KRS § 139.538 — KY Code / Title XI / Chapter 139 / Section 139.538
139.538 Encouragement of motion picture industry -- Legislative purpose -- Definitions -- Tax credit -- Administrative regulations
Status: in_force

139.538 Encouragement of motion picture industry -- Legislative purpose --

Definitions -- Tax credit -- Administrative regulations.

(1) It is the intent and purpose of the General Assembly in enacting this section and

KRS 139.990(5), to encourage the motion picture industry to choose locations in the

Commonwealth for the filming or producing of motion pictures, by providing an

exemption from sales and use taxes. The exemption is accomplished by granting a

refundable credit for sales and use taxes paid on purchases made in connection with

the filming or producing of motion pictures in Kentucky.

(2) (a) On or after April 27, 2018, and until July 1, 2022, the department shall not

accept any new applications as provided by subsection (4) of this section.

(b) On or before June 1, 2019, the department shall provide the following

information to the Interim Joint Committee on Appropriations and Revenue

for all fiscal years data is available:

1. The name of the motion picture company;

2. The filming location or locations in this state;

3. A brief description of the production;

4. The amount of sales and use tax refunded; and

5. The total amount of all sales and use tax refunded to motion picture

production companies during each fiscal year reported.

(3) As used in this section and KRS 139.990(5):

(a) "Financial institution" means any bank or savings and loan institution in the

Commonwealth which carries FDIC or FSLIC insurance;

(b) "Motion picture production company" means a company engaged in the

business of producing motion pictures intended for a theatrical release or for

exhibition on national television either by a network or for national

syndication, or television programs which will serve as a pilot for or a

segment of a nationally televised dramatic series, either by a network or for

national syndication; and

(c) "Secretary" means the secretary of the Kentucky Finance and Administration

Cabinet.

(4) Any motion picture production company that intends to film all or parts of a motion

picture in the Commonwealth and desires to receive the credit provided for in

subsection (7) of this section shall, prior to the commencement of filming:

(a) Provide the department with the address of a Kentucky location at which

records of expenditures qualifying for the tax credit will be maintained, and

with the name of the individual maintaining these records; and

(b) File an application for the tax credit within sixty (60) days after the

completion of filming or production in Kentucky. The application shall

include a final expenditure report providing documentation for expenditures in

accordance with administrative regulations promulgated by the department.

(5) To qualify as a basis for the financial incentive, expenditures must be made by

check drawn upon any Kentucky financial institution.

(6) The twelve (12) month period during which expenditures may qualify for the tax

credit shall begin on the date of the earliest expenditure reported.

(7) Any motion picture production company which films or produces one (1) or more

motion pictures in the Commonwealth during any twelve (12) month period shall,

upon making application therefor and meeting the other requirements prescribed in

this section, be entitled to a refundable tax credit equal to the amount of Kentucky

sales and use tax paid for purchases made in connection with the filming or

production of a motion picture.

(8) The department shall, within sixty (60) days following the receipt of an application

for a credit for sales and use tax paid, calculate the total expenditures of the motion

picture production company for which there is documentation for funds expended in

the Commonwealth, calculate the amount of credit to which the applicant is

entitled, and certify the amount of the credit to the secretary. In the case of an audit,

as provided for in subsection (13) of this section, the department shall certify the

amount of the credit due to the secretary within one hundred eighty (180) days

following the receipt of the motion picture production company's application.

(9) Upon receipt of the certification of the amount of credit from the department, the

secretary shall cause the refund of sales taxes paid to be remitted to the motion

picture production company. For purposes of payment and funding thereof, the

credit shall be paid in the same manner as other claims on the State Treasury are

paid. They shall not be charged against any appropriation but shall be deducted

from tax receipts for the current fiscal year.

(10) The sales and use taxes paid by the motion picture production company for which a

refundable tax credit is granted shall be deemed not to have been legally paid into

the State Treasury, and the refund of the credit shall not be in violation of Section

59 of the Kentucky Constitution.

(11) Any tax credit or part thereof paid to a motion picture production company as a

result of error by the department shall be repaid by such company to the secretary.

(12) Any tax credit or part thereof paid to a motion picture production company as a

result of error or fraudulent statements made by the motion picture production

company shall be repaid by such company to the secretary, together with interest, at

the tax interest rate provided for in KRS 131.010(6).

(13) The department may require that reported expenditures and the application for the

tax credit from a motion picture production company be subjected to an audit by the

department auditors to verify expenditures.

(14) For companies in the business of producing films or television shows other than

those which would qualify them for the credit under the definition of "motion

picture production company," the department may require separate accounting

records for the reporting of expenditures made in connection with the application

for a refundable tax credit.

(15) The department may promulgate appropriate administrative regulations to carry out

the intent and purposes of this section.