Amended in Senate January 22, 2014

Amended in Senate July 3, 2013

Amended in Senate April 8, 2013

Senate Bill No. 370

Introduced by Senator Lieu

February 20, 2013

An act to add Sections 17053.89, 17053.90, 23680, and 23681 to the Revenue and Taxation Code, relating to taxation, begin delete and making an appropriation therefor end delete begin insert to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 370, as amended, Lieu. Income tax: credits: qualified commercial production.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill would, for each taxable year beginning on or after January 1, begin delete 2013 end delete begin insert 2015 end insert , allow credits under both laws in an amount equal to 15% of a specified amount paid or incurred by a qualified taxpayer, as defined, for the production of a qualified commercial, as defined, inside or outside of the studio zone, begin insert with the credit end insert not to exceed $13,000,000 annually for credits for qualified commercials produced within a studio zone begin insert , end insert and begin insert end insert begin insert with the credit end insert not to exceed $2,000,000 annually for credits for qualified commercials produced outside of a studio zone in California, as specified. This bill would give the qualified taxpayer the option to carry over the credit or begin delete receive a refund end delete begin insert to sell the credit end insert , as specified. begin delete This bill would make a continuous appropriation from the General Fund to the Franchise Tax Board in the amount allowed for refunds for the purpose of making those refunds. end delete

This bill would provide that specified information provided to the California Film Commission shall constitute confidential taxpayer information, and would impose specified criminal penalties on the disclosure of that information. By expanding the crime of knowingly and wrongfully accessing, using, or disclosing specified information, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

begin insert

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert begin insert

This bill would make legislative findings to that effect.

end insert begin insert

This bill would take effect immediately as a tax levy.

end insert

Vote:  begin delete ²⁄₃ end delete begin insert majority end insert . Appropriation:  begin delete yes end delete begin insert no end insert . Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 17053.89 is added to the Revenue and
Taxation Code, to read:

17053.89.  

(a) For taxable years beginning on or after January
1, begin delete 2013, end delete begin insert 2015, end insert there shall be allowed to a qualified taxpayer a
credit against the “net tax,” as defined in Section 17039, an amount
equal to 15 percent, except as otherwise provided, of the qualified
expenditures credit base for the production of a qualified
commercial within the studio zone.

(b) For purposes of this section:

(1) (A) “Employee fringe benefits” means the amount allowable
as a deduction under this part to the qualified taxpayer involved
in the production of the qualified commercial, exclusive of any
amounts contributed by employees, for any year during the
production period with respect to any of the following:

(i) Qualified taxpayer contributions under any pension,
profit-sharing, annuity, or similar plan.

(ii) Qualified taxpayer-provided coverage under any accident
or health plan for employees.

(iii) The qualified taxpayer’s cost of life or disability insurance
provided to employees.

(B) Any amount treated as wages under clause (i) of
subparagraph (A) of paragraph (7) shall not be taken into account
under this paragraph.

(C) For the purposes of this paragraph, “employee” means a
qualified individual.

(2) (A) “Qualified commercial” means a commercial or
advertisement composed of moving images and sounds that is
recorded on film, videotape, or other digital medium, created for
display on a network, regional channel, cable, or interactive media,
including, but not limited to, the Internet, mobile devices, in-game
advertising, and experiential advertising begin delete where at least 75 percent
of the total expenditures occur wholly within the studio zone end delete . For
purposes of this paragraph, mobile devices include cellular
telephones, smartphones, personal digital assistants, and other
portable devices with a screen.

(B) “Qualified commercial” shall not include any
program-length production with an advertising component in
excess of five minutes, including an infomercial, news, or current
affairs program, interview or talk program, network promotion
(short-form content intended to promote other programming),
feature film promotion (trailers and teasers), sporting event, game
show, award ceremony, daytime drama, reality entertainment
program, program intended primarily for industrial, corporate, or
institutional end users, public service announcements, fundraising
commercial or commercial promoting a political candidate or
political issue, a program consisting of more than one-half of the
screen time of stock footage, a program produced by an
organization described in Section 527 of the Internal Revenue
Code, or any production to which the recordkeeping requirements
of Section 2257 of Title 18 of the United States Code apply.

(3) “Qualified expenditures” means the amount paid or incurred
during the taxable year to purchase or lease tangible personal
property within the studio zone in the production of a qualified
commercial, and to pay for services performed within the studio
zone in the production of a qualified commercial.

(4) “Qualified expenditures credit base” means the amount over
five hundred thousand dollars ($500,000) paid or incurred during
the taxable year within the studio zone in qualified expenditures.

(5) (A) “Qualified individual” means an individual who
performs services during the production period in an activity related
to the production of a qualified commercial.

(B) “Qualified individual” shall not include either of the
following:

(i) Any individual related to the qualified taxpayer as described
in Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5 percent owner, as defined in Section 416(i)(1)(B) of
the Internal Revenue Code, of the qualified taxpayer.

(6) (A) “Qualified taxpayer” means a taxpayer that is principally
engaged in the production of a qualified commercial, has control
over the selection of production location, deployment, or
management of the production equipment, directly employs the
production crew as the person that has control over the hiring and
firing of the crew on the qualified commercial, and paid or incurred
at least five hundred thousand dollars ($500,000) in qualified
expenditures within the studio zone during the taxable year.

(B) In the case of a pass-thru entity, the determination of whether
a taxpayer is a qualified taxpayer under this section shall be made
at the entity level and any credit under this section shall not be
allowed to the pass-thru entity, but shall be passed through and
allowed to the partners or shareholders in accordance with Part 10
(commencing with Section 17001). For purposes of this paragraph,
“pass-thru entity” means any entity taxed as a partnership or “S”
corporation.

(7) (A) “Qualified wages” means all of the following:

(i) Any wages required to be reported under Section 13050 of
the Unemployment Insurance Code that were paid or incurred by
a qualified taxpayer involved in the production of a qualified
commercial with respect to a qualified individual for services
performed on the qualified commercial produced within the studio
zone.

(ii) Any payments made to a qualified taxpayer for services
performed in the studio zone by a qualified individual.

(iii) Remuneration paid to an independent contractor who is a
qualified individual for services performed within the studio zone
by that qualified individual.

(iv) The portion of any employee fringe benefits paid or incurred
by a qualified taxpayer involved in the production of the qualified
commercial that are properly allocable to qualified wage amounts
described in clauses (i), (ii), and (iii).

(B) “Qualified wages” shall not include expenses, including
wages, paid per person per qualified commercial for writers,
directors, music directors, music composers, music supervisors,
producers, and performers, other than background actors with no
scripted lines.

(8) “Studio zone” means the area within a circle of 30 miles in
radius from the intersection of Beverly Boulevard and La Cienega
Boulevard in Los Angeles, California.

(c) In the case where the credit allowed under this section
exceeds the “net tax,” begin delete the following shall occur: end delete begin insert a qualified
taxpayer may do the following: end insert

begin delete

(1) Fifty percent of the excess credit shall be carried over to
reduce the “net tax” in the following taxable year.

(2) With regard to the remaining 50 percent of the excess credit,
the qualified taxpayer shall elect to do either of the following:

(A) Receive a refund of the excess credit amount.

(B) Carry over the excess credit to reduce the “net tax” in the
following taxable year, and succeeding six taxable years, if
necessary, until the credit has been exhausted.

end delete begin insert

(1) Carry over the credit to reduce the “net tax” in the following
taxable year, and succeeding six taxable years, if necessary, until
the credit has been exhausted.

end insert begin insert

(2) (A) Notwithstanding any other law, sell any credit allowed
under this section to an unrelated party.

end insert begin insert

(B) The qualified taxpayer shall report to the Franchise Tax
Board prior to the sale of the credit, in the form and manner
specified by the Franchise Tax Board, all required information
regarding the purchase and sale of the credit, including the social
security number or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount
of the credit sold, and the amount of consideration received by the
qualified taxpayer for the sale of the credit.

end insert begin insert

(C) A credit shall not be sold pursuant to this paragraph to
more than one unrelated party, nor may the credit be resold by
the unrelated party to another taxpayer or other party.

end insert begin insert

(D) An unrelated party that has acquired credits under this
section shall be subject to the requirements of this section.

end insert begin insert

(E) In no event may a qualified taxpayer assign or sell any credit
to the extent the credit allowed by this section is claimed on any
tax return of the qualified taxpayer.

end insert begin insert

(F) In the event that both the qualified taxpayer originally
allocated a credit under this section by the California Film
Commission and an unrelated party to whom the credit has been
sold both claim the credit on their tax returns, the Franchise Tax
Board may disallow the credit of either taxpayer if the statute of
limitations upon assessment remains open.

end insert begin insert

(G) Subdivision (g) of Section 17039 shall not apply to any
credit sold pursuant to this subdivision.

end insert begin insert

(H) For purposes of this subdivision, except as otherwise
specifically provided, the unrelated party that purchases a credit
pursuant to this subdivision shall be treated as a qualified taxpayer.

end insert begin delete

(3) There shall be continuously appropriated from the General
Fund to the Franchise Tax Board an amount equal to the refunds
allowed by this section for the purpose of making those refunds.

end delete

(d) A credit shall be allowed pursuant to this section only if the
qualified taxpayer provides the following to the California Film
Commission:

(1) The production schedule for each commercial produced in
a taxable year.

(2) Total qualified expenditures.

(3) Total qualified wages paid.

(4) Total nonqualified expenditures incurred in California.

(5) Agreed upon procedures as prescribed by the California
Film Commission begin delete and performed by a licensed certified public
accountant who performs attest services in California and who has
attended a certified public accountant orientation meeting
conducted by the California Film Commission end delete .

(6) Number of cast and crew members hired for each
commercial.

(7) Number of days worked by each cast and crew member for
each commercial.

(8) Number of vendors used during the taxable year.

(9) Any other information as requested by the California Film
Commission.

(e) The California Film Commission may prescribe rules and
regulations to carry out the purposes of this section including any
rules and regulations necessary to establish procedures, processes,
requirements, and rules identified in, or required to, implement
this section.

(f) For purposes of this section, the California Film Commission
shall do the following:

(1) Establish a procedure for applicants to file with the
begin delete commission end delete begin insert California Film Commission end insert a written application
begin delete due on or before April 1, 2014, and each April 1 thereafter, end delete begin insert for
work completed in the prior calendar year, end insert on a form jointly
prescribed by the begin delete commission end delete begin insert California Film Commission end insert and
the Franchise Tax Board for the allocation of the begin delete tax end delete credit.

(2) Subject to the annual cap established as provided in
subdivision (h), allocate and certify an amount of credits to
qualified taxpayers under this section and Section 23680.

(3) Establish a verification procedure for the amount of qualified
expenditures paid or incurred by the applicant.

(4) Establish audit requirements that shall be satisfied before a
credit certificate may be issued by the California Film Commission.

(5) Provide the Legislative Analyst’s Office, upon request, any
or all application materials or any other materials received from,
or submitted by, the applicants, in electronic format when available,
including, but not limited to, information provided pursuant to
subdivision (d).

(6) The information provided to the California Film Commission
pursuant to this section shall constitute confidential tax information
for purposes of Article 2 (commencing with Section 19542) of
Chapter 7 of Part 10.2.

(g) (1) The California Film Commission shall provide the
Legislative Analyst’s Office and the Franchise Tax Board annually
with a list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission. The list shall include the names and taxpayer
identification numbers begin delete , including taxpayer identification numbers
of each partner or shareholder, as applicable, end delete of the qualified
taxpayers.

(2) (A) Notwithstanding subparagraph (B) begin insert or paragraph (6) of
subdivision ( end insert begin insert f) end insert , the California Film Commission shall annually
post on its Internet Web site and make begin insert a table end insert available for public
release begin delete the following: end delete begin insert that includes all of the following information: end insert

begin delete

(i) A table which includes all of the following information:

end delete begin delete

(I)

end delete

begin insert (i) end insert  A list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission.

begin delete

(II)

end delete

begin insert (ii) end insert  The total number of production days in California reported
by the qualified taxpayers in its application.

begin delete

(III)

end delete

begin insert (iii) end insert  The number of California jobs directly created by the
production as reported by the qualified taxpayer in its application.

begin delete

(IV)

end delete

begin insert (iv) end insert  The total amount of qualified expenditures that were spent
on submitted productions.

begin delete

(ii) A summary describing the qualified taxpayer’s production
and background information regarding the qualified taxpayer
contained in the qualified taxpayer’s application for the credit.

end delete

(B) This subdivision shall not be construed to make the
information submitted by an applicant for a begin delete tax end delete credit under this
section a public record.

(h) (1) The aggregate amount of credits that may be allocated
in any fiscal year pursuant to this section and Section 23680 shall
be an amount equal to the sum of both of the following:

(A) Thirteen million dollars ($13,000,000) in credits for the
begin delete 2012-13 end delete begin insert 2014- end insert begin insert 15 end insert fiscal year and each fiscal year thereafter.

(B) The unused allocation credit amount, if any, begin delete for end delete begin insert from end insert the
preceding fiscal year.

(2) If the amount of credits applied for in any particular fiscal
year exceeds the aggregate amount of begin delete tax end delete credits authorized to be
allocated under this section and Section 23680, the aggregate
amount of begin delete tax end delete credits shall be allocated to each qualified taxpayer
on a pro rata basis.

(3) If the amount of credits allocated in a fiscal year is less than
the aggregate amount of begin delete tax end delete credits authorized to be allocated
under this section and Section 23680, the remaining amount shall
be allocated to qualified taxpayers outside of the studio zone and
within the state pursuant to Section 17053.90 or 23681 on a pro
rata basis, not to exceed 15 percent of the amount of the qualified
expenditures credit base.

(i) The California Film Commission shall have the authority to
allocate begin delete tax end delete credits in accordance with this section and in
accordance with any regulations prescribed pursuant to subdivision
(e) upon adoption.

(j) The credit allowed by this section shall be in lieu of any other
begin delete deduction end delete begin insert credit end insert that the taxpayer may otherwise claim pursuant
to this part with respect to qualified expenditures.

begin insert (k) end insert begin insert   end insert begin insert Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section. end insert

SEC. 2.  

Section 17053.90 is added to the Revenue and Taxation
Code, to read:

17053.90.  

(a) For taxable years beginning on or after January
1, begin delete 2013, end delete begin insert 2015, end insert there shall be allowed to a qualified taxpayer a
credit against the “net tax,” as defined in Section 17039, an amount
equal to 15 percent, except as otherwise provided, of the qualified
expenditures credit base for the production of a qualified
commercial outside of the studio zone and within the state.

(b) For purposes of this section:

(1) (A) “Employee fringe benefits” means the amount allowable
as a deduction under this part to the qualified taxpayer involved
in the production of the qualified commercial, exclusive of any
amounts contributed by employees, for any year during the
production period with respect to any of the following:

(i) Qualified taxpayer contributions under any pension,
profit-sharing, annuity, or similar plan.

(ii)  Qualified taxpayer-provided coverage under any accident
or health plan for employees.

(iii) The qualified taxpayer’s cost of life or disability insurance
provided to employees.

(B) Any amount treated as wages under clause (i) of
subparagraph (A) of paragraph (7) shall not be taken into account
under this paragraph.

(C) For the purposes of this paragraph, “employee” means a
qualified individual.

(2) (A) “Qualified commercial” means a commercial or
advertisement composed of moving images and sounds that is
recorded on film, videotape, or other digital medium, created for
display on a network, regional channel, cable, or interactive media,
including, but not limited to, the Internet, mobile devices, in-game
advertising, and experiential advertising begin delete where at least 75 percent
of the total expenditures occur wholly outside of the studio zone
and within the state end delete . For purposes of this paragraph, mobile devices
include cellular telephones, smartphones, personal digital assistants,
and other portable devices with a screen.

(B) “Qualified commercial” shall not include any
program-length production with an advertising component in
excess of five minutes, including an infomercial, news, or current
affairs program, interview or talk program, network promotion
(short-form content intended to promote other programming),
feature film promotion (trailers and teasers), sporting event, game
show, award ceremony, daytime drama, reality entertainment
program, program intended primarily for industrial, corporate, or
institutional end users, public service announcements, fundraising
commercial or commercial promoting a political candidate or
political issue, a program consisting of more than one-half of the
screen time of stock footage, a program produced by an
organization described in Section 527 of the Internal Revenue
Code, or any production to which the recordkeeping requirements
of Section 2257 of Title 18 of the United States Code apply.

(3) “Qualified expenditures” means the amount paid or incurred
during the taxable year to purchase or lease tangible personal
property outside of the studio zone and within the state in the
production of a qualified commercial, and to pay for services
performed outside of the studio zone and within the state in the
production of a qualified commercial.

(4) “Qualified expenditures credit base” means the amount over
two hundred fifty thousand dollars ($250,000) paid or incurred
during the taxable year outside the studio zone in qualified
expenditures.

(5) (A) “Qualified individual” means an individual who
performs services during the production period in an activity related
to the production of a qualified commercial.

(B) “Qualified individual” shall not include either of the
following:

(i) Any individual related to the qualified taxpayer as described
in Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5 percent owner, as defined in Section 416(i)(1)(B) of
the Internal Revenue Code, of the qualified taxpayer.

(6) (A) “Qualified taxpayer” means a taxpayer that is principally
engaged in the production of a qualified commercial, has control
over the selection of production location, deployment, or
management of the production equipment, directly employs the
production crew as the person that has control over the hiring and
firing of the crew on the qualified commercial, and paid or incurred
at least two hundred fifty thousand dollars ($250,000) in qualified
expenditures outside of the studio zone and within the state during
the taxable year.

(B) In the case of a pass-thru entity, the determination of whether
a taxpayer is a qualified taxpayer under this section shall be made
at the entity level and any credit under this section shall not be
allowed to the pass-thru entity, but shall be passed through and
allowed to the partners or shareholders in accordance with Part 10
(commencing with Section 17001). For purposes of this paragraph,
“pass-thru entity” means any entity taxed as a partnership or “S”
corporation.

(7) (A) “Qualified wages” means all of the following:

(i) Any wages required to be reported under Section 13050 of
the Unemployment Insurance Code that were paid or incurred by
a qualified taxpayer involved in the production of a qualified
commercial with respect to a qualified individual for services
performed on the qualified commercial produced outside of the
studio zone and within the state.

(ii) Any payments made to a qualified entity for services
performed outside of the studio zone and within the state by
qualified individuals.

(iii) Remuneration paid to an independent contractor who is a
qualified individual for services performed outside of the studio
zone and within the state by that qualified individual.

(iv) The portion of any employee fringe benefits paid or incurred
by a qualified taxpayer involved in the production of the qualified
commercial that are properly allocable to qualified wage amounts
described in clauses (i), (ii), and (iii).

(B) “Qualified wages” shall not include expenses, including
wages, paid per person per qualified commercial for writers,
directors, music directors, music composers, music supervisors,
producers, and performers, other than background actors with no
scripted lines.

(8) “Studio zone” means the area within a circle of 30 miles in
radius from the intersection of Beverly Boulevard and La Cienega
Boulevard in Los Angeles, California.

(c) In the case where the credit allowed under this section
exceeds the “net tax,” begin delete the following shall occur: end delete begin insert a qualified
taxpayer may do the following: end insert

begin delete

(1) Fifty percent of the excess credit may be carried over to
reduce the “net tax” in the following taxable year.

end delete begin delete

(2) With regard to the remaining 50 percent of the excess credit,
the qualified taxpayer shall elect to do either of the following:

end delete begin delete

(A) Receive a refund of the excess credit amount.

end delete begin delete

(B) Carry over the excess credit to reduce the “net tax” in the
following taxable year, and succeeding six taxable years, if
necessary, until the credit has been exhausted.

end delete begin insert

(1) Carry over the credit to reduce the “net tax” in the following
taxable year, and succeeding six taxable years, if necessary, until
the credit has been exhausted.

end insert begin insert

(2) (A) Notwithstanding any other law, sell any credit allowed
under this section to an unrelated party.

end insert begin insert

(B) The qualified taxpayer shall report to the Franchise Tax
Board prior to the sale of the credit, in the form and manner
specified by the Franchise Tax Board, all required information
regarding the purchase and sale of the credit, including the social
security number or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount
of the credit sold, and the amount of consideration received by the
qualified taxpayer for the sale of the credit.

end insert begin insert

(C) A credit shall not be sold pursuant to this paragraph to
more than one unrelated party, nor may the credit be resold by
the unrelated party to another taxpayer or other party.

end insert begin insert

(D) An unrelated party that has acquired credits under this
section shall be subject to the requirements of this section.

end insert begin insert

(E) In no event may a qualified taxpayer assign or sell any credit
to the extent the credit allowed by this section is claimed on any
tax return of the qualified taxpayer.

end insert begin insert

(F) In the event that both the qualified taxpayer originally
allocated a credit under this section by the California Film
Commission and an unrelated party to whom the credit has been
sold both claim the credit on their tax returns, the Franchise Tax
Board may disallow the credit of either taxpayer if the statute of
limitations upon assessment remains open.

end insert begin insert

(G) Subdivision (g) of Section 17039 shall not apply to any
credit sold pursuant to this subdivision.

end insert begin insert

(H) For purposes of this subdivision, except as otherwise
specifically provided, the unrelated party that purchases a credit
pursuant to this subdivision shall be treated as a qualified taxpayer.

end insert begin delete

(3) There shall be continuously appropriated from the General
Fund to the Franchise Tax Board an amount equal to the refunds
allowed by this section for the purpose of making those refunds.

end delete

(d) A credit shall be allowed pursuant to this section only if the
qualified taxpayer provides the following to the California Film
Commission:

(1) The production schedule for each commercial produced in
a taxable year.

(2) Total qualified expenditures.

(3) Total qualified wages paid.

(4) Total nonqualified expenditures incurred in California.

(5) Agreed upon procedures as prescribed by the California
Film Commission begin delete and performed by a licensed certified public
accountant who performs attest services in California and who has
attended a certified public accountant orientation meeting
conducted by the California Film Commission end delete .

(6) Number of cast and crew members hired for each
commercial.

(7) Number of days worked by each cast and crew member for
each commercial.

(8) Number of vendors used during the taxable year.

(9) Any other information as requested by the California Film
Commission.

(e) The California Film Commission may prescribe rules and
regulations to carry out the purposes of this section including any
rules and regulations necessary to establish procedures, processes,
requirements, and rules identified in or required to implement this
section.

(f) For purposes of this section, the California Film Commission
shall do the following:

(1) Establish a procedure for applicants to file with the
begin delete commission end delete begin insert California Film Commission end insert a written application
begin delete due on or before April 1, 2014, and each April 1 thereafter, end delete begin insert for
work completed in the prior calendar year, end insert on a form jointly
prescribed by the begin delete commission end delete begin insert California Film Commission end insert and
the Franchise Tax Board for the allocation of the begin delete tax end delete credit.

(2) Subject to the annual cap established as provided in
subdivision (h), allocate and certify an amount of credits to
qualified taxpayers under this section and Section 23681.

(3) Establish a verification procedure for the amount of qualified
expenditures paid or incurred by the applicant.

(4) Establish audit requirements that shall be satisfied before a
credit certificate may be issued by the California Film Commission.

(5) Provide the Legislative Analyst’s Office, upon request, any
or all application materials or any other materials received from,
or submitted by, the applicants, in electronic format when available,
including, but not limited to, information provided pursuant to
subdivision (d).

(6) The information provided to the California Film Commission
pursuant to this section shall constitute confidential tax information
for purposes of Article 2 (commencing with Section 19542) of
Chapter 7 of Part 10.2.

(g) (1) The California Film Commission shall provide the
Legislative Analyst’s Office and the Franchise Tax Board annually
with a list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission. The list shall include the names and taxpayer
identification numbers begin delete , including taxpayer identification numbers
of each partner or shareholder, as applicable, end delete of the qualified
taxpayers.

(2) (A) Notwithstanding subparagraph (B) begin insert or paragraph (6) of
subdivision ( end insert begin insert f) end insert , the California Film Commission shall annually
post on its Internet Web site and make begin insert a table end insert available for public
release begin delete the following end delete begin insert that includes all of the following information end insert :

begin delete

(i) A table which includes all of the following information:

(I)

end delete

begin insert (i) end insert  A list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission.

begin delete

(II)

end delete

begin insert (ii) end insert  The total number of production days in California reported
by the qualified taxpayers in its application.

begin delete

(III)

end delete

begin insert (iii) end insert   The number of California jobs directly created by the
production as reported by the qualified taxpayer in its application.

begin delete

(IV)

end delete

begin insert (iv) end insert  The total amount of qualified expenditures that were spent
on submitted productions.

begin delete

(ii) A summary describing the qualified taxpayer’s production
and background information regarding the qualified taxpayer
contained in the qualified taxpayer’s application for the credit.

end delete

(B) This subdivision shall not be construed to make the
information submitted by an applicant for a begin delete tax end delete credit under this
section a public record.

(h) (1) The aggregate amount of credits that may be allocated
in any fiscal year pursuant to this section and Section 23681 shall
be an amount equal to the sum of all of the following:

(A) Two million dollars ($2,000,000) in credits for the begin delete 2012-13 end delete
begin insert 2014-15 end insert fiscal year and each fiscal year thereafter.

(B) The unused allocation credit amount, if any, begin delete for end delete begin insert from end insert the
preceding fiscal year.

(2) If the amount of credits applied for in any particular fiscal
year exceeds the aggregate amount of begin delete tax end delete credits authorized to be
allocated under this section and Section 23681, the aggregate
amount of begin delete tax end delete credits shall be allocated to each qualified taxpayer
on a pro rata basis.

(3) If the amount of credits allocated in a fiscal year is less than
the aggregate amount of begin delete tax end delete credits authorized to be allocated
under this section and Section 23681, the remaining amount shall
be allocated to qualified taxpayers within the studio zone pursuant
to Section 17053.89 or 23680 on a pro rata basis, not to exceed 15
percent of the amount of the qualified expenditures credit base.

(i) The California Film Commission shall have the authority to
allocate begin delete tax end delete credits in accordance with this section and in
accordance with any regulations prescribed pursuant to subdivision
(e) upon adoption.

(j) The credit allowed by this section shall be in lieu of any other
begin delete deduction end delete begin insert credit end insert that the taxpayer may otherwise claim pursuant
to this part with respect to qualified expenditures.

begin insert

(k) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

end insert

SEC. 3.  

Section 23680 is added to the Revenue and Taxation
Code, to read:

23680.  

(a) For taxable years beginning on or after January 1,
begin delete 2013, end delete begin insert 2015, end insert there shall be allowed to a qualified taxpayer a credit
against the “tax,” as defined in Section 23036, an amount equal
to 15 percent, except as otherwise provided, of the qualified
expenditures credit base for the production of a qualified
commercial within the studio zone.

(b) For purposes of this section:

(1) (A) “Employee fringe benefits” means the amount allowable
as a deduction under this part to the qualified taxpayer involved
in the production of the qualified commercial, exclusive of any
amounts contributed by employees, for any year during the
production period with respect to any of the following:

(i) Qualified taxpayer contributions under any pension,
profit-sharing, annuity, or similar plan.

(ii) Qualified taxpayer-provided coverage under any accident
or health plan for employees.

(iii) The qualified taxpayer’s cost of life or disability insurance
provided to employees.

(B) Any amount treated as wages under clause (i) of
subparagraph (A) of paragraph (7) shall not be taken into account
under this paragraph.

(C) For the purposes of this paragraph, “employee” means a
qualified individual.

(2) (A) “Qualified commercial” means a commercial or
advertisement composed of moving images and sounds that is
recorded on film, videotape, or other digital medium, created for
display on a network, regional channel, cable, or interactive media,
including, but not limited to, the Internet, mobile devices, in-game
advertising, and experiential advertising begin delete where at least 75 percent
of the total expenditures occur wholly within the studio zone end delete . For
purposes of this paragraph, mobile devices include cellular
telephones, smartphones, personal digital assistants, and other
portable devices with a screen.

(B) “Qualified commercial” shall not include any
program-length production with an advertising component in
excess of five minutes, including an infomercial, news, or current
affairs program, interview or talk program, network promotion
(short-form content intended to promote other programming),
feature film promotion (trailers and teasers), sporting event, game
show, award ceremony, daytime drama, reality entertainment
program, program intended primarily for industrial, corporate, or
institutional end users, public service announcements, fundraising
commercial or commercial promoting a political candidate or
political issue, a program consisting of more than one-half of the
screen time of stock footage, a program produced by an
organization described in Section 527 of the Internal Revenue
Code, or any production to which the recordkeeping requirements
of Section 2257 of Title 18 of the United States Code apply.

(3) “Qualified expenditures” means the amount paid or incurred
during the taxable year to purchase or lease tangible personal
property within the studio zone in the production of a qualified
commercial, and to pay for services performed within the studio
zone in the production of a qualified commercial.

(4) “Qualified expenditures credit base” means the amount over
five hundred thousand dollars ($500,000) paid or incurred during
the taxable year within the studio zone in qualified expenditures.

(5) (A) “Qualified individual” means an individual who
performs services during the production period in an activity related
to the production of a qualified commercial.

(B) “Qualified individual” shall not include either of the
following:

(i) Any individual related to the qualified taxpayer as described
in Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5 percent owner, as defined in Section 416(i)(1)(B) of
the Internal Revenue Code, of the qualified taxpayer.

(6) (A) “Qualified taxpayer” means a taxpayer that is principally
engaged in the production of a qualified commercial, has control
over the selection of production location, deployment, or
management of the production equipment, directly employs the
production crew as the person that has control over the hiring and
firing of the crew on the qualified commercial, and paid or incurred
at least five hundred thousand dollars ($500,000) in qualified
expenditures within the studio zone during the taxable year. All
members of a commonly controlled group, as defined by
subdivision (b) of Section 25105, shall be treated as a single
qualified taxpayer for the purposes of computing qualified
expenditures.

(B) (i) In the case of a pass-thru entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any credit under this section shall
not be allowed to the pass-thru entity, but shall be passed through
and allowed to the partners or shareholders in accordance with
Part 11 (commencing with Section 23001). For purposes of this
paragraph, “pass-thru entity” means any entity taxed as a
partnership or “S” corporation.

(ii) In the case of an “S” corporation, the credit allowed under
this section shall not be used by an “S” corporation as a credit
against a tax imposed under Chapter 4.5 (commencing with Section
23800) of Part 11 of Division 2.

(7) (A) “Qualified wages” means all of the following:

(i) Any wages required to be reported under Section 13050 of
the Unemployment Insurance Code that were paid or incurred by
a qualified taxpayer involved in the production of a qualified
commercial with respect to a qualified individual for services
performed on the qualified commercial produced within the studio
zone.

(ii) Any payments made to a qualified taxpayer for services
performed in the studio zone by a qualified individual.

(iii) Remuneration paid to an independent contractor who is a
qualified individual for services performed within the studio zone
by that qualified individual.

(iv) The portion of any employee fringe benefits paid or incurred
by a qualified taxpayer involved in the production of the qualified
commercial that are properly allocable to qualified wage amounts
described in clauses (i), (ii), and (iii).

(B) “Qualified wages” shall not include expenses, including
wages, paid per person per qualified commercial for writers,
directors, music directors, music composers, music supervisors,
producers, and performers, other than background actors with no
scripted lines.

(8) “Studio zone” means the area within a circle of 30 miles in
radius from the intersection of Beverly Boulevard and La Cienega
Boulevard in Los Angeles, California.

(c) In the case where the credit allowed under this section
exceeds the “tax,” begin delete the following shall occur: end delete begin insert a qualified taxpayer
may do the following: end insert

begin delete

(1) Fifty percent of the excess credit shall be carried over to
reduce the “tax” in the following taxable year.

(2) With regard to the remaining 50 percent of the excess credit,
the qualified taxpayer shall elect to do either of the following:

(A) Receive a refund of the excess credit amount.

(B) Carry over the excess credit to reduce the “tax” in the
following taxable year, and succeeding six taxable years, if
necessary, until the credit has been exhausted.

end delete begin insert

(1) Carry over the credit to reduce the “tax” in the following
taxable year, and succeeding six taxable years, if necessary, until
the credit has been exhausted.

end insert begin insert

(2) (A) Notwithstanding any other law, sell any credit allowed
under this section to an unrelated party.

end insert begin insert

(B) The qualified taxpayer shall report to the Franchise Tax
Board prior to the sale of the credit, in the form and manner
specified by the Franchise Tax Board, all required information
regarding the purchase and sale of the credit, including the social
security number or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount
of the credit sold, and the amount of consideration received by the
qualified taxpayer for the sale of the credit.

end insert begin insert

(C) A credit shall not be sold pursuant to this paragraph to
more than one unrelated party, nor may the credit be resold by
the unrelated party to another taxpayer or other party.

end insert begin insert

(D) An unrelated party that has acquired credits under this
section shall be subject to the requirements of this section.

end insert begin insert

(E) In no event may a qualified taxpayer assign or sell any credit
to the extent the credit allowed by this section is claimed on any
tax return of the qualified taxpayer.

end insert begin insert

(F) In the event that both the qualified taxpayer originally
allocated a credit under this section by the California Film
Commission and an unrelated party to whom the credit has been
sold both claim the credit on their tax returns, the Franchise Tax
Board may disallow the credit of either taxpayer if the statute of
limitations upon assessment remains open.

end insert begin insert

(G) Subdivision (g) of Section 17039 shall not apply to any
credit sold pursuant to this subdivision.

end insert begin insert

(H) For purposes of this subdivision, except as otherwise
specifically provided, the unrelated party that purchases a credit
pursuant to this subdivision shall be treated as a qualified taxpayer.

end insert begin delete

(3)  There shall be continuously appropriated from the General
Fund to the Franchise Tax Board an amount equal to the refunds
allowed by this section for the purpose of making those refunds.

end delete

(d) A credit shall be allowed pursuant to this section only if the
qualified taxpayer provides the following to the California Film
Commission:

(1) The production schedule for each commercial produced in
a taxable year.

(2) Total qualified expenditures.

(3) Total qualified wages paid.

(4) Total nonqualified expenditures incurred in California.

(5) Agreed upon procedures as prescribed by the California
Film Commission begin delete and performed by a licensed certified public
accountant who performs attest services in California and who has
attended a certified public accountant orientation meeting
conducted by the California Film Commission end delete .

(6) Number of cast and crew members hired for each
commercial.

(7) Number of days worked by each cast and crew member for
each commercial.

(8) Number of vendors used during the taxable year.

(9) Any other information as requested by the California Film
Commission.

(e) The California Film Commission may prescribe rules and
regulations to carry out the purposes of this section including any
rules and regulations necessary to establish procedures, processes,
requirements, and rules identified in or required to implement this
section.

(f) For purposes of this section, the California Film Commission
shall do the following:

(1) Establish a procedure for applicants to file with the
begin delete commission end delete begin insert California Film Commission end insert a written application
begin delete due on or before April 1, 2014, and each April 1 thereafter, end delete begin insert for
work completed in the prior calendar year, end insert on a form jointly
prescribed by the begin delete commission end delete begin insert California Film Commission end insert and
the Franchise Tax Board for the allocation of the begin delete tax end delete credit.

(2) Subject to the annual cap established as provided in
subdivision (h), allocate and certify an amount of credits to
qualified taxpayers under this section and Section 17053.89.

(3) Establish a verification procedure for the amount of qualified
expenditures paid or incurred by the applicant.

(4) Establish audit requirements that shall be satisfied before a
credit certificate may be issued by the California Film Commission.

(5) Provide the Legislative Analyst’s Office, upon request, any
or all application materials or any other materials received from,
or submitted by, the begin delete applications, end delete begin insert applicants, end insert in electronic format
when available, including, but not limited to, information provided
pursuant to subdivision (d).

(6) The information provided to the California Film Commission
pursuant to this section shall constitute confidential tax information
for purposes of Article 2 (commencing with Section 19542) of
Chapter 7 of Part 10.2.

(g) (1) The California Film Commission shall provide the
Legislative Analyst’s Office and the Franchise Tax Board annually
with a list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission. The list shall include the names and taxpayer
identification numbers begin delete , including taxpayer identification numbers
of each partner or shareholder, as applicable, end delete of the qualified
taxpayers.

(2) (A) Notwithstanding subparagraph (B) begin insert or paragraph (6) of
subdivision (f) end insert , the California Film Commission shall annually
post on its Internet Web site and make begin insert a table end insert begin insert end insert available for public
release begin delete the following: end delete begin insert that includes all of the following information: end insert

begin delete

(i) A table which includes all of the following information.

end delete begin delete

(I)

end delete

begin insert (i) end insert  A list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission.

begin delete

(II)

end delete

begin insert (ii) end insert  The total number of production days in California reported
by the qualified taxpayers in its application.

begin delete

(III)

end delete

begin insert (iii) end insert  The number of California jobs directly created by the
production as reported by the qualified taxpayer in its application.

begin delete

(IV)

end delete

begin insert (iv) end insert  The total amount of qualified expenditures that were spent
on submitted productions.

begin delete

(ii) A summary describing the qualified taxpayer’s production
and background information regarding the qualified taxpayer
contained in the qualified taxpayer’s application for the credit.

end delete

(B) This subdivision shall not be construed to make the
information submitted by an applicant for a begin delete tax end delete credit under this
section a public record.

(h) (1) The aggregate amount of credits that may be allocated
in any fiscal year pursuant to this section and Section 17053.89
shall be an amount equal to the sum of all of the following:

(A) Thirteen million dollars ($13,000,000) in credits for the
begin delete 2012-13 end delete begin insert 2014-15 end insert fiscal year and each fiscal year thereafter.

(B) The unused allocation credit amount, if any, begin delete for end delete begin insert from end insert the
preceding fiscal year.

(2) If the amount of credits applied for in any particular fiscal
year exceeds the aggregate amount of begin delete tax end delete credits authorized to be
allocated under this section and Section 17053.89, the aggregate
amount of begin delete tax end delete credits shall be allocated to each qualified taxpayer
on a pro rata basis.

(3) If the amount of credits allocated in a fiscal year is less than
the aggregate amount of begin delete tax end delete credits authorized to be allocated
under this section and Section 17053.89, the remaining amount
shall be allocated to qualified taxpayers outside begin insert of end insert the studio zone
pursuant to Section 17053.90 or 23681 on a pro rata basis, not to
exceed 15 percent of the amount of the qualified expenditures
credit base.

(i) The California Film Commission shall have the authority to
allocate begin delete tax end delete credits in accordance with this section and in
accordance with any regulations prescribed pursuant to subdivision
(e) upon adoption.

(j) The credit allowed by this section shall be in lieu of any other
begin delete deduction end delete begin insert credit end insert that the taxpayer may otherwise claim pursuant
to this part with respect to qualified expenditures.

begin insert

(k) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

end insert

SEC. 4.  

Section 23681 is added to the Revenue and Taxation
Code, to read:

23681.  

(a) For taxable years beginning on or after January 1,
begin delete 2013, end delete begin insert 2015, end insert there shall be allowed to a qualified taxpayer a credit
against the “tax,” as defined in Section 23036, an amount equal
to 15 percent, except as otherwise provided, of the qualified
expenditures credit base for the production of a qualified
commercial outside of the studio zone and within the state.

(b) For purposes of this section:

(1) (A) “Employee fringe benefits” means the amount allowable
as a deduction under this part to the qualified taxpayer involved
in the production of the qualified commercial, exclusive of any
amounts contributed by employees, for any year during the
production period with respect to any of the following:

(i) Qualified taxpayer contributions under any pension,
profit-sharing, annuity, or similar plan.

(ii) Qualified taxpayer-provided coverage under any accident
or health plan for employees.

(iii) The qualified taxpayer’s cost of life or disability insurance
provided to employees.

(B) Any amount treated as wages under clause (i) of
subparagraph (A) of paragraph (7) shall not be taken into account
under this paragraph.

(C) For the purposes of this paragraph, “employee” means a
qualified individual.

(2) (A) “Qualified commercial” means a commercial or
advertisement composed of moving images and sounds that is
recorded on film, videotape, or other digital medium, created for
display on a network, regional channel, cable, or interactive media,
including, but not limited to, the Internet, mobile devices, in-game
advertising, and experiential advertising begin delete where at least 75 percent
of the total expenditures occur wholly outside of the studio zone
and within the state end delete . For purposes of this paragraph, mobile devices
include cellular telephones, smartphones, personal digital assistants,
and other portable devices with a screen.

(B) “Qualified commercial” shall not include any
program-length production with an advertising component in
excess of five minutes, including an infomercial, news, or current
affairs program, interview or talk program, network promotion
(short-form content intended to promote other programming),
feature film promotion (trailers and teasers), sporting event, game
show, award ceremony, daytime drama, reality entertainment
program, program intended primarily for industrial, corporate, or
institutional end users, public service announcements, fundraising
commercial or commercial promoting a political candidate or
political issue, a program consisting of more than one-half of the
screen time of stock footage, a program produced by an
organization described in Section 527 of the Internal Revenue
Code, or any production to which the recordkeeping requirements
of Section 2257 of Title 18 of the United States Code apply.

(3) “Qualified expenditures” means the amount paid or incurred
during the taxable year to purchase or lease tangible personal
property outside of the studio zone and within the state in the
production of a qualified commercial, and to pay for services
performed outside of the studio zone and within the state in the
production of a qualified commercial.

(4) “Qualified expenditures credit base” means the amount over
two hundred fifty thousand dollars ($250,000) paid or incurred
during the taxable year outside of the studio zone in qualified
expenditures.

(5) (A) “Qualified individual” means an individual who
performs services during the production period in an activity related
to the production of a qualified commercial.

(B) “Qualified individual” shall not include either of the
following:

(i) Any individual related to the qualified taxpayer as described
in Section 51(i)(1) of the Internal Revenue Code.

(ii) Any 5 percent owner, as defined in Section 416(i)(1)(B) of
the Internal Revenue Code, of the qualified taxpayer.

(6) (A) “Qualified taxpayer” means a taxpayer that is principally
engaged in the production of a qualified commercial, has control
over the selection of production location, deployment, or
management of the production equipment, directly employs the
production crew as the person that has control over the hiring and
firing of the crew on the qualified commercial, and paid or incurred
at least two hundred fifty thousand dollars ($250,000) in qualified
expenditures outside of the studio zone and within the state during
the taxable year. All members of a commonly controlled group,
as defined by subdivision (b) of Section 25105, shall be treated as
a single qualified taxpayer for the purposes of computing qualified
expenditures.

(B) (i) In the case of a pass-thru entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any credit under this section shall
not be allowed to the pass-thru entity, but shall be passed through
and allowed to the partners or shareholders in accordance with
Part 11 (commencing with Section 23001). For purposes of this
paragraph, “pass-thru entity” means any entity taxed as a
partnership or “S” corporation.

(ii) In the case of an “S” corporation, the credit allowed under
this section shall not be used by an “S” corporation as a credit
against a tax imposed under Chapter 4.5 (commencing with Section
23800) of Part 11 of Division 2.

(7) (A) “Qualified wages” means all of the following:

(i) Any wages required to be reported under Section 13050 of
the Unemployment Insurance Code that were paid or incurred by
a qualified taxpayer involved in the production of a qualified
commercial with respect to a qualified individual for services
performed on the qualified commercial produced outside of the
studio zone and within the state.

(ii) Any payments made to a qualified taxpayer for services
performed outside of the studio zone and within the state by a
qualified individual.

(iii) Remuneration paid to an independent contractor who is a
qualified individual for services performed outside of the studio
zone and within the state by that qualified individual.

(iv) The portion of any employee fringe benefits paid or incurred
by a qualified taxpayer involved in the production of the qualified
commercial that are properly allocable to qualified wage amounts
described in clauses (i), (ii), and (iii).

(B) “Qualified wages” shall not include expenses, including
wages, paid per person per qualified commercial for writers,
directors, music directors, music composers, music supervisors,
producers, and performers, other than background actors with no
scripted lines.

(8) “Studio zone” means the area within a circle of 30 miles in
radius from the intersection of Beverly Boulevard and La Cienega
Boulevard in Los Angeles, California.

(c) In the case where the credit allowed under this section
exceeds the “tax,” begin delete the following shall occur: end delete begin insert a qualified taxpayer
may do the following: end insert

begin delete

(1) Fifty percent of the excess credit shall be carried over to
reduce the “tax” in the following taxable year.

(2) With regard to the remaining 50 percent of the excess credit,
the qualified taxpayer shall elect to do either of the following:

(A) Receive a refund of the excess credit amount.

(B) Carry over the excess credit to reduce the “tax” in the
following taxable year, and succeeding six taxable years, if
necessary, until the credit has been exhausted.

end delete begin insert

(1) Carry over the credit to reduce the “tax” in the following
taxable year, and succeeding six taxable years, if necessary, until
the credit has been exhausted.

end insert begin insert

(2) (A) Notwithstanding any other law, sell any credit allowed
under this section to an unrelated party.

end insert begin insert

(B) The qualified taxpayer shall report to the Franchise Tax
Board prior to the sale of the credit, in the form and manner
specified by the Franchise Tax Board, all required information
regarding the purchase and sale of the credit, including the social
security number or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount
of the credit sold, and the amount of consideration received by the
qualified taxpayer for the sale of the credit.

end insert begin insert

(C) A credit shall not be sold pursuant to this paragraph to
more than one unrelated party, nor may the credit be resold by
the unrelated party to another taxpayer or other party.

end insert begin insert

(D) An unrelated party that has acquired credits under this
section shall be subject to the requirements of this section.

end insert begin insert

(E) In no event may a qualified taxpayer assign or sell any credit
to the extent the credit allowed by this section is claimed on any
tax return of the qualified taxpayer.

end insert begin insert

(F) In the event that both the qualified taxpayer originally
allocated a credit under this section by the California Film
Commission and an unrelated party to whom the credit has been
sold both claim the credit on their tax returns, the Franchise Tax
Board may disallow the credit of either taxpayer if the statute of
limitations upon assessment remains open.

end insert begin insert

(G) Subdivision (g) of Section 17039 shall not apply to any
credit sold pursuant to this subdivision.

end insert begin insert

(H) For purposes of this subdivision, except as otherwise
specifically provided, the unrelated party that purchases a credit
pursuant to this subdivision shall be treated as a qualified taxpayer.

end insert begin delete

(3) There shall be continuously appropriated from the General
Fund to the Franchise Tax Board an amount equal to the refunds
allowed by this section for the purpose of making those refunds.

end delete

(d) A credit shall be allowed pursuant to this section only if the
qualified taxpayer provides the following to the California Film
Commission:

(1) The production schedule for each commercial produced in
a taxable year.

(2) Total qualified expenditures.

(3) Total qualified wages paid.

(4) Total nonqualified expenditures incurred in California.

(5) Agreed upon procedures as prescribed by the California
Film Commission begin delete and performed by a licensed certified public
accountant who performs attest services in California and who has
attended a certified public accountant orientation meeting
conducted by the California Film Commission end delete .

(6) Number of cast and crew members hired for each
commercial.

(7) Number of days worked by each cast and crew member for
each commercial.

(8) Number of vendors used during the taxable year.

(9) Any other information as requested by the California Film
Commission.

(e) The California Film Commission may prescribe rules and
regulations to carry out the purposes of this section including any
rules and regulations necessary to establish procedures, processes,
requirements, and rules identified in or required to implement this
section.

(f) For purposes of this section, the California Film Commission
shall do the following:

(1) Establish a procedure for applicants to file with the
begin delete commission end delete begin insert California Film Commission end insert a written application
begin delete due on or before April 1, 2014, and each April 1 thereafter, end delete begin insert for
work completed in the prior calendar year, end insert on a form jointly
prescribed by the begin delete commission end delete begin insert California Film Commission end insert and
the Franchise Tax Board for the allocation of the begin delete tax end delete credit.

(2) Subject to the annual cap established as provided in
subdivision (h), allocate and certify an amount of credits to
qualified taxpayers under this section and Section 17053.90.

(3) Establish a verification procedure for the amount of qualified
expenditures paid or incurred by the applicant.

(4) Establish audit requirements that shall be satisfied before a
credit certificate may be issued by the California Film Commission.

(5) Provide the Legislative Analyst’s Office, upon request, any
or all application materials or any other materials received from,
or submitted by, the applicants, in electronic format when available,
including, but not limited to, information provided pursuant to
subdivision (d).

(6) The information provided to the California Film Commission
pursuant to this section shall constitute confidential tax information
for purposes of Article 2 (commencing with Section 19542) of
Chapter 7 of Part 10.2.

(g) (1) The California Film Commission shall provide the
Legislative Analyst’s Office and the Franchise Tax Board annually
with a list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission. The list shall include the names and taxpayer
identification numbers begin delete , including taxpayer identification numbers
of each partner or shareholder, as applicable, end delete of the qualified
taxpayers.

(2) (A) Notwithstanding subparagraph (B) begin insert or paragraph (6) of
subdivision (f) end insert , the California Film Commission shall annually
post on its Internet Web site and make begin insert a table end insert begin insert end insert available for public
release begin delete the following: end delete begin insert that includes all of the following information: end insert

begin delete

(i) A table which includes all of the following information:

end delete begin delete

(I)

end delete

begin insert (i) end insert  A list of qualified taxpayers and the begin delete tax end delete credit amounts
allocated to each qualified taxpayer by the California Film
Commission.

begin delete

(II)

end delete

begin insert (ii) end insert  The total number of production days in California reported
by the qualified taxpayers in its application.

begin delete

(III)

end delete

begin insert (iii) end insert  The number of California jobs directly created by the
production as reported by the qualified taxpayer in its application.

begin delete

(IV)

end delete

begin insert (iv) end insert  The total amount of qualified expenditures that were spent
on submitted productions.

begin delete

(ii) A summary describing the qualified taxpayer’s production
and background information regarding the qualified taxpayer
contained in the qualified taxpayer’s application for the credit.

end delete

(B) This subdivision shall not be construed to make the
information submitted by an applicant for a begin delete tax end delete credit under this
section a public record.

(h) (1) The aggregate amount of credits that may be allocated
in any fiscal year pursuant to this section and Section 17053.90
shall be an amount equal to the sum of all of the following:

(A) Two million dollars ($2,000,000) in credits for the begin delete 2012-13 end delete
begin insert 2014-15 end insert fiscal year and each fiscal year thereafter.

(B) The unused allocation credit amount, if any, begin delete for end delete begin insert from end insert the
preceding fiscal year.

(2) If the amount of credits applied for in any particular fiscal
year exceeds the aggregate amount of begin delete tax end delete credits authorized to be
allocated under this section and Section 17053.90, the aggregate
amount of begin delete tax end delete credits shall be allocated to each qualified taxpayer
on a pro rata basis.

(3) If the amount of credits allocated in a fiscal year is less than
the aggregate amount of begin delete tax end delete credits authorized to be allocated
under this section and Section 17053.90, the remaining amount
shall be allocated to qualified taxpayers within the studio zone
pursuant to Section 17053.89 or 23680 on a pro rata basis, not to
exceed 15 percent of the amount of the qualified expenditures
credit base.

(i) The California Film Commission shall have the authority to
allocate begin delete tax end delete credits in accordance with this section and in
accordance with any regulations prescribed pursuant to subdivision
(e) upon adoption.

(j)  The credit allowed by this section shall be in lieu of any
other begin delete deduction end delete begin insert credit end insert that the taxpayer may otherwise claim
pursuant to this part with respect to qualified expenditures.

begin insert

(k) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to
any standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board
pursuant to this section.

end insert

SEC. 5.  

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the unique need to support the commercial
industry in Los Angeles.

begin insert

begin insert SEC. 6. end insert   

end insert begin insert

The Legislature finds and declares that Sections 1, 2,
3, and 4 of this act, which adds Sections 17053.89, 17053.90,
23680, and 23681 to the Revenue and Taxation Code, imposes a
limitation on the public’s right of access to the meetings of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes
the following findings to demonstrate the interest protected by this
limitation and the need for protecting that interest:

end insert begin insert

Without making the tax information specified in these sections
confidential, the taxpayer’s privacy would not be maintained.

end insert

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

begin insert

begin insert SEC. 8. end insert   

end insert begin insert

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end insert