To amend the Internal Revenue Code of 1986 to allow a United States independent film and television production wage credit.

February 12, 2003

Mr. DREIER (for himself, Mr. RANGEL, Ms. DUNN, Mr. BERMAN, Mr. FOLEY, Mr. MATSUI, Mrs. BONO, Mr. BECERRA, Mr. WELLER, Mr. ABERCROMBIE, Mr. BACA, Mr. BLUMENAUER, Ms. BORDALLO, Mr. BOUCHER, Mr. CALVERT, Mrs. CAPPS, Mr. COBLE, Mr. DOYLE, Mr. FARR, Mr. FILNER, Mr. FROST, Mr. GIBBONS, Mr. GREENWOOD, Ms. HARMAN, Mr. JOHN, Mrs. JOHNSON of Connecticut, Mr. KELLER, Mr. LANTOS, Mr. MCINTYRE, Mr. MCKEON, Mr. MCGOVERN, Ms. MILLENDER-MCDONALD, Mrs. MYRICK, Mr. NADLER, Mr. PRICE of North Carolina, Mr. RADANOVICH, Ms. ROYBAL-ALLARD, Mr. SCHIFF, Mr. SHERMAN, Ms. SLAUGHTER, Mr. SMITH of Texas, Mr. TAUZIN, Mr. THOMPSON of California, Ms. WATSON, Mr. WAXMAN, Mr. WEXLER, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow a United States independent film and television production wage credit.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `United States Independent Film and Television Production Incentive Act of 2003'.

SEC. 2. TAX INCENTIVES FOR QUALIFIED UNITED STATES INDEPENDENT FILM AND TELEVISION PRODUCTION.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

`SEC. 45G. UNITED STATES INDEPENDENT FILM AND TELEVISION PRODUCTION WAGE CREDIT.

`(a) AMOUNT OF CREDIT-

`(1) IN GENERAL- For purposes of section 38, the United States independent film and television production wage credit determined under this section with respect to any taxpayer for any taxable year is an amount equal to 25 percent of the qualified wages paid or incurred per qualified United States independent film and television production during such taxable year.

`(2) HIGHER PERCENTAGE FOR PRODUCTION EMPLOYMENT IN CERTAIN AREAS- In the case of qualified employees in any qualified United States independent film and television production located in an area eligible for designation as a low-income community under section 45D or eligible for designation by the Delta Regional Authority as a distressed county or isolated area of distress, paragraph (1) shall be applied by substituting `35 percent' for `25 percent'.

`(b) ONLY FIRST $25,000 OF WAGES PER PRODUCTION TAKEN INTO ACCOUNT- With respect to each qualified United States independent film and television production, the amount of qualified wages paid or incurred to each qualified employee or personal service corporation which may be taken into account per such production shall not exceed $25,000.

`(c) QUALIFIED WAGES- For purposes of this section--

`(1) IN GENERAL- The term `qualified wages' means--

`(A) any wages paid or incurred by an employer for services performed in the United States by an employee while such employee is a qualified employee,

`(B) the employee fringe benefit expenses of the employer allocable to such services performed by such employee,

`(C) any payments made to personal service corporations as defined in section 269A(b)(1) for services performed in the United States, and

`(D) renumeration, other than wages, for services personally rendered in the United States.

`(2) QUALIFIED EMPLOYEE-

`(A) IN GENERAL- The term `qualified employee' means, with respect to any period, any individual who renders personal services if substantially all of such services are performed during such period in an activity related to any qualified United States independent film and television production.

`(B) CERTAIN INDIVIDUALS NOT ELIGIBLE- Such term shall not include--

`(i) any individual described in subparagraph (A), (B), or (C) of section 51(i)(1), and

`(ii) any 5-percent owner (as defined in section 416(i)(1)(B).

`(3) COORDINATION WITH OTHER WAGE CREDITS- No credit shall be allowed under any other provision of this chapter for wages paid to any employee during any taxable year if the employer is allowed a credit under this section for any of such wages.

`(4) WAGES- The term `wages' has the same meaning as when used in section 51.

`(5) EMPLOYEE FRINGE BENEFIT EXPENSES- The term `employee fringe benefit expenses' means the amount allowable as a deduction under this chapter to the employer for any taxable year with respect to--

`(A) employer contributions under stock bonus, pension, profit-sharing, or annuity plan,

`(B) employer-provided coverage under any accident or health plan for employees, and

`(C) the cost of life or disability insurance provided to employees.

Any amount treated as wages under paragraph (1)(A) shall not be taken into account under this subparagraph.

`(d) QUALIFIED UNITED STATES INDEPENDENT FILM AND TELEVISION PRODUCTION- For purposes of this section--

`(1) IN GENERAL- The term `qualified United States independent film and television production' means any production of any motion picture (whether released theatrically or directly to video cassette or any other format), television or cable programming, mini series, episodic television, movie of the week, or pilot production for any of the preceding productions if--

`(A) 75 percent of the total wages of the production are qualified wages,

`(B) the production is created primarily for use as public entertainment or for educational purposes, and

`(C) the total cost of wages of the production is more than $200,000 but less than $10,000,000.

Such term shall not include any production if records are required under section 2257 of title 18, United States Code, to be maintained with respect to any performer in such production (reporting of books, films, etc. with sexually explicit conduct). For purposes of subparagraph (A), no day of photography shall be considered a day of principal photography unless the cost of wages for the production for that day exceeds the average daily cost of wages for such production.

`(2) PUBLIC ENTERTAINMENT- The term `public entertainment' includes a motion picture film, video tape, or television program intended for initial broadcast via the public broadcast spectrum or delivered via cable distribution, or productions that are submitted to a national organization in existence on July 27, 2001, that rates films for violent or adult content. Such term does not include any film or tape the market for which is primarily topical, is otherwise essentially transitory in nature, or is produced for private noncommercial use.

`(3) INFLATION ADJUSTMENT-

`(A) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2003, the $10,000,000 amount contained in paragraph (1)(C) shall be increased by an amount equal to--

`(i) such dollar amount, multiplied by

`(ii) the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2002' for `calendar year 1992' in subparagraph (B) thereof.

`(B) ROUNDING- If any increase determined under subparagraph (A) is not a multiple of $500,000, such amount shall be rounded to the nearest multiple of $500,000.

`(e) CONTROLLED GROUPS- For purposes of this section--

`(1) all employers treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer for purposes of this subpart, and

`(2) the credit (if any) determined under this section with respect to each such employer shall be its proportionate share of the wages giving rise to such credit.

`(f) APPLICATION OF CERTAIN OTHER RULES- For purposes of this section, rules similar to the rules of section 51(k) and subsections (c) and (d) of section 52 shall apply.'.

(b) CREDIT TREATED AS BUSINESS CREDIT- Section 38(b) of the Internal Revenue Code of 1986 is amended by striking `plus' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `, plus', and by adding at the end the following new paragraph:

`(16) the United States independent film and television production wage credit determined under section 45G(a).'.

(c) NO CARRYBACKS- Subsection (d) of section 39 of the Internal Revenue Code of 1986 (relating to carryback and carryforward of unused credits) is amended by adding at the end the following:

`(11) NO CARRYBACK OF SECTION 45G CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the United States independent film and television production wage credit determined under section 45G may be carried back to a taxable year ending before the date of the enactment of section 45G.'.

(d) DENIAL OF DOUBLE BENEFIT- Subsection (a) of section 280C of the Internal Revenue Code of 1986 is amended by inserting `45G(a),' after `45A(a),'.

(e) CONFORMING AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

`Sec. 45G. United States independent film and television production wage credit.'.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act in taxable years ending after such date.

END