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A BILL TO BE ENTITLED
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AN ACT
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relating to the establishment of the Texas Multimedia Production |
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Program; providing tax credits; authorizing fees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle F, Title 4, Government Code, is amended |
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by adding Chapter 485B to read as follows: |
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CHAPTER 485B. TEXAS MULTIMEDIA PRODUCTION PROGRAM |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 485B.001. DEFINITIONS. (a) Except as otherwise |
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provided by this chapter, terms used in this chapter have the |
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meanings assigned by Chapters 485 and 485A, and rules adopted under |
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those chapters, as those chapters and rules existed on January 1, |
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2022. |
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(b) In this chapter: |
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(1) "Moving image project" means a visual and sound |
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production, including a film, television program, national or |
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multistate commercial, or education or instructional video. The |
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term does not include a production that is obscene, as defined by |
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Section 43.21, Penal Code. |
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(2) "Production company" means a film production |
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company, television production company, or film and television |
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production company. |
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SUBCHAPTER B. TAX CREDIT FOR CERTAIN MULTIMEDIA PRODUCTIONS |
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Sec. 485B.051. TAX CREDIT PROGRAM. (a) The office shall |
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implement and administer a tax credit program for production |
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companies that produce moving image projects in this state. |
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(b) The office shall develop a procedure by which a |
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production company may apply to the office for a certificate of |
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eligibility for the tax credit program authorized by this |
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subchapter. The procedure must: |
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(1) specify the method by which an applicant must |
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demonstrate that an individual is a Texas resident; and |
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(2) require the submission, before production of a |
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moving image project begins, of: |
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(A) an estimate of the applicant's total in-state |
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spending related to the project; |
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(B) the shooting script or story board, as |
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applicable, for the project; |
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(C) the estimated number of jobs for cast and |
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production crew during the production and completion of the |
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project; and |
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(D) any other information required by the office |
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to determine the amount of in-state spending by the applicant. |
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(c) The office may award a certificate of eligibility to a |
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production company based only on in-state spending by the company |
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that has been verified by the office. |
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(d) The office is not required to act on an application, and |
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shall deny an application, for a production that the office finds to |
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be obscene, as defined by Section 43.21, Penal Code. The office |
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must provide written notice of the finding to the applicant not |
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later than the seventh business day after the date the office makes |
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the finding. |
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(e) The office may not award a certificate of eligibility |
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under this subchapter unless the office: |
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(1) reviews a copy of the final script of the moving |
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image project to which the certificate of eligibility relates; and |
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(2) determines whether a substantial change occurred |
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during production of the moving image project such that the |
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production is ineligible for the certificate under Subsection (d). |
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(f) The office shall include the amount of the tax credit, |
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as determined under Sections 485B.053 and 485B.054, on the face of a |
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certificate of eligibility. An applicant who receives a |
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certificate of eligibility must provide the certificate to the |
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comptroller, along with any other information required by the |
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comptroller, to receive a tax credit under Subchapter O, Chapter |
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171, Tax Code. |
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(g) The office by rule may impose an application fee in an |
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amount sufficient to offset the administrative costs to the office |
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and to the comptroller in administering this chapter. |
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Sec. 485B.052. QUALIFICATION. (a) To qualify for a |
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certificate of eligibility under this subchapter for a moving image |
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project, a production company must: |
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(1) demonstrate to the office that the production |
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company made at least $15 million in in-state spending for the |
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project; |
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(2) film at least 25 percent of the project in this |
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state, including additional pick-up days and second unit days; |
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(3) submit to the office a ledger of expenses, in a |
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format prescribed by the office, that lists all in-state spending |
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and includes all receipts, invoices, pay orders, and other |
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documentation required by the office to determine the amount of the |
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production company's in-state spending; and |
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(4) meet the requirements of Subsection (b). |
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(b) Unless the office determines and certifies in writing |
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that a sufficient number of qualified crew, actors, and extras are |
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not available to a production company at the time principal |
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photography begins, at least 25 percent of the total number of |
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individuals employed or used as production crew, actors, and extras |
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for a moving image project must be Texas residents. |
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Sec. 485B.053. AMOUNT OF TAX CREDIT. (a) The office shall |
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adopt rules prescribing the method the office will use to calculate |
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the amount of credit to list on a certificate of eligibility awarded |
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to a production company under this subchapter for a moving image |
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project. The office shall publish a written summary of the method |
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the office develops to determine the amount of credit before the |
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date the office begins to award certificates of eligibility. |
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(b) The method adopted by the office under Subsection (a) |
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must provide that the amount of credit listed on a certificate of |
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eligibility awarded to a production company for a moving image |
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project is equal to the sum of: |
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(1) subject to Subsection (c), 30 percent of the |
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production company's in-state spending for the project, not |
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including wages; |
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(2) 20 percent of the wages paid by the production |
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company to individuals who are not Texas residents while working in |
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this state on the project; |
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(3) 35 percent of the wages paid by the production |
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company to Texas residents who do not reside in underutilized and |
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economically distressed areas; |
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(4) 38 percent of the wages paid by the production |
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company to Texas residents who reside in underutilized and |
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economically distressed areas; |
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(5) if applicable, 10 percent of the production |
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company's in-state spending for an episodic television series of |
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three or more episodes for which a completed distribution agreement |
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is provided to the office; |
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(6) if the production company spends at least 25 |
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percent of the project's filming days in an underutilized and |
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economically distressed area, 2.5 percent of the production |
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company's in-state spending for the project; and |
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(7) three percent of the production company's in-state |
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spending for post-production activities. |
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(c) The office may not consider the amount described by |
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Subsection (b)(1) when calculating the amount of credit to list on a |
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certificate of eligibility awarded to a production company for a |
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moving image project under Subsection (b) unless the production |
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company provides to the office promotional materials that may be |
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used by the office to promote economic development and tourism in |
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this state, including a promotional video that: |
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(1) uses an image of this state in its end credits; and |
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(2) includes at least: |
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(A) 30 behind-the-scenes stills of the |
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production during principal photography for the project; |
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(B) 10 behind-the-scenes stills of the lead |
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actors during principal photography for the project; and |
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(C) three minutes of behind-the-scenes video |
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footage of principal photography for the project. |
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Sec. 485B.054. REDUCTION OF TAX CREDIT FOR STATE DEBT. |
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Notwithstanding Section 485B.053, the office shall reduce the |
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amount of credit listed on a certificate of eligibility awarded to a |
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production company by an amount equal to any delinquent amount owed |
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by the production company to this state. |
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SECTION 2. Chapter 171, Tax Code, is amended by adding |
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Subchapter O to read as follows: |
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SUBCHAPTER O. TAX CREDIT FOR CERTIFIED TEXAS MULTIMEDIA PRODUCTION |
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PROGRAM |
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Sec. 171.751. DEFINITIONS. In this subchapter: |
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(1) "Certified production" means a media production |
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that is the basis for a certificate of eligibility awarded to a |
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production company under Chapter 485B, Government Code. |
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(2) "Office" means the Music, Film, Television, and |
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Multimedia Office. |
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(3) "Production company" has the meaning assigned by |
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Section 485B.001, Government Code. |
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Sec. 171.752. ELIGIBILITY FOR CREDIT. An entity is |
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eligible to apply for a credit in the amount and under the |
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conditions provided by this subchapter against the tax imposed |
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under this chapter. |
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Sec. 171.753. QUALIFICATION. (a) An entity qualifies for a |
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credit under this subchapter if the entity submits to the |
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comptroller with the application required by Section 171.756: |
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(1) a certificate of eligibility awarded by the |
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office; |
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(2) an audited cost report prepared by a certified |
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public accountant, as defined by Section 901.002, Occupations Code, |
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that itemizes the costs and expenses incurred by a production |
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company to make the certified production and on which the amount of |
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the credit is based; and |
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(3) an attestation from the production company as to |
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the total costs and expenses incurred to make the certified |
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production. |
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(b) An entity that sells or assigns a credit under this |
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subchapter to another entity shall provide a copy of the |
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certificate of eligibility, audited cost report, and attestation to |
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the purchaser or assignee. |
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Sec. 171.754. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject |
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to Subsection (b), the amount of the credit under this subchapter is |
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the amount listed by the office on the certificate of eligibility |
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awarded to a production company for a certified production. |
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(b) The total credit claimed for a report, including the |
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amount of any carryforward under Section 171.755, may not exceed |
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the amount of franchise tax due for the report after any other |
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applicable tax credits. |
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(c) An entity may not claim a credit under this subchapter |
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on a report that is originally due before September 1, 2025. |
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However, before September 1, 2025, an entity may sell or assign a |
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credit for which the entity qualifies under Section 171.753. |
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Sec. 171.755. CARRYFORWARD. (a) If an entity is eligible |
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for a credit that exceeds the limitation under Section 171.754(b), |
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the entity may carry the unused credit forward for not more than |
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five consecutive reports. |
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(b) A carryforward is considered the remaining portion of a |
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credit that cannot be claimed in the current year because of the |
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limitation under Section 171.754(b). |
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Sec. 171.756. APPLICATION FOR CREDIT. (a) An entity must |
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apply to the comptroller for a credit under this subchapter on or |
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with the report for the period for which the credit is claimed. |
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(b) An entity shall submit with an application the |
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information required under Section 171.753 and any other |
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information the comptroller determines is necessary to determine |
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whether the entity qualifies for the credit. |
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(c) The burden of establishing eligibility for and the |
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amount of the credit is on the entity. |
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Sec. 171.757. SALE OR ASSIGNMENT OF CREDIT. (a) An entity |
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awarded a certificate of eligibility by the office may sell or |
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assign all or part of the credit to one or more entities. An entity |
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to which all or part of a credit is sold or assigned may sell or |
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assign all or part of the credit to another entity. There is no |
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limit on the total number of transactions for sale or assignment of |
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all or part of the total credit authorized under this subchapter. |
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(b) An entity that sells or assigns a credit under this |
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section, and the entity to which the credit is sold or assigned, |
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shall jointly submit written notice of the sale or assignment to the |
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comptroller on a form prescribed by the comptroller not later than |
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the 30th day after the date of the sale or assignment. The notice |
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must include: |
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(1) the date of the sale or assignment; |
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(2) the amount of the credit sold or assigned; |
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(3) the names and federal tax identification numbers |
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of: |
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(A) the entity that sold or assigned the credit |
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or part of the credit; and |
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(B) the entity to which the credit or part of the |
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credit was sold or assigned; |
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(4) the amount of the credit owned by the selling or |
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assigning entity before the sale or assignment; and |
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(5) the amount of the credit the selling or assigning |
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entity retained, if any, after the sale or assignment. |
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(c) The sale or assignment of a credit under this section |
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does not increase the total amount of the credit that may be |
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claimed. After an entity claims a credit for a production company |
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expenditure that formed the basis for the certificate of |
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eligibility awarded by the office, another entity may not use the |
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same expenditure as the basis for another certificate of |
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eligibility or credit. |
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(d) Notwithstanding the requirements of this subchapter, a |
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credit earned or purchased by, or assigned to, a partnership, |
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limited liability company, S corporation, or other pass-through |
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entity may be allocated to the partners, members, or shareholders |
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of that entity and claimed under this subchapter in accordance with |
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the provisions of any agreement among the partners, members, or |
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shareholders, and without regard to the ownership interest of the |
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partners, members, or shareholders in the certified production, |
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provided that the entity that claims the credit must be subject to |
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the tax imposed under this chapter. |
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(e) An entity to which all or part of a credit is sold or |
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assigned and that is subject to a premium tax imposed under Chapter |
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221, 222, 223, or 224, Insurance Code, may claim all or part of the |
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credit against that tax. The provisions of this subchapter, |
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including provisions relating to the total amount of the credit |
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that may be claimed for a report, the carryforward of the credit, |
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and the sale or assignment of the credit, apply with respect to a |
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credit claimed against a tax imposed under Chapter 221, 222, 223, or |
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224, Insurance Code, to the same extent those provisions apply to a |
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credit claimed against the tax imposed under this chapter. An |
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entity claiming all or part of a credit as authorized by this |
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subsection is not required to pay any additional retaliatory tax |
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levied under Chapter 281, Insurance Code, as a result of claiming |
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that credit. |
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Sec. 171.758. RULES. The comptroller shall adopt rules and |
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forms necessary to implement this subchapter. |
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SECTION 3. Subchapter O, Chapter 171, Tax Code, as added by |
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this Act, applies only to a report originally due on or after |
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September 1, 2025. |
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SECTION 4. This Act takes effect September 1, 2023. |