may be adopted on an emergency basis, to\nensure compliance with the provisions of this paragraph. The department\nof economic development shall review each submitted plan as to whether\nit meets the requirements established by the commissioner of economic\ndevelopment, and shall verify that the applicant has met or made\ngood-faith efforts in achieving these goals.\n (b) Allocation of credit. The aggregate amount of tax credits allowed\nunder this section, subdivision fifty-five of section two hundred ten-B\nand subsection (nnn) of section six hundred six of this chapter in any\ntaxable year shall be five million dollars. Such credit shall be\nallocated by the department of economic development in order of priority\nbased upon the date of filing an application for allocation of digital\ngaming media production credit with such office. If the total amount of\nallocated credits applied for in any particular year exceeds the\naggregate amount of tax credits allowed for such year under this\nsection, such excess shall be treated as having been applied for on the\nfirst day of the subsequent taxable year. Provided, however, that for\ntaxable years beginning on or after January first, two thousand\ntwenty-three, if the total amount of allocated credits applied for in\nany particular year is less than the aggregate amount of tax credits\nallowed for such year under this section, any unused portion may be\ncarried over and added to the aggregate amount of credits allowed in the\nnext succeeding taxable year or years.\n (c) Definitions. As used in this section:\n (1) "Qualified digital gaming media production" means: (i) a website,\nthe digital media production costs of which are paid or incurred\npredominately in connection with (A) video simulation, animation, text,\naudio, graphics or similar gaming related property embodied in digital\nformat, and (B) interactive features of digital gaming (e.g., links,\nmessage boards, communities or content manipulation); (ii) video or\ninteractive games produced primarily for distribution over the internet,\nwireless network or successors thereto; and (iii) animation, simulation\nor embedded graphics digital gaming related software intended for\ncommercial distribution regardless of medium; provided, however, that\nthe qualified digital game development media productions described in\nsubparagraphs (i) through (iii) of this paragraph must have digital\nmedia production costs equal to or in excess of fifty thousand dollars\nper production. A qualified digital gaming media production does not\ninclude a website, video, interactive game or software that is used\npredominately for: electronic commerce (retail or wholesale purposes\nother than the sale of video interactive games), gambling (including\nactivities regulated by a New York gaming agency), or political advocacy\npurposes.\n (2) "Digital gaming media production costs" means any costs for wages\nor salaries paid to individuals, other than actors or writers, directly\nemployed for services performed by those individuals directly and\npredominantly in the creation of a digital gaming media production or\nproductions. Up to two hundred thousand dollars in wages and salaries\npaid to such employees, other than actors and writers, directly employed\nshall be used in the calculation of this credit. Digital gaming media\nproduction costs include but shall not be limited to payments for\nservices performed directly and predominantly in the development\n(including concept and prototype creation), design (including narrative\ndirection and sound design), production (including testing and\nencoding), editing (including bug fixing) and compositing (including the\nintegration of digital files for interaction by end users) of digital\ngaming media. Digital gaming media production costs shall not include\nexpenses incurred for the distribution, marketing, promotion, or\nadvertising content generated by end users, other costs not directly\nrelated to the creation, production or modification of digital gaming\nmedia or costs used by the taxpayer as a basis of the calculation of any\nother tax credit allowed under this chapter. In addition, wages related\nto the creation of digital gaming media for any person who predominantly\nserves in a corporate capacity in the role of chief executive officer,\nchief financial officer, president, treasurer or similar corporate\nposition shall not be included as digital gaming media production costs\nif the digital gaming media production entity has more than ten\nemployees. Wages paid to a person serving in such a role for the digital\ngaming media production entity shall also not be included if the person\nwas employed by a related person of the digital gaming media production\nentity within sixty months of the date the digital gaming media\nproduction entity applied for the tax credit certificate described in\nsubdivision (d) of this section. For purposes of the preceding sentence,\na related person shall have the same meaning as the term "related\nperson" in section four hundred sixty-five of the internal revenue code.\nFurthermore, any income or other distribution to any individual\nincluding, but not limited to, licensing or royalty fees, who holds an\nownership interest in a digital gaming media production entity, whether\nor not such individual is serving in the role of chief executive\nofficer, chief financial officer, president, treasurer or similar\nposition for such an entity, shall not be included as digital gaming\nmedia production costs. Up to five million dollars in qualified digital\ngaming media production costs per production shall be used in the\ncalculation of this credit. Digital gaming media production costs shall\nnot include those costs used by the taxpayer or another taxpayer as the\nbasis calculation of any other tax credit allowed under this chapter.\n (3) "Qualified digital gaming media production costs" means digital\ngaming media production costs only to the extent such costs are\nattributable to the use of property or the performance of services by\nany persons within the state directly and predominantly in the creation,\nproduction or modification of digital gaming related media. Such total\nproduction costs incurred and paid in this state shall be equal to or\nexceed fifty-one percent of total cost of an eligible production\nincurred and paid within and without this state.\n (4) "Digital gaming media production entity" means a corporation,\npartnership, limited partnership or other entity or individual engaged\nin qualified digital game development media production.\n (d) To be eligible for the empire state digital gaming media\nproduction credit, the taxpayer shall have been issued a certificate of\ntax credit by the department of economic development, which certificate\nshall set forth the amount of the credit that may be claimed and the\ntaxable year in which it shall be claimed. The taxpayer shall be allowed\nto claim only the amount listed on the certificate of tax credit for\nthat taxable year. In order to properly administer this credit, the\ndepartment shall be allowed to exchange information with the department\nof economic development about the taxpayers claiming this credit,\nincluding information about the tax credits claimed. A taxpayer that is\na partner in a partnership, member of a limited liability company or\nshareholder in a subchapter S corporation that has received a\ncertificate of tax credit shall be allowed its pro rata share of the\ncredit earned by the partnership, limited liability company or\nsubchapter S corporation. The taxpayer shall claim the tax credit in the\ntaxable year that begins in the year for which it is allocated credit\nunder this section.\n (e) Cross-references. For application of the credit provided for in\nthis section, see the following provisions of this chapter:\n (1) Article nine-A: section two hundred ten-B, subdivision fifty-five.\n (2) Article twenty-two: section six hundred six, subsection (i),\nparagraph one, subparagraph (B), clause (xlvi).\n (3) Article twenty-two: section six hundred six, subsection (nnn).\n