II

107TH CONGRESS

1ST SESSION S. 1278

To amend the Internal Revenue Code of 1986 to allow a United States

independent film and television production wage credit.

IN THE SENATE OF THE UNITED STATES

JULY 31, 2001

Mrs. LINCOLN (for herself, Ms. SNOWE, Mr. DURBIN, Mr. BREAUX, and Ms.

LANDRIEU) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to allow a

United States independent film and television production

wage credit.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘United States Inde5 pendent Film and Television Production Incentive Act of

6 2001’’.
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1 SEC. 2. TAX INCENTIVES FOR QUALIFIED UNITED STATES

2 INDEPENDENT FILM AND TELEVISION PRO3 DUCTION.

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 (relating to business related cred6 its) is amended by adding at the end the following new

7 section:

8 ‘‘SEC. 45G. UNITED STATES INDEPENDENT FILM AND TELE9 VISION PRODUCTION WAGE CREDIT.

10 ‘‘(a) AMOUNT OF CREDIT.—

11 ‘‘(1) IN GENERAL.—For purposes of section 38,

12 the United States independent film and television

13 production wage credit determined under this section

14 with respect to any employer for any taxable year is

15 an amount equal to 25 percent of the qualified

16 wages paid or incurred during such taxable year.

17 ‘‘(2) HIGHER PERCENTAGE FOR PRODUCTION

18 EMPLOYMENT IN CERTAIN AREAS.—In the case of

19 qualified employees in any qualified United States

20 independent film and television production located in

21 an area eligible for designation as a low-income com22 munity under section 45D or eligible for designation

23 by the Delta Regional Authority as a distressed

24 county or isolated area of distress, paragraph (1)

25 shall be applied by substituting ‘35 percent’ for ‘25

26 percent’.
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1 ‘‘(b) ONLY FIRST $25,000 OF WAGES PER YEAR

2 TAKEN INTO ACCOUNT.—With respect to each qualified

3 United States independent film and television production,

4 the amount of qualified wages paid or incurred to each

5 qualified employee which may be taken into account for

6 a taxable year shall not exceed $25,000.

7 ‘‘(c) QUALIFIED WAGES.—For purposes of this

8 section—

9 ‘‘(1) IN GENERAL.—The term ‘qualified wages’

10 means—

11 ‘‘(A) any wages paid or incurred by an em12 ployer for services performed in the United

13 States by an employee while such employee is a

14 qualified employee, and

15 ‘‘(B) the employee fringe benefit expenses

16 of the employer allocable to such services per17 formed by such employee.

18 ‘‘(2) QUALIFIED EMPLOYEE.—

19 ‘‘(A) IN GENERAL.—The term ‘qualified

20 employee’ means, with respect to any period,

21 any employee of an employer if substantially all

22 of the services performed during such period by

23 such employee for such employer are performed

24 in an activity related to any qualified United
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1 States independent film and television produc2 tion in a trade or business of the employer.

3 ‘‘(B) CERTAIN INDIVIDUALS NOT ELIGI4 BLE.—Such term shall not include—

5 ‘‘(i) any individual described in sub6 paragraph (A), (B), or (C) of section

7 51(i)(1), and

8 ‘‘(ii) any 5-percent owner (as defined

9 in section 416(i)(1)(B).

10 ‘‘(3) COORDINATION WITH OTHER WAGE CRED11 ITS.—No credit shall be allowed under any other

12 provision of this chapter for wages paid to any em13 ployee during any taxable year if the employer is al14 lowed a credit under this section for any of such

15 wages.

16 ‘‘(4) WAGES.—The term ‘wages’ has the same

17 meaning as when used in section 51.

18 ‘‘(5) EMPLOYEE FRINGE BENEFIT EXPENSES.—

19 The term ‘employee fringe benefit expenses’ means

20 the amount allowable as a deduction under this

21 chapter to the employer for any taxable year with re22 spect to—

23 ‘‘(A) employer contributions under stock

24 bonus, pension, profit-sharing, or annuity plan,
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1 ‘‘(B) employer-provided coverage under

2 any accident or health plan for employees, and

3 ‘‘(C) the cost of life or disability insurance

4 provided to employees.

5 Any amount treated as wages under paragraph

6 (1)(A) shall not be taken into account under this

7 subparagraph.

8 ‘‘(d) QUALIFIED UNITED STATES INDEPENDENT

9 FILM AND TELEVISION PRODUCTION.—For purposes of

10 this section—

11 ‘‘(1) IN GENERAL.—The term ‘qualified United

12 States independent film and television production’

13 means any production of any motion picture (wheth14 er released theatrically or directly to video cassette

15 or any other format), television or cable program16 ming, mini series, episodic television, movie of the

17 week, or pilot production for any of the preceding

18 productions if—

19 ‘‘(A) the majority of the days of principal

20 photography of the production are within the

21 United States (or in the case of the credit

22 under subsection (a)(2), the area described in

23 such subsection),
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1 ‘‘(B) the production is created primarily

2 for use as public entertainment or for edu3 cational purposes, and

4 ‘‘(C) the total cost of qualified wages of

5 the production is more than $200,000 but less

6 than $10,000,000.

7 Such term shall not include any production if

8 records are required under section 2257 of title 18,

9 United States Code, to be maintained with respect

10 to any performer in such production (reporting of

11 books, films, etc. with sexually explicit conduct). For

12 purposes of subparagraph (A), no day of photog13 raphy shall be considered a day of principal photog14 raphy unless the cost of wages for the production for

15 that day exceeds the average daily cost of wages for

16 such production.

17 ‘‘(2) PUBLIC ENTERTAINMENT.—The term

18 ‘public entertainment’ includes a motion picture

19 film, video tape, or television program intended for

20 initial broadcast via the public broadcast spectrum

21 or delivered via cable distribution, or productions

22 that are submitted to a national organization in ex23 istence on July 27, 2001, that rates films for violent

24 or adult content. Such term does not include any

25 film or tape the market for which is primarily top-
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1 ical, is otherwise essentially transitory in nature, or

2 is produced for private noncommercial use.

3 ‘‘(3) INFLATION ADJUSTMENT.—

4 ‘‘(A) IN GENERAL.—In the case of any

5 taxable year beginning in a calendar year after

6 2001, the $10,000,000 amount contained in

7 paragraph (1)(C) shall be increased by an

8 amount equal to—

9 ‘‘(i) such dollar amount, multiplied by

10 ‘‘(ii) the cost-of-living adjustment

11 under section 1(f)(3) for the calendar year

12 in which the taxable year begins, deter13 mined by substituting ‘calendar year 2000’

14 for ‘calendar year 1992’ in subparagraph

15 (B) thereof.

16 ‘‘(B) ROUNDING.—If any increase deter17 mined under subparagraph (A) is not a multiple

18 of $500,000, such amount shall be rounded to

19 the nearest multiple of $500,000.

20 ‘‘(e) CONTROLLED GROUPS.—For purposes of this

21 section—

22 ‘‘(1) all employers treated as a single employer

23 under subsection (a) or (b) of section 52 shall be

24 treated as a single employer for purposes of this

25 subpart, and
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1 ‘‘(2) the credit (if any) determined under this

2 section with respect to each such employer shall be

3 its proportionate share of the wages giving rise to

4 such credit.

5 ‘‘(f) APPLICATION OF CERTAIN OTHER RULES.—For

6 purposes of this section, rules similar to the rules of sec7 tion 51(k) and subsections (c) and (d) of section 52 shall

8 apply.’’.

9 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec10 tion 38(b) of the Internal Revenue Code of 1986 is amend11 ed by striking ‘‘plus’’ at the end of paragraph (14), by

12 striking the period at the end of paragraph (15) and in13 serting ‘‘, plus’’, and by adding at the end the following

14 new paragraph:

15 ‘‘(16) the United States independent film and

16 television production wage credit determined under

17 section 45G(a).’’.

18 (c) NO CARRYBACKS.—Subsection (d) of section 39

19 of the Internal Revenue Code of 1986 (relating to

20 carryback and carryforward of unused credits) is amended

21 by adding at the end the following:

22 ‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT

23 BEFORE EFFECTIVE DATE.—No portion of the un24 used business credit for any taxable year which is

25 attributable to the United States independent film
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1 and television production wage credit determined

2 under section 45G may be carried back to a taxable

3 year ending before the date of the enactment of sec4 tion 45G.’’.

5 (d) DENIAL OF DOUBLE BENEFIT.—Subsection (a)

6 of section 280C of the Internal Revenue Code of 1986 is

7 amended by inserting ‘‘45G(a),’’ after ‘‘45A(a),’’.

8 (e) CONFORMING AMENDMENT.—The table of sec9 tions for subpart C of part IV of subchapter A of chapter

10 1 of the Internal Revenue Code of 1986 is amended by

11 adding at the end the following new item:

‘‘Sec. 45G. United States independent film and television production wage credit.’’.

12 (f) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to amounts paid or incurred after

14 the date of the enactment of this Act in taxable years end15 ing after such date.

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