Learn: Senate Bill No. 218

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Regular Session, 2007

SENATE BILL NO. 218
BY SENATORS MURRAY, BAJOIE AND SCHEDLER AND REPRESENTATIVE
ARNOLD

TAX/TAXATION.

Grants refundable income tax credits related to musical or theatrical
productions and musical or theatrical facility infrastructure projects. (gov sig)

1 AN ACT
2 To enact R.S. 47:6026, relative to income tax credits; to provide for income tax credits
3 related to musical or theatrical productions and musical or theatrical facility
4 infrastructure projects; and to provide for related matters.
5 Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 47:6026 is hereby enacted to read as follows:
7 §6026. Musical and theatrical production income tax credit
8 A. Purpose. It is the intention of the legislature in creating these five
9 different types of tax credits, one for the production expenses of the producers
10 of performances, a temporary one for transporting their property, one for the
11 payroll of residents, one for employing college and vocational-technical
12 students, and one for the construction, repair, or renovation of facilities related
13 to such productions and performances, to establish and promote Louisiana as
14 the Broadway of the South: that is, one of the primary places in the United
15 States in which all the classic disciplines in the performing arts from creation
16 to presentation are present and thriving, including touring Broadway-bound
17 productions and productions of local artists. The creation of such a cultural

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center will 1 enhance economic development because it fits well with the state's
2 reputation as a tourist destination, will offer many and varied employment
3 opportunities, and in conjunction with the available federal and state incentives,
4 will be an attraction for new and relocating businesses and will provide for the
5 reinventing of countless abandoned properties as either performance or
6 rehearsal spaces, professional housing for artists, production support services
7 and facilities, back-end production and marketing headquarters, or retail,
8 restaurant, and entertainment spaces. Such a cultural center will also spur
9 educational development: Louisiana colleges, universities, and vocational10
technical schools will be able to offer talented undergraduate and graduate
11 students from this state, other states, and around the world a real world
12 opportunity to participate in degree programs across the state that work on the
13 various productions in accounting, law, management, and marketing and to fill
14 arts-related positions such as actors, writers, producers, stage hands, and
15 directors, as well as technicians working on all aspects of the production such
16 as lighting, sound, and actual stage production and operations. Careers now
17 possible only in California and New York will keep our children here.
18 B. Definitions. For the purposes of this Section:
19 (1) "Base investment" means expenditures for the following for which
20 a credit is granted in this Section, or investments made by a company or
21 financier which are for such expenditures:
22 (a) Production expenditures for a state-certified musical or theatrical
23 production.
24 (b) Expenditures in the state for the construction, repair, or renovation
25 of a state-certified musical or theatrical facility infrastructure project.
26 (2) "Company"or "financier" means any individual, firm, partnership,
27 limited liability company, joint venture, association, corporation, estate, trust,
28 or other entity, group, or combination acting as a unit, and the plural as well as
29 the singular number.

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(3) 1 "Expended in the state" means expenditures for tangible property to
2 be used within the state; and in the case of services, means expenditures for
3 services performed within the state; and in the case of intangible property,
4 means the acquisition of permits, licenses, or other rights related to state5
certified musical or theatrical productions or state-certified musical or
6 theatrical facility infrastructure projects used within the state.
7 (4) "Musical or theatrical production" means the producing, rehearsing,
8 marketing, administration, recording, performing and/or filming of a live
9 musical or theatrical performance in the state before live audiences the costs of
10 which are not certified for other tax credits provided for in Louisiana law,
11 whether or not there is a charge for admission. Such performances shall
12 include, but not be limited to drama, comedy, comedy revue, opera, ballet, jazz,
13 cabaret and variety entertainment.
14 (5) "Payroll" means all salary, wages, and other compensation, including
15 related benefits for services performed in Louisiana.
16 (6)(a) "Production expenditures" means development, production, or
17 operating expenditures in this state for a state-certified production, including,
18 but not limited to expenditures for the following:
19 (i) Set construction and operation, including special and visual effects.
20 (ii) Costumes, wardrobes, make-up, accessories, and related services.
21 (iii) Costs associated with sound, lighting, staging, and related services
22 and materials.
23 (iv) Payroll.
24 (v) Rental of facilities and equipment and leasing of vehicles.
25 (vi) Food and lodging.
26 (vii) Airfare for people to, from, or within the state shall be considered
27 production expenditures if purchased through a Louisiana-based travel agency
28 or travel company.
29 (viii) Music performed live in the state or recorded in the state, including

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the costs of sound, 1 digital, analogue recordings or the recording of music by any
2 other means, and the mixing of such recordings if performed or recorded by a
3 musician who is a resident of Louisiana, a group of musicians based in
4 Louisiana, or if contracted for through a Louisiana-based agency. Such costs
5 incurred when a group of musicians based in Louisiana provide the musical
6 accompaniment for non-resident performers, or the costs of music directors,
7 conductors, or composers who are non-residents shall also be included as a
8 production expenditure.
9 (ix) Preproduction, production, and postproduction expenditures in this
10 state that are directly incurred in connection with filming such production
11 which expenditures do not otherwise qualify as a production expenditure in this
12 Paragraph, including but not limited to costs associated with the following:
13 photography and sound synchronization, lighting, and related services and
14 materials; editing and related services; digital or tape editing, film processing,
15 transfer of film to tape or digital format, sound mixing, special and visual
16 effects.
17 (x) Administration and professional services, including but not limited
18 to management, accounting, and legal services incurred in connection with a
19 state-certified musical or theatrical production.
20 (xi) The costs of insurance or bonding incurred in connection with a
21 state-certified musical or theatrical production, if purchased through a
22 Louisiana-based insurance agency.
23 (xii) Preproduction and postproduction expenditures for marketing and
24 distribution within and without the state, if purchased through an agency which
25 has offices in Louisiana, if the creators of materials used in such marketing are
26 residents of Louisiana, or if the expenditures to create materials used in such
27 marketing occur within Louisiana.
28 (xiii) The costs of acquiring permits, licenses, or other rights related to
29 state-certified musical or theatrical productions.

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(xiv) 1 Similar production expenditures in the state as determined by rule.
2 (b) "Production expenditures" shall not include any indirect costs , any
3 expenditures later reimbursed by a third party, or any amounts that are paid
4 to persons or entities as a result of their participation in profits from the
5 exploitation of the production.
6 (7)(a) "Resident" or "resident of Louisiana" means a natural person
7 and, for the purpose of determining eligibility for the tax incentives provided
8 by this Section, a person who qualifies for any of the following reasons:
9 (i) The person is domiciled in the state of Louisiana.
10 (ii) The person maintains a permanent place of abode within the state
11 and spends in the aggregate more than six months of each year within the state.
12 (iii) The person pays taxes to the state on the amount of money paid to
13 such person for which a credit is sought pursuant to this Section.
14 (b) A company owned or controlled by such a person and which lends the
15 services of such a person for a state-certified musical or theatrical production
16 shall also be deemed a resident if such company is organized or authorized to
17 do business in the state and such company pays taxes to the state on the amount
18 of money paid to such company for such services of such person.
19 (8) "State-certified musical or theatrical facility infrastructure project"
20 or "state-certified infrastructure project" means a capital infrastructure
21 project in the state related to the production or performance of musical or
22 theatrical productions as defined in this Section, and any expenditures in the
23 state related to the construction, repair, or renovation of such project, which are
24 certified, verified, and approved as provided for in this Section.
25 (9)(a) "State-certified musical or theatrical production" means a musical
26 or theatrical production, or a series of productions occurring over the course
27 of a twelve-month period, and the recording or filming of such production,
28 which originate, are developed, or have their initial public performance before
29 a paying audience within Louisiana, or which have their United States debut

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1 within Louisiana, and the production expenditures, expenditures for the payroll
2 of residents, transportation expenditures, and expenditures for employing
3 college and vocational-technical students related to such production or
4 productions, that are certified, verified, and approved as provided for in this
5 Section.
6 (b) A "state-certified musical or theatrical production" which shall be
7 eligible for re-certification and the credit provided for in this Section shall
8 include a previously certified musical or theatrical production which received
9 a credit pursuant to this Section, and which is otherwise eligible pursuant to this
10 Section, which returns for performances within the state after being performed
11 on Broadway.
12 (10)(a) "Transportation expenditures" means expenditures for the
13 packaging and crating and transportation both to the state for use in a state14
certified musical or theatrical production of sets, costumes or other tangible
15 property constructed or manufactured out of state, and/or from the state after
16 use in a state-certified musical or theatrical production of sets, costumes, or
17 other tangible property constructed or manufactured in this state. Such term
18 shall include the packaging, crating, and transporting of property and
19 equipment used for special and visual effects, sound, lighting, and staging,
20 costumes, wardrobes, make-up and related accessories and materials, as well
21 as any other performance or production-related property and equipment;
22 provided that transportation services are purchased through a company which
23 has a significant business presence in the state.
24 (b) "Transportation expenditures" shall not include any costs to
25 transport property and equipment to be used only for filming and not in a state26
certified production, any indirect costs, any expenditures that are later
27 reimbursed by a third party, or any amounts that are paid to persons or entities
28 as a result of their participation in profits from the exploitation of the
29 production.

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1 C. Income tax credits for state-certified productions and state-certified
2 musical or theatrical facility infrastructure projects:
3 (1) There is hereby authorized the following types of credits against the
4 state income tax:
5 (a)(i) A base investment credit may be granted for the following:
6 (aa) For certified, verified, and approved production expenditures for a
7 state-certified musical or theatrical production, or for investments made by a
8 company or a financier in such production which are, in turn, expended for
9 such production expenditures.
10 (bb) For certified, verified, and approved expenditures in the state for
11 the construction, repair, or renovation of a state-certified musical or theatrical
12 facility infrastructure project, or for investments made by a company or a
13 financier in such infrastructure project which are, in turn, expended for such
14 construction, repair, or renovation.
15 (ii) The base investment credit shall be for the following amounts:
16 (aa) If the total base investment is greater than one hundred thousand
17 dollars and less than or equal to three hundred thousand dollars, a company
18 shall be allowed a tax credit of ten percent of the base investment made by that
19 company.
20 (bb) If the total base investment is greater than three hundred thousand
21 dollars and less than or equal to one million dollars, a company shall be allowed
22 a tax credit of twenty percent of the base investment made by that company.
23 (cc) If the total base investment is greater than one million dollars, a
24 company shall be allowed a tax credit of twenty-five percent of the base
25 investment made by that company.
26 (b) Because the legislature hereby determines that the state lacks the
27 facilities and services necessary to provide adequate resources for the
28 construction of sets, costumes and related property needed for productions and
29 performances in the state, an additional transportation expenditure tax credit

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1 shall be allowed for the following percentages of certified, verified, and
2 approved transportation expenditures as defined in Paragraph (B)(10) of this
3 Section; provided that transportation services are purchased through a
4 company which has a significant business presence in the state:
5 (i) One hundred percent of such amounts incurred through calendar
6 year 2010.
7 (ii) Fifty percent of such amounts incurred during the calendar year
8 2011.
9 (iii) Twenty-five percent of such amounts incurred during the calendar
10 year 2012.
11 (iv) No such transportation expenses incurred after December 31, 2012
12 shall be eligible for such credit.
13 (c) An additional tax credit of one tenth of one percent of the amount
14 expended to employ students enrolled in Louisiana colleges, universities, and
15 vocational-technical schools in a state certified musical or theatrical production
16 in arts-related positions, such as an actor, writer, producer, stage hand, or
17 director, or as a technician working on aspects of the production such as
18 lighting, sound, and actual stage work, or working indirectly on the production
19 in accounting, law, management, and marketing.
20 (d) To the extent that base investment is expended on payroll for
21 Louisiana residents employed in connection with a state-certified musical or
22 theatrical production, except for the students provided for in Subparagraph (c)
23 of this Paragraph, or the construction of a state-certified musical or theatrical
24 facility infrastructure project, a company shall be allowed an additional tax
25 credit of ten percent of such payroll. However, if the amount paid to any one
26 person exceeds one million dollars, the additional credit shall not include any
27 amount paid to that person that exceeds one million dollars.
28 (2)(a) The tax credits shall be earned each calendar year to the extent the
29 Louisiana Department of Economic Development verifies in writing that

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1 expenditures qualifying for a credit pursuant to this Section have been
2 expended for the calendar year in accordance with the estimates of such
3 expenditures for the calendar year set forth in the certification of the
4 production or project.
5 (b) No credit shall be allowed under this Section for any expenditures for
6 which a financier receives a credit pursuant to this Section, or for which a credit
7 is granted under R.S. 47:6007 or 6023. In addition, a state-certified production
8 or state-certified infrastructure project which receives tax credits pursuant to
9 the provisions of this Chapter shall not be eligible to receive the rebates
10 provided for in R.S. 51:2451 through 2461 in connection with the activity for
11 which the tax credits were received.
12 (3) Tax credits associated with a state-certified musical or theatrical
13 production or a state-certified musical or theatrical facility infrastructure
14 project shall never exceed the total base investment in that production or
15 infrastructure project and transportation expenditures.
16 D.(1) The credit shall be allowed against individual or corporate income
17 tax of the companies or financiers of the production or infrastructure project
18 in accordance with their share of the credit as provided for in the application
19 for certification for the production or infrastructure project. A company or
20 financier may on a one-time basis, transfer the credit, and/or any refund of an
21 overpayment, to an individual or other entity including without limitation a
22 bank or other lender, provided that the transfer shall not be effective until
23 receipt by the Department of Revenue of written notice of such transfer. The
24 credit shall be allowed for the taxable period in which expenditures eligible for
25 a credit are expended. Any excess of the credit over the income tax liability
26 against which the credit may be applied shall constitute an overpayment, as
27 defined in R.S. 47:1621(A), and the secretary shall make a refund of such
28 overpayment from the current collections of the taxes imposed by Chapter 1 of
29 Subtitle II of this Title, as amended. The right to a refund of any such

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1 overpayment shall not be subject to the requirements of R.S. 47:1621(B).
2 (2) Application of the credit.
3 (a) Individuals, estates, and trusts shall claim their share of any credit
4 on their income tax return.
5 (b) Entities not taxed as corporations shall claim their share of any credit
6 on the returns of the partners or members.
7 (c) Corporate partners or members shall claim their share of any credit
8 on their corporation income tax returns.
9 (d) Individual partners or members shall claim their share of any credit
10 on their individual income tax returns.
11 (e) Partners or members that are estates or trusts shall claim their share
12 of any credit on their fiduciary income tax returns.
13 E. Certification and administration:
14 (1)(a)(i) The secretary of the Department of Economic Development, the
15 commissioner of administration, and the office of the governor shall determine
16 which musical or theatrical productions and which musical or theatrical facility
17 infrastructure projects shall be certified pursuant to this Section through the
18 adoption and promulgation of rules by the department, in consultation with the
19 commissioner and the office of the governor. The rules shall also provide for the
20 manner in which the department shall decide which expenditures for such
21 productions or infrastructure projects will qualify for the credits provided for
22 in this Section.
23 (ii) Prior to adoption, these rules shall be approved by the House
24 Committee on Ways and Means and the Senate Committee on Revenue and
25 Fiscal Affairs.
26 (b) State certification shall not be granted to a production or
27 infrastructure project by any person or company, or financed by any person or
28 company, or any company or financier owned, affiliated, or controlled, in whole
29 or in part, by any company or person, which is in default on a loan made by the

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state or a loan 1 guaranteed by the state, or which has ever declared bankruptcy
2 under which an obligation of the company or person to pay or repay public
3 funds or monies was discharged as a part of such bankruptcy.
4 (c) When determining which musical or theatrical productions or
5 musical or theatrical facility infrastructure projects qualify for certification, the
6 Louisiana Department of Economic Development, the commissioner of
7 administration, and the office of the governor shall take the following factors
8 into consideration:
9 (i) The contribution of the production or infrastructure project to
10 establishing the state as a cultural center for all the classic disciplines in the
11 performing arts from creation to presentation, for touring productions as well
12 as local artists.
13 (ii) The impact of the production or infrastructure project on the
14 employment of Louisiana residents.
15 (iii) The extent to which students in Louisiana colleges, universities, and
16 vocational-technical schools will have an opportunity to work in a production
17 in an arts-related position, such as an actor, writer, producer, stage hand, or
18 director, or as a technician working on aspects of the production such as
19 lighting, sound, and actual stage work, or working indirectly on the production
20 in accounting, law, management, and marketing.
21 (iv) The impact of the production or infrastructure project on the overall
22 economy of the state including the manner in which available federal and state
23 incentives will be utilized in the financing or operation of the infrastructure
24 project.
25 (v) The availability and kind of musical or theatrical facilities within the
26 area in which a musical or theatrical facility infrastructure project is proposed
27 to be located sufficient to provide production and presentation of all the classic
28 disciplines in the performing arts.
29 (d) Upon approval by the Louisiana Department of Economic

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1 Development, the commissioner of administration, and the office of the
2 governor, the department shall initially certify a production or project as a
3 state-certified production or state-certified infrastructure project and send
4 notice of such certification to the applicant and to the secretary of the
5 Department of Revenue. The initial certification shall include the companies
6 and/or financiers to whom the credits shall be allocated and the estimated
7 amounts of the credits to be allocated to each and a unique identifying number
8 for the state-certified production or state-certified infrastructure project.
9 (e) Prior to the final certification of a production or infrastructure
10 project, the applicant shall submit to the Louisiana Department of Economic
11 Development a report of the final amount of expenditures qualifying for credits
12 pursuant to this Section, which report the Louisiana Department of Economic
13 Development may require to be prepared by an independent certified public
14 accountant. The Louisiana Department of Economic Development shall review
15 the report and, upon the consent of the commissioner of administration and the
16 office of the governor, shall issue a final tax credit certification letter, certifying
17 the applicant and indicating the type and amount of tax credits for which the
18 applicant or other companies or financiers are eligible pursuant to this Section.
19 (f) An applicant applying for the credits shall be required to reimburse
20 the Louisiana Department of Economic Development for any audits required
21 in relation to granting the certification or tax credits.
22 (2)(a) Application. An applicant for the tax credit shall submit an
23 application for initial certification to the Louisiana Department of Economic
24 Development that includes the following information:
25 (i) The application for state-certified productions shall include:
26 (aa) A preliminary budget including estimated Louisiana payroll,
27 estimated transportation expenditures, and estimated base investment,
28 including the manner in which available federal and state incentives will be
29 utilized in the financing or operation of the production.

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1 (bb) A general description of the production and performance which
2 may, at the request of the department, include the book, libretto, score, or
3 concept, and plans for recording and/or filming such production.
4 (cc) A list of the principal creative elements including the cast, musicians,
5 headline performers, conductor, producer, or director.
6 (dd) A possibility of offering students in Louisiana colleges, universities,
7 and vocational-technical schools an opportunity to work directly in the
8 production in an arts-related position, including a description of possible job or
9 trainee positions working with professional actors, writers, producers, stage
10 hands, directors, or technicians working on all aspects of the production such
11 as lighting, sound, and actual stage work, or working indirectly on the
12 production with professionals in accounting, law, management, and marketing.
13 (ee) Estimated dates for start and completion of rehearsals before paid
14 performances and the estimated dates of performances in the state.
15 (ff) Plans, if any, for a national tour or for any performances in other
16 states.
17 (gg) The companies and/or financiers to whom the credits shall be
18 allocated and the estimated amounts of the credits to be allocated to each.
19 (hh) A discussion of any other reasons why the applicant believes the
20 production should be considered a state-certified production as defined in this
21 Section.
22 (ii) The application for state-certified musical or theatrical facility
23 infrastructure projects shall include:
24 (aa) A detailed description of the infrastructure project.
25 (bb) A preliminary budget, including the manner in which available
26 federal and state incentives will be utilized in the financing or operation of the
27 infrastructure project.
28 (cc) The companies and/or financiers to whom the credits shall be
29 allocated and the estimated amounts of the credits to be allocated to each.

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1 (dd) A discussion of why the project should be considered a
2 state-certified infrastructure project as defined in this Section.
3 (b) Additional information may be requested if deemed necessary by the
4 Louisiana Department of Economic Development.
5 (3) The secretary of the Louisiana Department of Economic
6 Development, in consultation with the Department of Revenue, shall adopt and
7 promulgate such rules and regulations as are necessary to carry out the intent
8 and purposes of this Section in accordance with the general guidelines provided
9 herein.
10 F.(1) Recapture of credits. If the office of the governor, the Department
11 of Economic Development, or the Department of Revenue find that funds for
12 which a taxpayer received credits according to this Section were not expended
13 for expenditures qualifying for a credit as provided in this Section, then the
14 taxpayer's state income tax for such taxable period shall be increased by such
15 amount necessary for the recapture of credit provided by this Section.
16 (2)(a) Recovery of credits by Department of Revenue. Credits granted
17 to a taxpayer, but later disallowed, may be recovered by the secretary of the
18 Department of Revenue through any collection remedy authorized by R.S.
19 47:1561 and initiated within three years from December thirty-first of the year
20 in which the credit was taken.
21 (b) The only interest that may be assessed and collected on recovered
22 credits is interest at a rate three percentage points above the rate provided in
23 R.S. 9:3500(B)(1), which shall be computed from the original date of the return
24 on which the credit was taken.
25 (3) The provisions of this Paragraph are in addition to and shall not limit
26 the authority of the secretary of the Department of Revenue to assess or to
27 collect under any other provision of law.
28 Section 2. The credits provided for in this Act shall be applicable to expenditures
29 occurring on or after the effective date of this Act.

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Section 3. This Act shall 1 become effective upon signature by the governor or, if not
2 signed by the governor, upon expiration of the time for bills to become law without signature
3 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
4 vetoed by the governor and subsequently approved by the legislature, this Act shall become
5 effective on the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Riley Boudreaux.
DIGEST
Present law provides income tax credits for the production of motion pictures, sound
recordings, and digital interactive media.
Proposed law provides five types of corporate or individual refundable income tax credits
for "state-certified musical or theatrical productions" and for "state-certified musical or
theatrical facility infrastructure projects."
"BASE INVESTMENT CREDITS" FOR PRODUCTIONS AND INFRASTRUCTURE
(1) A "base investment credit" is authorized for "production expenditures" for a "statecertified musical or theatrical production," or for investments made by a person in such production which are, in turn, expended for such production expenditures.
"Musical or theatrical production" is defined as producing, rehearsing, marketing,
administration, recording, performing and/or filming of a live musical or theatrical
performance in the state before live audiences the costs of which are not certified for
other tax credits provided for in Louisiana law, whether or not there is a charge for
admission. Such performances include, but are not limited to drama, comedy,
comedy revue, opera, ballet, jazz, cabaret and variety entertainment.

A "state-certified musical or theatrical production" is defined as such a production,
or a series of productions occurring over the course of a twelve-month period, and
the recording or filming of such production, which originate, are developed, or have
their initial public performance before a paying audience within Louisiana, or which
have their United States debut within Louisiana. The "production expenditures,"
expenditures for the payroll of residents, "transportation expenditures," and
expenditures for employing college and vo-tech students related to such production
or productions, that are "certified, verified, and approved" as provided for in the
proposed law are included for the credit.

In addition, a "state-certified musical or theatrical production" is eligible for recertification and the credit if it is a previously certified musical or theatrical
production which received a credit and which is otherwise eligible and which returns
for performances within the state after being performed on Broadway.
(2) A "base investment credit" for "expenditures in the state" for the construction, repair, or renovation of a "state-certified musical or theatrical facility infrastructure project," or for investments made by a financier in such infrastructure project which are, in turn, expended for such construction, repair, or renovation.

"State-certified musical or theatrical facility infrastructure project" is defined as a

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capital infrastructure project in the state related to the production or performance of
musical or theatrical productions as defined in the proposed law, and any
"expenditures in the state" related to the construction, repair, or renovation of such
project, which are certified, verified, and approved as provided for in the proposed
law.

"Expended in the state" for both productions and infrastructure projects is defined as
expenditures for tangible property to be used within the state; and in the case of services, expenditures for services performed within the state; and in the case of "intangible property," means the acquisition of permits, licenses, or other rights related to such productions or infrastructure projects used within the state.
The "base investment credit" provides the following amounts of income tax credits:
(a) If the total "base investment" for a production or an infrastructure project is between $100,000 and $300,000, ten percent of the "base investment."
(b) If the total "base investment" is between $300,000 and $1 million, twenty percent of the base investment.
(c) If the total base investment is greater than $1 million, twenty-five percent of the
"base investment." "Base investment" is defined for infrastructure projects as "expenditures in the state" for the construction, repair, or renovation of a state-certified musical or theatrical facility infrastructure project. "Base investment" is defined for productions as expenditures or investments made by a person for "production expenditures" for a state-certified musical or theatrical production.
Such "production expenditures" are defined as development, production, or operating
"expenditures in this state" for a state-certified production, including, but not limited to expenditures for the following:
(a) Set construction and operation, including special and visual effects.
(b) Costumes, wardrobes, make-up, accessories, and related services.
(c) Costs associated with sound, lighting, staging, and related services and materials.
(d) Payroll, which is defined as all salary, wages, and other compensation, including
related benefits for services performed in Louisiana.
(e) Rental of facilities and equipment and leasing of vehicles.
(f ) Food and lodging.
(g) Airfare for people to, from, or within the state, which are considered "production
expenditures" if purchased through a Louisiana-based travel agency or travel
company.
(h) Music performed live in the state or recorded in the state, including the costs of
sound, digital, analogue recordings or the recording of music by any other means,
and the mixing of such recordings if performed or recorded by a musician who is a
resident of Louisiana, a group of musicians based in Louisiana, or if contracted for
through a Louisiana-based agency. Such costs incurred when a group of musicians
based in Louisiana provide the musical accompaniment for non-resident performers,
or the costs of music directors, conductors, or composers who are non-residents are

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also included as a "production expenditure."

(i) Preproduction, production, and postproduction expenditures in this state that are
directly incurred in connection with filming such production which expenditures do
not otherwise qualify as a "production expenditure," including but not limited to
costs associated with the following: photography and sound synchronization,
lighting, and related services and materials; editing and related services; digital or
tape editing, film processing, transfer of film to tape or digital format, sound mixing,
special and visual effects.
(j) Administration and professional services, including but not limited to management,
accounting, and legal services incurred in connection with a state-certified musical
or theatrical production.
(k) The costs of insurance or bonding incurred in connection with a state-certified
musical or theatrical production, if purchased through a Louisiana-based insurance
agency.
(l) Preproduction and postproduction expenditures for marketing and distribution within
and without the state, if purchased through an agency which has offices in Louisiana,
if the creators of materials used in such marketing are "residents of Louisiana" (see
definition below), or if the expenditures to create materials used in such marketing
occur within Louisiana.
(m) The costs of acquiring permits, licenses, or other rights related to state-certified
musical or theatrical productions.
(n) Similar production expenditures in the state as determined by rule.
"Production expenditures" may not include any indirect costs, any expenditures later
reimbursed by a third party, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.

"TRANSPORTATION EXPENDITURES" CREDIT FOR PRODUCTIONS
Proposed law grants an additional transportation expenditure credit for the following
percentages of certified, verified, and approved "transportation expenditures"; provided that transportation services are purchased through a company which has a significant business presence in the state:

(1) 100% of such amounts incurred through calendar year 2010.
(2) 50% incurred during the calendar year 2011.
(3) 25% incurred during the calendar year 2012.
(4) No credit for transportation expenses incurred after December 31, 2012.

"Transportation to the state expenditures" is defined as expenditures for the packaging and crating and transportation both to the state for use in a state-certified musical or theatrical production of sets, costumes, or other tangible property constructed or manufactured out of state, and/or transportation from the state after use in such a production of such property constructed or manufactured in the state. Such term also includes packaging, crating, and transporting property and equipment used for special and visual effects, sound, lighting, and staging, and to transport costumes, wardrobes, make-up and related accessories and materials, as well as any other performance or production-related property and equipment; provided that transportation services are purchased through a company which has a significant business presence in the state.

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Excluded from "transportation expenditures" are any costs to transport property and
equipment to be used only for filming and not in a state-certified production, any indirect costs, any expenditures that are later reimbursed by a third party, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production.

EMPLOYMENT OF STUDENTS TAX CREDIT FOR PRODUCTIONS
Proposed law grants an additional tax credit of one tenth of one percent of the amount expended to employ students enrolled in Louisiana colleges, universities, and vo-tech schools in a state-certified production in arts-related positions, such as actor, writer, producer, stage hand, or director, or as a technician working on aspects of the production such as lighting, sound, and actual stage work, or working indirectly on the production in accounting, law, management, and marketing.

"PAYROLL OF RESIDENTS" CREDIT FOR PRODUCTIONS AND INFRASTRUCTURE PROJECTS
Proposed law grants an additional tax credit of 10% of base investment that is expended on payroll for Louisiana residents employed in connection with a state-certified musical or theatrical production, except for the students, or the construction of a state-certified musical or theatrical facility infrastructure project. However, if the amount paid to any one person exceeds $1 million, the additional credit may not include any amount paid to that person that exceeds $1 million.

"Resident of Louisiana" is defined as a person who qualifies for any of the following
reasons:
(1) The person is domiciled in the state of Louisiana.
(2) The person maintains a permanent place of abode within the state and spends in theaggregate more than 6 months of each year within the state.
(3) The person pays taxes to the state on the amount of money paid to such person forwhich a credit is sought. A "resident" is also defined as a company owned or controlled by such a person and which lends the services of such a person for a state-certified production, if;
(1) The company is organized or authorized to do business in the state.
(2) The company also pays taxes to the state on the amount of money paid to such
company for such services of such person.

DETERMINING THE TAX CREDIT AMOUNT AND REFUNDS
Proposed law provides that the tax credits are earned each calendar year to the extent DED verifies in writing that base qualifying expenditures have been expended for the calendar year in accordance with the estimates of base investment and transportation to the state expenditures for the calendar year set forth in the "certification" of the production or project. No credit is allowed for any expenditures for which a financier receives a credit pursuant to the proposed law, or for which a credit is granted under R.S. 47:6007 [movie credits] or 6023 [sound recording credits]. In addition, a state-certified production or state-certified
infrastructure project which receives tax credits pursuant to the provisions of this Chapter shall not be eligible to receive the quality jobs rebates provided for in R.S. 51:2451 through 2461 in connection with the activity for which the tax credits were received.

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Tax credits associated with a state-certified production or a state-certified infrastructure project can never exceed the total base investment in that production or infrastructure project and transportation to the state expenditures. Proposed law provides that the credit is allowed against individual or corporate income tax
of the "companies" or "financiers" [defined as people or other entities] of the production or infrastructure project in accordance with their share of the credit as provided for in the application for "certification" for the production or infrastructure project. Proposed law authorizes the transfer of the credit on a one-time basis, and/or any refund of an overpayment, to an individual or other entity, provided that the transfer is not effective until receipt by DOR. Proposed law allows the credit for the taxable period in which expenditures eligible for a credit are expended. Any excess of the credit over the income tax constitutes an overpayment and a refund of the overpayment is made from the current collections of income taxes.
Proposed law delineates the way in which various taxpayers may take the credit.

CERTIFICATION AND ADMINISTRATION

Proposed law provides that the secretary of the DED, the commissioner of administration, and the office of the governor determines which productions and which infrastructure projects are to be "certified" through the adoption and promulgation of rules by DED, in consultation with the commissioner and the office of the governor. The rules must also provide for the manner in which DED will decide which expenditures for such productions or infrastructure projects will qualify for the credits. Prior to adoption, the rules must be approved by House Ways and Means and Senate Revenue and Fiscal Affairs. Proposed law prohibits granting certification to a production or infrastructure project by any person or company, or financed by any person or company, or any company or financier owned, affiliated, or controlled, in whole or in part, by any company or person, which is in default on a loan made by the state or a loan guaranteed by the state, or which has ever declared bankruptcy under which an obligation of the company or person to pay or repay public funds or monies was discharged as a part of such bankruptcy.

Proposed law requires DED, the commissioner, and the office of the governor to take the following factors into consideration when determining whether to certify:
(1) The contribution of the production or infrastructure project to establishing the state as a cultural center for all the classic disciplines in the performing arts from creation to presentation, for touring productions as well as local artists.
(2) The impact of the production or infrastructure project on the employment of
Louisiana residents.
(3) The extent to which students in Louisiana colleges, universities, and vo-tech schools will have an opportunity to work directly or indirectly in a production.
(4) The impact of the production or infrastructure project on the overall economy of the state including the manner in which available federal and state incentives will be
utilized in the financing or operation of the infrastructure project.
(5) The availability and kind of musical or theatrical facilities within the area in which
an infrastructure project is proposed to be located sufficient to provide production
and presentation of all the classic disciplines in the performing arts.
Upon approval by DED, the commissioner, and the office of the governor, DED "initially certifies" a production or project as a state-certified production or state-certified infrastructure project and sends notice of such certification to the applicant and to the

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secretary of DOR. The "initial certification" must include the companies and/or financiers to whom the credits are to be allocated and the estimated amounts of the credits to be allocated to each and a unique identifying number for the state-certified production or statecertified infrastructure project.

Prior to "final certification" of a production or infrastructure project, the applicant mustsubmit to DED a report of the final amount of qualifying expenditures, which report DEDmay require to be prepared by an independent CPA. DED must review the report and, upon the consent of the commissioner and the office of the governor, issue a "final tax credit certification letter," certifying the applicant and indicating the type and amount of tax credits for which the applicant or other companies or financiers are eligible. An applicant is required to reimburse DED for any audits required in relation to granting the certification or tax credits.

APPLICATION
Proposed law requires an applicant for the tax credit to submit an application for "initial certification" to DED that includes the following information:

For state-certified productions:
(1) A preliminary budget including estimated Louisiana payroll, estimated transportation expenses, and estimated base investment, including the manner in which available federal and state incentives will be utilized in the financing or operation of the production.
(2) A general description of the production and performance which may, at the request of the department, include the book, libretto, score, or concept, and plans for
recording and/or filming such production.
(3) A list of the principal creative elements including the cast, musicians, headline
performers, conductor, producer, or director.
(4) A "possibility of offering" students in Louisiana colleges, universities, and
vocational-technical schools will have an opportunity to work directly in the
production, or indirectly on the production with professionals in accounting, law,
management, and marketing.
(5) Estimated dates for start and completion of rehearsals before paid performances and the estimated dates of performances in the state.
(6) Plans, if any, for a national tour or for any performances in other states.
(7) The companies and/or financiers to whom the credits shall be allocated and the
estimated amounts of the credits to be allocated to each.
(8) A discussion of any other reasons why the production should be considered a
state-certified production.

For infrastructure projects:
(1) A detailed description of the infrastructure project.
(2) A preliminary budget, including the manner in which available federal and state
incentives will be utilized in the financing or operation of the infrastructure project.
(3) The companies and/or financiers to whom the credits shall be allocated and the
estimated amounts of the credits to be allocated to each.

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(4) A discussion of why the project should be considered a state-certified infrastructure project as defined in this Section.

Proposed law provides that additional information may be requested if deemed necessary by DED.

Proposed law requires the secretary of DED, in consultation with DOR, to promulgate such rules and regulations as are necessary to carry out the intent and purposes of the proposed law.

RECAPTURE OF TAX CREDITS
Proposed law provides that if funds for which credits were received were not expended for "production expenditures" or were not "expended in the state" for an infrastructure project, then the taxpayer's income tax for such taxable period must be increased by the amount necessary for the recapture of the credit. They may be recovered through any collection remedy authorized by R.S. 47:1561 and initiated within three years from December thirtyfirst of the year in which the credit was taken. Interest is assessed at a rate of three percentage points above the legal interest rate in R.S. 9:3500(B)(1), which must be computed from the original date of the return on which the credit was taken. The credits are applicable to expenditures occurring on or after the effective date of the proposed law.

Effective upon signature of the governor or lapse of time for gubernatorial action and
applicable to expenditures incurred after that date.
(Adds R.S. 47:6026)

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