PRINTER'S NO. 1149
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
937
Session of
2015
INTRODUCED BY AUMENT, COSTA AND RAFFERTY, JUNE 29, 2015
REFERRED TO FINANCE, JUNE 29, 2015
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," providing for concert rehearsal and tour tax
credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XVII-J
CONCERT REHEARSAL AND TOUR TAX CREDIT
Sec.
1701-J. Scope of article.
1702-J. Definitions.
1703-J. Procedure.
1704-J. Claim.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
1705-J. Carryover, carryback and assignment of tax credit.
1706-J. Determination of Pennsylvania rehearsal and tour
expenses.
1707-J. Limitations.
1708-J. Penalty.
1709-J. Pass-through entity.
1710-J. Department guidelines and regulations.
1711-J. Report to General Assembly.
Section 1701-J. Scope of article.
This article relates to concert rehearsal and tour tax
credits.
Section 1702-J. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Class 1 venue." A stadium, arena, other structure or on
property owned by a municipality at which concerts are performed
and which is all of the following:
(1) Located in a city of the first class or a county of
the second class.
(2) Is constructed in a manner in which the venue has a
seating capacity of at least 14,000.
"Class 2 venue." A stadium, arena or other structure at
which concerts are performed and which is all of the following:
(1) Located outside the geographic boundaries of a city
of the first class or a county of the second class.
(2) Is constructed in a manner in which the venue has a
seating capacity of at least 6,000.
"Class 3 venue." A stadium, arena or other structure which
is any of the following:
20150SB0937PN1149 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) Located within a neighborhood improvement zone, as
defined in section 1902-B.
(2) Owned by or affiliated with a State-related
institution, as defined in 62 Pa.C.S. § 103 (relating to
definitions).
(3) Owned by the Commonwealth and affiliated with the
State System of Higher Education.
"Concert." A live performance of music in the presence of
individuals who view the performance.
"Concert tour equipment." Includes stage, set, scenery,
design elements, automation, rigging, trusses, spot lights,
lighting, sound equipment, video equipment, special effects,
cases, communication devices, power distribution equipment,
backline and other miscellaneous equipment or supplies used
during a concert or rehearsal.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Minimum rehearsal and tour requirements." During a tour,
all of the following must occur:
(1) the purchase or rental of concert tour equipment, in
an amount of at least $1,500,000, from companies located in
this Commonwealth for use on the tour;
(2) a rehearsal at a qualified rehearsal facility for a
minimum of 10 days;
(3) at least one concert performed at a class 1 venue;
and
(4) at least one concert performed at a venue which is
located in a municipality other than the municipality in
which the class 1 venue under paragraph (3) is located.
"Pass-through entity." A partnership as defined in section
20150SB0937PN1149 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
301(n.0) or a Pennsylvania S corporation as defined in section
301(n.1).
"Pennsylvania rehearsal and tour expenses." The sum of
Pennsylvania rehearsal expenses and tour expenses.
"Pennsylvania rehearsal expense." A rehearsal expense which
is incurred or will be incurred within this Commonwealth.
"Qualified rehearsal and tour expense." All Pennsylvania
rehearsal and tour expenses if Pennsylvania rehearsal expenses
comprise at least 60% of the total rehearsal expenses. The term
shall not include more than $5,000,000 in the aggregate of
compensation paid to individuals or payment made to entities
representing an individual for services provided in the tour.
"Qualified rehearsal facility." A rehearsal facility which
meets at least six of the following criteria:
(1) Has had a minimum of $8,000,000 invested in the
rehearsal facility in land or structure, or a combination of
land and structure.
(2) Has a permanent grid system with a capacity of
1,000,000 pounds.
(3) Has a built-in power supply system available at a
minimum of 3,200 amps without the need for any supplemental
generators.
(4) Has a height from floor to permanent grid of a
minimum of 80 feet.
(5) Has at least two sliding or roll-up access doors
with a minimum height of 14 feet.
(6) Has a perimeter security system which includes 24-
hour, seven-days-a-week security cameras and the use of
access control identification badges.
(7) Has a service area with production offices, catering
20150SB0937PN1149 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
and dressing rooms with a minimum of 5,000 square feet.
(8) Is located within one mile of a minimum of two
companies which provide concert tour equipment for use on a
tour.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VII or IX. The term shall not include any
tax withheld by an employer from an employee under Article III.
"Rehearsal." An event or series of events which occur in
preparation for a tour prior to the start of the tour or during
a tour when additional preparation may be needed.
"Rehearsal expense." All of the following when incurred or
will be incurred during a rehearsal:
(1) Compensation paid to an individual employed in the
rehearsal of the performance.
(2) The costs of construction, operations, editing,
photography, staging, lighting, wardrobe and accessories.
(3) The cost of leasing vehicles.
(4) The cost of transportation of people or concert tour
equipment to or from a train station, bus depot, airport or
other transportation facility or directly from a residence or
business entity.
(5) The cost of insurance coverage.
(6) The cost of food and lodging.
(7) The cost of purchase or rental of concert tour
equipment.
(8) The cost of renting a rehearsal facility.
(9) The cost of emergency or medical support services
required to conduct a rehearsal.
"Rehearsal facility." As follows:
(1) A facility primarily used for rehearsals which is
20150SB0937PN1149 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
all of the following:
(i) Located within this Commonwealth.
(ii) Has a minimum of 25,000 square feet of column-
free, unobstructed floor space.
(2) The term does not include a facility at which
concerts are capable of being held.
"Start date." The date the first set of concert tour
equipment arrives or is expected to arrive at a qualified
rehearsal facility.
"Tax credit." The concert rehearsal and tour tax credit
provided under this article.
"Taxpayer." A concert tour promotion company, concert tour
management company or other concert management company subject
to tax under Article III or IV. The term does not include
contractors or subcontractors of a concert tour promotion
company, concert tour management or other concert management
company.
"Tour." A series of concerts performed by a musical
performer in more than one location.
"Tour expense." As follows:
(1) Costs incurred or which will be incurred during a
tour for venues located in this Commonwealth. The term
includes all of the following:
(i) Compensation paid to an individual on which the
tax imposed by Article III will be paid or accrued.
(ii) The cost of transportation of people or concert
touring equipment incurred while transporting to or from
a train station, bus depot, airport or other
transportation facility or while transporting directly
from a residence or business entity, located in this
20150SB0937PN1149 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Commonwealth or incurred for transportation provided by a
company which is subject to the tax imposed under Article
III or IV.
(iii) The cost of leasing vehicles upon which the
tax imposed by Article II will be paid or accrued.
(iv) The cost of insurance coverage purchased
through an insurance agent based in this Commonwealth.
(v) The cost of purchasing or renting facilities and
equipment from or through a resident of this Commonwealth
or an entity subject to taxation in this Commonwealth.
(vi) The cost of food and lodging incurred from a
facility located in this Commonwealth.
(vii) Expenses incurred in marketing or advertising
a tour at venues located within this Commonwealth.
(viii) The cost of merchandise purchased from a
company located within this Commonwealth and used on the
tour.
(2) The term does not include any of the following:
(i) Development cost, including the writing of music
or lyrics.
(ii) Cost related to the sale or assignment of a
concert rehearsal and tour tax credit under section 1705-
J(d).
"Venue." A class 1, class 2 or class 3 venue.
Section 1703-J. Procedure.
(a) Application.--A taxpayer may apply to the department for
a tax credit under this section. The application shall be on the
form required by the department.
(b) Review and approval.--
(1) The department shall establish application periods
20150SB0937PN1149 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
not to exceed 30 days. All applications received during an
application period shall be reviewed and evaluated by the
department based on the following criteria:
(i) The anticipated number of rehearsal days in a
qualified rehearsal facility.
(ii) The anticipated number of concerts at class 1
venues.
(iii) The anticipated number of concerts at class 2
venues.
(iv) The anticipated number of concerts at class 3
venues.
(v) The amount of Pennsylvania rehearsal expenses in
comparison to the aggregate amount of rehearsal expenses.
(vi) The anticipated Pennsylvania tour expenses.
(vii) The anticipated tour equipment expenses which
are or will be purchased or rented from a company located
in this Commonwealth and which will be used on the tour.
(viii) The anticipated number of days spent in
Commonwealth hotels.
(ix) Other criteria that the department deems
appropriate to ensure maximum employment opportunities
and entertainment benefits for the residents of this
Commonwealth.
(2) Upon determining that the taxpayer has paid the
applicable application fee, not to exceed $300, has met the
minimum rehearsal and tour requirements and has incurred or
will incur qualified rehearsal and tour expenses, the
department may approve the taxpayer for a tax credit.
Applications not approved may be reviewed and considered in
subsequent application periods. The department may approve a
20150SB0937PN1149 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
taxpayer for a tax credit based on its evaluation of the
criteria under this subsection.
(c) Contract.--If the department approves the taxpayer's
application under subsection (b), the department and the
taxpayer shall enter into a contract containing the following:
(1) An itemized list of rehearsal expenses incurred or
to be incurred for the tour.
(2) An itemized list of Pennsylvania rehearsal expenses
incurred or to be incurred for the tour.
(3) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to incur
the Pennsylvania rehearsal expenses as itemized.
(4) An itemized list of the qualified rehearsal and tour
expenses incurred or to be incurred for the tour.
(5) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to incur
the qualified rehearsal and tour expenses as itemized.
(6) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to hold at
least one concert at a class 1 venue.
(7) With respect to a contract entered into prior to
completion of a tour, a commitment by the taxpayer to hold at
least one concert at a venue located in a municipality other
than the municipality in which the class 1 venue under
paragraph (6) is located.
(8) The start date or the expected start date.
(9) Any other information the department deems
appropriate.
(d) Certificate.--Upon execution of the contract required by
subsection (c), the department shall award the taxpayer a
20150SB0937PN1149 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
concert rehearsal and tour tax credit and issue the taxpayer a
tax credit certificate.
Section 1704-J. Claim.
A taxpayer may claim a concert rehearsal and tour tax credit
against the qualified tax liability of the taxpayer.
Section 1705-J. Carryover, carryback and assignment of tax
credit.
(a) General rule.--If a taxpayer cannot use the entire
amount of a tax credit for the taxable year in which the tax
credit is first approved, the excess may be carried over to
succeeding taxable years and used as a tax credit against the
qualified tax liability of the taxpayer for those taxable years.
Each time the tax credit is carried over to a succeeding taxable
year, the tax credit shall be reduced by the amount that was
used as a credit during the immediately preceding taxable year.
The tax credit may be carried over and applied to succeeding
taxable years for no more than three taxable years following the
first taxable year for which the taxpayer was entitled to claim
the tax credit.
(b) Application.--A tax credit approved by the department in
a taxable year first shall be applied against the taxpayer's
qualified tax liability for the current taxable year as of the
date on which the tax credit was approved before the tax credit
can be applied against any tax liability under subsection (a).
(c) No carryback or refund.--A taxpayer shall not be
entitled to carry back or obtain a refund of all or any portion
of an unused tax credit granted to the taxpayer under this
article.
(d) Sale or assignment.--The following shall apply:
(1) A taxpayer, upon application to and approval by the
20150SB0937PN1149 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
department, may sell or assign, in whole or in part, a tax
credit granted to the taxpayer under this article.
(2) The department and the Department of Revenue shall
jointly promulgate regulations for the approval of
applications under this subsection.
(3) Before an application is approved, the Department of
Revenue must make a finding that the applicant has filed all
required State tax reports and returns for all applicable
taxable years and paid any balance of State tax due as
determined at settlement, assessment or determination by the
Department of Revenue.
(4) Notwithstanding any other provision of law, the
Department of Revenue shall settle, assess or determine the
tax of an applicant under this subsection within 90 days of
the filing of all required final returns or reports in
accordance with section 806.1(a)(5) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(e) Purchasers and assignees.--Except as provided under
subsection (f), the following apply:
(1) The purchaser or assignee of all or a portion of a
tax credit under subsection (d) shall immediately claim the
tax credit in the taxable year in which the purchase or
assignment is made.
(2) The amount of the tax credit that a purchaser or
assignee may use against any one qualified tax liability may
not exceed 50% of such qualified tax liability for the
taxable year.
(3) The purchaser or assignee may not carry forward,
carry back or obtain a refund of or sell or assign the tax
credit.
20150SB0937PN1149 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(4) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the tax
credit in compliance with procedures specified by the
Department of Revenue.
(f) Limited carry forward of tax credit by a purchaser or
assignee.--A purchaser or assignee may carry forward all or any
unused portion of a tax credit purchased or assigned in:
(1) Calendar year 2015 against qualified tax liabilities
incurred in taxable year 2016 or 2017.
(2) Calendar year 2016 against qualified tax liabilities
incurred in taxable year 2017.
Section 1706-J. Determination of Pennsylvania rehearsal and
tour expenses.
When prescribing standards for determining which rehearsal or
tour expenses are considered Pennsylvania rehearsal and tour
expenses for purposes of computing the tax credit provided by
this article, the department shall consider:
(1) The location where services are performed.
(2) The location where tour equipment is purchased,
rented, delivered and used.
(3) The location where performances are held.
(4) Other factors the department determines are
relevant.
Section 1707-J. Limitations.
(a) Cap.--The aggregate amount of tax credits awarded in any
fiscal year under this article may not exceed $10,000,000. The
department may, in the department's discretion, award in one
fiscal year up to 50% of the dollar amount of tax credits
available to be awarded in the next succeeding fiscal year.
(b) Advance award of credits.--
20150SB0937PN1149 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) The advance award of tax credits under subsection
(a) shall:
(i) count against the total dollar amount of tax
credits that the department may award in that next
succeeding fiscal year; and
(ii) reduce the dollar amount of tax credits that
the department may award in that next succeeding fiscal
year.
(2) The individual limitations on the awarding of tax
credits apply to an advance award of tax credits under
subsection (a) and to a combination of tax credits awarded
against the current fiscal year's cap and against the next
succeeding fiscal year's cap.
(c) Individual limitations.--The following shall apply:
(1) A taxpayer may not be awarded more than $3,000,000
of tax credits for a tour.
(2) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
under section 1703-J(d) to a taxpayer for a tour with
concerts at a class 1 venue and a class 2 venue may not
exceed 25% of the qualified rehearsal and tour expenses
incurred or to be incurred.
(3) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
under section 1703-J(d) to a taxpayer for a tour with
concerts at a class 1 venue and a class 3 venue may not
exceed 30% of the qualified rehearsal and tour expenses
incurred or to be incurred.
(4) Except as provided under paragraph (5), the
aggregate amount of tax credits awarded by the department
20150SB0937PN1149 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
under section 1703-J(d) to a taxpayer for a tour with
concerts at a class 1 venue and a class 3 venue which does
not serve alcohol may not exceed 35% of the qualified
rehearsal and tour expenses incurred or to be incurred.
(5) In addition to the tax credits under paragraph (2),
(3) or (4), a taxpayer is eligible for a tax credit in the
amount of 5% of the qualified rehearsal and tour expenses
incurred or to be incurred by the taxpayer if the taxpayer
holds concerts at a total of two or more class 2 venues or
class 3 venues.
(d) Qualified rehearsal facility.--To be considered a
qualified rehearsal facility under this article, the owner of a
rehearsal facility shall provide evidence to the department to
verify the development or facility specifications and capital
improvement costs incurred for the rehearsal facility so that
the threshold amounts set in the definition of "qualified
rehearsal facility" under section 1702-J are satisfied, and upon
verification, the rehearsal facility shall be registered by the
department officially as a qualified rehearsal facility.
(e) Waiver.--The department may make a determination that
the financial benefit to this Commonwealth resulting from the
direct investment in or payments made to Pennsylvania rehearsal
and concert facilities outweighs the benefit of maintaining the
60% Pennsylvania rehearsal expenses requirement contained in the
definition of qualified rehearsal and tour expense. If such
determination is made, the department may waive the requirement
that 60% of a tour's aggregate rehearsal expenses be comprised
of Pennsylvania rehearsal expenses.
Section 1708-J. Penalty.
A taxpayer which claims a tax credit and fails to incur the
20150SB0937PN1149 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
amount of qualified rehearsal and tour expenses agreed to in
section 1703-J(c)(4) for a tour in that taxable year shall repay
to the Commonwealth an amount equal to 110% of the difference
between the amount agreed to in section 1703-J(c)(4) and the
amount of qualified rehearsal and tour expenses actually
incurred by the taxpayer.
Section 1709-J. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
tax credits under section 1705-J, it may elect in writing,
according to procedures established by the Department of
Revenue, to transfer all or a portion of the tax credits to
shareholders, members or partners in proportion to the share of
the entity's distributive income to which the shareholder,
member or partner is entitled.
(b) Limitation.--A pass-through entity and a shareholder,
member or partner of a pass-through entity shall not claim the
tax credit under subsection (a) for the same qualified rehearsal
and tour expense.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom a tax credit is transferred under
subsection (a) shall immediately claim the tax credit in the
taxable year in which the transfer is made. The shareholder,
member or partner may not carry forward, carry back, obtain a
refund of or sell or assign the tax credit.
Section 1710-J. Department guidelines and regulations.
The department shall develop written guidelines for the
implementation of the provisions of this article. The guidelines
shall be in effect until such time as the department promulgates
regulations for the implementation of the provisions of this
article. The department shall promulgate regulations for the
20150SB0937PN1149 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
implementation of this article within two years of the effective
date of this section.
Section 1711-J. Report to General Assembly.
No later than June 1, 2016, and September 1 of each year
thereafter, the Secretary of Community and Economic Development
shall submit a report to the General Assembly summarizing the
effectiveness of the tax credits provided by this article. The
report shall include the name of the tours which rehearsed in
this Commonwealth, the names of all taxpayers utilizing the tax
credit as of the date of the report and the amount of tax
credits approved for each taxpayer. The report may also include
any recommendations for changes in the calculation or
administration of the tax credits provided by this article. The
report shall be submitted to the chairman and minority chairman
of the Appropriations Committee of the Senate, the chairman and
minority chairman of the Finance Committee of the Senate, the
chairman and minority chairman of the Appropriations Committee
of the House of Representatives and the chairman and minority
chairman of the Finance Committee of the House of
Representatives. In addition to the information set forth above,
the report shall include the following information, which shall
be separated by geographic location within this Commonwealth:
(1) The amount of tax credits claimed during the fiscal
year by tour.
(2) The total amount spent in this Commonwealth during
the fiscal year by tours and concert tour promotion companies
for services and supplies.
(3) The total amount of tax revenues, both directly and
indirectly, generated for the Commonwealth during the fiscal
year by the concert rehearsal and tour industry.
20150SB0937PN1149 - 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Section 2. This act shall take effect in 60 days.
20150SB0937PN1149 - 17 -
1