BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 1197
Author: Calderon (D)
Amended: 8/24/12
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : Not available
SUBJECT : Income taxes: credits: film: extension
SOURCE : Author
DIGEST : This bill extends the operation of the
California Motion Picture Tax Credit for two years, thereby
authorizing the allocation of an additional $100 million
annually in tax credits to qualified productions from July
1, 2015 until July 1, 2017.
Assembly Amendments delete the Senate version of the bill
relating to crematories and replace with the above
language.
ANALYSIS : The Personal Income Tax (PIT) Law and the
Corporation Tax (CT) Law authorize various credits against
the taxes imposed by those laws, including a credit against
those taxes for taxable years beginning on or after January
1, 2011, in an amount equal to a specified percentage of
the qualified expenditures, as defined, attributable to the
production of a qualified motion picture in California, or,
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if the qualified motion picture has relocated to California
or is an independent film, as provided. Existing law
allows specified qualified taxpayers to elect to assign the
credit, requires specified information from qualified
taxpayers that apply for a tax credit allocation, and
imposes specified duties on the California Film Commission
(CFC) related to the administration of the credits,
including a requirement to allocate the tax credits until
July 1, 2015, and limits the aggregate amount of credits
that may be allocated to qualified motion pictures in any
fiscal year to $100,000,000, through the 2014-15 fiscal
year. Existing law additionally allows, in lieu of the
credits under the Personal Income Tax Law and the
Corporation Tax Law for qualified motion pictures, a credit
against qualified state sales and use taxes, as provided.
This bill:
1. Authorizes the CFC to allocate annually the motion
picture tax credits, under both the PIT and the CT
Laws, to qualified applicants for two additional fiscal
years (FYs), from July 1, 2015 until July 1, 2017.
2. Extend the existing $100 million-per-FY limitation on
the aggregate amount of motion picture tax credits that
may be allocated by the CFC in any FY, through and
including the 2016-17 FY.
3. Requires the Legislative Analyst's Office (LAO) to do
both of the following:
A. Prepare a report evaluating the economic effects
and administration of the Film Tax Credit under the
Sales and Use Tax Law, the PIT Law and the CT Law.
B. Provide the report on or after January 1, 2016,
to the Assembly Committee on Revenue and Taxation,
the Senate Committee on Governance and Finance, and
the public.
1. Authorizes the LAO to request and receive all
information provided by taxpayers applying for the Film
Tax Credit to the CFC, the Franchise Tax Board (FTB),
and the Board of Equalization (BOE).
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2. Allows the CFC, the FTB, the BOE, and the Employment
Development Department, and all other relevant state
agencies to disclose to the LAO additional information,
as requested by the LAO, for purposes of preparing the
LAO's report.
3. Provides that the information received by the LAO
shall be considered confidential taxpayer information,
as specified.
4. Allows the LAO to publish statistics in conjunction
with the required report if the published statistics
are classified to prevent the identification of
particular taxpayers, reports, and tax returns and the
publication of the percentage of dividend received
deductions.
5. Revises the type of information required to be
included in an application for a Film Tax Credit
allocation.
6. Establishes a procedure for a qualified applicant to
report to the CFC, prior to the issuance of a credit
certificate, certain specified information, including a
list of other jurisdictions in which any member of the
applicant's combined reporting group, in the preceding
calendar year, has produced a qualified motion picture.
7. Specifies that certain tax information obtained by
the CFC from a qualified taxpayer prior to the issuance
of a credit certificate shall remain confidential, as
provided.
8. Requires the CFC to post annually on its Internet
website, and make available for public release,
specified information, including a list of qualified
taxpayers and the tax credit amounts allocated to each
qualified taxpayer by the commission.
Related Legislation
AB 2026 (Fuentes), introduced in the 2011-12 legislative
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session, would extend the film production tax credit until
FY 2016-17. AB 2026 passed out of both Senate Governance
and Finance Committee and Appropriations Committee and is
currently pending on the Senate Floor.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The FTB staff estimates that this bill will result in an
annual General Fund revenue loss of $5.1 million in FY
2014-15, $22 million in FY 2015-16, and an additional $161
million in future FYs as a result of extended tax credit
benefits.
SUPPORT : (Verified 8/24/12)
California Labor Federation
California Taxpayers Association
Motion Picture Association of America, Inc.
ARGUMENTS IN SUPPORT : Supporters state that the film
production tax credit has been successful in its goal to
retain and increase film and television production
occurring in California. California's film tax credit "has
a proven track record of creating and retaining jobs in the
film industry," generating 41,000 new jobs and $2.2 billion
in economic activity since 2009. The proponents also
emphasize that the film tax credit is "one of few tax
breaks in California that has the appropriate
accountability measures to make sure it is effective." The
program includes a five-year sunset, an annual cap of $100
million and is targeted. The proponents assert that an
extension of the film tax credit shows "California's
commitment to long-term investment in the film industry to
encourage more production companies to invest here" and
would help California "compete with other states and
countries." The proponents conclude that this bill "is an
important step to regain the thousands of jobs lost in film
production over the years."
DLW:n 8/31/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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