SENATE, No. 1952

STATE OF NEW JERSEY

216th LEGISLATURE

 

INTRODUCED APRIL 28, 2014

 


 

Sponsored by:

Senator  RAYMOND J. LESNIAK

District 20 (Union)

 

 

 

 

SYNOPSIS

     "Economic Opportunity Act of 2014, Part 2."

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning incentives for certain economic development projects and designated as the Economic Opportunity Act of 2014, Part 2, and amending P.L.1977, c.44 and P.L.2005, c.345.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 6 of P.L.1977, c.44 (C.34:1B-27) is amended to read as follows:

     6.    The Motion Picture and Television Development Commission shall have the following powers:

     a.     To adopt such rules and regulations as it deems advisable with respect to the conduct of its own affairs.

     b.    To hold hearings, and to do or perform any acts which may be necessary, desirable or proper to carry out the purposes of this act.

     c.     To request and obtain from any department, division, board, bureau, commission, or other agency of the State or of any county, municipality, authority or other political subdivision within the State such assistance and data as will enable it properly to carry out its powers and duties hereunder.

     d.    To accept any federal funds granted, by act of Congress or by Executive  Order, for all or any of the purposes of this act.

     e.     To accept any gifts, donations, bequests, or grants of funds from private and public agencies for all or any of the purposes of this act.

     f.     To coordinate the activities of similar councils or boards appointed by  any city or county within the State for all or any of the purposes of this act.

     g.    To create advisory councils necessary for the performance of responsibilities pursuant to this act and to appoint members thereto.

     h.    To directly secure any and all location permits from any department, division, board, bureau, commission, or other agency of the State or from any county, municipality, authority, or other political subdivision within the State for applicants interested in motion picture and television production within the State.

     i.     [to] To establish reasonable fees, pursuant to the provisions of the "Administrative Procedure Act," for the services provided by the commission.

     j.     To promote and facilitate public-private partnerships between the motion picture and television industry and four-year public institutions of higher education.

     k.    To establish a motion picture and television industry student internship program providing work experience opportunities for students enrolled in media and fine arts programs at four-year public institutions of higher education who are interested in the motion picture and television industry.

(cf: P.L.2003, c.117, s.44)

 

     2.    Section 7 of P.L.1977, c. 44 (C.34:1B-28) is amended to read as follows:

     7.    The Motion Picture and Television Development Commission shall prepare and implement programs to promote a motion picture and television industry within the State.  Such a program shall include but not be limited to:

     a.     The preparation and distribution of appropriate promotional and informational materials pointing out desirable locations within the State, explaining the benefits and advantages of producing within the State, and detailing the services available at the State and local level and within industry;

     b.    Facilitate cooperation from local government, State and Federal government agencies and private sector groups in regard to applications, locations, production, and ancillary facilities;

     c.  Cooperate with all sections of management and labor engaged in the motion picture and television industry;

     d.  (1)  Facilitate public-private partnerships between motion picture and television industry production entities and four-year public institutions of higher education. 

     (2)   The commission shall adopt rules and regulations it deems appropriate to promote and facilitate public-private partnerships and to establish the parameters of public-private partnership agreements necessary for a motion picture or television industry production entity to qualify for tax credits pursuant to section 1 of P.L.2005, c.345 (C.54:10A-5.39) or section 2 of P.L.2005, c.345 (C.54A:4-12). 

     (3)   The rules and regulations shall address the following elements of public-private partnership agreements:

     (a)   requirements and guidelines for use of the expertise and research capabilities of four-year public institutions of higher education by motion picture and television industry production entities;

     (b)   requirements and guidelines for licensing rights authorizing four-year public institutions of higher education to use content produced through public-private partnerships;

     (c)   requirements and guidelines for motion picture and television industry employment opportunities for students enrolled in media and fine arts programs at four-year public institutions of higher education;

     (d)   requirements and guidelines for motion picture and television industry internships for students enrolled in media and fine arts programs at four-year public institutions of higher education.

     (4)   A public-private partnership agreement shall not qualify a taxpayer for tax credits pursuant to section 1 of P.L.2005, c.345 (C.54:10A-5.39) or section 2 of P.L.2005, c.345 (C.54A:4-12) unless the agreement complies with the requirements and guidelines of subparagraphs (a) and (b) of paragraph (3) of this subsection, and the requirements and guidelines of either subparagraph (c) or (d) of paragraph (3) of this subsection.

(cf: P.L.1977, c.44, s.7)

 

     3.    Section 1 of P.L.2005, c.345 (C.54:10A-5.39) is amended to read as follows:

     1.    a.  A taxpayer, upon application to the Director of the Division of Taxation in the Department of the Treasury and the New Jersey Economic Development Authority, shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount equal to 20 percent of the qualified film production expenses of the taxpayer during a privilege period commencing after the effective date of P.L.2005, c.345, provided that (1) at least 60 percent of the total film production expenses, exclusive of post-production costs, of the taxpayer will be incurred for services performed and goods used or consumed in New Jersey, [and] (2) principal photography of the film commences [within] the earlier of 180 days from the date of the original application for the tax credit, or 150 days [after] from the date of approval by the New Jersey Economic Development Authority of the application for the credit, and (3) the taxpayer will enter into a public-private partnership with a four-year public institution of higher education in accordance with the rules and regulations promulgated by the Motion Picture and Television Development Commission pursuant to the "Motion Picture and Television Development Act," P.L.1977, c.44 (C.34:1B-22 et seq.).

     The credit allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be in an amount equal to 22 percent for the qualified film production expenses of the taxpayer during a privilege period that represent purchases of goods from a qualified business located within an Urban Enterprise Zone, as defined under P.L.1983, c.303 (C.52:27H-60 et seq.), or that represent the purchase of services performed by a resident of an Urban Enterprise Zone.

     b.    A taxpayer, upon application to the Director of the Division of Taxation in the Department of the Treasury and the New Jersey Economic Development Authority, shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount up to 20 percent, as determined by the authority, of the qualified digital media content production expenses of the taxpayer during a privilege period commencing after the effective date of P.L.2007, c.257, provided that (1) the taxpayer will enter into a public-private partnership with a four-year public institution of higher education in accordance with the rules and regulations promulgated by the Motion Picture and Television Development Commission pursuant to the "Motion Picture and Television Development Act," P.L.1977, c.44 (C.34:1B-22 et seq.), and (2) at least $2,000,000 of the total digital media content production expenses of the taxpayer will be incurred for services performed and goods used or consumed in New Jersey and at least a significant percentage, as determined by the authority, of the qualified digital media content production expenses of the taxpayer will include wages and salaries paid to [one or more new] full-time or full-time equivalent employees in New Jersey.  For purposes of this subsection, "[new] full-time or full-time equivalent employee" means a person employed by the taxpayer for consideration for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time or full-time equivalent employment, whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., or who is a partner of a taxpayer that is an eligible partnership, who works for the partnership for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time or full-time equivalent employment, and whose distributive share of income, gain, loss, or deduction, or whose guaranteed payments, or any combination thereof, is subject to the payment of estimated taxes, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. [, and who is determined by the authority to work in a newly created permanent position according to criteria it develops.]  "[New full-time] Full-time or full-time equivalent employee" shall not include any person who works as an independent contractor or on a consulting basis for the taxpayer.  [In determining the amount of any grant of tax credits made pursuant to this subsection, the authority shall consider the number of new full-time positions created by the taxpayer as well as the quality of the full-time positions created, including but not limited to the salaries and benefits provided to new full-time employees. The authority, in consultation with the Division of Taxation, shall establish rules for the recapture of all, or a portion of, the grant of tax credits pursuant to this subsection in the event the taxpayer fails to maintain the new full-time positions that were included in calculating the qualified digital media content production expenses of the taxpayer.]

     The credit allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall be in an amount equal to 22 percent for the qualified digital media content production expenses of the taxpayer during a privilege period that represent purchases of goods from a qualified business located within an Urban Enterprise Zone, as defined under P.L.1983, c.303 (C.52:27H-60 et seq.), or that represent the purchase of services performed by a resident of an Urban Enterprise Zone.

     c.     The amount of the credit [applied] allowed under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162, for a privilege period, when taken together with any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162, shall not exceed 50 percent of the tax liability otherwise due and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162. The priority in which credits allowed pursuant to this section and any other credits shall be taken shall be as determined by the Director of the Division of Taxation. The amount of the credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 may be carried over, if necessary, to the seven privilege periods following the privilege period for which the credit was allowed.

     d.    A taxpayer may, with an application for a credit provided for in subsection a. or subsection b. of this section, apply to the director and the executive director of the authority for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of the credit against the tax liability of the taxpayer. The director and the executive director of the authority may consult with the New Jersey Motion Picture and Television Development Commission in consideration of any application for approval of a tax credit or tax credit transfer certificate under this section.  The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director and the authority, may be sold or assigned, in full or in part, to any other taxpayer that may have a tax liability under P.L.1945, c.162 or N.J.S.54A:1-1 et seq., in exchange for private financial assistance to be provided by the purchaser or assignee to the taxpayer that has applied for and been granted the credit. The certificate provided to the taxpayer shall include a statement waiving the taxpayer's right to claim that amount of the credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) that the taxpayer has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the taxpayer of less than 75% of the transferred credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability under P.L.1945, c.162 shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to subsection c. of this section. Any amount of a tax credit transfer certificate obtained by a purchaser or assignee under subsection a. of this section may be applied against the purchaser's or assignee's tax liability under N.J.S.54A:1-1 et seq. and shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to section 2 of P.L.2005, c.345 (C.54A:4-12).

     e.     As used in this section:

     "Digital media content" means any data or information that is produced in digital form, including data or information created in analog form but reformatted in digital form, text, graphics, photographs, animation, sound and video content. "Digital media content" does not mean content offerings generated by the end user (including postings on electronic bulletin boards and chat rooms); content offerings comprised primarily of local news, events, weather or local market reports; public service content; electronic commerce platforms (such as retail and wholesale websites); websites or content offerings that contain obscene material as defined pursuant to N.J.S.2C:34-2 and N.J.S.2C:34-3; websites or content that are produced or maintained primarily for private, industrial, corporate or institutional purposes; or digital media content acquired or licensed by the taxpayer for distribution or incorporation into the taxpayer's digital media content.

     "Film" means a feature film, a television series or a television show of [15] 22 minutes or more in length, intended for a national audience. "Film" shall not include a production featuring news, current events, weather and market reports or public programming, talk show, game show, sports event, award show or other gala event, a production that solicits funds, a production containing obscene material as defined under N.J.S.2C:34-2 and N.J.S.2C:34-3, or a production primarily for private, industrial, corporate or institutional purposes.

     "Loan out company" means a personal service corporation that employs an actor or actress who is hired by a film or digital media production company.

     "Qualified digital media content production expenses" means an expense incurred in New Jersey for the production of digital media content. Qualified digital media content production expenses shall include but shall not be limited to wages and salaries of individuals employed in the production of digital media content on which the tax imposed by the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. has been paid or is due; the costs of computer software and hardware, data processing, visualization technologies, sound synchronization, editing, and the rental of facilities and equipment. Qualified digital media content production expenses shall not include expenses incurred in marketing, promotion or advertising digital media or other costs not directly related to the production of digital media content. Costs related to the acquisition or licensing of digital media content by the taxpayer for distribution or incorporation into the taxpayer's digital media content shall not be qualified digital media content production expenses.

     "Qualified film production expenses" means an expense incurred in New Jersey for the production of a film including post-production costs incurred in New Jersey. Qualified film production expenses shall include but shall not be limited to wages and salaries of individuals employed in the production of a film on which the tax imposed by the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. has been paid or is due; the costs of construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories and the cost of rental of facilities and equipment. Qualified film production expenses shall not include expenses incurred in marketing or advertising a film.

     "Total digital media content production expenses" means costs for services performed and property used or consumed in the production of digital media content.

     "Total film production expenses" means costs for services performed and tangible personal property used or consumed in the production of a film.

     "Post-production costs" means the costs of the phase of production that follows principal photography, in which raw footage is cut and assembled into a finished film with sound synchronization and visual effects.

     f.     The Director of the Division of Taxation in the Department of the Treasury, in consultation with the New Jersey Motion Picture and Television Development Commission and the New Jersey Economic Development Authority, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to implement this act including examples of qualified film production and digital media content production expenses, a requirement that an applicant submit an agreed-upon procedures report prepared by an independent certified public accountant to verify the tax credit claim, and the procedures and forms to apply for a credit and for a tax credit transfer certificate necessary for a taxpayer to sell or assign an amount of tax credit under this section. The value of credits, including tax credits allowed through the granting of tax credit transfer certificates, approved by the director and the authority pursuant to subsection a. of this section and pursuant to section 2 of P.L.2005, c.345 (C.54A:4-12) shall not exceed a cumulative total of [$10,000,000] $50,000,000 in [any] fiscal year 2014 and in each fiscal year thereafter, to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), and the tax imposed pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. If the cumulative total amount of credits and tax credit transfer certificates allowed to taxpayers for privilege periods or taxable years commencing during a single fiscal year under subsection a. of this section and section 2 of P.L.2005, c.345 (C.54A:4-12) exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit or tax credit transfer certificate amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits and tax credit transfer certificates under subsection a. of this section and section 2 of P.L.2005, c.345 (C.54A:4-12) are not in excess of the amount of credits available. The value of credits, including tax credits allowed through the granting of tax credit transfer certificates, approved by the director and the authority pursuant to subsection b. of this section shall not exceed a cumulative total of [$5,000,000] $10,000,000 in [any] fiscal year 2014 and in each fiscal year thereafter, to apply against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).  If the total amount of credits and tax credit transfer certificates allowed to taxpayers for privilege periods or taxable years commencing during a single fiscal year under subsection b. of this section exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit or tax credit transfer certificate amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits and tax credit transfer certificates under subsection b. of this section are not in excess of the amount of credits available. The Executive Director of the New Jersey Economic Development Authority, in conjunction with the Director of the Division of Taxation shall prepare and submit a report to the Governor and the Legislature on the effectiveness of the credit as an incentive for encouraging film productions and digital media content productions to locate in New Jersey which shall be completed before the third taxable year or privilege period in which a credit may be claimed.

     g.    For the purpose of determining eligibility for or the amount of any grant of tax credits pursuant to this section, the authority shall not include any job that is included in the calculation of a business employment incentive grant pursuant to the provisions of P.L.1996, c.26 (C.34:1B-124 et al.) or a business retention and relocation grant pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.).

     h.    Amounts of tax credits approved to a loan out company not registered to do business in New Jersey shall be subject to New Jersey gross income tax withholding at the applicable rate under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

(cf:  P.L.2007, c.257, s.1)

 

     4.    Section 2 of P.L.2005, c.345 (C.54A:4-12) is amended to read as follows:

     2.    a.  A taxpayer, upon application to the Director of the Division of Taxation in the Department of the Treasury and the New Jersey Economic Development Authority, shall be allowed a credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., in an amount equal to 20 percent of the qualified film production expenses of the taxpayer during a taxable year commencing after the effective date of P.L.2005, c.345, provided that (1) at least 60 percent of the total production expenses, exclusive of post-production costs, of the taxpayer will be incurred for services performed and goods used or consumed in New Jersey, [and] (2) principal photography of the film commences [within] the earlier of 180 days from the date of the original application for the tax credit, or 150 days [after] from the date of approval by the New Jersey Economic Development Authority of the application for the credit, and (3) the taxpayer will enter into a public-private partnership with a four-year public institution of higher education in accordance with the rules and regulations promulgated by the Motion Picture and Television Development Commission pursuant to the "Motion Picture and Television Development Act," P.L.1977, c. 44 (C. 34:1B-22 et seq.).

     The credit allowed against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be in an amount equal to 22 percent of the qualified film production expenses of the taxpayer during a privilege period that represent purchases of goods from a qualified business located within an Urban Enterprise Zone, as defined under P.L.1983, c.303 (C.52:27H-60 et seq.), or that represent the purchase of services performed by a resident of an Urban Enterprise Zone.

     b.    The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under N.J.S.54A:1-1 et seq. after all other credits and payments. If the credit exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7.

     c.     A taxpayer may, with an application for a credit provided for in subsection a. of this section, apply to the director and the executive director of the authority for a tax credit transfer certificate in lieu of the taxpayer being allowed any amount of the credit against the tax liability of the taxpayer. The director and the executive director of the authority may consult with the New Jersey Motion Picture and Television Development Commission in consideration of any application for approval of a tax credit or tax credit transfer certificate under this section.  The tax credit transfer certificate, upon receipt thereof by the taxpayer from the director and the authority, may be sold or assigned, in full or in part, to any other taxpayer that may have a tax liability under N.J.S.54A:1-1 et seq. or P.L.1945, c.162 (C.54:10A-1 et seq.), in exchange for private financial assistance to be provided by the purchaser or assignee to the taxpayer that has applied for and been granted the credit.  The certificate provided to the taxpayer shall include a statement waiving the taxpayer's right to claim that amount of the credit against the tax imposed pursuant to N.J.S.54A:1-1 et seq., that the taxpayer has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the taxpayer of less than 75% of the transferred credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability under N.J.S.54A:1-1 et seq., shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to subsection b. of this section.  Any amount of a tax credit transfer certificate obtained by a purchaser or assignee under this section may be applied against the purchaser's or assignee's tax liability under P.L.1945, c.162 and shall be subject to the same limitations and conditions that apply to the use of a credit pursuant to section 1 of P.L.2005, c.345 (C.54:10A-5.39).

     d.    A partnership shall not be allowed a credit under this section directly, but the amount of credit or tax credit transfer certificate of a taxpayer in respect of a distributive share of partnership income under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be determined by allocating to the taxpayer that proportion of the credit or certificate acquired by the partnership that is equal to the taxpayer's share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer's taxable year. For the purposes of subsection b. of this section, the amount of tax liability that would be otherwise due of a taxpayer is that proportion of the total liability of the taxpayer that the taxpayer's share of the partnership income or gain included in gross income bears to the total gross income of the taxpayer. The provisions of subsection c. of this section shall apply to the amount of any credit or certificate of a taxpayer in respect of a distributive share of partnership income.

     e.     As used in this section:

     "Film" means a feature film, a television series or a television show of [15] 22 minutes or more in length, intended for a national audience.  "Film" shall not include a production featuring news, current events, weather and market reports or public programming, talk show, game show, sports event, award show or other gala event, a production that solicits funds, a production containing obscene material as defined under N.J.S.2C:34-2 and N.J.S.2C:34-3, or a production primarily for private, industrial, corporate or institutional purposes.

     "Loan out company" means a personal service corporation that employs an actor or actress who is hired by a film or digital media production company.

     "Qualified film production expenses" means an expense incurred in New Jersey for the production of a film including post-production costs incurred in New Jersey. Qualified film production expenses shall include but shall not be limited to wages and salaries of individuals employed in the production of a film on which the tax imposed by the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. has been paid or is due; the costs of construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories and the cost of rental of facilities and equipment. Qualified film production expenses shall not include expenses incurred in marketing or advertising a film.

     "Total film production expenses" means costs for services performed and tangible personal property used or consumed in the production of a film.

     "Post production costs" means the costs of the phase of production that follows principal photography, in which raw footage is cut and assembled into a finished film with sound synchronization and visual effects.

     f.     The Director of the Division of Taxation in the Department of the Treasury, in consultation with the New Jersey Motion Picture and Television Development Commission and the New Jersey Economic Development Authority, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary to implement this act including examples of qualified film production expenses, a requirement that an applicant submit an agreed-upon procedures report prepared by an independent certified public accountant to verify the tax credit claim, and the procedures and forms to apply for a credit and for a tax credit transfer certificate necessary for a taxpayer to sell or assign an amount of tax credit under this section. The amount of credits, including tax credits allowed through the granting of tax credit transfer certificates, approved by the director and the authority pursuant to subsection a. of this section and pursuant to section 1 of P.L.2005, c.345 (C.54:10A-5.39) shall not exceed a cumulative total of [$10,000,000] $50,000,000 in [any] fiscal year 2014 and in every fiscal year thereafter, to apply against the tax imposed under N.J.S.54A:1-1 et seq., and the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5).  If the cumulative total amount of credits and tax credit transfer certificates allowed to taxpayers for taxable years or privilege periods commencing during a single fiscal year under this section and subsection a. of section 1 of P.L.2005, c.345 (C.54:10A-5.39) exceeds the amount of credits available in that year, then taxpayers who have first applied for and have not been allowed a credit or tax credit transfer certificate amount for that reason shall be allowed, in the order in which they have submitted an application, the amount of tax credit or certificate on the first day of the next succeeding fiscal year in which tax credits and tax transfer certificates under this section and subsection a. of section 1 are not in excess of the amount of credits available. The Executive Director of the New Jersey Economic Development Authority, in conjunction with the Director of the Division of Taxation shall prepare and submit a report to the Governor and the Legislature on the effectiveness of the credit as an incentive for encouraging film productions to locate in New Jersey which shall be completed before the third taxable year or privilege period in which a credit may be claimed.

     g.    Amounts of tax credits approved to a loan out company not registered to do business in New Jersey shall be subject to New Jersey gross income tax withholding at the applicable rate under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

(cf:  P.L.2007, c.257, s.2)

 

     5.    Section 3 of P.L.2005, c.345 is amended to read as follows:

     3.    [This act] P.L.2005, c.345 shall take effect [immediately] January 12, 2006 and apply to qualified film production expenses incurred on or after [the] that date [of enactment], and sections 1 and 2 of P.L.2005, c.345 shall apply respectively to privilege periods and taxable years beginning on and after July 1, 2005 and shall expire with privilege periods and taxable years first commencing after July 1, [2015] 2020.

 

     6.    This act shall take effect immediately.

 

 

STATEMENT

 

     This bill amends the law commonly known as the “Garden State Film and Digital Media Jobs Act,” New Jersey’s toolkit for attracting film productions, by expanding the existing tax credits for film and digital media production expenses.  It also enhances the benefits provided to the State under the act by requiring taxpayers to partner with certain public colleges in order to qualify for tax credits under the act.

     First, the bill increases the annual program cap for the film production tax credit from $10 million to $50 million and for the digital media production tax credit from $5 million to $10 million. 

     Second, the bill provides for a tax credit equal to 22 percent, instead of the current 20 percent, of eligible production expenses if the expenses represent purchases of goods from businesses located in Urban Enterprise Zones (UEZ) or purchases of services performed by residents of a UEZ.  The bill also extends the digital media tax credit to salaries and wages paid to full-time employees who are not new employees.

     Third, the bill requires a taxpayer applying for a tax credit to enter into a public-private partnership with a four-year public institution of higher education.  The bill requires the Motion Picture and Television Development Commission to adopt rules and regulations establishing the parameters of public-private partnership agreements necessary for a motion picture or television industry production entity to qualify for tax credits.

     Fourth, the bill extends the expiration date of this program from 2015 to 2020.

     The bill recognizes the film production tax credit as an important economic development tool.  An Ernst & Young study of the economic and fiscal impacts of the New Mexico film production tax credit concluded that 2007 film productions generated 9,209 jobs in New Mexico, $487.5 million in additional income, and $891.8 million in additional economic activity.  New Mexico almost broke even on its investment, as $49.4 million in tax credits were almost completely offset by $44.1 million in additional tax collections produced by the credits.  A June 2009 study of Pennsylvania’s Film Production Tax Credit conducted by Economic Research Associates yielded similar positive results.  By strengthening New Jersey’s film production tax credit, these parts of the bill back a proven tool to grow the State’s movie industry and economy as a whole.