TITLE 44
Taxation
CHAPTER 44-31.3
Musical and Theatrical Production Tax Credits
SECTION 44-31.3-2
§ 44-31.3-2 Musical and Theatrical
Production Tax Credits.
(a) Definitions. As used in this chapter:
(1) "Accredited theater production" means a for-profit live
stage presentation in a qualified production facility, as defined in this
chapter that is either: (i) A Pre-Broadway production, or (ii) A Post-Broadway
production.
(2) "Accredited theater production certificate" means a
certificate issued by the film office certifying that the production is an
accredited theater production that meets the guidelines of this chapter.
(3) "Advertising and public relations expenditure" means
costs incurred within the state by the accredited theater productions for goods
or services related to the national marketing, public relations, creation and
placement of print, electronic, television, billboards and other forms of
advertising to promote the accredited theater production.
(4) "Payroll" means all salaries, wages, fees, and other
compensation including related benefits for services performed and costs
incurred within Rhode Island.
(5) "Pre-broadway production" means a live stage production
that, in its original or adaptive version, is performed in a qualified
production facility having a presentation scheduled for Broadway's theater
district in New York City within (12) months after its Rhode Island
presentation.
(6) "Post-broadway production" means a live stage production
that, in its original or adaptive version, is performed in a qualified
production facility and opens its US tour in Rhode Island after a presentation
scheduled for Broadway's theater district in New York City.
(7) "Production and performance expenditures" means a
contemporaneous exchange of cash or cash equivalent for goods or services
related to development, production, performance, or operating expenditures
incurred in this state for a qualified theater production including, but not
limited to, expenditures for design; construction and operation, including
sets, special and visual effects, costumes, wardrobes, make-up, accessories;
costs associated with sound, lighting, staging, payroll, transportation
expenditures, advertising and public relations expenditures, facility expenses,
rentals, per diems, accommodations and other related costs.
(8) "Qualified production facility" means a facility located
in the state of Rhode Island in which live theatrical productions are, or are
intended to be, exclusively presented that contains at least one stage, a
seating capacity of one thousand (1,000) or more seats, and dressing rooms,
storage areas, and other ancillary amenities necessary for the accredited
theater production.
(9) "Resident" or "Rhode Island resident" means for the
purpose of determination of eligibility for the tax incentives provided by this
chapter, an individual who is domiciled in the state of Rhode Island or who is
not domiciled in this state but maintains a permanent place of abode in this
state and is in this state for an aggregate of more than one hundred
eighty-three (183) days of the taxable year, unless the individual is in the
armed forces of the United States.
(10) "Rhode Island film and television office" means the
office within the department of administration that has been established in
order to promote and encourage the locating of film and television productions
within the state of Rhode Island. The office is also referred to as the "film
office".
(11)(i) "Transportation expenditures" means expenditures for
the packaging, crating, and transportation both to the state for use in a
qualified theater production of sets, costumes, or other tangible property
constructed or manufactured out of state, and/or from the state after use in a
qualified theater production of sets, costumes, or other tangible property
constructed or manufactured in this state and the transportation of the cast
and crew to and from the state. Such term shall include the packaging, crating,
and transporting of property and equipment used for special and visual effects,
sound, lighting and staging, costumes, wardrobes, make-up, and related
accessories and materials, as well as any other performance or
production-related property and equipment.
(ii) Transportation expenditures shall not include any costs
to transport property and equipment to be used only for filming and not in a
qualified theater production, any indirect costs, and expenditures that are
later reimbursed by a third party, or any amounts that are paid to persons or
entities as a result of their participation in profits from the exploitation of
the production.
(b) Tax Credit.
(1) Any person, firm, partnership, trust, estate, or other
entity that receives an accredited theater production certificate shall be
allowed a tax credit equal to twenty-five percent (25%) of the total production
and performance expenditures and transportation expenditures for the accredited
theater production and to be computed as provided in this chapter against a tax
imposed by chapters 11, 12, 13, 14, 17, and 30 of this title. Said credit shall
not exceed five million dollars ($5,000,000) and shall be limited to certified
production cost directly attributable to activities in the state and
transportation expenditures defined above. The total production budget shall be
a minimum of one hundred thousand dollars ($100,000).
(2) No more than fifteen million dollars ($15,000,000) in
total may be issued for any tax year for motion picture tax credits pursuant to
chapter 31.2 of this title and/or musical and theatrical production tax credits
pursuant to this chapter. Said credits shall be equally available to motion
picture productions and musical and theatrical productions. No specific amount
shall be set aside for either type of production.
(3) The tax credit shall be allowed against the tax for the
taxable period in which the credit is earned and can be carried forward for not
more than three (3) succeeding tax years.
(4) Credits allowed to a company that is a subchapter S
corporation, partnership, or a limited liability company that is taxed as a
partnership, shall be passed through respectively to persons designated as
partners, members, or owners on a pro rata basis or pursuant to an executed
agreement among such persons designated as subchapter S corporation
shareholders, partners, or members documenting an alternate distribution method
without regard to their sharing of other tax or economic attributes of such
entity.
(5) If the company has not claimed the tax credits in whole
or part, taxpayers eligible for the tax credits may assign, transfer, or convey
the tax credits, in whole or in part, by sale or otherwise, to any individual
or entity and such assignee of the tax credits that have not claimed the tax
credits in whole or part may assign, transfer, or convey the tax credits, in
whole or in part, by sale or otherwise, to any individual or entity. The
assignee of the tax credits may use acquired credits to offset up to one
hundred percent (100%) of the tax liabilities otherwise imposed pursuant to
chapter 11, 12, 13 (other than the tax imposed under § 44-13-13), 14, 17,
or 30 of this title. The assignee may apply the tax credit against taxes
imposed on the assignee for not more than three (3) succeeding tax years. The
assignor shall perfect the transfer by notifying the state of Rhode Island
division of taxation, in writing, within thirty (30) calendar days following
the effective date of the transfer and shall provide any information as may be
required by the division of taxation to administer and carry out the provisions
of this section.
(6) For purposes of this chapter, any assignment or sales
proceeds received by the assignor for its assignment or sale of the tax credits
allowed pursuant to this section shall be exempt from this title.
(7) In the case of a corporation, this credit is only allowed
against the tax of a corporation included in a consolidated return that
qualifies for the credit and not against the tax of other corporations that may
join in the filing of a consolidated tax return.
(c) Certification and administration.
(1) The applicant shall properly prepare, sign, and submit to
the film office an application for initial certification of the theater
production. The application shall include such information and data as the film
office deems reasonably necessary for the proper evaluation and administration
of said application, including, but not limited to, any information about the
theater production company and a specific Rhode Island live theater or musical
production. The film office shall review the completed application and
determine whether it meets the requisite criteria and qualifications for the
initial certification for the production. If the initial certification is
granted, the film office shall issue a notice of initial certification of the
accredited theater production to the theater production company and to the tax
administrator. The notice shall state that, after appropriate review, the
initial application meets the appropriate criteria for conditional eligibility.
The notice of initial certification will provide a unique identification number
for the production and is only a statement of conditional eligibility for the
production and, as such, does not grant or convey any Rhode Island tax benefits.
(2) Upon completion of an accredited theater production, the
applicant shall properly prepare, sign, and submit to the film office an
application for final certification of the accredited theater production. The
final application shall also contain a cost report and an "accountant's
certification." The film office and tax administrator may rely without
independent investigation, upon the accountant's certification, in the form of
an opinion, confirming the accuracy of the information included in the cost
report. Upon review of a duly completed and filed application and upon no later
than thirty (30) days of submission thereof, the division of taxation will make
a determination pertaining to the final certification of the accredited theater
production and the resultant tax credits.
(3) Upon determination that the company qualifies for final
certification and the resultant tax credits, the tax administrator of the
division of taxation shall issue to the company: (i) An Accredited Theater
Production Certificate; and (ii) A tax credit certificate in an amount in
accordance with this section (b) hereof. A musical and theatrical production
company is prohibited from using state funds, state loans, or state guaranteed
loans to qualify for the motion picture tax credit. All documents that are
issued by the film office pursuant to this section shall reference the
identification number that was issued to the production as part of its initial
certification.
(4) The director of the department of administration, in
consultation as needed with the tax administrator, shall promulgate such rules
and regulations as are necessary to carry out the intent and purposes of this
chapter in accordance with the general guidelines provided herein for the
certification of the production and the resultant production credit.
(5) If information comes to the attention of the film office
that is materially inconsistent with representations made in an application,
the film office may deny the requested certification. In the event that tax
credits or a portion of tax credits are subject to recapture for ineligible
costs and such tax credits have been transferred, assigned, and/or allocated,
the state will pursue its recapture remedies and rights against the applicant
of the theater production tax credits. No redress shall be sought against
assignees, sellers, transferees, or allocates of such credits.
(d) Information requests.
(i) The director of the film office, and his or her agents,
for the purpose of ascertaining the correctness of any credit claimed under the
provisions of this chapter, may examine any books, paper, records, or memoranda
bearing upon the matters required to be included in the return, report, or
other statement, and may require the attendance of the person executing the
return, report, or other statement, or of any officer or employee of any
taxpayer, or the attendance of any other person, and may examine the person
under oath respecting any matter that the director, or his or her agent, deems
pertinent or material in administration and application of this chapter and
where not inconsistent with other legal provisions, the director may request
information from the tax administrator.
(ii) The tax administrator, and his or her agents, for the
purpose of ascertaining the correctness of any credit claimed under the
provisions of this chapter, may examine any books, paper, records, or memoranda
bearing upon the matters required to be included in the return, report, or
other statement, and may require the attendance of the person executing the
return, report, or other statement, or of any officer or employee of any
taxpayer, or the attendance of any other person, and may examine the person
under oath respecting any matter which the tax administrator or his or her
agent deems pertinent or material in determining the eligibility for credits
claimed and may request information from the film office, and the film office
shall provide the information in all cases to the tax administrator.
(e) The film office shall comply with the impact analysis and
periodic reporting provisions of § 44-31.2-6.1.
History of Section.
(P.L. 2012, ch. 241, art. 21, § 12; P.L. 2014, ch. 505, § 1; P.L.
2014, ch. 539, § 1.)
