HF 2059

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/13/2023 03:55pm

A bill for an act
relating to taxation; individual income; corporate franchise; modifying the film
production credit; increasing the allocation; repealing the sunset; amending
Minnesota Statutes 2022, sections 116U.27, subdivisions 1, 4; 290.06, subdivision
39; 297I.20, subdivision 4; repealing Minnesota Statutes 2022, section 116U.27,
subdivision 7.

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

Section 1.

Minnesota Statutes 2022, section 116U.27, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

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

(b) "Allocation certificate" means a certificate issued by the commissioner to a taxpayer
upon receipt of an initial application for a credit for a project that has not yet been completed.

(c) "Application" means the application for a credit under subdivision 4.

(d) "Commissioner" means the commissioner of employment and economic development.

(e) "Credit certificate" means a certificate issued by the commissioner upon submission
of the cost verification report in subdivision 4, paragraph (e).

(f) "Eligible production costs" means eligible production costs as defined in section
116U.26, paragraph (b), clause (1), incurred in Minnesota that are directly attributable to
the production of a film project in Minnesota.

(g) "Film" has the meaning given in section 116U.26, paragraph (b), clause (2).

(h) "Project" means a film:

(1) that includes the promotion of Minnesota;

(2) for which the taxpayer has expended at least $1,000,000 in deleted text begin the taxable year deleted text end new text begin a
consecutive 12-month period beginning when expenditures are first paid in Minnesota new text end for
eligible production costs; and

(3) to the extent practicable, that employs Minnesota residents.

(i) "Promotion of Minnesota" or "promotion" means visible display of a static or animated
logo, approved by the commissioner and lasting approximately five seconds, that promotes
Minnesota within its presentation in the end credits before the below-the-line crew crawl
for the life of the project.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2022.
new text end

Sec. 2.

Minnesota Statutes 2022, section 116U.27, subdivision 4, is amended to read:

Subd. 4.

Applications; allocations.

(a) To qualify for a credit under this section, a
taxpayer must submit to the commissioner an application for a credit in the form prescribed
by the commissioner, in consultation with the commissioner of revenue.

(b) Upon approving an application for a credit that meets the requirements of this section,
the commissioner shall issue allocation certificates that:

(1) verify eligibility for the credit;

(2) state the amount of credit anticipated for the eligible project, with the credit amount
up to 25 percent of eligible project costs; and

(3) state the taxable year in which the credit is allocated.

The commissioner must consult with the Minnesota Film and TV Board prior to issuing an
allocation certificate.

(c) The commissioner must not issue allocation certificates for more than deleted text begin $4,950,000 deleted text end new text begin
$24,950,000 new text end of credits each year. If the entire amount is not allocated in that taxable year,
any remaining amount is available for allocation for the four following taxable years until
the entire allocation has been made. deleted text begin The commissioner must not award any credits for
taxable years beginning after December 31, 2024, and any unallocated amounts cancel on
that date.
deleted text end

(d) The commissioner must allocate credits on a first-come, first-served basis.

(e) Upon completion of a project, the taxpayer shall submit to the commissioner a report
prepared by an independent certified public accountant licensed in the state of Minnesota
to verify the amount of eligible production costs related to the project. The report must be
prepared in accordance with generally accepted accounting principles. Upon receipt and
review of the cost verification report, the commissioner shall determine the final amount
of eligible production costs and issue a credit certificate to the taxpayer. The credit may not
exceed the anticipated credit amount on the allocation certificate. If the credit is less than
the anticipated amount on the allocation credit, the difference is returned to the amount
available for allocation under paragraph (c). To claim the credit under section 290.06,
subdivision 39, or 297I.20, subdivision 4, a taxpayer must include a copy of the credit
certificate as part of the taxpayer's return.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for allocation certificates issued after
December 31, 2022.
new text end

Sec. 3.

Minnesota Statutes 2022, section 290.06, subdivision 39, is amended to read:

Subd. 39.

Film production credit.

(a) A taxpayer, including a taxpayer to whom a credit
has been assigned under section 116U.27, subdivision 3, may claim a credit against the tax
imposed by this chapter equal to the amount certified on a credit certificate under section
116U.27, subject to the limitations in this subdivision.

(b) 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 subdivision for any taxable
year exceeds this limitation, the excess is a film production credit carryover to each of the
five 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 that may be added under this paragraph must not exceed the taxpayer's liability
for tax, less any film production credit for the taxable year.

(c) Credits allowed to a partnership, a limited liability company taxed as a partnership,
or an S corporation are passed through to the partners, members, shareholders, or owners,
respectively, pro rata to each based on the partner's, member's, shareholder's, or owner's
share of the entity's assets, or as specially allocated in the organizational documents or any
other executed agreement, as of the last day of the taxable year.

(d) Notwithstanding the approval and certification by the commissioner of employment
and economic development under section 116U.27, the commissioner may utilize any audit
and examination powers under chapter 270C or 289A to the extent necessary to verify that
the taxpayer is eligible for the credit and to assess the amount of any improperly claimed
credit. The commissioner may only assess the original recipient of the credit certificate for
the amount of improperly claimed credits. The commissioner may not assess a credit
certificate assignee for any amount of improperly claimed credits, and an assignee's claim
for credit is not affected by the commissioner's assessment of improperly claimed credits
against the assignor.

deleted text begin (e) This subdivision expires January 1, 2025, for taxable years beginning after December
31, 2024, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed
under this subdivision.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2022, section 297I.20, subdivision 4, is amended to read:

Subd. 4.

Film production credit.

deleted text begin (a) deleted text end A taxpayer may claim a credit against the premiums
tax imposed under this chapter equal to the amount indicated on the credit certificate
statement issued to the company under section 116U.27. If the amount of the credit exceeds
the taxpayer's liability for tax under this chapter, the excess is a credit carryover to each of
the five succeeding taxable years. The entire amount of the excess unused credit for the
taxable year must be 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. This credit
does not affect the calculation of fire state aid under section 477B.03 and police state aid
under section 477C.03.

deleted text begin (b) This subdivision expires January 1, 2025, for taxable years beginning after and
premiums received after December 31, 2024.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2022, section 116U.27, subdivision 7, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 23-02467

116U.27 FILM PRODUCTION CREDIT.

Subd. 7.

Expiration.

Subdivisions 1 to 5 expire January 1, 2025, for taxable years beginning after December 31, 2024.