February 24, 2005, Introduced by Reps. Hunter, Tobocman, Kolb, Leland and Condino and referred to the Committee on Tax Policy.
A bill to amend 1975 PA 228, entitled
"Single business tax act,"
(MCL 208.1 to 208.145) by adding section 35d.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 35d. (1) For tax years that begin after December 31,
2005, a taxpayer that is an eligible film production company may
claim a credit against the tax imposed by this act for the
production of a motion picture or television film equal to the sum
of both of the following amounts:
(a) Not more than 4%, as determined by the department, of the
taxpayer's eligible production expenses paid in the tax year.
(b) Not more than 7.25% of the taxpayer's costs paid in the
tax year for transient accommodations.
(2) A taxpayer that is an eligible film production company
shall apply to the department to determine the percentage of
eligible production expenses under subsection (1) that the taxpayer
may use to calculate the credit under this section. The department
shall use the following criteria to determine the applicable
percentage:
(a) A taxpayer is allowed at least 75% but not more than the
maximum percentage under subsection (1) if all of the following
criteria are met:
(i) The production utilizes Michigan scenery, culture, or
products.
(ii) If the product is a motion picture, the taxpayer spends a
minimum of $2,000,000.00 to produce the motion picture, and if the
product is a television film, the taxpayer spends a minimum of
$750,000.00 to produce the television film.
(iii) The taxpayer provides documentation of 66% national
distribution or coverage.
(b) A taxpayer is allowed up to 75% of the maximum percentage
under subsection (1) if all the following criteria are met:
(i) If the product is a motion picture, the taxpayer spends a
minimum of $3,000,000.00 to produce the motion picture, and if the
product is a television film, the taxpayer spends a minimum of
$1,000,000.00 to produce the television film.
(ii) At least 50% of all personnel employed in technical and
craft positions in the production of the motion picture or
television film are residents of this state. Executive, creative,
writing, directing, producing, and acting positions are not
included in determining the minimum percentage under this
subparagraph.
(iii) The taxpayer provides documentation of 66% national
distribution or coverage.
(3) The department shall determine the percentage amount for
each applicant not more than 60 days after the department receives
the application.
(4) An affiliated group as defined in this act, a controlled
group of corporations as defined in section 1563 of the internal
revenue code and further described in 26 CFR 1.414(b)-1 and
1.414(c)-1 to 1.414(c)-5, or an entity under common control as
defined by the internal revenue code shall consolidate all eligible
production expenses to calculate the credit allowed by this
section.
(5) If the amount of the credit allowed under this section
exceeds the tax liability of the taxpayer for the tax year, that
portion of the credit that exceeds the tax liability shall be
refunded.
(6) As used in this section:
(a) "Eligible film production company" means a film production
company registered with the department that meets the following
criteria:
(i) Is engaged in the motion picture or television film
production business.
(ii) Incurs costs in this state while producing a motion
picture or television film.
(iii) Can demonstrate to the department that the motion picture
or television film benefits this state by promoting this state,
promoting tourism to this state, or creating jobs and business
opportunities in this state in the motion picture and television
film industry.
(b) "Eligible production expenses" means all of the following:
(i) Wages and salaries paid for talent, management, and labor
including payments to personal services corporations for the
services of qualified performing artists as determined under
section 62(b)(1) of the internal revenue code that relate to the
production of film in this state.
(ii) Story and other rights to materials or information.
(iii) Supplies and cost of copying.
(iv) Cost for the rental of facilities, including location
fees, camera and production equipment, sound synchronization,
wardrobe, props, vehicles, and other related equipment or
materials.
(v) Film and film editing costs.
(vi) Costs for lighting, permits, artwork, animal handlers,
animals, lodging, catering, travel, insurance, and any other direct
costs.
(c) "Motion picture or television film" means a feature-length
motion picture intended for theatrical release or for exhibition on
national television by a network or through national syndication or
a television program that will serve as a pilot for or be a segment
of an ongoing dramatic or situation comedy services televised on a
network or through national syndication that has been certified by
the Michigan economic development corporation. Motion picture or
television film does not include news programs, sports programs,
and commercials.
(d) "Transient accommodation costs" means the actual
expenditures paid to an operator of transient accommodations in
this state during the production of a motion picture or television
film.
(e) "Transient accommodations" means the furnishing of a room,
apartment, suite, or similar accommodation that is customarily
occupied by a person for less than 180 consecutive days for each
letting by a hotel, apartment hotel, motel, condominium,
cooperative apartment, or rooming house that provides living
quarters, sleeping, or housekeeping accommodations, or other place
in which lodgings are regularly furnished to transients for
consideration.