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148.546 Application for motion picture or entertainment production tax
incentives -- Tax incentive agreement -- Required terms -- Administrative
fee -- Review -- Verification of expenditure reports -- Annual reports.
(1)
(2)
(3)
(4)
An eligible company shall, at least thirty (30) days prior to incurring any
expenditure for which recovery will be sought, file an application for tax
incentives with the office. The application shall include:
(a) The name and address of the applicant;
(b) The production script or a detailed synopsis of the script;
(c) The anticipated date on which filming or production shall begin;
(d) The anticipated date on which the production will be completed;
(e) The total anticipated qualifying expenditures;
(f) The total anticipated qualifying payroll expenditures for above-the-line
crew;
(g) The total anticipated qualifying payroll expenditures for below-the-line
crew;
(h) The address of a Kentucky location at which records of the production will
be kept;
(i) An affirmation that if not for the incentive offered under KRS 148.542 to
148.546, the eligible company would not film or produce the production in
the Commonwealth; and
(j) Any other information the office may require.
The office shall notify the eligible company within thirty (30) days after
receiving the application of its status.
(a) Upon review of the application and any additional information submitted,
the office shall present the application and its recommendation to the
Tourism Development Finance Authority established by KRS 148.850
which may, by resolution, authorize the execution of a tax incentive
agreement between the Tourism Development Finance Authority and the
approved company.
(b) 1.
The total amount of tax credits authorized by the Tourism
Development Finance Authority during fiscal year 2010-2011 shall
not exceed five million dollars ($5,000,000).
2.
The total amount of tax credits authorized by the Tourism
Development Finance Authority during the fiscal year 2011-2012
shall not exceed seven million five hundred thousand dollars
($7,500,000).
The tax incentive agreement shall include the following provisions:
(a) The duties and responsibilities of the parties;
(b) A detailed description of the motion picture or entertainment production
for which incentives are requested;
(c) The anticipated qualifying expenditures and qualifying payroll
expenditures for both above-the-line and below-the-line crews;
(d) The minimum combined total of qualifying expenditures and qualifying
payroll expenditures necessary for the approved company to qualify for
incentives;
(e) That the approved company shall have no more than two (2) years from
the date the tax incentive agreement is executed to start the motion
picture or entertainment production;
(f) That the approved company shall have no more than four (4) years from
the execution of the tax incentive agreement to complete the motion
picture or entertainment production;
(g) That the motion picture or entertainment production shall not include
obscene materials and shall not negatively impact the economy or the
tourism industry of the Commonwealth;
(h) That the execution of the agreement is not a guarantee of tax incentives
and that actual receipt of the incentives shall be contingent upon the
approved company meeting the requirements established by the tax
incentive agreement;
(i) That the approved company shall submit to the office within one hundred
eighty (180) days of the completion of the motion picture or entertainment
production a detailed cost report of the qualifying expenditures, qualifying
payroll expenditures, and final script;
(j) That the approved company shall provide the office with documentation
that the approved company has withheld income tax as required by KRS
141.310 on all qualified payroll expenditures for which an incentive under
KRS 141.383 and 148.544 is sought;
(k) That, if the office determines that the approved company has failed to
comply with any of its obligations under the tax incentive agreement:
1.
The office may deny the incentives available to the approved
company;
2.
Both the office and the cabinet may pursue any remedy provided
under the tax incentive agreement;
3.
The office may terminate the tax incentive agreement; and
4.
Both the office and the cabinet may pursue any other remedy at law
to which it may be entitled;
(l) That the office shall monitor the tax incentive agreement;
(m) That the approved company shall provide to the office and the cabinet all
information necessary to monitor the tax incentive agreement;
(n) That the office may share information with the cabinet or any other entity
the office determines is necessary for the purposes of monitoring and
enforcing the terms of the tax incentive agreement;
(o) That the motion picture or entertainment production shall contain an
acknowledgment that the motion picture production was filmed or the
touring show was produced in the Commonwealth of Kentucky;
(p) Terms of default;
(q) The method and procedures by which the approved company shall
request and receive the incentive provided under KRS 141.383 and
148.544;
(r)
That the approved company may be required to pay an administrative fee
as authorized under subsection (5) of this section; and
(s) Any other provisions deemed necessary or appropriate by the parties to
the tax incentive agreement.
(5) The office may require the approved company to pay an administrative fee, the
amount of which shall be established by administrative regulation promulgated
in accordance with KRS Chapter 13A. The administrative fee shall not exceed
one-half of one percent (0.5%) of the estimated amount of tax incentive sought
or five hundred dollars ($500), whichever is greater.
(6) Prior to commencement of activity as provided in a tax incentive agreement,
the tax incentive agreement shall be submitted to the Government Contract
Review Committee established by KRS 45A.705 for review, as provided in KRS
45A.695, 45A.705, and 45A.725.
(7) The office shall notify the cabinet upon approval of an approved company. The
notification shall include the name of the approved company, the name of the
motion picture or entertainment production, the estimated amount of qualifying
expenditures, the estimated date on which the approved company will
complete filming or production, and any other information required by the
cabinet.
(8) Within one hundred eighty days (180) days of completion of the motion picture
or entertainment production, the approved company shall submit to the office a
detailed cost report of:
(a) Qualifying expenditures;
(b) Qualifying payroll expenditures for above-the-line crew;
(c) Qualifying payroll expenditures for below-the-line crew; and
(d) The final script.
(9) (a) The office, together with the secretary, shall review all information
submitted for accuracy and shall confirm that all relevant provisions of the
tax incentive agreement have been met.
(b) Upon confirmation that all requirements of the tax incentive agreement
have been met, the office, and the secretary shall review the final script,
and if they determine that the motion picture or entertainment production
does not:
1.
Contain visual or implied scenes that are obscene; or
2.
Negatively impact the economy or the tourism industry of the
Commonwealth;
the office shall forward the detailed cost report to the cabinet for
calculation of the refundable credit.
(10) The cabinet shall verify that the approved company withheld the proper amount
of income tax on qualifying payroll expenditures, and the cabinet shall notify
the office of the total amount of refundable credit available on qualifying
expenditures and qualifying payroll expenditures.
(11) On or before October 1, 2010, and on or before each October 1 thereafter, for
the immediately preceding fiscal year, the office shall report to the Tourism
Development Finance Authority:
(a)
(b)
(c)
(12) (a)
(b)
(c)
(d)
The number of tax incentive agreements that have been executed;
The estimated amount of tax incentives that have been requested under
KRS 141.383 and 148.542 to 148.546; and
The amount of tax incentives approved under KRS 139.538, 141.383,
and 148.542 to 148.546.
By October 1, 2010, and on or before October 1 of each year thereafter,
the authority shall file an annual report with the Legislative Research
Commission. The report shall also be available on the Tourism, Arts and
Heritage Cabinet's Web site.
The report shall include information for all motion picture or entertainment
production projects approved.
The report shall include the following information:
1.
For each approved motion picture or entertainment production
project:
a.
The name of the approved company and a brief description of
the project;
b.
The amount of approved costs included in the agreement; and
c.
The total amount recovered under the tax incentive agreement;
2.
The number of applications for projects submitted during the prior
fiscal year;
3.
The number of projects finally approved during the prior fiscal year;
and
4.
The total dollar amount approved for recovery for all projects
approved during the prior fiscal year, and cumulatively under KRS
141.383 and 148.542 to 148.546 since its inception, by year of
approval.
The information required to be reported under this section shall not be
considered confidential taxpayer information and shall not be subject to
KRS Chapter 131 or any other provisions of the Kentucky Revised
Statutes prohibiting disclosure or reporting of information.
Effective:June 4, 2010
History: Amended 2010 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 7, effective June 4,
2010. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 45, effective June
26, 2009.
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