HF 4145

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; income and sales taxes; providing for a film investment
credit; exempting motion picture productions from sales tax; amending
Minnesota Statutes 2006, section 297A.68, subdivision 30; proposing coding for
new law in Minnesota Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

[290.0678] FILM INVESTMENT CREDIT.

Subdivision 1.

Definitions.

For the purposes of this section, the following terms
have the meanings given.

(a) "Qualifying film production" means a motion picture that is certified by the
Minnesota Film and TV Board as made in Minnesota, in whole or in part.

(b) "Qualified investment" means an amount of cash used to pay qualified production
expenses that is provided by an investor who does not have any financial interest in the
motion picture or the production company responsible for filming the motion picture.

(c) "Motion picture" means a nationally distributed feature length film, video, or
television series, made in Minnesota, in whole or in part, for theatrical or television
viewing or as a television pilot, but not including television coverage of news and athletic
events.

(d) "Qualified production expenses" means preproduction, production, and
postproduction expenditures directly incurred in Minnesota that are directly used in a
qualifying film production, including, without limitation, set construction and operation;
wardrobes, make-up, accessories, and related services; costs associated with photography
and sound synchronization, lighting, and related services and materials; editing and
related services; rental of facilities and equipment; leasing of vehicles; costs of food
and lodging; digital or tape editing, film processing, transfer of film to tape or digital
format, sound mixing, and special and visual effects; total aggregate payroll; and music,
if performed, composed, or recorded by a Minnesota musician or released or published
by a Minnesota-domiciled and headquartered company. The following are not included:
(1) postproduction costs for marketing and distribution; (2) any amounts that are later
reimbursed; (3) any costs related to the transfer of credits; and (4) any amounts paid
to persons or entities as a result of their participation in profits from the exploitation
of the production.

Subd. 2.

Credit allowed.

An individual or corporate taxpayer is allowed a credit
against the tax due under this chapter equal to the amount of a qualified investment in a
qualifying film production made during the taxable year.

Subd. 3.

Carryover.

The credit is limited to the liability for tax, as computed under
this chapter for the taxable year. If the amount of the credit determined under this section
for any taxable year exceeds this limitation, the excess is a film investment credit carryover
to each of the 15 succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this subdivision shall not exceed
the taxpayer's liability for tax, less the film investment credit for the taxable year.

Subd. 4.

Certification of credits.

(a) Before making a qualified investment,
taxpayers must apply to the Minnesota Film and TV Board for a film production credit
certificate. The application must be in the form and made under the procedures specified
by the Minnesota Film and TV Board. The Minnesota Film and TV Board must only issue
credit certificates for qualifying investments in qualifying film productions.

(b) By January 31 of each year, the Minnesota Film and TV Board must report to
the commissioner of revenue the number, amount, and taxpayers to whom film credit
certificates were issued during the preceding taxable year.

Subd. 5.

Transfer of credit.

A credit under this subdivision may be transferred or
sold. Any transfer or sale does not affect the time schedule for claiming the credit.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2007.

Sec. 2.

Minnesota Statutes 2006, section 297A.68, subdivision 30, is amended to read:

Subd. 30.

Television commercials and motion pictures.

Tangible personal
property primarily used or consumed in the preproduction, production, or postproduction
of a television commercial or motion picture is exempt. For purposes of this subdivision,
"motion picture" means a nationally distributed feature length film, video, or television
series, made in Minnesota, in whole or in part, for theatrical or television viewing or as a
television pilot, but not including television coverage of news and athletic events. Any
such commercial or motion picture, regardless of the medium in which it is transferred, is
exempt. "Preproduction" and "production" include, but are not limited to, all activities
related to the preparation for shooting and the shooting of television commercials or
motion pictures, including film processing. Equipment rented for the preproduction and
production activities is exempt. "Postproduction" includes, but is not limited to, all
activities related to the finishing and duplication of television commercials or motion
pictures. This exemption does not apply to tangible personal property used primarily in
administration, general management, or marketing. Machinery and equipment purchased
for use in producing such commercials or motion pictures and fuel, electricity, gas, or
steam used for space heating or lighting are not exempt under this subdivision.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2008.