1.1 	A bill for an act
1.2 	relating to taxation; requiring a study of tax incentives to certain industries; 
1.3 	providing a tax credit for film production expenditures;amending Minnesota 
1.4 	Statutes 2006, section 290.06, by adding a subdivision.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. STUDY OF INCENTIVES; PILOT PROJECT.
 1.7 	The commissioner of employment and economic development with the assistance 
1.8 	of the commissioner of revenue shall study the effectiveness of providing tax incentives 
1.9 	to certain industries in Minnesota and provide a written report and recommendations to 
1.10 	the legislature, in compliance with Minnesota Statutes, sections 3.195 and 3.197, by 
1.11 	February 1, 2012. The study must report on:
1.12 	(1) the effect of the implementation of the tax credit provided in Minnesota Statutes, 
1.13 	section 290.06, subdivision 34; and 
1.14 	(2) the estimated change in state revenues attributed to implementation of the tax 
1.15 	credit, including both the reduction in revenues due to the credit and the increase in 
1.16 	revenues due to the increased film production activity in the state that results from the 
1.17 	availability of the credit.

1.18 	Sec. 2. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision 
1.19 	to read:
1.20 		Subd. 34.Film production credit; appropriation. (a) A taxpayer is allowed 
1.21 	a credit against the taxes due under this chapter equal to 20 percent of film production 
1.22 	expenditures made in Minnesota that are directly attributable to film production in 
1.23 	Minnesota.
2.1 	(b) Expenditures that qualify for the credit under this subdivision must be subject to 
2.2 	taxation in Minnesota and include:
2.3 	(1) payment of wages, fringe benefits, or fees for talent, management, or labor to a 
2.4 	person who is a Minnesota resident for purposes of this chapter;
2.5 	(2) payment to personal services corporations for the services of a performing artist, 
2.6 	if the performing artist receiving payments from the personal services corporation pays 
2.7 	Minnesota income tax; and 
2.8 	(3) any of the following provided by a vendor:
2.9 	(i) the story and scenario to be used for a film;
2.10 	(ii) set construction and operations, wardrobe, accessories, and related services;
2.11 	(iii) photography, sound synchronization, lighting, and related services;
2.12 	(iv) editing and related services;
2.13 	(v) rental of facilities and equipment;
2.14 	(vi) leasing of vehicles; and 
2.15 	(vii) food and lodging.
2.16 	(c) If the amount of the credit under this subdivision exceeds the taxpayer's tax 
2.17 	liability under this chapter for the taxable year, the amount of the excess must be refunded 
2.18 	to the taxpayer.  The amount necessary to pay the refunds is appropriated annually from 
2.19 	the general fund to the commissioner of revenue.

2.20 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.21 	December 31, 2007, and before January 1, 2012.