1.1 	A bill for an act
1.2 	relating to taxation; income and sales taxes; providing for a film investment 
1.3 	credit; exempting motion picture productions from sales tax;amending 
1.4 	Minnesota Statutes 2006, section 297A.68, subdivision 30; proposing coding for 
1.5 	new law in Minnesota Statutes, chapter 290.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. [290.0678] FILM INVESTMENT CREDIT.
1.8 		Subdivision 1.Definitions. For the purposes of this section, the following terms 
1.9 	have the meanings given. 
1.10 	(a) "Qualifying film production" means a motion picture that is certified by the 
1.11 	Minnesota Film and TV Board as made in Minnesota, in whole or in part.
1.12 	(b) "Qualified investment" means an amount of cash used to pay qualified production 
1.13 	expenses that is provided by an investor who does not have any financial interest in the 
1.14 	motion picture or the production company responsible for filming the motion picture.
1.15 	(c) "Motion picture" means a nationally distributed feature length film, video, or 
1.16 	television series, made in Minnesota, in whole or in part, for theatrical or television 
1.17 	viewing or as a television pilot, but not including television coverage of news and athletic 
1.18 	events.
1.19 	(d) "Qualified production expenses" means preproduction, production, and 
1.20 	postproduction expenditures directly incurred in Minnesota that are directly used in a 
1.21 	qualifying film production, including, without limitation, set construction and operation; 
1.22 	wardrobes, make-up, accessories, and related services; costs associated with photography 
1.23 	and sound synchronization, lighting, and related services and materials; editing and 
1.24 	related services; rental of facilities and equipment; leasing of vehicles; costs of food 
1.25 	and lodging; digital or tape editing, film processing, transfer of film to tape or digital 
2.1 	format, sound mixing, and special and visual effects; total aggregate payroll; and music, 
2.2 	if performed, composed, or recorded by a Minnesota musician or released or published 
2.3 	by a Minnesota-domiciled and headquartered company. The following are not included: 
2.4 	(1) postproduction costs for marketing and distribution; (2) any amounts that are later 
2.5 	reimbursed; (3) any costs related to the transfer of credits; and (4) any amounts paid 
2.6 	to persons or entities as a result of their participation in profits from the exploitation 
2.7 	of the production. 
2.8 		Subd. 2.Credit allowed. An individual or corporate taxpayer is allowed a credit 
2.9 	against the tax due under this chapter equal to the amount of a qualified investment in a 
2.10 	qualifying film production made during the taxable year.
2.11 		Subd. 3.Carryover. The credit is limited to the liability for tax, as computed under 
2.12 	this chapter for the taxable year. If the amount of the credit determined under this section 
2.13 	for any taxable year exceeds this limitation, the excess is a film investment credit carryover 
2.14 	to each of the 15 succeeding taxable years. The entire amount of the excess unused credit 
2.15 	for the taxable year is carried first to the earliest of the taxable years to which the credit 
2.16 	may be carried and then to each successive year to which the credit may be carried. The 
2.17 	amount of the unused credit which may be added under this subdivision shall not exceed 
2.18 	the taxpayer's liability for tax, less the film investment credit for the taxable year.
2.19 		Subd. 4.Certification of credits. (a) Before making a qualified investment, 
2.20 	taxpayers must apply to the Minnesota Film and TV Board for a film production credit 
2.21 	certificate. The application must be in the form and made under the procedures specified 
2.22 	by the Minnesota Film and TV Board. The Minnesota Film and TV Board must only issue 
2.23 	credit certificates for qualifying investments in qualifying film productions.
2.24 	(b) By January 31 of each year, the Minnesota Film and TV Board must report to 
2.25 	the commissioner of revenue the number, amount, and taxpayers to whom film credit 
2.26 	certificates were issued during the preceding taxable year.
2.27 		Subd. 5.Transfer of credit. A credit under this subdivision may be transferred or 
2.28 	sold. Any transfer or sale does not affect the time schedule for claiming the credit.

2.29 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
2.30 	December 31, 2007.

2.31 	Sec. 2. Minnesota Statutes 2006, section 297A.68, subdivision 30, is amended to read:
2.32 		Subd. 30.Television commercials and motion pictures. Tangible personal 
2.33 	property primarily used or consumed in the preproduction, production, or postproduction 
2.34 	of a television commercial or motion picture is exempt. For purposes of this subdivision, 
2.35 	"motion picture" means a nationally distributed feature length film, video, or television 
3.1 	series, made in Minnesota, in whole or in part, for theatrical or television viewing or as a 
3.2 	television pilot, but not including television coverage of news and athletic events. Any 
3.3 	such commercial or motion picture, regardless of the medium in which it is transferred, is 
3.4 	exempt. "Preproduction" and "production" include, but are not limited to, all activities 
3.5 	related to the preparation for shooting and the shooting of television commercials or 
3.6 	motion pictures, including film processing. Equipment rented for the preproduction and 
3.7 	production activities is exempt. "Postproduction" includes, but is not limited to, all 
3.8 	activities related to the finishing and duplication of television commercials or motion 
3.9 	pictures. This exemption does not apply to tangible personal property used primarily in 
3.10 	administration, general management, or marketing. Machinery and equipment purchased 
3.11 	for use in producing such commercials or motion pictures and fuel, electricity, gas, or 
3.12 	steam used for space heating or lighting are not exempt under this subdivision.

3.13 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
3.14 	June 30, 2008.