PRINTER'S NO. 329
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
321
Session of
2021
INTRODUCED BY BARTOLOTTA, COLLETT, SCAVELLO, ROBINSON, COSTA,
YUDICHAK AND STEFANO, MARCH 10, 2021
REFERRED TO FINANCE, MARCH 10, 2021
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," in entertainment production tax credit, further
providing for heading of article, for scope of article, for
definitions, for credit for qualified film production
expenses, for film production tax credits, for carryover,
carryback and assignment of credit, for determination of
Pennsylvania production expenses, for limitations, for
reissuance of film production tax credits, for film
production tax credit districts, for penalty, for pass-
through entity and for report to General Assembly.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The heading of Article XVII-D and section 1701-D
of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, are amended to read:
ARTICLE XVII-D
ENTERTAINMENT PRODUCTION TAX [CREDIT] CREDITS
AND INCENTIVES
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Section 1701-D. Scope of article.
This article relates to entertainment production tax credits
and incentives .
Section 2. The definitions of "film production tax credit
district," "tax credit" and "tax district capitol investment" in
section 1711-D of the act, added June 28, 2019 (P.L.50, No.13),
are amended and the section is amended by adding a definition to
read:
Section 1711-D. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Film [production tax credit] industry incentive district."
A district authorized under section 1716.2-D.
"Incentive." The film industry incentive authorized under
this subarticle, which may be claimed as a tax credit.
* * *
["Tax credit." The film production tax credit provided under
this subarticle.]
"Tax district capital investment." Investment within a film
[production tax credit] industry incentive district that may
consist of new construction, renovation, real property
improvement and a similar investment as well as other economic
development expenditures within the Commonwealth arising
directly from the investment.
* * *
Section 3. Sections 1712-D and 1713-D of the act are amended
to read:
Section 1712-D. Credit for qualified film production
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expenses.
(a) Application.--A taxpayer may apply to the department for
[a tax credit] an incentive under this section. The application
shall be on the form required by the department.
(b) Review and approval.--The department shall establish
application periods not to exceed 90 days each. All applications
received during the application period shall be reviewed and
evaluated by the department based on the following criteria:
(1) The anticipated number of production days in a
qualified production facility.
(2) The anticipated number of Pennsylvania employees.
(3) The number of preproduction days through
postproduction days in Pennsylvania.
(4) The anticipated number of days spent in Pennsylvania
hotels.
(5) The Pennsylvania production expenses in comparison
to the production budget.
(6) The use of studio resources.
(7) If the application includes a qualified
postproduction expense:
(i) The qualified postproduction facility where the
activity will occur.
(ii) The anticipated type of postproduction activity
that will be conducted.
(8) Other criteria that the Director of the Pennsylvania
Film Office deems appropriate to ensure maximum employment
and benefit within this Commonwealth.
Upon determining the taxpayer has incurred or will incur
qualified film production expenses, the department may approve
the taxpayer for [a tax credit] an incentive. Applications not
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approved may be reviewed and considered in subsequent
application periods. The department may approve a taxpayer for
[a tax credit] an incentive based on its evaluation of the
criteria under this subsection.
(b.1) Review and approval of applications for film
[production tax credit] industry incentive district activity.--
For applications involving film production expenses incurred
within a designated film [production tax credit] industry
incentive district authorized under section 1716.2-D, the
department shall accept applications at any time. Applications
shall be reviewed by the department utilizing the criteria
required under subsection (b). Upon determining the taxpayer has
incurred or will incur qualified film production expenses, the
department shall approve the taxpayer for [a tax credit] an
incentive utilizing the [tax credits] incentives authorized
under section 1716.2-D, not to exceed the amount authorized for
the fiscal year.
(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 production expenses incurred or
to be incurred for the film.
(2) An itemized list of Pennsylvania production expenses
incurred or to be incurred for the film.
(3) With respect to a contract entered into prior to
completion of production, a commitment by the taxpayer to
incur the qualified film production expenses as itemized.
(4) The start date.
(5) Any other information the department deems
appropriate.
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(d) Certificate.--Upon execution of the contract required by
subsection (c), the department shall award the taxpayer a film
[production tax credit] industry incentive and issue the
taxpayer a film [production tax credit] industry incentive
certificate.
Section 1713-D. Film [production tax credits] industry
incentives.
A taxpayer may claim [a tax credit] an incentive against the
qualified tax liability of the taxpayer.
Section 4. Section 1714-D of the act, amended June 28, 2019
(P.L.50, No.13), is amended to read:
Section 1714-D. Carryover, carryback and assignment of credit.
(a) General rule.--If the taxpayer cannot use the entire
amount of the [tax credit] incentive for the taxable year in
which the [tax credit] incentive is first approved, then the
excess may be carried over to succeeding taxable years and used
as a credit against the qualified tax liability of the taxpayer
for those taxable years. Each time the [tax credit] incentive is
carried over to a succeeding taxable year, it shall be reduced
by the amount that was used as a credit during the immediately
preceding taxable year. The [tax credit] incentive provided by
this subarticle 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 [credit] incentive.
(b) Application.--[A tax credit] An incentive 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 [credit] incentive was approved
before the [tax credit] incentive can be applied against any tax
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liability under subsection (a).
(c) No carryback or refund.--A taxpayer is not entitled to
carry back or obtain a refund of all or any portion of an unused
[tax credit] incentive granted to the taxpayer under this
subarticle.
(d) (Reserved).
(e) Sale or assignment.--The following shall apply:
(1) A taxpayer, upon application to and approval by the
department, may sell or assign, in whole or in part, [a tax
credit] an incentive granted to the taxpayer under this
subarticle.
(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.
(f) Purchasers and assignees.--Except as provided in
subsections (g) and (h), the following apply:
(1) The purchaser or assignee of all or a portion of [a
tax credit] an incentive under subsection (e) shall
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immediately claim the [credit] incentive in the taxable year
in which the purchase or assignment is made.
(2) The amount of the [tax credit] incentive 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] incentive.
(4) The purchaser or assignee shall notify the
Department of Revenue of the seller or assignor of the [tax
credit] incentive in compliance with procedures specified by
the Department of Revenue.
(g) Limited carry forward of [tax credits] incentives by a
purchaser or assignee.--A purchaser or assignee may carry
forward all or any unused portion of [a tax credit] an incentive
purchased or assigned in:
(1) Calendar year 2010 against qualified tax liabilities
incurred in taxable years 2011 and 2012.
(2) Calendar year 2013 against qualified tax liabilities
incurred in taxable year 2014.
(3) Calendar year 2014 against qualified tax liabilities
incurred in taxable year 2015.
(h) Full utilization of [tax credits] incentives.--[A tax
credit] An incentive awarded under this article may be sold or
assigned to a purchaser or assignee included in the same Federal
consolidated tax return as permitted under sections 1501 and
1502 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. §§ 1501 and 1502), filed by the taxpayer under subsection
(a) to reduce or eliminate the qualified tax liability to the
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same extent allowable for the taxpayer under subsections (a),
(b) and (c). [Tax credits] Incentives sold or assigned under
this subsection are limited to the taxable year in which the
purchase or assignment is made and may only be carried forward
for the remainder of the carryforward period of the original
[credit] incentive.
Section 5. Section 1715-D of the act is amended to read:
Section 1715-D. Determination of Pennsylvania production
expenses.
In prescribing standards for determining which production
expenses are considered Pennsylvania production expenses for
purposes of computing the [credit] incentive provided by this
subarticle, the department shall consider:
(1) The location where services are performed.
(2) The location where supplies are consumed.
(3) Other factors the department determines are
relevant.
Section 6. Section 1716-D of the act, amended June 28, 2019
(P.L.50, No.13), is amended to read:
Section 1716-D. Limitations.
(a) Cap.--Except for [tax credits] incentives reissued under
section 1716.1-D, in no case shall the aggregate amount of [tax
credits] incentives awarded in any fiscal year under this
subarticle exceed [$70,000,000] $125,000,000. The department
may, in its discretion, award in one fiscal year up to:
(1) Thirty percent of the dollar amount of film
[production tax credits] industry incentives available to be
awarded in the next succeeding fiscal year.
(2) Twenty percent of the dollar amount of film
[production tax credits] industry incentives available to be
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awarded in the second successive fiscal year.
(3) Ten percent of the dollar amount of film [production
tax credits] industry incentives available to be awarded in
the third successive fiscal year.
(a.1) Advance award of credits.--The advance award of film
[tax credits] industry incentives under subsection (a) shall:
(1) count against the total dollar amount of [credits]
incentives that the department may award in that next
succeeding fiscal year; and
(2) reduce the dollar amount of [credits] incentives
that the department may award in that next succeeding fiscal
year.
The individual limitations on the awarding of film [production
tax credits] industry incentives apply to an advance award of
film [production tax credits] industry incentives under
subsection (a) and to a combination of film [production tax
credits] industry incentives awarded against the current fiscal
year cap and against the next succeeding fiscal year's cap.
(b) Individual limitations.--The following shall apply:
(1) Except as set forth in paragraph (1.1) or (1.2), the
aggregate amount of film [production tax credits] industry
incentives awarded by the department under section 1712-D(d)
to a taxpayer for a film may not exceed 25% of the qualified
film production expenses to be incurred.
(1.1) In addition to the [tax credit] incentive under
paragraph (1), a taxpayer is eligible for [a credit] an
incentive in the amount of 5% of the qualified film
production expenses incurred by the taxpayer if the taxpayer:
(i) films a feature film, television film or
television series, which is intended as programming for a
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national audience; and
(ii) films in a qualified production facility which
meets the minimum stage filming requirements.
(1.2) A qualified postproduction expense shall qualify
for a 30% [credit] incentive.
(2) A taxpayer that has received a grant under 12
Pa.C.S. § 4106 (relating to approval) shall not be eligible
for a film [production tax credit] industry incentive under
this act for the same film.
(c) Qualified production facility.--To be considered a
qualified production facility or qualified postproduction
facility, the owner of a facility shall provide evidence to the
department to verify the development or facility specifications
and capital investment costs incurred for the facility so that
the threshold amounts set in the definitions of "qualified
production facility" and "qualified postproduction facility" are
satisfied, and upon verification, the facility shall be
registered by the department officially as a qualified
production facility or qualified postproduction facility.
(d) 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 facilities
outweighs the benefit of maintaining the 60% requirement
contained in the definition of "qualified film production
expense." If such determination is made, the department may
waive the requirement that 60% of a film's total production or
postproduction expenses be comprised of Pennsylvania production
expenses for a film, television film or television series that
is intended as programming for a national audience and is filmed
or produced in a qualified production facility or qualified
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postproduction facility if the taxpayer who has Pennsylvania
production expenses of at least $30,000,000 per production meets
the minimum stage filming requirements.
Section 7. Section 1716.1-D of the act is amended to read:
Section 1716.1-D. Reissuance of film [production tax credits]
industry incentives.
(a) Reissuance.--In any fiscal year, the department may
reissue [a tax credit] an incentive which meets all of the
following:
(1) The [tax credit] incentive was approved under
section 1712-D(b).
(2) The contract was signed under section 1712-D(c).
(3) The [tax credit] incentive was awarded and a
certificate was issued under section 1712-D(d).
(b) Amount.--The amount of [a tax credit] an incentive to be
reissued shall be calculated as the difference between the
amounts in subsection (a)(1) and (3).
(c) Applicability.--This section shall apply to [a tax
credit] an incentive awarded under this article in any fiscal
year beginning after June 30, 2017.
Section 8. Section 1716.2-D of the act, amended June 28,
2019, (P.L.50, No.13), is amended to read:
Section 1716.2-D. Film [production tax credit] industry
incentive districts.
(a) Establishment.--The department may designate not more
than two film [production tax credit] industry incentive
districts for the purpose of enhancing, promoting and expanding
film production opportunities and establishing a film production
industry within this Commonwealth.
(b) Criteria.--A film [production tax credit] industry
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incentive district shall:
(1) Be at least 55 acres in size.
(2) Be located on deteriorated property.
(3) Be comprised of a parcel that is or will be occupied
by two or more qualified businesses that:
(i) in the aggregate, make a tax district capital
investment of at least $400,000,000 within eight years
after the effective date of the designation of the
district; and
(ii) are dedicated to film production activity,
postproduction activity or other activities that directly
or indirectly support film production activity occurring
within the district or within this Commonwealth.
(4) Contain at least one qualified production facility
and two sound stages.
(c) Application.--The following apply:
(1) An application to designate a film [production tax
credit] industry incentive district may be made by the county
or municipality in which all or part of the district will be
located. The department shall review the application and, if
approved, issue a designation for the film [production tax
credit] industry incentive district. The application period
shall be set by the department.
(2) The application shall contain the following
information:
(i) The geographic area of the proposed film
[production tax credit] industry incentive district.
(ii) A detailed map of the proposed district,
including geographic boundaries, total area and present
use and conditions of the land and structures.
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(iii) A description of the current social, economic
and demographic characteristics of the proposed district
and anticipated improvements in education, health, human
services, public safety and employment that will result
from designation of the district.
(iv) A description of anticipated film production
activity and ancillary activities in the proposed
district.
(v) Evidence of potential private and public
investment in the proposed district.
(vi) The role of the proposed district in regional
economic and community development.
(d) Designation period.--A district designated under
subsection (c) shall expire 15 years after the effective date of
the designation.
(e) Construction.--The [tax credits] incentives authorized
under this section are in addition to the [tax credits]
incentives under section 1716-D(a) and are available exclusively
for activities occurring within the designated district.
(f) Annual [tax credits] incentives.--The department may
authorize [a tax credit] an incentive for a film [production tax
credit] industry incentive district in fiscal year 2019-2020 and
in each fiscal year thereafter.
Section 9. Sections 1717-D, 1718-D and 1720-D of the act are
amended to read:
Section 1717-D. Penalty.
A taxpayer which claims [a tax credit] an incentive and fails
to incur the amount of qualified film production expenses agreed
to in section 1712-D(c)(3) for a film in that taxable year shall
repay to the Commonwealth the amount of the film [production tax
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credit] industry incentive claimed under this subarticle for the
film.
Section 1718-D. Pass-through entity.
(a) General rule.--If a pass-through entity has any unused
[tax credit] incentive under section 1714-D, it may elect in
writing, according to procedures established by the Department
of Revenue, to transfer all or a portion of the [credit]
incentive 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
[credit] incentive under subsection (a) for the same qualified
film production expense.
(c) Application.--A shareholder, member or partner of a
pass-through entity to whom [a credit] an incentive is
transferred under subsection (a) shall immediately claim the
[credit] incentive 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 credit.
Section 1720-D. Report to General Assembly.
(a) General rule.--No later than June 1, 2008, 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 credit]
incentive provided by this subarticle. The report shall include
the name of the film produced, the names of all taxpayers
utilizing the [credit] incentive as of the date of the report
and the amount of [credits] incentives approved for, utilized by
or sold or assigned by each taxpayer. The report may also
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include any recommendations for changes in the calculation or
administration of the [tax credit] incentive. The report shall
be submitted to the chairman and minority chairman of the
Appropriations and Finance Committees of the Senate and the
chairman and minority chairman of the Appropriations and Finance
Committees 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 [credits] incentives claimed during
the fiscal year by film.
(2) The total amount spent in this Commonwealth during
the fiscal year by film.
(3) The total amount of tax revenues generated by this
Commonwealth during the fiscal year by film.
(4) The total number of jobs created during the fiscal
year by film, including the duration of the jobs.
(b) Public information.--Notwithstanding any law providing
for the confidentiality of tax records, the information in the
report shall be public information, and all report information
shall be posted on the department's Internet website.
Section 10. A reference to the former film production tax
credit in law or regulation shall be a reference to the film
industry incentive.
Section 11. The amendment of section 1716-D(a) of the act
shall apply to fiscal years beginning on or after July 1, 2021.
Section 12. This act shall take effect immediately.
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