SENATE, No. 2274

SECTION 1.  Section 6 of chapter 62 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting after the word “video” in line 401, the following words:- , digital media project.

SECTION 2.  Paragraph (2) of subsection (l) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The credit shall be equal to 25 per cent of the total aggregate payroll paid by a motion picture production company that constitutes Massachusetts source income, when total production costs incurred in the commonwealth equal or exceed $50,000 during the taxable year.

SECTION 3.  Paragraph (4) of said subsection (l) of said section 6 of said chapter 62, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The tax credit shall be taken against the taxes imposed under this chapter and shall be refundable to the extent provided for in section 6A.

SECTION 4.  Said subsection (l) of said section 6 of said chapter 62, as so appearing, is hereby further amended by striking out paragraphs (5) and (6).

SECTION 5. Said chapter 62, as so appearing, is hereby amended by inserting after section 6 the following section:-

Section 6A.  (a) This section shall apply to credits earned under subsection (l) of section 6.  It shall not apply to any other credits.

(b)  At the written election of a taxpayer entitled to a credit to which this section applies, the commissioner shall apply the credit against the liability of the taxpayer as determined on its return, as first reduced by any other available credits, and shall then refund to the taxpayer 90 per cent of the balance of the credits.  An election under this subsection shall preclude any carry forward of the credit or any portion thereof to future taxable years.

(c)  The commissioner may require substantiation of a taxpayer’s claim for refund under subsection (b) before the refund or thereafter.  Interest shall not accrue on the refund under section 40 of chapter 62C before the commissioner’s receipt of the substantiation as he may reasonably request.

(d)  The commissioner shall promulgate such regulations or other written guidance as needed to implement this section.  Such guidance shall include transition rules with regard to credit programs under which credits were previously transferable and shall include provisions allowing non-profit entities that have earned credits to which this section applies to receive direct refund of credit amounts under this section through the filing of such returns or applications as the commissioner may determine.

SECTION 6.  Chapter 63 of the General Laws, as so appearing, is hereby amended by inserting after section 32D the following section:-

Section 32E.  (a) This section shall apply to credits earned under section 38T, as inserted by section 2 of chapter 158 of the acts of 2005.  It shall not apply to any other credits.

(b)  At the written election of a taxpayer entitled to a credit to which this section applies, the commissioner shall apply the credit against the liability of the taxpayer as determined on its return, as first reduced by any other available credits, and shall then refund to the taxpayer 90 percent of the balance of such credits.  An election under this subsection shall preclude any carry forward of the credit or any portion thereof to future taxable years.

(c) The commissioner may require substantiation of a taxpayer’s claim for refund under subsection (b) prior to any such refund or thereafter.  No interest shall accrue on such refund under section 40 of chapter 62C prior to the commissioner’s receipt of such substantiation as he may reasonably request.

(d)  The commissioner shall promulgate such regulations or other written guidance as needed to implement this section.  Such guidance shall include transition rules with regard to credit programs under which credits were previously transferable and shall include provisions allowing non-profit entities that have earned credits to which this section applies to receive direct refund of credit amounts under this section through the filing of such returns or applications as the commissioner may determine.

SECTION 7.  Section 38T of said chapter 63, inserted by section 2 of chapter 158 of the acts of 2005, is hereby amended by inserting after the word “video”, in line 14,  the following words:- , a digital media project .

SECTION 8.  Subsection (b) of said section 38T of said chapter 63, as so inserted, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The credit shall be equal to 25 per cent of the total aggregate payroll paid by a motion picture production company that constitutes Massachusetts source income, when total production costs incurred in the commonwealth equal or exceed $50,000 during the taxable year.

SECTION 9.  Subsection (d) of said section 38T of said chapter 63, as so inserted, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The tax credit shall be taken against the taxes imposed under this chapter and shall be refundable to the extent provided for in section 32E.

SECTION 10.  Said section 38T of said chapter 63, as so inserted, is hereby amended by striking out subsections (e) and (f).

SECTION 11.  Section 1 of chapter 64H of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting, in line 50, after the word “video” the following words:- , a digital media project.

SECTION 12.  Section 6 of said chapter 64H, as so appearing, is hereby amended by striking out, in lines 576 and 592, the figure $250,000” and inserting in place thereof, in each instance, the following figure:- $50,000.

SECTION 13.  Notwithstanding any general or special law to the contrary, the commissioner of revenue shall annually, not later than December 31, report in writing to the house and senate committee on ways and means on the status of the film tax credit established pursuant to subsection (l) of section 6 of chapter 62, section 38T of chapter 63 and section 6 of chapter 64H of the General Laws.  The report shall include, but not be limited to, the motion picture production activity generated by the tax credits and the net revenue impact of the tax credits.

SECTION 14.  This act shall be effective for tax years beginning on or after January 1, 2007.