H.B. 945
GENERAL ASSEMBLY OF NORTH CAROLINA
May 11, 2021
SESSION 2021 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH30421-MCfa-189
Short Title: Esports Incentive Program. (Public)
Sponsors: Representative Saine.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO PROVIDE A PRODUCTION TAX CREDIT FOR ESPORTS EVENTS IN THE
3 STATE.
4 The General Assembly of North Carolina enacts:
5 SECTION 1. G.S. 105-151.29 is reenacted as it existed immediately before its repeal
6 and reads as rewritten:
7 "§ 105-151.29. Credit for qualifying expenses of a production company.
8 (a) Definitions. – The following definitions apply in this section:
9 (1) Esports event. – A scheduled form of multiplayer video game competition,
10 particularly between professional players, individually or as teams, organized
11 by an amateur, collegiate, or professional organization, institution, or
12 association for live or tape-delayed broadcast. An Esports event does not
13 include a live sporting event.
14 (1a) Highly compensated individual. – An individual who directly or indirectly
15 receives compensation in excess of one million dollars ($1,000,000) for
16 personal services with respect to a single production. An individual receives
17 compensation indirectly when a production company pays a personal service
18 company or an employee leasing company that pays the individual.
19 (2) Live sporting event. – A scheduled sporting competition, game, or race that is
20 not originated by a production company, but originated solely by an amateur,
21 collegiate, or professional organization, institution, or association for live or
22 tape-delayed television or satellite broadcast. A live sporting event does not
23 include commercial advertising, an episodic television series, a television
24 pilot, a music video, a motion picture, or a documentary production in which
25 sporting events are presented through archived historical footage or similar
26 footage taken at least 30 days before it is used.
27 (2a) Production. – An Esports event.
28 (3) Production company. – Defined in G.S. 105-164.3.
29 (4) Qualifying expenses. – The sum of the following amounts spent in this State
30 by a production company in connection with a production, less the amount
31 paid in excess of one million dollars ($1,000,000) to a highly compensated
32 individual:
33 a. Goods and services leased or purchased. For goods with a purchase
34 price of twenty-five thousand dollars ($25,000) or more, the amount
35 included in qualifying expenses is the purchase price less the fair
36 market value of the good at the time the production is completed.
*DRH30421-MCfa-189*
 General Assembly Of North Carolina Session 2021
1 b. Compensation and wages on which withholding payments are remitted
2 to the Department of Revenue under Article 4A of this Chapter.
3 c. The cost of production-related insurance coverage obtained on the
4 production. Expenses for insurance coverage purchased from a related
5 member are not qualifying expenses.
6 d. Employee fringe contributions, including health, pension, and welfare
7 contributions.
8 e. Per diems, stipends, and living allowances paid for work being
9 performed in this State.
10 (5) Related member. – Defined in G.S. 105-130.7A.
11 (6) Video game. – A game that employs electronics to create an interactive system
12 between one or more players and a user interface or input device to generate
13 visual feedback on a video display device for the player or players.
14 (b) Credit. – A taxpayer that is a production company and has qualifying expenses of at
15 least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a
16 credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production
17 company's qualifying expenses. For the purposes of this section, in the case of an episodic Esports
18 event television series, an entire season of episodes is one production. The credit is computed
19 based on all of the taxpayer's qualifying expenses incurred with respect to the production, not
20 just the qualifying expenses incurred during the taxable year.
21 (b1) Repealed by Session Laws 2009-529, s. 2, effective January 1, 2011.
22 (c) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and
23 G.S. 105-269.15, a pass-through entity that qualifies for a credit provided in this section does not
24 distribute the credit among any of its owners. The pass-through entity is considered the taxpayer
25 for purposes of claiming a credit allowed by this section. If a return filed by a pass-through entity
26 indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under
27 this section does not affect the entity's payment of tax on behalf of its owners.
28 (d) Return. – A taxpayer may claim a credit allowed by this section on a return filed for
29 the taxable year in which the production activities are completed. The return must state the name
30 of the production, a description of the production, and a detailed accounting of the qualifying
31 expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit
32 by the Secretary before the credit is allowed.
33 (e) Credit Refundable. – If a credit allowed by this section exceeds the amount of tax
34 imposed by this Part for the taxable year reduced by the sum of all credits allowable, the Secretary
35 must refund the excess to the taxpayer. The refundable excess is governed by the provisions
36 governing a refund of an overpayment by the taxpayer of the tax imposed in this Part. In
37 computing the amount of tax against which multiple credits are allowed, nonrefundable credits
38 are subtracted before refundable credits.
39 (f) Limitations. – The amount of credit allowed under this section with respect to a
40 production that is a feature film may not exceed twenty million dollars ($20,000,000). No credit
41 is allowed under this section for any production that satisfies one of the following conditions:
42 (1) It is political advertising.
43 (2) It is a television production of a news program or live sporting event.
44 (3) It contains material that is obscene, as defined in G.S. 14-190.1.
45 (4) It is a radio production.
46 (g) Substantiation. – A taxpayer allowed a credit under this section must maintain and
47 make available for inspection any information or records required by the Secretary of Revenue.
48 The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The
49 Secretary may consult with the North Carolina Film Office of the Department of Commerce and
50 the regional film commissions in order to determine the amount of qualifying expenses.
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 General Assembly Of North Carolina Session 2021
1 (h) Report. – The Department must include in the economic incentives report required by
2 G.S. 105-256 the following information itemized by taxpayer:
3 (1) The location of sites used in a production for which a credit was taken.
4 (2) The qualifying expenses for which a credit was taken, classified by whether
5 the expenses were for goods, services, or compensation paid by the production
6 company.
7 (3) The number of people employed in the State with respect to credits taken.
8 (4) The total cost to the General Fund of the credits taken.
9 (i) Repealed by Session Laws 2006-220, s. 4, effective for taxable years beginning on
10 and after January 1, 2007.
11 (j) NC Film Office. – To claim a credit under this section, a taxpayer must notify the
12 Division of Tourism, Film, and Sports Development in the Department of Commerce of the
13 taxpayer's intent to claim the production tax credit. The notification must include the title of the
14 production, the name of the production company, a financial contact for the production company,
15 the proposed dates on which the production company plans to begin filming the production, and
16 any other information required by the Division. For productions that have production credits, a
17 taxpayer claiming a credit under this section must acknowledge in the production credits both
18 the North Carolina Film Office and the regional film office responsible for the geographic area
19 in which the filming of the production occurred.
20 (k) Sunset. – This section is repealed for qualifying expenses occurring on or after
21 January 1, 2015.2025."
22 SECTION 2. G.S. 105-130.47 is reenacted as it existed immediately before its repeal
23 and reads as rewritten:
24 "§ 105-130.47. Credit for qualifying expenses of a production company.
25 (a) Definitions. – The following definitions apply in this section:
26 (1) Esports event. – A scheduled form of multiplayer video game competition,
27 particularly between professional players, individually or as teams, organized
28 by an amateur, collegiate, or professional organization, institution, or
29 association for live or tape-delayed broadcast. An Esports event does not
30 include a live sporting event.
31 (1a) Highly compensated individual. – An individual who directly or indirectly
32 receives compensation in excess of one million dollars ($1,000,000) for
33 personal services with respect to a single production. An individual receives
34 compensation indirectly when a production company pays a personal service
35 company or an employee leasing company that pays the individual.
36 (2) Live sporting event. – A scheduled sporting competition, game, or race that is
37 not originated by a production company, but originated solely by an amateur,
38 collegiate, or professional organization, institution, or association for live or
39 tape-delayed television or satellite broadcast. A live sporting event does not
40 include commercial advertising, an episodic television series, a television
41 pilot, a music video, a motion picture, or a documentary production in which
42 sporting events are presented through archived historical footage or similar
43 footage taken at least 30 days before it is used.
44 (2a) Production. – An Esports event.
45 (3) Production company. – Defined in G.S. 105-164.3.
46 (4) Qualifying expenses. – The sum of the following amounts spent in this State
47 by a production company in connection with a production, less the amount in
48 excess of one million dollars ($1,000,000) paid to a highly compensated
49 individual:
50 a. Goods and services leased or purchased. For goods with a purchase
51 price of twenty-five thousand dollars ($25,000) or more, the amount
DRH30421-MCfa-189 Page 3
 General Assembly Of North Carolina Session 2021
1 included in qualifying expenses is the purchase price less the fair
2 market value of the good at the time the production is completed.
3 b. Compensation and wages on which withholding payments are remitted
4 to the Department of Revenue under Article 4A of this Chapter.
5 c. The cost of production-related insurance coverage obtained on the
6 production. Expenses for insurance coverage purchased from a related
7 member are not qualifying expenses.
8 d. Employee fringe contributions, including health, pension, and welfare
9 contributions.
10 e. Per diems, stipends, and living allowances paid for work being
11 performed in this State.
12 (5) Related member. – Defined in G.S. 105-130.7A.
13 (6) Video game. – A game that employs electronics to create an interactive system
14 between one or more players and a user interface or input device to generate
15 visual feedback on a video display device for the player or players.
16 (b) Credit. – A taxpayer that is a production company and has qualifying expenses of at
17 least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a
18 credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production
19 company's qualifying expenses. For the purposes of this section, in the case of an episodic Esports
20 event television series, an entire season of episodes is one production. The credit is computed
21 based on all of the taxpayer's qualifying expenses incurred with respect to the production, not
22 just the qualifying expenses incurred during the taxable year.
23 …
24 (f) Limitations. – The amount of credit allowed under this section with respect to a
25 production that is a feature film may not exceed twenty million dollars ($20,000,000). No credit
26 is allowed under this section for any production that satisfies one of the following conditions:
27 (1) It is political advertising.
28 (2) It is a television production of a news program or live sporting event.
29 (3) It contains material that is obscene, as defined in G.S. 14-190.1.
30 (4) It is a radio production.
31 …
32 (k) Sunset. – This section is repealed for qualifying expenses occurring on or after
33 January 1, 2015.2025."
34 SECTION 3.(a) There is transferred from the General Fund to the State Capital and
35 Infrastructure Fund the sum of five million dollars ($5,000,000) in nonrecurring funds for the
36 2021-2022 fiscal year.
37 SECTION 3.(b) There is appropriated from the State Capital and Infrastructure Fund
38 to the Board of Governors of The University of North Carolina the sum of five million dollars
39 ($5,000,000) in nonrecurring funds for the 2021-2022 fiscal year to provide funds for the
40 planning, development, and construction of an Esports Training and Education Center at North
41 Carolina State University.
42 SECTION 4.(a) There is transferred from the General Fund to the State Capital and
43 Infrastructure Fund the sum of two million five hundred thousand dollars ($2,500,000) in
44 nonrecurring funds for the 2021-2022 fiscal year.
45 SECTION 4.(b) There is appropriated from the State Capital and Infrastructure Fund
46 to the Board of Governors of The University of North Carolina the sum of two million five
47 hundred thousand dollars ($2,500,000) in nonrecurring funds for the 2021-2022 fiscal year to
48 provide funds for the purchase of a mobile Esports Training and Education Center.
49 SECTION 5. Sections 3 and 4 of this act become effective July 1, 2021. The
50 remainder of this act is effective for taxable years beginning on or after January 1, 2021, and
51 applies to qualifying expenses occurring on or after that date.
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Statutes affected:
Filed: 105-151.29, 105-130.47
Edition 1: 105-151.29, 105-130.47