March 4, 2008, Introduced by Senators CLARKE, ALLEN, VAN WOERKOM, KUIPERS, BIRKHOLZ, STAMAS, BROWN, GILBERT, JANSEN, HARDIMAN, McMANUS, PAPPAGEORGE, RICHARDVILLE, JELINEK, KAHN, GEORGE, GARCIA, JACOBS, CHERRY, WHITMER, PRUSI, GLEASON, BARCIA, THOMAS, ANDERSON, SCHAUER, HUNTER and OLSHOVE and referred to the Committee on Commerce and Tourism.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
(MCL 208.1101 to 208.1601) by adding section 457.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 457. (1) Until September 30, 2015, the Michigan film
office, with the concurrence of the state treasurer, may enter into
an agreement with a taxpayer providing the taxpayer with a credit
against the tax imposed by this act for an investment in a
qualified film and digital media infrastructure project, as
provided under this section. To qualify for the credit under this
section, a taxpayer shall meet all of the following requirements:
(a) Invest and expend at least $250,000.00 for a qualified
film and digital media infrastructure project in this state.
(b) Enter into an agreement as provided in this section.
(c) Receive an investment expenditure certificate from the
office under subsection (5).
(d) Submit the investment expenditure certificate issued by
the office under subsection (5) to the department under subsection
(7).
(e) Shall not be delinquent in a tax or other obligation owed
to this state or be owned or under common control of an entity that
is delinquent in a tax or other obligation owed to this state.
(2) For investment expenditures made by a taxpayer for all
qualified film and digital media infrastructure projects in this
state, an agreement under this section may provide for the taxpayer
to claim a tax credit equal to 25% of the taxpayer's base
investment. The credit under this section shall be reduced by any
credit claimed by the taxpayer under section 437 for the same base
investment. No more than $10,000,000.00 in total credits under this
section shall be authorized in a tax year. If all or a portion of a
qualified film and digital media infrastructure project is a
facility that may be used for purposes unrelated to production or
postproduction activities, then the project is eligible for the
credit only if the department determines that the facility will
support and be necessary to secure production or postproduction
activity for the production and postproduction facility and the
taxpayer agrees to both of the following:
(a) The facility will be used as a state of the art production
or postproduction facility or as support and component of the
facility for the useful life of the facility.
(b) A credit will not be claimed under this section until the
facility is complete.
(3) A taxpayer seeking a credit under this section may submit
an application to enter into an agreement under this section to the
Michigan film office. The application shall be submitted in a form
prescribed by the Michigan film office and shall be accompanied by
a $100.00 application fee and all of the information and records
requested by the office. An application fee received by the office
under this subsection shall be deposited in the Michigan film
promotion fund. The office shall not process the application until
it is complete. If the office, with the concurrence of the state
treasurer, determines to enter into an agreement under this
section, the agreement shall provide for all of the following:
(a) A requirement that construction on the qualified film and
digital media infrastructure project commence within 180 days of
the date of the agreement or else the agreement shall expire.
However, upon request submitted by the taxpayer based on good
cause, the office may extend the period for commencement of work
for an additional 90 days.
(b) A unique number assigned to the qualified film and digital
media infrastructure project.
(c) A detailed description of the qualified film and digital
media infrastructure project.
(d) A detailed business plan and market analysis for the
qualified film and digital media infrastructure project.
(e) A projected budget for the qualified film and digital
media infrastructure project.
(f) Estimated start date and completion date for the qualified
film and digital media infrastructure project.
(g) A requirement that the taxpayer not file a claim for the
credit under this section until at least 25% of the base investment
in the qualified film and digital media infrastructure project
identified in the agreement has been expended.
(h) A requirement that the taxpayer provide the office with
the information and independent certification the office and the
department deem necessary to verify investment expenditures and
eligibility for the credit under this section.
(i) A requirement that if the cost of tangible assets
described in subdivision (a) was paid or accrued in a tax year
beginning after December 31, 2007, the taxpayer shall repay an
amount equal to 25% of the gross proceeds or benefit derived from
the sale or other disposition of the tangible assets minus the
gain, multiplied by the apportionment factor for the taxable year
as prescribed in chapter 3, and plus the loss, multiplied by the
apportionment factor for the taxable year as prescribed in chapter
3 from the sale or other disposition reflected in federal taxable
income and minus the gain from the sale or other disposition added
to the business income tax base in section 201.
(4) In determining whether to enter into an agreement under
this section, the Michigan film office and the state treasurer
shall consider all of the following:
(a) The potential that in the absence of the credit the
qualified film and digital media infrastructure project will be
constructed in a location other than this state.
(b) The extent to which the qualified film and digital media
infrastructure project may have the effect of promoting economic
development or job creation in this state.
(c) The extent to which the credit will attract private
investment for the production of motion pictures, videos,
television programs, and digital media in this state.
(d) The extent to which the credit will encourage the
development of film, video, television, and digital media
production and postproduction facilities in this state.
(5) If the Michigan film office determines that a taxpayer has
complied with the terms of an agreement entered into under this
section, the office shall issue an investment expenditure
certificate to the taxpayer. The taxpayer shall submit a request to
the office for an investment expenditure certificate on a form
prescribed by the office, along with any information or independent
certification the office or the department deems necessary. The
office shall process each request within 60 days after the request
is complete. However, the office may request additional information
or independent certification before issuing an investment
expenditure certificate and need not issue the investment
expenditure certificate until satisfied that investment
expenditures and eligibility are adequately established. The
additional information requested may include a report of
expenditures audited and certified by an independent certified
public accountant. Each investment expenditure certificate shall be
signed by the Michigan film commissioner and shall include the
following information:
(a) The name of the taxpayer.
(b) A description of the qualified film and digital media
infrastructure project.
(c) The taxpayer's eligible investment expenditures for the
qualified film and digital media infrastructure project.
(d) The unique number assigned to the qualified film and
digital media infrastructure project by the office under subsection
(3).
(e) The taxpayer's federal employer identification number or
Michigan treasury number.
(f) Any independent certification required by the department
or the Michigan film office.
(6) Information and records submitted by a taxpayer to the
Michigan film office under this section shall be considered
confidential and exempt from disclosure under the freedom of
information act, 1976 PA 442, MCL 15.231 to 15.246, to the extent
that the information or records describe the commercial and
financial operations of the taxpayer, the information or records
have not been publicly disseminated at any time, and disclosure of
the information or records might put the taxpayer at a competitive
disadvantage. A taxpayer submitting materials under this section
shall specifically designate any information and records that the
taxpayer deems confidential. The office may release any information
and records submitted under this section that have not been
designated confidential by the taxpayer.
(7) To claim a credit under this section, a taxpayer shall
submit an investment expenditure certificate issued under
subsection (5) to the department. If the credit allowed under this
section exceeds the amount of taxes owed by the taxpayer under this
act for a tax year, that portion of the credit that exceeds the tax
liability of the taxpayer for the tax year shall not be refunded
but may be carried forward to offset tax liability under this act
in subsequent tax years for a period not to exceed 10 tax years or
until used up, whichever occurs first.
(8) The credit under this section shall be claimed after all
other credits under this act. An eligible production company may
assign all or a portion of a credit under this section to any
assignee. An assignee may subsequently assign a credit or any
portion of a credit assigned under this subsection to 1 or more
assignees. A company may claim a portion of a credit and assign the
remaining credit amount. A credit assignment under this subsection
is irrevocable. The credit assignment under this subsection shall
be made on a form prescribed by the department. The qualified
taxpayer shall send a copy of the completed assignment form to the
department in the tax year in which the assignment is made and
shall attach a copy of the form to the return on which the credit
is claimed.
(9) The amount of the credit under this section shall be
reduced by a credit application and redemption fee equal to 0.5% of
the credit claimed, which shall be paid by the taxpayer claiming
the credit and be deposited by the department in the Michigan film
promotion fund.
(10) A taxpayer that willfully submits information under this
section that the taxpayer knows to be fraudulent or false shall, in
addition to any other penalties provided by law, be liable for a
civil penalty equal to the amount of the taxpayer's credit under
this section. A penalty collected under this section shall be
deposited in the Michigan film production promotion fund.
(11) As used in this section:
(a) "Base investment" means the cost, including fabrication
and installation, paid or accrued in the taxable year of tangible
assets of a type that are, or under the internal revenue code will
become, eligible for depreciation, amortization, or accelerated
capital cost recovery for federal income tax purposes, provided
that the assets are physically located in this state for use in a
business activity in this state and are not mobile tangible assets
expended by a person in the development of a qualified film and
digital media infrastructure project.
(b) "Michigan film office" or "office" means the Michigan film
office created under chapter 2A of the Michigan strategic fund act,
1984 PA 270, MCL 125.2029 to 125.2029g.
(c) "Michigan film promotion fund" means the fund created
under chapter 2A of the Michigan strategic fund act, 1984 PA 270,
MCL 125.2029 to 125.2029g.
(d) "Qualified film and digital media infrastructure project"
means a film, video, television, or digital media production and
postproduction facility located, movable and immovable property and
equipment related to the facility, and any other facility that
supports and is a necessary component of the facility. A qualified
film and digital media infrastructure project does not include a
movie theater or other commercial exhibition facility.