Bill Summary – FastDemocracy

LB1022                                                                                  LB1022
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                                LEGISLATURE OF NEBRASKA
                             ONE HUNDRED EIGHTH LEGISLATURE
                                       SECOND SESSION
                        LEGISLATIVE BILL 1022
     Introduced by Sanders, 45.
     Read first time January 05, 2024
     Committee: Revenue
 A BILL FOR AN ACT relating to film incentives; to amend section 81-1220,
         Revised Statutes Cumulative Supplement,        2022,    and sections
         77-2715.07, 77-2717, and 77-2734.03, Revised Statutes Supplement,
         2023; to adopt the Cast and Crew Nebraska Act; to provide for tax
         credits;   to provide for grants;    to define terms;   to harmonize
         provisions; and to repeal the original sections.
     Be it enacted by the people of the State of Nebraska,
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         Section 1.       Sections 1 to 13 of this act shall be known and may be
  cited as the Cast and Crew Nebraska Act.
         Sec. 2.     (1) The Legislature finds that:
        (a) Film and television production in Nebraska not only provides
     jobs for residents of Nebraska and dollars for Nebraska businesses but
     also enhances the state's image nationwide;
         (b) The high cost of film and television production is driving such
  production to other states, and the industry is always seeking attractive
  locations that can help cut the costs of production;
         (c) The retention of Nebraska's youth is one of the top priorities
     in growing the state's economy. Film studies and creative arts students
     from the universities and colleges in Nebraska are taking their talents
     to other states due to the lack of strongly developed media production
  facilities within the state;
         (d) The State of Nebraska, with the appropriate incentive, can build
  on past success as an attractive site for film and television production;
        (e)    Nebraska is   presently among several states with minimal
    incentives to attract the film and television industry; and
         (f)    A   new and attractive film incentive should be      used in
  conjunction with the Local Option Municipal Economic Development Act,
  passed by   the Ninety-Second Legislature,     First Session,      1991,   as
  Legislative Bill 840, for municipalities that have included production of
  films or television programs as a qualifying business expense.
         (2) It is the intent of the Legislature to provide an incentive that
  will allow the state to compete with other states and increase film and
  television production in this state.
         Sec. 3.     For purposes of the Cast and Crew Nebraska Act:
         (1)    Above-the-line employee means production company employees
  involved in the creative development, direct production, and direction of
  a production activity including screenwriters,      producers,     directors,
 casting directors, and cast;
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           (2) Below-the-line employee means production company employees that
     are responsible for keeping production operations on    schedule and
  preparing all lights, sets, props, and all other aspects for production;
           (3) Department means the Department of Economic Development;
           (4)(a) Expatriate means a person that previously resided in Nebraska
     for at least one year but does not currently reside in Nebraska.
           (b) The Nebraska Film Office shall partner with other in-state film
  offices and production companies in the state to maintain a roster of
  cast and crew who are expatriates and shall make such roster available to
  any production company upon request;
           (5) Film office means a specialized office under the authority of a
  government entity or    an administrative office with the purpose of
  promoting the local region through the development of film, video, and
     multimedia productions;
           (6) Full-length means a production at least forty minutes in length
  including credits;
           (7) Loan out means payments to a loan out company by a production
    company if    the production company withheld and remitted Nebraska
     applicable income tax on     all payments to    the loan out company for
  services performed in this state. The amount withheld is considered to
  have been withheld by the loan out company on wages paid to its employees
  for services performed in     this state.     Loan out company nonresident
     employees performing services in this state must be considered taxable
  nonresidents and the loan out company is subject to income taxation in
  the taxable year in    which the loan out company's employees perform
     services in this state;
           (8) Nebraska Film Office means the Nebraska Film Office within the
  Department of Economic Development or its successor;
           (9)   Nebraska supplier means       a brick and mortar Nebraska-based
 corporation or limited liability company registered, licensed, and in
 good standing with the Secretary of State;
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          (10)    Pre-production means the planning process and execution of
  every task that must take place before production begins;
          (11) Post-production means the time period after the production is
    completed and the editing of the visual and audio materials begins. Post-
    production includes, but is not limited to, all of the tasks associated
    with cutting raw footage, assembling that footage, and adding and dubbing
    music, sound effects and visual effects;
          (12) Principal photography means the creative execution phase of
  film production between pre-production and post-production;
          (13)(a) Production activity means production of a new film, video,
 or digital project in   this state.     This includes the production of
     projects filmed or recorded in this state, in whole or in part and in
     short or long form and animation, fixed on a delivery system, including
 film,     videotape,    computer disc,      laser disc,    and any element of   the
     digital domain, from which the program is viewed or reproduced and which
  is intended for multimarket commercial distribution via a theater, video
 on demand, digital or fiber optic distribution platforms, digital video
    recording, a digital platform designed for distribution of interactive
    games, licensing for exhibition by individual television stations, groups
     of stations,    networks,    advertiser-supported sites,        cable television
  stations, streaming services, or public broadcasting station.
          (b)     Production activity includes full-length films,     animation
  projects, documentaries, short-length films, commercial advertisements,
  except commercials containing political promotions,       infomercials,        or
  commercials distributed only on   the Internet,       and over-the-air and
  streaming television programming, except those television programs that
  are exclusively for news, weather, sports, financial market reports or
  instructional videos.
          (c) Production activity does not include any project with sexually
     explicit or obscene material;
          (14) Production company means a corporation, partnership, limited
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    liability company, or other business entity engaged in the business of
    creating productions and registered with the Secretary of State to engage
    in business in Nebraska;
        (15)   Production expenditure report means   a report issued by    a
    production accountant that verifies all expenses of a production activity
    and ensures all expenses have been paid in full;
        (16) Qualified production activity means any production activity
    approved by the department after application for qualification;
        (17)    Resident means any individual domiciled in     the state of
    Nebraska and any other individual who maintains a permanent place of
    residence within the state even though temporarily absent from the state
    and who has not established a residence elsewhere;
         (18) Scouting means finding places to shoot commercials, television
  shows, or movies and searching for interior and exterior venues to serve
  as the setting for scenes depicted in a script during pre-production;
         (19) Screen credit means a logo developed by the Nebraska Film
  Office and mentioned in the production credits and end titles declaring
  the production activity was filmed in Nebraska;
         (20)   Screenplay means    a film,   movie,    television show,   or other
  motion picture in written form; and
        (21) Short-length means a production more than thirty seconds and
    less than forty minutes including credits.
         Sec.   4.    (1)    For purposes of   the Cast and Crew Nebraska Act,
     qualifying expenditure includes:
        (a)    Pre-production,      production,     and post-production expenditures
    made in Nebraska that are subject to taxation by the state;
         (b) Scouting and spending related to the production activity in the
  state prior to application for qualification;
        (c)(i) Above-the-line employee wages for residents of Nebraska or
    paid through a Nebraska loan out company.
        (ii) Loan out companies will be required to pay applicable Nebraska
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  income taxes.
         (iii) The total above-the-line employee wages and related expenses
  shall be    not more than twenty-five percent of    the total instate
     expenditures of a production activity;
         (d) Below-the-line employee wages;
         (e) Per diems of up to thirty dollars per day per employee; and
        (f)     Expenditures not otherwise available for rental or   purchase
    within Nebraska and paid for via a Nebraska supplier.
        (2) Qualifying expenditures do not include:
         (a)     Wages paid to      independent contractors,      or self-employed
     individuals, except that wages shown to be paid by a Nebraska-based
  production company for a commercial production activity may be approved
  by the department on the application for the tax credit;
         (b) Above-the-line employee per diems or living allowance expenses;
         (c) Taxes imposed pursuant to the Federal Insurance Contributions
  Act and other payroll taxes;
         (d) Contributions under the Federal Unemployment Tax Act and the
     Employment Security Law; and
         (e) Union dues and benefits.
         Sec. 5.        (1) For taxable years beginning or deemed to begin on or
  after January 1, 2024, a production company shall be eligible to receive
  tax credits under the Cast and Crew Nebraska Act for qualifying
 expenditures incurred by the production company in Nebraska directly
  attributable to a qualified production activity.
         (2) The tax credit under the Cast and Crew Nebraska Act shall be a
 refundable tax credit allowed against the income tax imposed by the
     Nebraska Revenue Act of 1967 in an amount equal to twenty percent of the
  qualifying expenditures incurred by    the production company directly
  attributable to a qualified production activity.
        (3) The amount of the tax credit may be increased by any or all of
  the following amounts:
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         (a)   An additional five percent of   the qualifying expenditures
    incurred by the production company directly attributable to a qualified
    production activity if the qualified production activity films Nebraska
     as Nebraska in Nebraska, contains a minimum of seventy percent of the
     principal photography from the original submitted screenplay based in
  Nebraska, and uses a screen credit;
          (b)   An additional five percent of   the qualifying expenditures
  incurred by the production company directly attributable to a full-length
  qualified production activity if the qualified production activity films
  entirely in areas at least thirty miles from the corporate limits of a
  city of the metropolitan or primary class; and
         (c)(i) An additional five percent of qualified expenditures incurred
     by the production company directly attributable to   a full-length
  qualified production activity that are wages paid, at a rate of at least
 the Nebraska minimum wage, to Nebraska residents who are employed as
    first-time actors or first-time below-the-line employees.
          (ii) For purposes of subdivision (2)(c)(i) of this section, first-
  time means the individual's first-time receiving compensation and wages
  as either an actor or as a below-the-line employee on a full-length film
  in the State of Nebraska.
         (iii) The wages of a maximum of ten first-time actors and below-the-
     line employees per full-length film can be used in calculating the tax
     credit in subdivision (2)(c)(i) of this section.
         Sec. 6.     (1) The total amount of tax credits allowed in any year
    under the Cast and Crew Nebraska Act shall not exceed twenty-five million
    dollars.
          (2) The maximum allowable tax credit claimed under the act in any
  single taxable year for any qualified production activity that is a full-
     length film, made-for-television movie, television series of at least
  five episodes, or streaming television series shall not exceed fifteen
  million dollars.
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        Sec. 7.      (1) For a production activity to qualify as a qualified
    production activity under the Cast and Crew Nebraska Act, a production
     company must file an    application for qualification of   a production
     activity to the department at least:
        (i) Thirty days prior to the start of principal photography for a
    full-length film, documentary, or television programming; and
         (ii) Ten days prior to the start of filming for a short-length film,
     animation project, or commercial.
        (2) The application shall be submitted on a form prescribed by the
    department and shall include the following:
        (a) A nonrefundable fee of five hundred dollars;
        (b) A detailed description of the production activity;
        (c)    An estimate of   expected qualifying expenditures for the
    production activity;
        (d) A certificate of general liability insurance with a minimum
    coverage of one million dollars;
        (e) A worker's compensation policy;
        (f)(i) Except as provided in subdivision (f)(ii) of this section,
    documentation that shows the production activity is fully funded other
    than post-production expenditures.
         (ii) If a production activity is a commercial production activity,
  documentation showing full funding for post-production expenditures shall
     be included; and
        (g)    Any other information or      documentation required by    the
    department.
         Sec. 8.      (1) If the department determines that an application for
    qualification is complete and that the production activity qualifies
    under the Cast and Crew Nebraska Act, the department shall approve the
    application, notify the production company of the approval, and issue a
     screen credit to the production company that can be used to meet the
     requirements for the tax credit increase under subdivision (2)(b) of
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