PETITION OF:

Section 6 of chapter 62 of the General Laws, as most recently amended by section 4 of chapter 63 of the acts of 2007, is hereby further amended by adding the following 2 subsections:-

(m) “State-certified infrastructure project” shall mean an infrastructure project approved by the executive office of housing and economic development. The term “infrastructure project” shall not include movie theaters or other commercial exhibition facilities.

“A taxpayer may claim an income tax credit of up to 20 per cent for the construction, conversion, or equipping, or any combination of these activities or a motion picture, television, digital media, video gaming, post production facility or any businesses that support such activity including but not limited to equipment rental, camera rental, film laboratory, and telecine facility. The minimum investment for any such facility and or equipment shall be $500,000. Unused credits may be carried forward 15 succeeding taxable years. All credits cannot reduce a taxpayer’s income tax liability below 0 in any given year.

Motion picture infrastructure tax incentives; definitions:

A.The executive office of housing and economic development shall certify motion picture infrastructure projects in this state for the purpose of tax credits. To qualify for certification:

A person or entity shall apply to the executive office of housing and economic development. The applicant shall be the person or entity who will own and operate the infrastructure project and may be a motion picture production company. The applicant must include:

a) The applicant’s name and contact information

b) A detailed description of the project

c) A preliminary budget

d) An outline of how the project meets the requirements of this section

e) The projected start and completion dates

f) The name and contract information for the prime contractor, if known

g) A copy of the construction contract, if available

h) An affirmation signed by an executive representing the applicant that:

i. The applicant agrees to furnish records of expenditures on infrastructure projects in this state to the department of economic development; and

ii. Any items included in its base investment are intended for use by the applicant directly in the infrastructure project.

Preapproval by the executive office of housing and economic development lapses, the application is void and the amount of the preapproved incentives does not apply against the dollar limit if, within 90 days after the executive office of housing and economic development preapproves the company’s application, the company fails to provide documentation of either:

1. Its expenditure in this state of the lesser of:

(a) 5 per cent of the estimated total budget of the infrastructure project to be spent in this state; or

(b) 250,000 dollars on the applied for project

The executive office of housing and economic development shall reallocate the amount of credits that is voluntarily relinquished or that lapse. The reallocation shall be to other film tax incentives applicants (either for motion picture production or infrastructure projects) that applied in the original credit year based on priority placement. The amount of the reallocated credits shall continue to apply against the dollar limit of the original credit year regardless of the year in which the reallocation occurs. If for any year an unused balance occurs in the income tax credits authorized under the dollar limit prescribed by subsection J of this section:

1. The balance shall be allocated to other film tax credit applicants that successfully appeal the denial of approval. Any amount of income tax credits due to successful appeals that are not paid for an unused balance in any year shall be paid against the dollar limit allowed in the following year.

2. Any remaining unused balance shall be reallocated for the following year.

Within 30 days after submission of a complete application, the executive office of housing and economic development shall review each application to determine whether the applicant satisfies all of the criteria required by this section. The executive office of housing and economic development may conduct a site visit as part of the review process. This process shall approve an applicant for tax credits under this section based on priority placement for credits under this section established by the date the applicant filed its complete initial application. On completion of the motion picture infrastructure project, an applicant that has been preapproved for income tax credits must apply to the executive office of housing and economic development in writing for approval of the total base investment in the project. If the applicant has met the eligibility requirements of this section, the executive office of housing and economic development shall:

1. Approve the total base investment amount, but the calculated income tax credit shall not exceed the preapproved amount under this section; and

2. Notify the department of revenue that the applicant shall claim the income tax credits in the amount determined herein.

“Base investment” means the budget submitted to the executive office of housing and economic development for the infrastructure project.

“Infrastructure” means land, permanent buildings, whether new construction or refurbishing of old buildings, or capital equipment that is necessary for the operation of a film studio or support and augmentation facilities.

“Motion Picture” has the same meaning as defined in subsection L.

“Motion Picture infrastructure project”, “Infrastructure project” and “project” means:

a) A film studio and its sound stages, office buildings, parking facilities, land, equipment and support buildings, and support and augmentation facilities that are constructed in this state and primarily used for motion picture production.

b) Does not include motion picture theaters and other commercial exhibition facilities.

“Film Studio” means a permanent facility of one or more sound stages, office and support buildings, parking facilities and facility used primarily for staging and filming motion pictures, television, digital or new media production.

“Support and augmentation facilities” means permanent facilities that are used to complement motion picture production needs and complement the motion picture production process, including but not limited to post-productions facilities and film laboratories.

The department shall not allow:

1. Tax credits for any taxable year that would violate the aggregate limits set by this section.

2. A tax credit under this section to a taxpayer that has a delinquent tax balance owing to the department under this title or title 42 of the United States Code.

Co-owners of a business, including corporate partners in a partnership and members of a limited liability company, may allocate the credit allowed under this section among the co-owners on any basis without regard to their proportional ownership interest. The total of the credits allowed all such owners may not exceed the amount that would have been allowed for a sole owner of the company.

All or part of any unclaimed amount of credit under this section may be sold or otherwise transferred under the following conditions:

1. A single sale or transfer may involve one or more transferees, and a transferee shall in turn resell or transfer the credit subject to the same conditions of this subsection.

2. Both the transferor and transferee must submit a written notice of the transfer to the department within 30 days after the sale or transfer. The transferee’s notice shall include a processing fee equal to 1 per cent of the transferee’s tax credit balance or $200, whichever is less. The notice shall include:

a) The name of the taxpayer

b) The date of the transfer

c) The amount of the transfer

d) The transferor’s tax credit balance before the transfer and the remaining balance after the transfer

e) All tax identification numbers for both transferor and transferee; and

f) Any other information required by rule

3. A sale or transfer of the credits does not extend the time in which the credit can be used. The carry forward period of time under subsection e of this section for a credit a credit that is sold or transferred begins on the date the credit was originally earned.

4. If a transferor was not qualified or was disqualified from using the credit at the time of the transfer, the department shall either disallow the credit claimed by a transferee or recapture the credit from the transferee through any authorized collection method. The transferee’s recourse is against the transferor.

5. In the case of any failure to comply with this subsection, the department shall disallow the tax credit until the taxpayer is in full compliance.

The executive office housing and economic development shall maintain annual data on the total amount of monies credited pursuant to this section, and shall provide that data to the executive office of housing and economic development on request. The department of revenue, with the cooperation of the executive office of housing and economic development, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purpose of this subsection.

The credit allowed by the subsection is in lieu of any allowance for state tax purposes of a deduction of those expenses allowed by the Internal Revenue Code.

(n) A motion picture production company initially applying for qualification under this section must report the following to the office of economic development on a form and in a manner prescribed by the office of economic development, with the cooperation of the department of revenue:

1. The name, address, telephone number and web site of the motion picture production company.

2. The name and address of an individual who will maintain records of expenditures in this state.

3. The projected first preproduction date and last production date in this state.

4. The production office address and office telephone number in this state.

5. The estimated total budget of the production.

6. The estimated total expenditures in this state.

7. The estimated total percentage of the production taking place in this state.

8. The estimated level of employment of residents of this state in the cast and crew.

9. A script, including a synopsis, the proposed director and a preliminary list of the cast and producer, except that, with respect to a television series, other than a pilot production in lieu of a script the applicant must include:

a) A synopsis of the general nature of the series.

b) A description of the characters and the intended nature of their interaction with each other.

c) A description of the locations.

d) A description of the sets.

e) The intended distribution or broadcast medium with specific television channels, if known.

10. An affirmation signed by any person who will be credited on screen as the producer or producers of the motion picture, not including the executive producers, associate producers, assistant producers or line producers, that:

a) The motion picture production company agrees to furnish records of expenditures in this state to the executive office of housing and economic development of request.

b) Any items purchased with a certification issued under this subsection are intended for use by the applicant directly in motion picture production.

The executive office of housing and economic development shall review all applications within 30 days after submission of a complete application to determine whether the motion picture production company satisfies all of the criteria and shall establish the process by which the executive office of housing and economic development qualifies and preapproves a company for motion picture production tax incentives. This process shall preapprove a company for motion picture production tax incentives based on priority placement established by the date that such motion picture production company filed its initial application for qualification with the executive office of housing and economic development.

The executive office of housing and economic development shall conduct a site visit to verify that production has begun. Within 90 days after the executive office of housing and economic development preapproves the company’s initial application, the company must submit notice to the executive office of housing and economic development that production has begun and provide at least 1 of the following:

A copy of a contract, loan out agreement or deal memo with a cameraman and crew.
A copy of the crew call sheet for the first day of production.
Evidence that residents of this state have been paid a total of at least five thousand dollars for work on the preapproved motion picture.
A copy of a contract or agreement directly attributable to the preapproved motion picture.

If preapproval by the executive office of housing and economic development lapses, the application is void and the amount of the preapproved incentives does not apply against the dollar limit prescribed by subsection of this section if, within 90 days after the executive office of housing and economic development preapproves the company’s application, the company fails to provide documentation of either:

Its expenditure in this state of the lesser of:

(A) 10 per cent of the estimated total budget of the production to be spent in this state.

(B) $250,000, or

2 A completion bond, equal to the estimated total budget of the production, for the production of the motion picture for which the company was preapproved. For the purposes of this paragraph, “Completion Bond” means an executed written contract, issued by an insurance company with an insurance industry rating equal to or better than an a.m. best company “B+” guarantying to the financiers of the project that it will be completed according to the terms of the preapproved application submitted by the production company in its application.

The preapproved amount applies against the dollar limit prescribed by this section for the year in which the application was submitted regardless of whether the initial preapproval period extends into the following year or years. Before the expiration of the initial preapproval or requalification period, a company may voluntarily relinquish unused credit amounts.

The executive office of housing and economic development shall reallocate the amount of credits that is voluntarily relinquished or that lapse. The reallocation shall be to other film tax incentives applicants (either for motion picture production or infrastructure projects) that applied in the original credit year based on priority placement. The amount of the reallocated credits shall continue to apply against placement. The amount of the reallocated credits shall continue to apply against the dollar limit of the original credit year regardless of the year in which the reallocation occurs. If for any year an unused balance occurs in the income tax credits authorized under the dollar limit prescribed by subsection J of this section:

1. The balance shall be allocated to motion picture production companies that successfully appeal the denial of approval. Any amount of income tax credits due to successful appeals that are not paid from an unused balance in any year shall be paid against the dollar limit allowed in the following year.

2. Any remaining unused balance shall be reallocated for the following year.

On a determination by the executive office of housing and economic development that a motion picture production company qualifies for motion picture production tax incentives, the executive office of housing and economic development shall issue the company a written letter of qualification and transmit a copy of the letter to the department of revenue. A letter of qualification is effective for 24 consecutive months as stated in the letter.

If a preapproved motion picture production company fails to undertake production, and also fails to voluntarily relinquish the unused credit amounts for reallocation by the executive office of housing and economic development within the 90 day period, the company and all persons signing the application for preapproval are disqualified from receiving, or participating in any motion picture production company that applies for or receives, tax incentives pursuant to this subsection for 3 years after the original application.

SECTION 2. Said section 6 of said chapter 62 is hereby further amended by adding the following paragraph:-

Beginning with the tax credits allocated for 2008, the executive office of housing and economic development shall not preapprove income tax credits for either film production as defined herein, or infrastructure projects as defined herein, exceeding a total of $85,000,000 per year. The executive office of housing and economic development shall maintain detailed annual data on the total amount of monies applied for and credited pursuant to this section, and shall provide that data to the general court and administration upon request. The department of revenue, with the cooperation of the executive office of housing and economic development, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of subsection L, M, and N for the purposes of section 2 of chapter 58 it is hereby determined that a film studio shall permanently qualify as a manufacturing corporations.