OVERVIEW:
A Federal income tax credit designed to address the issue of "runaway film and television production." It would encourage film and television/cable production in the United States and employment of U.S. small business workers on such productions.

DESCRIPTION:
The wage credit would be structured as a "general business credit" in the tax code (like other business credits), and would be a dollar-for-dollar offset against any Federal tax liability. Like other business credits, it is nonrefundable to the extent a taxpayer has no further tax liability. If the credit is not used in one year (because the taxpayer had no tax liability) it can be carriedback one year or carriedforward up to 20 years, to offset taxes in other years.

AMOUNT:
2 Tiers: (1) 25% of the costs of "qualified wages and salaries" – those wages and salaries paid or incurred by an employer to "qualified employees" (members of targeted group) involved in a "qualified U.S. production" (targeted activity); (2) 35% of such costs if incurred in a "low-income community" (similar to the existing definition for the "New Markets Tax Credit").

DOLLAR LIMIT:
Credit is only available on first $25,000 of qualified wages and salaries. Note: There is no limit based on total wages (e.g., all employees would qualify, but only on first $25,000).

QUALIFIED EMPLOYEES (Targeted Group):
Any employee who performs substantially all of his/her services in connection with a "qualified U. S. production"

QUALIFIED FILM PRODUCTION IN THE U.S. (Targeted Activity):
Any public entertainment or educational motion picture film (whether released theatrically or directly to video cassette or other format), television or cable programming, mini series, episodic television, movies of the week (MOW) or pilots that were produced in the United States.

QUALIFYING TAXPAYERS:
The credit is targeted to the segment of the market most impacted by "runaway production," and therefore, has additional limits:

• The credit is only available if total "wages" (i.e., labor costs) are more than $200 thousand and less than $10 million; and
  
• The credit is not available to a production subject to the reporting requirements of 18 USC 2257 (reporting of books, films, etc. with sexually explicit conduct).