Bill S.2441

SENATE . . . . . . . . . . . . . . No. 2441

Senate, July 14, 2016 – Text of amendment (201) (offered by Senator Lesser) to the Ways and Means amendment (Senate, No. 2423) to the House Bill relative to job creation, workforce development and infrastructure investment.

The Commonwealth of Massachusetts

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In the One Hundred and Eighty-Ninth General Court
(2015-2016)

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by inserting at the end thereof the following new sections:-

“SECTION X. Section 6 of Chapter 62 of the General Laws, as appearing in the 2008 Official Edition, is further amended by adding the following subsection:

(t) There shall be established a live theater tax credit program under which a live theater company doing business with a Massachusetts based theater venue, theater company, theater presenter or producer may be eligible. The credit may be claimed against the taxes due pursuant to this chapter or Chapter 63. The credit shall be established to support the expansion of pre-Broadway, pre off-Broadway live theater, Broadway tour launches and World Premieres and shall assist in the development of long run show development and growth.

(1) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Commissioner” means the commissioner of revenue.

“Company” means a live theater company, however organized.

“Eligible theater production” means a live stage musical or theatrical production or tour being presented in a qualified production facility, as defined in this chapter that is either: (a) a Pre-Broadway production, or (b) a pre off-Broadway production, or (c) a Broadway Tour Launch or (d) a World Premiere.

“Eligible theater production certificate” means a certificate issued by the Massachusetts Office of Travel and Tourism certifying that the production is an eligible theater production that meets the guidelines of this chapter.

“Advertising and public relations expenditure” means costs incurred within the state by the Eligible theater productions for goods or services related to the marketing, public relations, creation and placement of print, electronic, television, billboards and other forms of advertising to promote the Eligible theater production.

“Office” means the Massachusetts office of travel and tourism.

"Payroll" means all salaries, wages, fees, and other compensation wages including, but not limited to, taxes, benefits, and any other consideration incurred or paid to talent and non-talent employees of the applicant who are residents of the commonwealth of Massachusetts for services rendered to and on behalf of an eligible theater production. The expenditure shall be incurred or paid by the applicant for services related to any portion of an eligible theater production from its pre-production stages, including, but not limited to, (a) the writing of the script, (b) casting, (c) hiring of service providers, (d) purchases from vendors, (e) marketing, (f) advertising, (g) public relations, (h) load in, (i) rehearsals, (j) performances, (k) other eligible theater production related activities, (l) load out; provided further, said labor expenditure shall be directly attributable to the eligible theater production and shall be limited to the first $100,000 of wages incurred or paid to each employee of an eligible theater production in each tax year.

“Pre-Broadway Production” means a live stage production that, in its original or adaptive version, is performed in a qualified production facility having a presentation scheduled for New York City’s Broadway theater district within (12) months after its Massachusetts presentation.

“Pre-Off Broadway Production” means a live stage production that, in its original or adaptive version, is performed in a qualified production facility having a presentation scheduled for New York City’s Off-Broadway’s theater district within (12) months after its Massachusetts presentation.

“Broadway Tour Launch” means a live stage production that, in its original or adaptive version, is performed in a qualified production facility that was originally presented in New York City’s Broadway theater district and opens its US tour in Massachusetts.

“Production and Performance Expenditures” means a contemporaneous exchange of cash or cash equivalent for goods or services related to development, production, performance or operating expenditures incurred in this state for a qualified theater production including, but not limited to, expenditures for design, construction and operation, including sets, special and visual effects, costumes, wardrobes, make-up, accessories, costs associated with sound, lighting, staging, payroll, transportation expenditures, advertising and public relations expenditures, facility expenses, rentals, per diems, accommodations and other related costs.

“Qualified Production Facility” means a facility located in the State of Massachusetts in which live theatrical productions are, or are intended to be, exclusively presented that contains at least one stage, a seating capacity of three hundred fifty (350)or more seats, and dressing rooms, storage areas, and other ancillary amenities necessary for the Eligible theater production.

“Massachusetts Office of Travel and Tourism” means the office within the secretariat of economic development that has been established in order to market Massachusetts as a leisure travel destination in order to generate state and local tax revenues, create jobs, and support travel-related businesses.

“Transportation expenditures” means expenditures for the packaging, crating, and transportation both to the state for use in a qualified theater production of sets, costumes, or other tangible property constructed or manufactured out of state, and/or from the state after use in a qualified theater production of sets, costumes, or other tangible property constructed or manufactured in this state and the transportation of the cast and crew to and from the state. Such term shall include the packaging, crating, and transporting of property and equipment used for special and visual effects, sound, lighting, and staging, costumes, wardrobes, make-up and related accessories and materials, as well as any other performance or production-related property and equipment.

“World Premiere” means a live stage production performed in a qualified production facility of an original work which has never been commercially presented in public before.

(2) Any person, firm, partnership, trust, estate or other entity that receives an eligible theater production certificate shall be allowed a tax credit equal to thirty-five percent (35%) of production and performance expenditures which shall consist of payroll and twenty –five percent (25%) of the production and performance expenditures and transportation expenditures for the eligible theater production and to be computed as provided in this chapter against a tax imposed by this chapter. Said credit shall not exceed five million dollars ($5,000,000) and shall be limited to certified production cost directly attributable to activities in the state and transportation expenditures defined above. The total production budget shall be a minimum of one hundred thousand dollars ($100,000).

(3) No more than five million dollars ($5,000,000) in total may be issued for any tax year for musical and theatrical production tax credits pursuant to this chapter.

(4) The tax credit shall be allowed against the tax for the taxable period in which the credit is earned and can be carried forward for not more than five (5) succeeding tax years.

(5) Credits allowed to a company, which is a subchapter S corporation, partnership, or a limited liability company that is taxed as a partnership, shall be passed through respectively to persons designated as partners, members or owners of such companies on a pro rata basis or pursuant to an executed agreement among such persons designated as subchapter S corporation shareholders, partners, or members documenting an alternate distribution method without regard to their sharing of other tax or economic attributes of such entity.

(6) If the company has not claimed the tax credits in whole or part, taxpayers eligible for the tax credits may assign, transfer or convey the tax credits, in whole or in part, by sale or otherwise to any individual or entity and such assignee of the tax credits that have not claimed the tax credits in whole or part may assign, transfer or convey the tax credits, in whole or in part, by sale or otherwise to any individual or entity. The assignee of the tax credits may use acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed pursuant to this chapter or Chapter 63, as appropriate. The assignee may apply the tax credit against taxes imposed on the assignee for not more than three (3) succeeding tax years. The assignor shall perfect the transfer by notifying the commissioner of revenue, in writing, within thirty (30) calendar days following the effective date of the transfer and shall provide any information as may be required by the commissioner to administer and carry out the provisions of this section.

(7) For purposes of this chapter, any assignment or sales proceeds received by the assignor for its assignment or sale of the tax credits allowed pursuant to this section and Section 38GG of Chapter 63 shall be exempt from this title.

(8) In the case of a corporation, this credit is only allowed against the tax of a corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return, provided, however, that in the case of a corporation that files a consolidated return with one or more other corporations with operations in Massachusetts, the credit will be allowed to be included in a consolidated return with respect to such corporations with operations in Massachusetts only.

(9) The applicant or applicants shall properly prepare, sign and submit to the Massachusetts office of travel and tourism an application for initial certification of the theater production. The application shall include such information and data as the office deems reasonably necessary for the proper evaluation and administration of said application, including, but not limited to, any information about the theater production company or their related partners/presenters and a specific Massachusetts live theater or musical production. The office shall review the completed applications and determine whether it meets the requisite criteria and qualifications for the initial certification for the production and/or presentation. If the initial certification is granted, the office shall issue a notice of initial certification of the eligible theater production and/or presentation to the theater production company, co-producer or presenter and to the commissioner. The notice shall state that, after appropriate review, the initial application meets the appropriate criteria for conditional eligibility. The notice of initial certification will provide a unique identification number for the production/presentation and is only a statement of conditional eligibility for the production/presentation and, as such, does not grant or convey any Massachusetts tax benefits.

(10) Upon completion of an eligible theater production, the applicant or applicants shall properly prepare, sign and submit to the office an application for final certification of the eligible theater production. The final application shall also contain a cost report and an “accountant’s certification.” The office and commissioner may rely without independent investigation, upon the accountant’s certification, in the form of an opinion, confirming the accuracy of the information included in the cost report. Upon review of a duly completed and filed application and upon no later than thirty (30) days of submission thereof, the commissioner will make a determination pertaining to the final certification of the eligible theater production and the resultant tax credits.

(11) Upon completion of an eligible theater production, the applicant or applicants shall deposit an amount equal to 15% of the tax credits received pursuant to this chapter into the Massachusetts Cultural Council Facilities Fund. The Massachusetts Cultural Council shall use these funds to address issues related to the workforce development and sustainability of the Massachusetts live theater industry.

(12) Upon determination that the company qualifies for final certification and the resultant tax credits, the commissioner shall issue to the company: (1) an eligible theater production certificate; and (2) a tax credit certificate in an amount in accordance with this section (b) hereof. A musical and theatrical production company is prohibited from using state funds, state loans or state guaranteed loans to qualify for the live theater infrastructure tax credit. All documents that are issued by the office pursuant to this section shall reference the identification number that was issued to the production as part of its initial certification.

(13) The Massachusetts office of travel and tourism, in consultation as needed with the commissioner of revenue, shall promulgate such rules and regulations as are necessary to carry out the intent and purposes of this chapter in accordance with the general guidelines provided herein for the certification of the production and the resultant production credit.

(14) If information comes to the attention of the Massachusetts Office of Travel and Tourism that is materially inconsistent with representations made in an application, the office may deny the requested certification. In the event that tax credits or a portion of tax credits are subject to recapture for ineligible costs and such tax credits have been transferred, assigned and/or allocated, the state will pursue its recapture remedies and rights against the applicant of the theater production tax credits. No redress shall be sought against assignees, sellers, transferees or allocates of such credits.

(15) No credits shall be issued on or after January 1, 2022 unless the production has received initial certification under this section prior to January 1, 2022.

SECTION XX. Chapter 63 of the General Laws, as appearing in the 2008 Official Edition, is further amended by adding the following section:

Section 38GG. There shall be established a live theater tax credit program under which a live theater company doing business with a Massachusetts based theater venue, theater company, theater presenter or producer may be eligible. The credit may be claimed against the taxes due pursuant to this chapter or Chapter 62. The credit shall be established to support the expansion of pre-Broadway, pre off-Broadway live theater, Broadway tour launches and World Premieres and shall assist in the development of long run show development and growth.

(a) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Commissioner” means the commissioner of revenue.

“Company” means a live theater company, however organized.

“Office” means the Massachusetts office of travel and tourism.

“World Premiere” means a live stage production performed in a qualified production facility of an original work which has never been commercially presented in public before.

(b) Any person, firm, partnership, trust, estate or other entity that receives an eligible theater production certificate shall be allowed a tax credit equal to thirty-five percent (35%) of production and performance expenditures which shall consist of payroll and twenty –five percent (25%) of the production and performance expenditures and transportation expenditures for the eligible theater production and to be computed as provided in this chapter against a tax imposed by this chapter. Said credit shall not exceed five million dollars ($5,000,000) and shall be limited to certified production cost directly attributable to activities in the state and transportation expenditures defined above. The total production budget shall be a minimum of one hundred thousand dollars ($100,000).

(c) No more than five million dollars ($5,000,000) in total may be issued for any tax year for musical and theatrical production tax credits pursuant to this chapter or chapter 62.

(d) The tax credit shall be allowed against the tax for the taxable period in which the credit is earned and can be carried forward for not more than five (5) succeeding tax years.

(e) If the company has not claimed the tax credits in whole or part, taxpayers eligible for the tax credits may assign, transfer or convey the tax credits, in whole or in part, by sale or otherwise to any individual or entity and such assignee of the tax credits that have not claimed the tax credits in whole or part may assign, transfer or convey the tax credits, in whole or in part, by sale or otherwise to any individual or entity. The assignee of the tax credits may use acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed pursuant to this chapter or Chapter 62, as appropriate. The assignee may apply the tax credit against taxes imposed on the assignee for not more than three (3) succeeding tax years. The assignor shall perfect the transfer by notifying the commissioner of revenue, in writing, within thirty (30) calendar days following the effective date of the transfer and shall provide any information as may be required by the commissioner to administer and carry out the provisions of this section.

(f) For purposes of this chapter, any assignment or sales proceeds received by the assignor for its assignment or sale of the tax credits allowed pursuant to this section and subsection (t) of section 6 of Chapter 62 shall be exempt from this title.

(g) In the case of a corporation, this credit is only allowed against the tax of a corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return, provided, however, that in the case of a corporation that files a consolidated return with one or more other corporations with operations in Massachusetts, the credit will be allowed to be included in a consolidated return with respect to such corporations with operations in Massachusetts only.

(h) The applicant or applicants shall properly prepare, sign and submit to the Massachusetts office of travel and tourism an application for initial certification of the theater production. The application shall include such information and data as the office deems reasonably necessary for the proper evaluation and administration of said application, including, but not limited to, any information about the theater production company or their related partners/presenters and a specific Massachusetts live theater or musical production. The office shall review the completed applications and determine whether it meets the requisite criteria and qualifications for the initial certification for the production and/or presentation. If the initial certification is granted, the office shall issue a notice of initial certification of the eligible theater production and/or presentation to the theater production company, co-producer or presenter and to the commissioner. The notice shall state that, after appropriate review, the initial application meets the appropriate criteria for conditional eligibility. The notice of initial certification will provide a unique identification number for the production/presentation and is only a statement of conditional eligibility for the production/presentation and, as such, does not grant or convey any Massachusetts tax benefits.

(i) Upon completion of an eligible theater production, the applicant or applicants shall properly prepare, sign and submit to the office an application for final certification of the eligible theater production. The final application shall also contain a cost report and an “accountant’s certification.” The office and commissioner may rely without independent investigation, upon the accountant’s certification, in the form of an opinion, confirming the accuracy of the information included in the cost report. Upon review of a duly completed and filed application and upon no later than thirty (30) days of submission thereof, the commissioner will make a determination pertaining to the final certification of the eligible theater production and the resultant tax credits.

(j) Upon determination that the company qualifies for final certification and the resultant tax credits, the commissioner shall issue to the company: (1) an eligible theater production certificate; and (2) a tax credit certificate in an amount in accordance with this section (b) hereof. A musical and theatrical production company is prohibited from using state funds, state loans or state guaranteed loans to qualify for the live theater infrastructure tax credit. All documents that are issued by the office pursuant to this section shall reference the identification number that was issued to the production as part of its initial certification.

(k) Upon completion of an eligible theater production, the applicant or applicants shall deposit an amount equal to 15% of the tax credits received pursuant to this chapter into the Massachusetts Cultural Council Facilities Fund. The Massachusetts Cultural Council shall use these funds to address issues related to the workforce development and sustainability of the Massachusetts live theater industry.

(l) The Massachusetts office of travel and tourism, in consultation as needed with the commissioner of revenue, shall promulgate such rules and regulations as are necessary to carry out the intent and purposes of this chapter in accordance with the general guidelines provided herein for the certification of the production and the resultant production credit.

(m) If information comes to the attention of the Massachusetts Office of Travel and Tourism that is materially inconsistent with representations made in an application, the office may deny the requested certification. In the event that tax credits or a portion of tax credits are subject to recapture for ineligible costs and such tax credits have been transferred, assigned and/or allocated, the state will pursue its recapture remedies and rights against the applicant of the theater production tax credits. No redress shall be sought against assignees, sellers, transferees or allocates of such credits.

(n) No credits shall be issued on or after January 1, 2022 unless the production has received initial certification under this section prior to January 1, 2022.”