HB 1321

1	A bill to be entitled
2	An act relating to entertainment industry economic
3	development; transferring, renumbering, and amending s.
4	288.1254, F.S.; revising the entertainment industry
5	financial incentive program to provide corporate income
6	tax credits to qualified entertainment entities rather
7	than reimbursements from appropriations; revising
8	provisions relating to definitions, creation and scope,
9	application procedures, approval process, eligibility,
10	required documents, qualified productions, rules,
11	fraudulent claims, and annual reports; providing criteria
12	and limitations for awards of tax credits; providing
13	marketing requirements; providing for future repeal;
14	amending s. 477.0135, F.S.; correcting a cross-reference;
15	providing an effective date.
16
17	Be It Enacted by the Legislature of the State of Florida:
18
19	Section 1.  Section 288.1254, Florida Statutes, is
20	transferred and renumbered as section 220.192, Florida Statutes,
21	and amended to read:
22	220.192 288.1254  Entertainment industry financial
23	incentive program; creation; purpose; definitions; application
24	procedure; approval process; reimbursement eligibility;
25	submission of required documentation; recommendations for credit
26	award payment; policies and procedures; fraudulent claims.--
27	(1)  CREATION AND PURPOSE OF PROGRAM.--Subject to specific
28	appropriation, There is created within the Office of Film and
29	Entertainment an entertainment industry financial incentive
30	program. The purpose of this program is to encourage the use of
31	this state as a site for filming and developing and sustaining
32	the workforce and infrastructure providing production services
33	for filmed entertainment.
34	(2)  DEFINITIONS.--As used in this section, the term:
35	(a)  "Filmed entertainment" means a theatrical or
36	direct-to-video motion picture, a made-for-television motion
37	picture teleproduction, a commercial, a music video, an
38	industrial or educational film, a promotional video or film, a
39	documentary film, a television pilot, a presentation for a
40	television pilot, a television special, a television series,
41	including, but not limited to, a drama, a reality, a comedy, a
42	soap opera, a telenovela, a game show, and a miniseries
43	production, or a digital-media-effects production by the
44	entertainment industry to be sold or displayed in an electronic
45	medium, excluding news shows and sporting events. As used in
46	this paragraph, the term "motion picture" means a motion picture
47	made on or by film, tape, or otherwise and produced by means of
48	a motion picture camera, electronic camera or device, tape
49	device, any combination of the foregoing, or any other means,
50	method, or device now used or which may hereafter be adopted. As
51	used in this paragraph, the term "digital-media-effects" means
52	visual elements created through the modification of already
53	existing or newly created visual elements for film, video, or
54	animated media through the use of digital 2D/3D animation or
55	painting, motion capture, or compositing technologies. For
56	purposes of this section, the term "filmed entertainment" does
57	not include the electronic gaming industry or sporting events.
58	(b)  "High-impact television series" means a production
59	created to run multiple production seasons with an estimated
60	order of at least seven episodes per season and qualified
61	expenditures of at least $625,000 per episode.
62	(c)(b)  "Production costs" means the costs of real,
63	tangible, and intangible property used and services performed
64	primarily or customarily in the production, including
65	preproduction and postproduction, of qualified filmed
66	entertainment. Production costs generally include, but are not
67	limited to:
68	1.  Wages, salaries, or other compensation, including
69	amounts paid through payroll service companies, for technical
70	and production crews, directors, producers, and performers who
71	are residents of this state.
72	2.  Expenditures for sound stages, backlots, production
73	editing, digital effects, sound recordings, sets, and set
74	construction.
75	3.  Expenditures for rental equipment, including, but not
76	limited to, cameras and grip or electrical equipment.
77	4.  Expenditures for meals, travel, and accommodations, and
78	goods used in producing filmed entertainment that is located and
79	doing business in this state.
80	5.  Expenditures for goods and services used in producing
81	filmed entertainment.
82	(d)(c)  "Qualified expenditures" means production costs
83	incurred in this state within the current fiscal year for goods
84	purchased or leased from or services provided by purchased,
85	leased, or employed from a resident of this state or a vendor or
86	supplier who is located and doing business in this state, or
87	payments to residents of this state but excluding wages,
88	salaries, and or other compensation paid to the two highest-paid
89	employees in this state.
90	(e)(d)  "Qualified production" means filmed entertainment
91	that meets or exceeds minimum makes expenditures required in
92	this state for the total or partial production of filmed
93	entertainment. Productions that are deemed by the Office of Film
94	and Entertainment to contain obscene content, as defined by the
95	United States Supreme Court, are not qualified productions.
96	Also, a production is not a qualified production if it is
97	determined that the first day of principal photography in this
98	state occurred on or before the date of submitting its
99	application to the Office of Film and Entertainment or prior to
100	certification by the Office of Tourism, Trade, and Economic
101	Development.
102	(f)(e)  "Qualified production company relocation project"
103	means a corporation, limited liability company, partnership,
104	corporate headquarters, or other private entity engaged in
105	productions of filmed entertainment that is domiciled in another
106	state or country and relocates its operations to this state, is
107	organized under the laws of this or any other state or country,
108	and includes as one of its primary purposes digital-media-
109	effects or motion picture and television production, or
110	postproduction.
111	(3)  APPLICATION PROCEDURE; APPROVAL PROCESS.--
112	(a)  Any company engaged in this state in producing filmed
113	entertainment may submit an application to the Office of Film
114	and Entertainment for the purpose of determining qualification
115	for an award of credits against the tax imposed by this chapter
116	as receipt of reimbursement provided in this section. The office
117	must be provided information required to determine if the
118	production is a qualified production and to determine the
119	qualified expenditures, production costs, and other information
120	necessary for the office to determine both eligibility for the
121	15-percent tax credit and level of reimbursement.
122	(b)  A digital-media-effects company in the state which
123	furnishes digital material to filmed entertainment may submit an
124	application to the Office of Film and Entertainment for the
125	purpose of determining qualification for receipt of
126	reimbursement authorized by this section. The office must be
127	provided information required to determine if the company is
128	qualified and to determine the amount of reimbursement.
129	(c)  Any corporation, limited liability company,
130	partnership, corporate headquarters, or other private entity
131	domiciled in another state which includes as one of its primary
132	purposes digital-media-effects or motion picture and television
133	production and which is considering relocation to this state may
134	submit an application to the Office of Film and Entertainment
135	for the purpose of determining qualification for reimbursement
136	under this section.
137	(d)1.  The Office of Film and Entertainment shall establish
138	a process by which an application is accepted and reviewed and
139	reimbursement eligibility and reimbursement amount are
140	determined. The Office of Film and Entertainment may request
141	assistance from a duly appointed local film commission in
142	determining qualifications for reimbursement and compliance.
143	1.2.  The Office of Film and Entertainment shall develop a
144	standardized application form for use in approving a qualified
145	production, a qualified relocation project, or a company
146	qualifying under paragraph (a), paragraph (b), or paragraph (c).
147	The application form for a qualified production must include,
148	but need not be limited to, production-related information on
149	employment, proposed total production budgets, planned
150	expenditures in this state which are intended for use
151	exclusively as an integral part of preproduction, production, or
152	postproduction activities engaged primarily in this state, and a
153	signed affirmation from the applicant Office of Film and
154	Entertainment that the information on the application form has
155	been verified and is correct. The application form shall be
156	distributed to applicants by the Office of Film and
157	Entertainment or local film commissions.
158	2.3.  The Office of Film and Entertainment must complete
159	its review of each application and recommend approval of the
160	amount of the tax credit award to the Office of Tourism, Trade,
161	and Economic Development or notify the applicant that he or she
162	has not met the requirements for qualification within 10
163	business 5 days after receipt of the completed application,
164	including all required information, and it must notify the
165	applicant of the certified maximum tax credit award, if any, its
166	determination within 10 business days after being notified of
167	certification by the Office of Tourism, Trade, and Economic
168	Development receipt of the completed application and required
169	information.
170	3.4.  Upon determination that all criteria are met for
171	qualification for reimbursement, The Office of Film and
172	Entertainment shall notify the applicant of such approval. the
173	office shall also notify the Office of Tourism, Trade, and
174	Economic Development of the applicant approval and amount of
175	reimbursement required. The Office of Tourism, Trade, and
176	Economic Development shall make the final determination for the
177	actual tax credit award reimbursement.
178	4.5.  The Office of Film and Entertainment shall deny an
179	application if it determines that:
180	a.  The application is not complete or does not meet the
181	requirements of this section; or
182	b.  The tax credit amount reimbursement sought does not
183	meet the requirements of this section for such reimbursement.
184	(4)  CREDIT REIMBURSEMENT ELIGIBILITY; SUBMISSION OF
185	REQUIRED DOCUMENTATION; APPLICATION RECOMMENDATIONS FOR TRANSFER
186	PAYMENT.--
187	(a)  A production that is qualified by the Office of Film
188	and Entertainment and is certified by the Office of Tourism,
189	Trade, and Economic Development is eligible for a tax credit for
190	reimbursement of up to 15 percent of its qualifying expenditures
191	in this state on a filmed entertainment program, excluding
192	wages, salaries, and other compensation paid to the two highest-
193	paid employees of the production in this state that demonstrates
194	a minimum of $850,000 in total qualified expenditures for the
195	entire run of the project, versus the budget on a single
196	episode, within the fiscal year from July 1 to June 30. However,
197	the maximum reimbursement that may be made with respect to any
198	filmed entertainment program is $2 million. All reimbursements
199	under this section are subject to appropriation. Tax credits
200	awarded Payments under this section in a fiscal year shall be
201	made to qualified productions according to a production's
202	principal photography start date, for those qualified
203	productions having entered into the first queue as cited in
204	subparagraph 1. or the second queue cited in subparagraph 2.
205	within the first 2 weeks after the queue's opening. All other
206	qualified productions entering into either queue after the
207	initial 2-week openings shall be on a first-come, first-served
208	basis until the appropriation for that fiscal year is exhausted.
209	The aggregate amount of tax credits allowed under this section
210	in any fiscal year is $25 million. If the total amount of
211	allocated tax credits applied for in any fiscal year exceeds the
212	aggregate amount of tax credits authorized annually under this
213	section, such excess shall be treated as having been applied for
214	on the first day of the next fiscal year in which tax credits
215	remain available for allocation. On February 1 of each year, the
216	remaining funds within both queues shall be combined into a
217	single queue and distributed based on a project's principal
218	photography start date. The eligibility of qualified productions
219	may not carry over from year to year, but such productions may
220	reapply for eligibility under the guidelines established for
221	doing so. The Office of Film and Entertainment shall develop a
222	procedure to ensure that qualified productions continue on a
223	reasonable schedule until completion. If a qualified production
224	is not continued according to a reasonable schedule, the office
225	shall withdraw its eligibility and reallocate the funds to the
226	next qualified productions already in the queue that have yet to
227	receive their full tax credit maximum or 15-percent financial
228	reimbursement, if they have not started principal photography by
229	the time the funds become available.
230	1.  Film, television, and episodic queue.--Theatrical or
231	direct-to-video motion pictures, made-for-television movies,
232	commercials, music videos, industrial and educational films,
233	promotional videos or films, documentary films, television
234	specials, television series, including, but not limited to,
235	miniseries and telenovelas, and digital-media-effects
236	productions by the entertainment industry to be sold or
237	displayed in an electronic medium that demonstrate a minimum of
238	$625,000 in total qualified expenditures for the entire run of
239	the project, which, for a television series, means a season even
240	if the season is not completed in the same fiscal year in which
241	principal photography began, shall have their own separate queue
242	established, and such queue shall have dedicated to it 60
243	percent of all available tax credits in any fiscal year for
244	which this section applies of the state incentive money. The
245	maximum tax credit award that may be made from this queue for
246	any single production is $2 million, unless the production is a
247	high-impact television series, in which case the production
248	shall be eligible for a maximum tax credit award of $3 million,
249	provided such production meets the other criteria of this
250	section. On March 1 of each year, the remaining tax credits
251	within this queue shall be merged into a general queue and may
252	be used for other purposes of this section as determined by the
253	Office of Film and Entertainment. A qualified high-impact
254	television series shall be allowed first position in this queue
255	for its first five production seasons if the application is
256	received by the Office of Film and Entertainment within the
257	first 2 weeks after the queue's opening. A television series
258	after its fifth production season is not eligible for tax credit
259	awards under this section.
260	2.  Television pilot queue.--Television pilots and,
261	presentations for television pilots for television series
262	intended to be shot in this state and, or television series,
263	including, but not limited to, drama, reality, comedy, soap
264	opera, telenovela, game show, or miniseries productions, by the
265	entertainment industry to be sold or displayed in an electronic
266	medium that demonstrate a minimum of $625,000 in total qualified
267	expenditures for the pilot episode or presentation shall have
268	their own separate queue established, and such queue shall have
269	dedicated to it 20 40 percent of all available tax credits in
270	any given fiscal year for which this section applies of the
271	state incentive money. The maximum tax credit award that may be
272	made from this queue for any single project is $2 million. On
273	March 1 of each year, the remaining tax credits within this
274	queue shall be merged into a general queue and may be used for
275	other purposes of this section as determined by the Office of
276	Film and Entertainment.
277	3.  Commercials and music video queue.--Commercials and
278	music videos by the entertainment industry to be sold or
279	displayed in an electronic medium that demonstrate a minimum of
280	$500,000 in total qualified expenditures from a production
281	company during the state fiscal year with a minimum of $75,000
282	in qualified expenditures for each production shall have their
283	own separate queue established. Such queue shall have dedicated
284	to it 20 percent of available tax credits in any given fiscal
285	year for which this section applies. The maximum tax credit
286	award that may be made from this queue for any single production
287	company is $500,000. On April 1 of each year, the remaining tax
288	credits within this queue shall be merged into a general queue
289	and may be used for other purposes of this section as determined
290	by the Office of Film and Entertainment.
291	(b)  The tax credit available under this section shall only
292	be surrendered in satisfaction of the tax owed by a qualified
293	production company under this chapter and only up to the face
294	amount of the credit. If the qualified production company cannot
295	use the entire tax credit in the year in which the credit is
296	approved, any excess may be carried over to a succeeding taxable
297	year. A tax credit granted under this section may be carried
298	forward only for a maximum of 5 years following the year in
299	which the credit was approved. A digital-media-effects company
300	in the state which furnishes digital material to filmed
301	entertainment may be eligible for a payment in an amount not to
302	exceed 5 percent of its annual gross revenues on qualified
303	expenditures as defined in paragraph (2)(c) before taxes or
304	$100,000, whichever is less. A company applying for payment must
305	submit documentation annually as required by the Office of Film
306	and Entertainment for determination of eligibility of claimed
307	billing and determination of the amount of payment for which the
308	company is eligible.
309	(c)  Upon application and approval by the Department of
310	Revenue, a taxpayer may sell or assign, in whole or in part, a
311	tax credit granted under this section. The sale or assignment of
312	any amount of the tax credit shall not be exchanged for
313	consideration received by the taxpayer of less than 75 percent
314	of the transferred amount of tax credit. The purchaser or
315	assignee shall surrender the tax credit in the year acquired
316	from the qualified production company and otherwise may carry
317	the tax credit over subject to the same limitations on credit
318	usage as the qualified production company awarded the tax
319	credit. The purchaser may not sell, assign, or otherwise
320	transfer the tax credit. A qualified relocation project that is
321	certified by the Office of Film and Entertainment is eligible
322	for a one-time incentive payment in an amount equal to 5 percent
323	of its annual gross revenues before taxes for the first 12
324	months of conducting business in its Florida domicile or
325	$200,000, whichever is less. A company applying for payment must
326	submit documentation as required by the Office of Film and
327	Entertainment for determination of eligibility of claimed
328	billing and determination of the amount of payment for which the
329	company is eligible.
330	(d)  A qualified production company that is not a
331	corporation, as defined in s. 220.03(1)(e), shall make an
332	election, a digital-media-effects company, or a qualified
333	relocation project applying for a payment under this section
334	must submit documentation for claimed qualified expenditures to
335	the Department of Revenue or distribute tax credits awarded
336	under this section to its partners or members in proportion to
337	the respective distributive share of such partners' or members'
338	income or loss in the year in which such tax credits were
339	approved. A tax credit granted under this section shall be
340	carried forward only for a maximum of 5 years following the year
341	in which the credit was approved Office of Film and
342	Entertainment.
343	(e)  A qualified production applying for a tax credit award
344	under this section must submit in a timely manner, but no later
345	than August 15 of the state fiscal year following the state
346	fiscal year in which claimed qualified expenditures were
347	incurred, a single report from a certified public accountant
348	based in this state, preapproved by the Office of Film and
349	Entertainment, documenting the amount of claimed qualified
350	expenditures to the Office of Film and Entertainment. The Office
351	of Film and Entertainment shall notify the Office of Tourism,
352	Trade, and Economic Development whether an applicant meets the
353	criteria for reimbursement and shall recommend the reimbursement
354	amount. The Office of Tourism, Trade, and Economic Development
355	shall make the final determination for actual reimbursement.
356	(5)  MARKETING REQUIREMENTS.--The Office of Film and
357	Entertainment shall ensure appropriate marketing materials,
358	including promotions of this state as a tourist or filming
359	destination, are required when appropriate to be included on
360	any filmed entertainment as a condition of receiving a tax
361	credit under this section. The Office of Film and
362	Entertainment shall coordinate with VISIT Florida and other
363	appropriate state entities for the development and
364	implementation of marketing materials.
365	(6)(5)  RULES POLICIES AND PROCEDURES.--The Office of
366	Tourism, Trade, and Economic Development shall adopt rules
367	pursuant to ss. 120.536(1) and 120.54 policies and procedures to
368	implement this section, including, but not limited to, rules
369	specifying requirements for the application and approval
370	process, records required for submission for substantiation of
371	credit awards for reimbursement, and determination of and
372	qualification for credit awards, and marketing requirements for
373	credit recipients reimbursement.
374	(7)(6)  FRAUDULENT CLAIMS.--An eligible entity or company
375	that obtains a payment under this section through a claim that
376	it knows is fraudulent is liable for reimbursement of the amount
377	paid plus a penalty in an amount double the payment and
378	reimbursement of reasonable costs, which penalty is in addition
379	to any criminal penalty to which the entity or company is liable
380	for the same acts. The entity or company is also liable for
381	costs and fees incurred by the state in investigating and
382	prosecuting the fraudulent claim. Any applicant who knowingly
383	submits an application under this section that includes
384	fraudulent information shall be liable for reimbursement of the
385	reasonable costs and fees associated with the review,
386	processing, investigation, and prosecution of the fraudulent
387	application.
388	(8)(7)  ANNUAL REPORT.--The Office of Film and
389	Entertainment shall provide an annual report for the previous
390	fiscal year, due October 1, to the Governor, the President of
391	the Senate, and the Speaker of the House of Representatives
392	outlining the return on investment to the state on funds
393	expended pursuant to this section.
394	(9)  REPEAL.--This section is repealed July 1, 2014.
395	Section 2.  Subsection (5) of section 477.0135, Florida
396	Statutes, is amended to read:
397	477.0135  Exemptions.--
398	(5)  A license is not required of any individual providing
399	makeup, special effects, or cosmetology services to an actor,
400	stunt person, musician, extra, or other talent during a
401	production recognized by the Office of Film and Entertainment as
402	a qualified production as defined in s. 220.192 288.1254(2).
403	Such services are not required to be performed in a licensed
404	salon. Individuals exempt under this subsection may not provide
405	such services to the general public.
406	Section 3.  This act shall take effect July 1, 2006.

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