Bill H.2711

HOUSE DOCKET, NO. 3849 FILED ON: 1/20/2023

HOUSE . . . . . . . . . . . . . . . No. 2711

By Representative Biele of Boston, a petition (accompanied by bill, House, No. 2711) of David Biele for legislation to establish a tax credit program for live theater. Revenue.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act creating a pilot program to enhance economic and community development through live theatrical arts.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 6 of Chapter 62 of the General Laws, as appearing in the 2008 Official Edition, is amended by adding the following subsection:

Section 38DD. (a) Notwithstanding any general or special law to the contrary, there is hereby established a pilot program for a live theater tax credit for which a live theater company doing business with a Massachusetts-based theater venue, theater company, theater presenter or producer may be eligible. The credit shall be established to support the expansion of pre-Broadway productions, pre-off Broadway productions and national tour launches, as those terms are defined in paragraph (1) of subsection (aa) of section 6 of chapter 62 of the General Laws, and shall assist in the development of long run show development and growth.

(b)(1) An applicant for a live theater tax credit shall properly prepare, sign and submit to the office of travel and tourism an application for initial certification of the theater production. The initial application shall include information and data the office deems necessary for the evaluation and administration of the application, including, but not limited to, any information about the theater production company or its related partners or presenters and a specific Massachusetts live theater or musical production. (2) The office of travel and tourism shall review the completed application and determine whether it meets the requisite criteria and qualifications for the initial certification for the production. If the initial certification is granted, the office shall issue a notice of initial certification of the eligible theater production or presentation to the theater production company, co-producer or presenter and to the commissioner of revenue. The notice shall state that, after appropriate review, the initial application meets the appropriate criteria for eligibility. The notice of initial certification shall provide a unique identification number for the production and shall be a statement of conditional eligibility for the production and shall not grant or convey any Massachusetts tax credits or other benefits.

(c)(1) Upon completion of an eligible theater production, the applicant shall properly prepare, sign and submit to the office of travel and tourism an application for final certification of the eligible theater production. The final application shall contain a cost report and an accountant’s certification; provided, that an eligible theater production, as defined in paragraph (1) subsection (aa) of section 6 of chapter 62 of the General Laws, shall not use state funds, state loans or state guaranteed loans to qualify for the live theater tax credit. The office of travel and tourism and commissioner of revenue may rely, without independent investigation, upon an accountant’s certification, in the form of an opinion, confirming the accuracy of the information included in the cost report. (2) Upon review of a duly completed and filed application and not later than 30 days after submission, the office of travel and tourism, in consultation with the commissioner of revenue, shall make a determination pertaining to the final certification of the eligible theater production and the tax credits pursuant to said subsection (aa) of said section 6 of said chapter 62 and section 38KK of chapter 63 of the General Laws. Upon final determination of eligibility, the office shall issue a final certificate.

(d)(1) If the office of travel and tourism or the department of revenue receives information that is materially inconsistent with representations made in an application, the office may deny the requested certification.

(2) If a tax credit or a portion of a tax credit is subject to recapture for ineligible costs and such tax credit has been transferred, assigned or allocated, the commonwealth shall pursue its recapture remedies and rights against the recipient of the theater production tax credit. No redress shall be sought against assignees, sellers, transferees or allocates of such credit

(e) All documents that are issued by the office of travel and tourism pursuant to this section shall reference the identification number issued to the production as part of its initial certification.

(f) The office of travel and tourism, in consultation with the commissioner of revenue, shall promulgate rules and regulations to carry out this section.

(g) The secretary of housing and economic development, in conjunction with the commissioner of revenue, shall report on the impact of the live theater tax credit pursuant to subsection (aa) of section 6 of chapter 62 and section 38KK of chapter 63 of the General Laws and shall submit the report to the clerks of the house of representatives and the senate, the house and senate committees on ways and means and the joint committee on economic development and emerging technologies not later than December 31, 2027. The secretary and commissioner shall collaborate with the live theater industry to collect the relevant data for the report. Said report shall include, but not be limited to, the following information regarding live theater in the commonwealth during the pilot program:

(i) the number of shows that have been presented in the commonwealth since enactment of this section;

(ii) the number of live show days since enactment of this section;

(iii) an analysis of the number of shows and live show days after enactment of this section as compared to before enactment of this section;

(iv) the total spending by live theater productions on local businesses and vendors, including supplies, hotels, car rental, food and beverage, and items related to the live theater production;

(v) the total expenditure on local labor to set up, support and take down each production, including total labor hours;

(vi) the number of ticket orders from outside the commonwealth;

(vii) the number of ticket orders from outside the United States; and

(viii) the impact on local businesses in proximity to live theaters, including hotels and restaurants.

(h) No tax credit pursuant to subsection (aa) of section 6 of chapter 62 or section 38KK of chapter 63 of the General Laws shall be issued on or after January 1, 2028 unless the production has received initial certification under this section prior to January 1, 2028.

SECTION 2. Chapter 63 is hereby further amended by inserting after section 38JJ the following section:-

Section 38KK. (a) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Advertising and public relations expenditure”, a cost incurred within the commonwealth by an eligible theater production for goods or services related to the marketing, public relations, creation and placement of print, electronic, television, billboards or other forms of advertising to promote the eligible theater production.

“Eligible theater production”, a live stage musical, dance or theatrical production or tour being presented in a qualified production facility that is either: (a) a pre-Broadway production; (b) a pre-off Broadway production; or (c) a national tour launch.

“Eligible theater production certificate”, a final certificate issued by the office, in consultation with the commissioner, certifying that a production is an eligible theater production that meets the rules or regulations of the office.

“National tour launch”, a live stage production that, in its original or adaptive version, is performed in a qualified production facility and opens its national tour in the commonwealth.

“Office”, the office of travel and tourism established in section 13E of chapter 23A.

“Payroll”, all salaries, wages, fees and other compensation, including, but not limited to, taxes, benefits and any other consideration incurred or paid to talent and non-talent employees of the applicant for services rendered within the commonwealth to and on behalf of an eligible theater production; provided, that the payroll 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, and (l) load out; and provided further, that the payroll 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”, 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 24 months after its presentation in the commonwealth.

“Pre-off Broadway production”, 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 theater district within 24 months after its presentation in the commonwealth.

“Production and performance expenditures”, a contemporaneous exchange of cash or cash equivalent for goods or services related to development, production, performance or operating expenditures incurred in the commonwealth 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, advertising and public relations expenditures, facility expenses, rentals, per diems, accommodations and other related costs.

“Qualified production facility”, a facility located in the commonwealth in which live theater productions are, or are intended to be, exclusively presented that contains at least 1 stage, a seating capacity of not less than 175 seats, dressing rooms, storage areas and other ancillary amenities necessary for the eligible theater production.

“Transportation expenditures”, expenditures for the packaging, crating and transportation both to the commonwealth for use in a qualified theater production of sets, costumes or other tangible property constructed or manufactured out of state, or from the commonwealth after use in a qualified theater production of sets, costumes or other tangible property constructed or manufactured in the commonwealth and the transportation of the cast and crew to and from the commonwealth; provided, that “transportation expenditures” 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 and any other performance or production-related property and equipment.

(b) Any taxpayer that receives an eligible theater production certificate shall be allowed a tax credit against taxes imposed by this chapter. The credit shall be equal to 35 per cent of the total in-state payroll costs and 25 per cent of the production and performance expenditures and transportation expenditures and all out of state payroll costs for the eligible theater production directly attributable to activities in the commonwealth. The credit shall not be greater than $5,000,000 and shall be limited to (i) in-state payroll costs, (ii) production and performance expenditures, (iii) transportation expenditures, and (iv) all out of state payroll costs, directly attributable to activities in the commonwealth. The eligible theater production budget shall be not less than $100,000.

(c) Not more than $5,000,000 in total may be issued for any tax year for tax credits pursuant to this section. If the total amount of allocated credits applied for in any particular year exceeds the aggregate amount of tax credits allowed for such year, the excess shall be treated as having been applied on the first day of the subsequent year.

(d) The tax credit shall be allowed against the tax for the taxable period in which the credit is issued and any amount of the tax credit that exceeds the tax due for a taxable year may be carried forward for not more than 5 succeeding tax years.

(e) If a taxpayer has not claimed the tax credits in whole or part, a taxpayer 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 in 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 100 per cent of the tax liabilities otherwise imposed pursuant to this chapter. The assignee may apply the tax credits against taxes imposed on the assignee for not more than 5 succeeding tax years from the date an eligible theater production certificate is first issued by the office. The assignor shall perfect the transfer by notifying the commissioner, in writing, within 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 this section.

(f) Any assignment or sales of proceeds received by the assignor for its assignment or sale of the tax credits allowed pursuant to this section shall be exempt from tax under this chapter.

(g) The credit shall only be allowed against the tax of a corporation included in a consolidated return that qualifies for the credit and shall not be allowed 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 1 or more other corporations with operations in the commonwealth, the credit shall be allowed to be included in a consolidated return with respect to such corporations with operations only in the commonwealth.

(h) Credits allowed to a company that is a S corporation, as defined in section 1361 of the Code, 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 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.

(i) Upon determination by the office, in consultation with the commissioner, that the taxpayer qualifies for an eligible theater production certificate, the commissioner shall issue to the taxpayer a tax credit in an amount in accordance with subsection (b).

(j) The commissioner shall promulgate such rules and regulations necessary for the administration of this section.

Name:	District/Address:	Date Added:
David Biele	4th Suffolk	1/19/2023
Patrick M. O'Connor	First Plymouth and Norfolk	4/11/2023