A BILL TO BE ENTITLED
AN ACT to expand the definition of a production company for purposes of the sales and use tax and income tax.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑130.47 reads as rewritten:
"§ 105‑130.47.  Credit for qualifying expenses of a production company.
(a)	Definitions. – The following definitions apply in this section:
(1)	Entertainment software. – Interactive games for computers, video game consoles, mobile phones, or other gaming platforms. The term does not include interpersonal communications services such as videoconferencing, wireless communications, text‑based channels, or chat rooms.
(1a)	Highly compensated individual. – An individual who directly or indirectly receives compensation in excess of one million dollars ($1,000,000) for personal services with respect to a single production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
(2)	Live sporting event. – A scheduled sporting competition, game, or race that is not originated by a production company, but originated solely by an amateur, collegiate, or professional organization, institution, or association for live or tape‑delayed television or satellite broadcast. A live sporting event does not include commercial advertising, an episodic television series, a television pilot, a music video, a motion picture, or a documentary production in which sporting events are presented through archived historical footage or similar footage taken at least 30 days before it is used.
(3)	Production. – Original motion picture, television, or radio images produced for theatrical, commercial, advertising, or educational purposes or entertainment software produced for commercial distribution.
(3a)	Production company. – Defined in G.S. 105‑164.3.
(4)	Qualifying expenses. – The sum of the following amounts spent in this State by a production company in connection with a production, less the amount in excess of one million dollars ($1,000,000) paid to a highly compensated individual:
a.	Goods and services leased or purchased. For goods with a purchase price of twenty‑five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed.
b.	Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter.
c.	The cost of production‑related insurance coverage obtained on the production. Expenses for insurance coverage purchased from a related member are not qualifying expenses.
(5)	Related member. – Defined in G.S. 105‑130.7A.
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(j)	NC Film Office. – To claim a credit under this section for a production other than entertainment software, a taxpayer must notify the Division of Tourism, Film, and Sports Development in the Department of Commerce of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Division. For productions other than entertainment software that have production credits, a taxpayer claiming a credit under this section must acknowledge in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the production occurred.
(k)	Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2014."
SECTION 2.  G.S. 105‑151.29 reads as rewritten:
"§ 105‑151.29.  Credit for qualifying expenses of a production company.
(a)	Definitions. – The following definitions apply in this section:
(1)	Entertainment software. – Interactive games for computers, video game consoles, mobile phones, or other gaming platforms. The term does not include interpersonal communications services such as videoconferencing, wireless communications, text‑based channels, or chat rooms.
(1a)	Highly compensated individual. – An individual who directly or indirectly receives compensation in excess of one million dollars ($1,000,000) for personal services with respect to a single production. An individual receives compensation indirectly when a production company pays a personal service company or an employee leasing company that pays the individual.
(2)	Live sporting event. – A scheduled sporting competition, game, or race that is not originated by a production company, but originated solely by an amateur, collegiate, or professional organization, institution, or association for live or tape‑delayed television or satellite broadcast. A live sporting event does not include commercial advertising, an episodic television series, a television pilot, a music video, a motion picture, or a documentary production in which sporting events are presented through archived historical footage or similar footage taken at least 30 days before it is used.
(3)	Production. – Original motion picture, television, or radio images, produced for theatrical, commercial, advertising, or educational purposes or entertainment software produced for commercial distribution.
(3a)	Production company. – Defined in G.S. 105‑164.3.
(4)	Qualifying expenses. – The sum of the following amounts spent in this State by a production company in connection with a production, less the amount paid in excess of one million dollars ($1,000,000) to a highly compensated individual:
a.	Goods and services leased or purchased. For goods with a purchase price of twenty‑five thousand dollars ($25,000) or more, the amount included in qualifying expenses is the purchase price less the fair market value of the good at the time the production is completed.
b.	Compensation and wages on which withholding payments are remitted to the Department of Revenue under Article 4A of this Chapter.
c.	The cost of production‑related insurance coverage obtained on the production. Expenses for insurance coverage purchased from a related member are not qualifying expenses.
(5)	Related member. – Defined in G.S. 105‑130.7A.
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(j)	NC Film Office. – To claim a credit under this section for a production other than entertainment software, a taxpayer must notify the Division of Tourism, Film, and Sports Development in the Department of Commerce of the taxpayer's intent to claim the production tax credit. The notification must include the title of the production, the name of the production company, a financial contact for the production company, the proposed dates on which the production company plans to begin filming the production, and any other information required by the Division. For productions other than entertainment software that have production credits, a taxpayer claiming a credit under this section must acknowledge in the production credits both the North Carolina Film Office and the regional film office responsible for the geographic area in which the filming of the production occurred.
(k)	Sunset. – This section is repealed for qualifying expenses occurring on or after January 1, 2014."
SECTION 3.  G.S. 105‑164.3(30) reads as rewritten:
"§ 105‑164.3.  Definitions.
The following definitions apply in this Article:
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(30)	Production company. – A person engaged in the business of making original motion picture, television, or radio images for theatrical, commercial, advertising, or educational purposes or making entertainment software for commercial distribution.
.…"
SECTION 4.  Sections 1 and 2 of this act are effective for taxes imposed for taxable years beginning on or after January 1, 2009.  Section 3 of this act becomes effective January 1, 2009, and applies to sales made on or after July 1, 2009.  The remainder of this act is effective when it becomes law.