HB 47

1
A bill to be entitled
2An act relating to entertainment industry economic
3development; amending s. 288.1254, F.S.; revising the
4entertainment industry financial incentive program to
5provide corporate income tax and sales and use tax credits
6to qualified entertainment entities rather than
7reimbursements from appropriations; revising provisions
8relating to definitions, creation and scope, application
9procedures, approval process, eligibility, required
10documents, qualified and certified productions, and annual
11reports; providing duties and responsibilities of the
12Office of Film and Entertainment, the Office of Tourism,
13Trade, and Economic Development, and the Department of
14Revenue relating to the tax credits; providing criteria
15and limitations for awards of tax credits; providing for
16uses, allocations, election, distributions, and
17carryforward of the tax credits; providing for withdrawal
18of tax credit eligibility; providing for use of
19consolidated returns; providing for partnership and
20noncorporate distributions of tax credits; providing for
21succession of tax credits; providing requirements for
22transfer of tax credits; authorizing the Office of
23Tourism, Trade, and Economic Development to adopt rules,
24policies, and procedures; authorizing the Department of
25Revenue to adopt rules and conduct audits; providing for
26revocation and forfeiture of tax credits; providing
27liability for reimbursement of certain costs and fees
28associated with a fraudulent claim; requiring an annual
29report to the Governor and the Legislature; providing for
30future repeal; amending s. 220.02, F.S.; including tax
31credits enumerated in s. 288.1254, F.S., in the order of
32application of credits against certain taxes; amending s.
33213.053, F.S.; authorizing the Department of Revenue to
34provide tax credit information to the Office of Film and
35Entertainment and the Office of Tourism, Trade, and
36Economic Development; amending s. 212.08, F.S.; requiring
37electronic funds transfer for the entertainment industry
38tax credit; providing procedures; providing severability;
39providing an effective date.
40
41Be It Enacted by the Legislature of the State of Florida:
42
43     Section 1.  Section 288.1254, Florida Statutes, is amended
44to read:
45(Substantial rewording of section. See
46s. 288.1254, F.S., for present text.)
47     288.1254  Entertainment industry financial incentive
48program.--
49     (1)  DEFINITIONS.--As used in this section, the term:
50     (a)  "Certified production" means a qualified production
51that has tax credits allocated to it by the Office of Tourism,
52Trade, and Economic Development based on its estimated qualified
53expenditures, up to its maximum certified amount of tax credits,
54by the Office of Tourism, Trade, and Economic Development. The
55term excludes a production if its first day of principal
56photography in this state occurred before the production is
57certified by the Office of Tourism, Trade, and Economic
58Development.
59     (b)  "Digital media project" means a production of
60interactive entertainment which is produced for distribution in
61commercial or educational markets, including a video game,
62simulation, or animation, or a production intended for Internet
63or wireless distribution. The term excludes a production deemed
64by the Office of Film and Entertainment to contain obscene
65content as defined in s. 847.001(10).
66     (c)  "Off-season certified production" means a production,
67other than a digital media project or an animated production,
68which films 75 percent or more of its principal photography days
69from June 1 through November 30.
70     (d)  "Production" means a theatrical or direct-to-video
71motion picture; a made-for-television motion picture; a
72commercial; a music video; an industrial or educational film; an
73infomercial; a documentary film; a television pilot program; a
74presentation for a television pilot program; a television
75series, including, but not limited to, a drama, a reality show,
76a comedy, a soap opera, a telenovela, a game show, or a
77miniseries production; or a digital media project by the
78entertainment industry. One season of a television series is
79considered one production. The term excludes a weather or market
80program; a sporting event; a sports show; a gala; a production
81that solicits funds; a home shopping program; a political
82program; a political documentary; political advertising; a
83gambling-related project or production; a concert production; a
84pornographic production; or a local, regional, or Internet-
85distributed-only news show, current-events show, pornographic
86production, or current-affairs show. A production may be
87produced on or by film, tape, or otherwise by means of a motion
88picture camera; electronic camera or device; tape device;
89computer; any combination of the foregoing; or any other means,
90method, or device now used or later adopted.
91     (e)  "Production expenditures" means the costs of tangible
92and intangible property used and services performed primarily
93and customarily in production, including preproduction and
94postproduction, excluding costs for development, marketing, and
95distribution. Production expenditures include, but are not
96limited to:
97     1.  Wages, salaries, or other compensation, including
98amounts paid through payroll service companies, for technical
99and production crews, directors, producers, and performers.
100     2.  Expenditures for sound stages, backlots, production
101editing, digital effects, sound recordings, sets, and set
102construction.
103     3.  Expenditures for rental equipment, including, but not
104limited to, cameras and grip or electrical equipment.
105     4.  Costs of computer software and hardware, including
106servers, data processing, and visualization technologies used
107exclusively in the state for the production of digital media.
108     5.  Expenditures for meals, travel, and accommodations.
109     (f)  "Qualified expenditures" means production expenditures
110incurred in this state by a qualified production for:
111     1.  Goods purchased or leased from, or services provided
112by, a vendor or supplier, including a payroll services company,
113in this state which is registered with the Department of State
114or the Department of Revenue and doing business in this state.
115     2.  Payments to residents of this state in the form of
116salary, wages, or other compensation up to a maximum of
117$1,000,000 per resident unless otherwise specified in subsection
118(4).
119
120For a qualified production involving an event, such as an awards
121show, the term excludes expenditures solely associated with the
122event itself and not directly required by the production. The
123term excludes expenditures prior to certification, with the
124exception of those incurred for a commercial, a music video, or
125the pickup of additional episodes of a television series within
126a single season.
127     (g)  "Qualified production" means a production in this
128state meeting the requirements of this section. The term
129excludes a production:
130     1.  In which less than 50 percent of the positions that
131make up its production cast and below-the-line production crew
132are filled by residents of this state, whose residency is
133demonstrated by a valid Florida driver's license or other state-
134issued identification confirming residency, or students enrolled
135full-time in a film-and-entertainment-related course of study at
136an institution of higher education in this state; or
137     2.  That is deemed by the Office of Film and Entertainment
138to contain obscene content as defined in s. 847.001(10).
139     (h)  "Qualified production company" means a corporation,
140limited liability company, partnership, or other legal entity
141engaged in a production or productions.
142     (2)  CREATION AND PURPOSE OF PROGRAM.--The entertainment
143industry financial incentive program is created within the
144Office of Film and Entertainment. The purpose of this program is
145to encourage the use of this state as a site for filming and to
146develop and sustain the workforce and infrastructure for film
147and entertainment production.
148     (3)  APPLICATION PROCEDURE; APPROVAL PROCESS.--
149     (a)  Program application.--A qualified production company
150in this state producing a qualified production may submit a
151program application to the Office of Film and Entertainment for
152the purpose of determining qualification for an award of tax
153credits authorized by this section no earlier than 6 months
154before the anticipated production start date. The applicant
155shall provide the office with information required to determine
156whether the production is a qualified production and to
157determine the qualified expenditures and other information
158necessary for the office to determine eligibility for the tax
159credit.
160     (b)  Required documentation.--The Office of Film and
161Entertainment shall develop an application form for qualifying
162an applicant as a qualified production. The form must include,
163but need not be limited to, production-related information
164concerning employment of residents in this state, a detailed
165budget of planned qualified expenditures, and the applicant's
166signed affirmation that the information on the form has been
167verified and is correct. The Office of Film and Entertainment
168and local film commissions shall distribute the form.
169     (c)  Application process.--The Office of Film and
170Entertainment shall establish a process by which an application
171is accepted and reviewed and by which tax credit eligibility and
172amount are determined. The office may request assistance from a
173duly appointed local film commission in determining compliance
174with this section.
175     (d)  Certification.--The Office of Film and Entertainment
176shall review the application within 10 business days after
177receipt. Upon its determination that the application contains
178all the information required by this subsection and meets the
179criteria set out in this section, the office shall qualify the
180applicant and recommend to the Office of Tourism, Trade, and
181Economic Development that the applicant be certified for the
182maximum tax credit award amount. Within 5 business days after
183receipt of the recommendation, the Office of Tourism, Trade, and
184Economic Development shall reject the recommendation or certify
185the maximum recommended tax credit award, if any, to the
186applicant and to the executive director of the Department of
187Revenue.
188     (e)  Grounds for denial.--The Office of Film and
189Entertainment shall deny an application if it determines that
190the application is not complete, the production does not meet
191the requirements of this section, or the tax credit sought does
192not meet the requirements of this section.
193     (f)  Verification of actual qualified expenditures.--
194     1.  The Office of Film and Entertainment shall develop a
195process to verify the actual qualified expenditures of a
196certified production. The process must require:
197     a.  A certified production to submit, in a timely manner
198after production ends and after making all of its qualified
199expenditures, data substantiating each qualified expenditure to
200an independent certified public accountant licensed in this
201state;
202     b.  Such accountant to conduct an audit, at the certified
203production's expense, to substantiate each qualified expenditure
204and submit the results as a report, along with all
205substantiating data, to the Office of Film and Entertainment;
206and
207     c.  The Office of Film and Entertainment to review the
208accountant's submittal and report to the Office of Tourism,
209Trade, and Economic Development the final verified amount of
210actual qualified expenditures made by the certified production.
211     2.  The Office of Tourism, Trade, and Economic Development
212shall determine and approve the final tax credit award amount to
213each certified applicant based on the final verified amount of
214actual qualified expenditures and shall then notify the
215executive director of the Department of Revenue that the
216certified production has met the requirements of the incentive
217program and of the final amount of the tax credit award.
218     (g)  Promoting Florida.--The Office of Film and
219Entertainment shall ensure that, as a condition of receiving a
220tax credit under this section, marketing materials promoting
221this state as a tourist destination or film and entertainment
222production destination are included, when appropriate, at no
223cost to the state, which must, at a minimum, include placement
224in the end credits of a "Filmed in Florida" logo with size and
225placement commensurate to other logos included in the end
226credits or, if no logos are used, the statement "Filmed in
227Florida using Florida's Entertainment Industry Financial
228Incentive," or a similar statement approved by the Office of
229Film and Entertainment before such placement. The Office of Film
230and Entertainment shall develop a "Filmed in Florida" logo and
231supply it for the purposes specified in this paragraph.
232     (4)  TAX CREDIT ELIGIBILITY; ELECTION AND DISTRIBUTION;
233CARRYFORWARD; CONSOLIDATED RETURNS; PARTNERSHIP AND NONCORPORATE
234DISTRIBUTIONS; MERGERS AND ACQUISITIONS.--
235     (a)  Tax credit award.--Tax credits awarded under this
236section in a fiscal year shall be made to qualified productions
237according to the principal photography start date of the
238productions, except for digital media projects, which shall be
239based on the start date of the productions.
240     (b)  Tax credit eligibility.--
241     1.  A qualified production, excluding commercials, music
242videos, digital media projects, and independent Florida films,
243that demonstrates a minimum of $500,000 in qualified
244expenditures is eligible for tax credits equal to 20 percent of
245its actual qualified expenditures.
246     2.  An off-season certified production is eligible for an
247additional 5-percent tax credit on actual qualified
248expenditures. An off-season certified production that does not
249complete 75 percent of principal photography due to disruption
250caused by a hurricane or tropical storm may not be disqualified
251from eligibility for the additional 5-percent credit as a result
252of the disruption.
253     3.  A qualified production company that produces national
254or regional commercials or music videos may be eligible for a
255tax credit award if it demonstrates a minimum of $100,000 in
256qualified expenditures per national or regional commercial or
257music video and exceeds a combined threshold of $500,000 after
258combining actual qualified expenditures from qualified
259commercials and music videos during a single state fiscal year.
260After a qualified production company that produces commercials,
261music videos, or both reaches the threshold of $500,000, it is
262eligible to apply for certification for a tax credit award. The
263maximum credit award shall be equal to 10 percent of its actual
264qualified expenditures up to a maximum of $500,000.
265     4.  A qualified production that is a digital media project
266that demonstrates a minimum of $300,000 in total qualified
267expenditures is eligible for a tax credit equal to 20 percent of
268its actual qualified expenditures. As used in this subparagraph,
269the term "qualified expenditures" means the wages or salaries
270paid to a resident of this state for working on a single
271qualified digital media project, up to a maximum of $200,000 in
272wages or salaries paid per resident. A qualified production
273company producing digital media projects may not qualify for
274more than three projects in a fiscal year. A project that
275extends beyond a fiscal year must reapply each fiscal year in
276order to be eligible for a tax credit award for that year.
277     5.  An independent Florida film that meets the criteria of
278this subparagraph and demonstrates a minimum of $100,000, but
279not more than $625,000, in total qualified expenditures is
280eligible for tax credits equal to 15 percent of its actual
281qualified expenditures. To qualify for this tax credit, a
282qualified production must:
283     a.  Be planned as a feature film or documentary of no less
284than 70 minutes in length.
285     b.  Provide evidence of 50 percent of the financing for its
286total budget in an escrow account or other form dedicated to the
287production.
288     c.  Do all major postproduction in this state.
289     d.  Employ Florida workers in at least six of the following
290key positions: writer, director, producer, director of
291photography, star or one of the lead actors, unit production
292manager, editor, or production designer. As used in this sub-
293subparagraph, the term "Florida worker" means a person who has
294been a resident of this state for at least 1 year before a
295production's application under subsection (3) was submitted or a
296person who graduated from a film school, college, university, or
297community college in this state no more than 5 years before such
298submittal or who is enrolled full-time in such a school,
299college, or university.
300     6.  A certified production determined by the Commissioner
301of Film and Entertainment, with the advice of the Florida Film
302and Entertainment Advisory Council, to be family-friendly, based
303on the review of the script and an interview with the director,
304is eligible for an additional tax credit equal to 2 percent of
305its actual qualified expenditures. Family-friendly productions
306are those that have cross-generational appeal; would be
307considered suitable for viewing by children age 5 or older; are
308appropriate in theme, content, and language for a broad family
309audience; embody a responsible resolution of issues; and do not
310exhibit any act of smoking, sex, nudity, or vulgar or profane
311language.
312
313Each qualified production under this paragraph shall make a good
314faith effort to use existing providers of infrastructure or
315equipment in this state, including, but not limited to,
316providers of camera gear, grip and lighting equipment, vehicle
317providers, and postproduction services when available in-state.
318     (c)  Withdrawal of tax credit eligibility.--A qualified or
319certified production shall continue on a reasonable schedule,
320which means beginning principal photography or in the case of a
321digital media project the start date of the production, in this
322state no more than 45 calendar days before or after the date
323provided in the production's program application. The Office of
324Tourism, Trade, and Economic Development shall withdraw the
325eligibility of a qualified or certified production that does not
326continue on a reasonable schedule.
327     (d)  Election and distribution of tax credits.--A certified
328production company receiving a tax credit award under this
329section shall, at the time the credit is awarded by the Office
330of Tourism, Trade, and Economic Development after production is
331completed and all requirements to receive a credit award have
332been met, make an irrevocable election to apply the credit
333against taxes due under chapter 220, against taxes collected or
334accrued under chapter 212, or against a stated combination of
335the two taxes. The election shall be binding upon any
336distributee, successor, transferee, or purchaser. The Office of
337Tourism, Trade, and Economic Development shall notify the
338Department of Revenue of any election made pursuant to this
339paragraph.
340     (e)  Tax credit carryforward.--If the certified production
341company cannot use the entire tax credit in the taxable year or
342reporting period in which the credit is awarded, any excess
343amount may be carried forward to a succeeding taxable year or
344reporting period. A tax credit applied against taxes imposed
345under chapter 212 may be carried forward for a maximum of 5
346years following the date of award. A tax credit applied against
347taxes imposed under chapter 220 may be carried forward for a
348maximum of 5 years following the year in which the credit was
349awarded, after which the credit expires and may not be used.
350     (f)  Consolidated returns.--A certified production company
351that files a Florida consolidated return as a member of an
352affiliated group under s. 220.131(1) may be allowed the credit
353on a consolidated return basis up to the amount of the tax
354imposed upon the consolidated group under chapter 220.
355     (g)  Partnership and noncorporate distributions.--A
356qualified production company that is not a corporation as
357defined in s. 220.03 may elect to distribute tax credits awarded
358under this section to its partners or members in proportion to
359their respective distributive income or loss in the taxable
360fiscal year in which the tax credits were awarded.
361     (h)  Mergers or acquisitions.--Tax credits available under
362this section to a certified production company may succeed to a
363surviving or acquiring entity subject to the same conditions and
364limitations as described in this section; however, they may not
365be transferred again by the surviving or acquiring entity.
366     (5)  TRANSFER OF TAX CREDITS.--
367     (a)  Authorization.--Upon application to the Office of Film
368and Entertainment and approval by the Office of Tourism, Trade,
369and Economic Development, a certified production company, or a
370partner or member that has received a distribution under
371paragraph (4)(g), may elect to transfer, in whole or in part,
372any unused credit amount granted under this section. An election
373to transfer any unused tax credit amount under chapter 212 or
374chapter 220 must be made no later than 5 years from the date the
375credit was awarded, after which period the credit expires and
376may not be used. The Office of Tourism, Trade, and Economic
377Development shall notify the Department of Revenue of the
378election and transfer.
379     (b)  Number of transfers permitted.--A certified production
380company that has elected to apply a credit amount against taxes
381remitted under chapter 212 is permitted a one-time transfer of
382unused credits to one transferee. A certified production company
383that has elected to apply a credit amount against taxes due
384under chapter 220 is permitted a one-time transfer of unused
385credits to no more than four transferees, and such transfers
386shall occur in the same taxable year.
387     (c)  Transferee rights and limitations.--The transferee is
388subject to the same rights and limitations as the certified
389production company awarded the tax credit, except that the
390transferee may not sell or otherwise transfer the tax credit.
391     (d)  Rulemaking.--The Department of Revenue may adopt rules
392pursuant to ss. 120.536(1) and 120.54 to administer this
393subsection, as provided in subsection (6).
394     (6)  RULES, POLICIES, AND PROCEDURES.--
395     (a)  The Office of Tourism, Trade, and Economic Development
396may adopt rules pursuant to ss. 120.536(1) and 120.54 and
397develop policies and procedures to implement and administer this
398section, including, but not limited to, rules specifying
399requirements for the application and approval process, records
400required for substantiation for tax credits, procedures for
401making the election in paragraph (4)(d), the manner and form of
402documentation required to claim tax credits awarded or
403transferred under this section, and marketing requirements for
404tax credit recipients.
405     (b)  The Department of Revenue may adopt rules pursuant to
406ss. 120.536(1) and 120.54 to administer this section, including
407rules governing the examination and audit procedures required to
408administer this section and the manner and form of documentation
409required to claim tax credits awarded or transferred under this
410section.
411     (7)  AUDIT AUTHORITY; REVOCATION AND FORFEITURE OF TAX
412CREDITS; FRAUDULENT CLAIMS.--
413     (a)  Audit authority.--The Department of Revenue may
414conduct examinations and audits as provided in s. 213.34 to
415verify that tax credits under this section have been received,
416transferred, and applied according to the requirements of this
417section. If the Department of Revenue determines that tax
418credits have not been received, transferred, or applied as
419required by this section, it may, in addition to the remedies
420provided in this subsection, pursue recovery of such funds
421pursuant to the laws and rules governing the assessment of
422taxes.
423     (b)  Revocation of tax credits.--The Office of Tourism,
424Trade, and Economic Development may revoke or modify any written
425decision qualifying, certifying, or otherwise granting
426eligibility for tax credits under this section if it is
427discovered that the tax credit applicant submitted any false
428statement, representation, or certification in any application,
429record, report, plan, or other document filed in an attempt to
430receive tax credits under this section. The Office of Tourism,
431Trade, and Economic Development shall immediately notify the
432Department of Revenue of any revoked or modified orders
433affecting previously granted tax credits. Additionally, the
434applicant must notify the Department of Revenue of any change in
435its tax credit claimed.
436     (c)  Forfeiture of tax credits.--A determination by the
437Department of Revenue, as a result of an audit or examination by
438the Department of Revenue or from information received from the
439Office of Film and Entertainment, that an applicant received tax
440credits pursuant to this section to which the applicant was not
441entitled is grounds for forfeiture of previously claimed and
442received tax credits. The applicant is responsible for returning
443forfeited tax credits to the Department of Revenue, and such
444funds shall be paid into the General Revenue Fund of the state.
445Tax credits purchased in good faith are not subject to
446forfeiture unless the transferee submitted fraudulent
447information in the purchase or failed to meet the requirements
448in subsection (5).
449     (d)  Fraudulent claims.--Any applicant that submits
450information under this section that includes fraudulent
451information is liable for reimbursement of the reasonable costs
452and fees associated with the review, processing, investigation,
453and prosecution of the fraudulent claim. An applicant that
454obtains a credit payment under this section through a claim that
455is fraudulent is liable for reimbursement of the credit amount
456plus a penalty in an amount double the credit amount. The
457penalty is in addition to any criminal penalty to which the
458applicant is liable for the same acts. The applicant is also
459liable for costs and fees incurred by the state in investigating
460and prosecuting the fraudulent claim.
461     (8)  ANNUAL REPORT.--Each October 1, The Office of Film and
462Entertainment shall provide an annual report for the previous
463fiscal year to the Governor, the President of the Senate, and
464the Speaker of the House of Representatives which outlines the
465return on investment and economic benefits to the state.
466     (9)  REPEAL.--This section is repealed July 1, 2014, except
467that the tax credit carryforward provided in this section shall
468continue to be valid for the period specified.
469     Section 2.  Subsection (8) of section 220.02, Florida
470Statutes, is amended to read:
471     220.02  Legislative intent.--
472     (8)  It is the intent of the Legislature that credits
473against either the corporate income tax or the franchise tax be
474applied in the following order: those enumerated in s. 631.828,
475those enumerated in s. 220.191, those enumerated in s. 220.181,
476those enumerated in s. 220.183, those enumerated in s. 220.182,
477those enumerated in s. 220.1895, those enumerated in s. 221.02,
478those enumerated in s. 220.184, those enumerated in s. 220.186,
479those enumerated in s. 220.1845, those enumerated in s. 220.19,
480those enumerated in s. 220.185, those enumerated in s. 220.187,
481those enumerated in s. 220.192, and those enumerated in s.
482220.193, and those enumerated in s. 288.1254.
483     Section 3.  Paragraph (z) is added to subsection (8) of
484section 213.053, Florida Statutes, to read:
485     213.053  Confidentiality and information sharing.--
486     (8)  Notwithstanding any other provision of this section,
487the department may provide:
488     (z)  Information relative to tax credits taken under s.
489288.1254 to the Office of Film and Entertainment and the Office
490of Tourism, Trade, and Economic Development.
491
492Disclosure of information under this subsection shall be
493pursuant to a written agreement between the executive director
494and the agency. Such agencies, governmental or nongovernmental,
495shall be bound by the same requirements of confidentiality as
496the Department of Revenue. Breach of confidentiality is a
497misdemeanor of the first degree, punishable as provided by s.
498775.082 or s. 775.083.
499     Section 4.  Paragraph (q) is added to subsection (5) of
500section 212.08, Florida Statutes, to read:
501     212.08  Sales, rental, use, consumption, distribution, and
502storage tax; specified exemptions.--The sale at retail, the
503rental, the use, the consumption, the distribution, and the
504storage to be used or consumed in this state of the following
505are hereby specifically exempt from the tax imposed by this
506chapter.
507     (5)  EXEMPTIONS; ACCOUNT OF USE.--
508     (q)  Entertainment industry tax credit; authorization;
509eligibility for credits.--
510     1.  For the fiscal years beginning July 1, 2009, and ending
511June 30, 2014, a qualified production company as defined in s.
512288.1254(1)(g), is eligible for tax credits against its sales
513and use tax liabilities as provided in s. 288.1254.
514     2.  The credit shall be deducted from any sales and use tax
515remitted by the dealer to the department by electronic funds
516transfer and can only be deducted on a sales and use tax return
517initiated through electronic data interchange. The dealer shall
518separately state the credit on the electronic return. The net
519amount of tax due and payable must be remitted by electronic
520funds transfer. If the credit for the qualified expenditures is
521larger than the amount owed on the sales and use tax return, the
522amount of the credit may be carried forward to a succeeding
523reporting period. A dealer may only obtain a credit using the
524method described in this subparagraph. A dealer is not
525authorized to obtain a credit by applying for a refund.
526     Section 5.  If any provision of this act or the application
527thereof to any person or circumstance is held invalid, the
528invalidity shall not affect other provisions or applications of
529the act which can be given effect without the invalid provision
530or application, and to this end the provisions of this act are
531declared severable.
532     Section 6.  This act shall take effect July 1, 2009.


CODING: Words stricken are deletions; words underlined are additions.