A2256

An Act establishing the New Jersey Film and Television Project and Employment Incentive Program, supplementing P.L.1945, c.162 and Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. (1) A taxpayer shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to the value of 25 percent of qualified film and television project costs.

(2) For a taxpayer to qualify for the credit allowed pursuant to this section, the taxpayer shall comply with the requirements of this paragraph.

(a) Qualified film or television projects shall have an annual or seasonal operating budget of at least $1,000,000.

(b) At least fifty percent of a project’s qualified film and television project costs shall be studio based.

b. (1) The credit shall be applied to the taxpayer’s liability for the second privilege period beginning after the qualified film or television project commences. Credit applied pursuant to this section and credited pursuant to R.S.54:49-15 in excess of liability shall be treated as a refund of overpayment of tax, except that interest pursuant to section 7 of P.L.1992, c.175 (C.54:49-15.1) shall not apply.

(2) The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period shall be as prescribed by the director.

(3) A taxpayer shall not be granted a credit pursuant to this section for qualified film and television project costs included in the calculation of another credit against any State tax or a grant.

(4) The director is authorized to direct basis adjustments for property associated with qualified film and television project costs for which a credit is allowed pursuant to this section.

(5) (a) For each State fiscal year, the credits allowed pursuant to this section and section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $30,000,000.

(b) At least one-third of the amount of the credits allowed for a State fiscal year pursuant to this paragraph (5) shall be issued for projects based in counties with a percentage of persons below the poverty level of no less than eight percent, per capita annual money income of $35,000 or less, and annual retail sales not exceeding $6,000,000,000. The data for this calculation shall be derived from the most recent version of the U.S. Census Bureau’s State and County QuickFacts publication.

c. As used in this section:

“Below-the-line expense” means budget expenses allocated for costs other than actors, producers, writers or directors.

“Qualified film project” means the production of a nationally distributed film with its primary studio operating from its primary and fixed set in New Jersey.

“Qualified television project” means the production of a nationally televised program with its primary studio operating from its primary and fixed set in New Jersey.

“Qualified film and television project costs” means below-the-line expenses associated with the performance of a qualified film or television project in New Jersey that qualify as trade or business expenses for purposes of section 162 of the federal Internal Revenue Code (26 U.S.C. s.162) or a capitalizeable expense for the acquisition of property used in a trade or business or for the production of income within terms of section 167 of the federal Internal Revenue Code (26 U.S.C. s.167).

2. a. (1) A taxpayer shall be allowed a credit against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., in an amount equal to the value of 25 percent of qualified film and television project costs.

(2) For a taxpayer to qualify for the credit allowed pursuant to this section, the taxpayer shall comply with the requirements of this paragraph.

(a) Qualified film or television projects shall have an annual or seasonal operating budget of at least $1,000,000.

(b) At least fifty percent of a project’s qualified film and television project costs shall be studio based.

b. (1) The credit shall be applied to the taxpayer’s liability for the second taxable year beginning after the qualified film or television project commences. Credit applied pursuant to this section in excess of liability shall be treated as a refund of an overpayment of tax in accordance with N.J.S.54A:9-7, except that interest pursuant to subsection (f) of that section shall not apply.

(2) The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., for a taxable year shall be as prescribed by the director.

(3) A taxpayer shall not be granted a credit pursuant to this section for qualified film and television project costs included in the calculation of another credit against any State tax or a grant.

(4) The director is authorized to direct basis adjustments for property associated with qualified film and television project costs for which a credit is allowed pursuant to this section.

(5) (a) For each State fiscal year, the credits allowed pursuant to this section and section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $30,000,000.

(6) (a) A business entity that elects to be treated as a partnership for federal income tax purposes shall not be allowed a credit directly pursuant to this section, but a taxpayer partner shall be allowed the amount of a partnership’s credit associated with the qualified film and television project costs allocated to the taxpayer as partnership expenses.

(b) An S Corporation shall not be allowed a credit directly pursuant to this section, but a taxpayer shareholder shall be allowed the amount of an S Corporation’s credit associated with the qualified film and television project costs allocated to the taxpayer as pro rata share of S Corporation expenses.

c. As used in this section:

“Below-the-line expense” means budget expenses allocated for costs other than actors, producers, writers or directors.

“Qualified film project” means the production of a nationally distributed film with its primary studio operating from its primary and fixed set in New Jersey.

“Qualified television project” means the production of a nationally televised program with its primary studio operating from its primary and fixed set in New Jersey.

3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after the date of enactment.

STATEMENT

This bill establishes the New Jersey Film and Television Project and Employment Incentive Program. The purpose of this bill is to encourage more nationally distributed film and television productions to work from New Jersey.

The bill’s New Jersey Film and Television Project and Employment Incentive Program provides a 25 percent credit for qualified investment and labor costs associated with film and television projects working from New Jersey sets and studios. The refundable credits are available under either the Corporation Business Tax or Gross Income Tax. Creditable projects must have an annual or seasonal operating budget of at least $1,000,000 and derive at least one-half of creditable costs from studio activity. Additionally, creditable projects must be nationally distributed and operate from primary studios and fixed sets in New Jersey. Creditable costs do not include expenses for actors, producers, writers, or directors. Credits are not authorized for costs included in the calculation of another State tax credit or grant.

The bill caps the maximum amount of New Jersey Film and Television Project and Employment Incentive Program credits to be awarded per State fiscal year to $30,000,000. At least one-third of the credits allowed annually must be issued to projects in counties with the following indicators of insufficient economic activity: a percentage of persons below the poverty level of no less than eight percent, per capita annual money income of $35,000 or less, and annual retail sales not exceeding $6,000,000,000. Based on the most recent data, the one-third floor allocation of credit amounts for counties with indicators of insufficient economic activity would cover Atlantic, Camden, Cape May, Cumberland, Gloucester, and Salem.

The bill schedules the New Jersey Film and Television Project and Employment Incentive Program to apply to tax years beginning on or after the date of enactment. Credits allowed are to be applied to taxpayer liability for the second tax year beginning after a creditable project investment and labor demand commences.