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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 64 TO TITLE 12 SO AS TO ENACT THE "SOUTH CAROLINA MOTION PICTURE INCENTIVE ACT OF 2008", REVISING AND UPDATING TAX INCENTIVES FOR MOTION PICTURE PRODUCTIONS IN THIS STATE BY ADDING AND MODERNIZING DEFINITIONS, MAKING TECHNICAL CORRECTIONS, ELIMINATING THE REBATE OF STATE AND LOCAL SALES TAXES PROVIDED UNDER FORMER LAW, PROVIDING FOR THE CARRY FORWARD OF REBATE FUNDS TO AVOID MULTIPLE APPLICATIONS, CLARIFYING THE WAGE INCENTIVE AND RESIDENT HIRING BONUS, ESTABLISHING A FIVE-YEAR APPRENTICESHIP PROGRAM, INCREASING THE NUMBER OF DAYS STATE PROPERTY MAY BE USED WITHOUT FEE FROM SEVEN TO TEN DAYS, AND PROVIDING ADDITIONAL REQUIREMENTS FOR FILM CREDITS FOR THIS STATE; AND TO REPEAL CHAPTER 62 OF TITLE 12 RELATING TO THE SOUTH CAROLINA MOTION PICTURE INCENTIVE ACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 12 of the 1976 Code is amended by adding:
Section 12-64-10. This chapter may be cited as the 'South Carolina Motion Picture Incentive Act of 2008'.
Section 12-64-20. (1) 'Base investment' means the aggregate funds actually invested and expended by a production company as qualified production expenditures incurred in this State that are directly used in state-certified production or productions.
(2) 'Company' means a corporation, partnership, limited liability company, or other business entity.
(3) 'Department' means the South Carolina Department of Commerce, including the South Carolina Film Commission and the Coordinating Council for Economic Development.
(4) 'Direct use expenditure' means an expenditure in a qualified production activity. A production company may only claim production expenditures that are directly used in a qualified production activity. In determining whether an expenditure is directly used in a qualified production activity, the South Carolina Film Commission will consider the proximity of the expenditure to the activity as well as the causal relationship between the expenditure and the activity.
(5) 'Live sporting event' means 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. The term does not include commercial advertising, an episodic television series, a television pilot, music video, motion picture, or documentary production where any sporting events are presented through archived historical footage or similar footage depicting either live sporting events that originated more than thirty days before the time of usage.
(6) 'Multimarket commercial distribution' means commercial distribution which extends to markets outside the State of South Carolina.
(7) 'Payroll' means salary or wages, subject to South Carolina income tax withholdings. In the case of a person or persons represented by a loan out company, personal service company or an employee leasing company, and paid by a payroll service company, all payments qualify under Section 12-8-550.
(8) 'Production company' means a company which has been approved by the department and primarily engages in qualified production activities. 'Production company' does not mean or include any form of business owned, affiliated, or controlled, in whole or in part, by any company or person which is in default on any tax obligation of the State, or a loan made or guaranteed by the State until such time as the tax obligation or loan is satisfied.
(9) 'Qualified production activities' means the production of new film, video, or digital projects produced in this State and approved by the department such as feature films, pilots, movies for television, commercial advertisement, music videos, and multimedia or interactive entertainment. The term 'qualified production activities' does not include the production of television coverage of news and live sporting events or a production produced by a production company if records, as required by 18 USC 2257, are to be maintained by that motion picture production company with respect to any performer portrayed in that single media or multimedia program.
For purposes of this definition, in the case of an episodic television series, an entire season of episodes is considered one production. The rebate is computed based on all of the production company's qualifying expenses incurred with respect to the production of the entire season's episodes.
(10) 'Qualified production expenditures' means preproduction, production and postproduction expenditures incurred in this State that are directly used in a qualified production activity, including without limitation the following from a South Carolina supplier: set construction and operation; wardrobes, make-up, accessories, and related services; costs associated with photography and sound synchronization, lighting and related services and materials; editing and related services; rental of facilities and equipment; leasing of vehicles; costs of food and lodging; digital or tape editing, transfers of film to tape or digital format, sound mixing, computer graphics services, special effects services, and animation services; total aggregate payroll; airfare, if the flight is directly related to production activities in South Carolina and purchased through a South Carolina travel agency or travel company; insurance costs if purchased through a South Carolina based insurance agency; and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. The term must not include postproduction expenditures for marketing and distribution.
(11) 'Resident' means an individual who is domiciled in this State and who is liable for South Carolina income and property taxes.
(12) 'Secretary' means the Secretary of Commerce.
(13) 'South Carolina supplier' means an entity, including but not limited to a limited liability company, a single member limited liability company, a corporation, an S corporation, a partnership or a sole proprietorship that:
(a) has at least one full-time employee within the State;
(b) has a physical location in the State that consists of more than a post office box or drop box and that maintains normal business and has a South Carolina telephone number;
(c) has registered to pay South Carolina income taxes and withholding taxes, and if applicable, South Carolina sales tax; and
(d) has registered to do business, if required, with the South Carolina Secretary of State.
Section 12-64-30. (A) For the purposes of the recruitment and development of qualified production activities in South Carolina, the General Assembly shall appropriate to the department ten million dollars in addition to an amount equal to twenty-six percent of the general fund portion of admissions tax collected by the State for the previous fiscal year. These appropriations must be appropriated annually to the department in the general appropriations act and must be made available annually by September first to the department for the exclusive use of the South Carolina Film Commission. Unexpended funds from this source may be carried over to the next and succeeding fiscal years and must be used for the same purpose. The distribution of rebates may not exceed the amount funded to the department.
(B) The department shall utilize funds to rebate direct use expenditures for qualified production activities or qualified production expenses as provided pursuant to Sections 12-64-40 and 12-64-60 when these expenditures equal or exceed a base investment of one million dollars in twelve consecutive months.
(C)(1) An application for the rebates provided for by this chapter must be accepted only from production companies that report an anticipated base investment in the State in the aggregate equal to or exceeding one million dollars in a twelve month period.
(2) The application must be approved by the department.
(D) The department shall use up to seven percent of these funds for marketing for the following purposes:
(1) to allow for assistance with recruitment or infrastructure development of the film industry, or
(2) marketing, or
(3) ally support, or
(4) special events.
(E)(1) The rebate provided in this section is available to the production company at the end of all qualified production activity. The production company shall apply to the South Carolina Film Commission for a certificate of completion once qualified production activity in South Carolina is complete. The production company shall provide any information the South Carolina Film Commission considers necessary to determine if the one million dollar base investment requirement has been met.
(2) A production company may claim the rebate by filing a request for a rebate with the South Carolina Film Commission once the certificate of completion is obtained. To claim the rebate, the production company and all companies described in Section 12-64-40(B)(1)(b) or (c) must be current with respect to all taxes or loans due and owing the State or political subdivisions at the time of the filing of the request for the rebate. If the production company or company described in Section 12-64-40(B)(1)(b) or (c) is not current with respect to all taxes due and owing the State or political subdivisions, the production company may be barred from claiming the rebate until the taxes and loans have been paid in full.
(3) The production company shall attach to its request for the rebate a copy of the certificate of completion and a copy of all assignments of the rebate, if applicable.
(F) A production company claiming a rebate pursuant to this section, and all companies described in Section 12-64-40(B)(1)(b) or (c), shall make payroll books and records of all expenditures available for inspection to the South Carolina Film Commission at the times requested by the South Carolina Film Commission. Each production company claiming the rebate, at the time of filing, shall provide a report to the South Carolina Film Commission that includes the project's name, the name of each employee that worked on the project, the social security number for each employee, the beginning and ending date of employment, the number of days the employee worked, a job description for each employee, the total gross wages for each employee, the South Carolina taxable wages subject to withholding for each employee, and other information considered necessary by the South Carolina Film Commission. The report also must contain the total amount of withholding attributable to all employees that worked on the project in South Carolina.
(G) A production company claiming a rebate pursuant to Section 12-64-60 shall make records of all expenditures available for inspection to the South Carolina Film Commission at the times requested by the South Carolina Film Commission. Each production company claiming the rebate shall provide a report, as prescribed by the South Carolina Film Commission, at the time of filing.
(H) For purposes of this section, and as an exception to Section 12-54-240, a production company and a company described in Section 12-64-40(B)(1)(b) or (c) agree that the department and the Department of Revenue may provide information concerning the request for the rebate and the certificate of completion among the respective taxpayers and the respective agencies.
(I) The allocations to production companies contemplated by this chapter must be made by the department. The South Carolina Film Commission may prescribe procedures for the application and award of the rebate.
(J) The rebates paid to a production company are not income and not subject to tax pursuant to Chapter 6 of this title.
(K) The department shall report annually on the use of all funds pursuant to this section. The report is a public record pursuant to the Freedom of Information Act, Chapter 4 of Title 30, and must be posted annually on the department's web site by December thirty-first for the previous fiscal year.
Section 12-64-40. (A) The department may rebate to a production company a portion of the South Carolina payroll of the employment of persons subject to South Carolina income tax withholdings in connection with production of qualified production activities. The rebate is twenty percent of the total aggregate South Carolina payroll. An additional ten percent rebate will be paid for all South Carolina residents who are paid a minimum of eighteen dollars an hour. For purposes of this section, total aggregate payroll does not include the portion of the salary of an employee whose salary is greater than one million dollars for each qualified production activity.
(B)(1) For purposes of this section, an employee is an individual directly involved in the qualified production activity in South Carolina and who is an employee of a:
(a) production company;
(b) personal service corporation retained by a production company to provide persons used directly in the qualified production activity in South Carolina; or
(c) payroll services or loan out company that is retained by a production company to provide employees who work directly in the qualified production activity in South Carolina.
(2) For his wages to qualify for the rebate, the employee must be certified by the South Carolina Film Commission as a qualifying employee and the employee is liable for South Carolina income tax withholding. In the case of a person or persons represented by a loan out company, personal service company or an employee leasing company, and paid by a payroll service company, all payments qualify pursuant to Section 12-8-550.
(C) The rebate applies with respect to an employee described in subsection (B)(1)(b) or (c) of this section only if, before the rebate is applied for, the personal services corporation, payroll services company, or loan out company is approved and certified by the South Carolina Film Commission, and makes an irrevocable assignment of its rebate to the production company that produced the qualified production activity. The assignment must be made on a form provided by the South Carolina Film Commission which must include a waiver of confidentiality pursuant to Section 12-54-240. Upon assignment, the rebate may be paid only to the production company. A personal services corporation, payroll services company, or loan out company which is a subcontractor to another entity which has made or does make the irrevocable assignment is not required to make the assignment to execute the form. However, a subcontractor is not entitled to a rebate unless, before the start of the physical production in South Carolina, the subcontractor has notified the South Carolina Film Commission and the production company that it does not intend to assign its rebate.
Section 12-64-50. At the time the production company is certified by the department, it may make, with the approval of the department, an irrevocable assignment of future payments attributable to the rebates made pursuant to Section 12-64-30 to a designated trustee. The assignment must specify the exact dollar amount being assigned to the designated trustee. For purposes of this chapter, 'designated trustee' means the single financier or financial institution designated by the production company to receive all assignments of payments made pursuant to this chapter and to the terms of an agreement entered into by the production company. If a production company elects to assign payments to the designated trustee, the election must be made on a form provided by the department, including a waiver of confidentiality pursuant to Section 12-54-240, and the payments may be paid only to the designated trustee. The production company shall file an application for the assignment with the department before applying for the rebate.
Section 12-64-60. (A)(1) The department may rebate to a production company thirty percent of the qualified production expenditures made by the production company in this State.
(2) This subsection does not apply to payroll paid for production company employees subject to Section 12-64-40 or money paid to the companies described in Section 12-64-40(B)(1)(b) or (c).
(B) An additional one percent of the general fund portion of admissions tax collected by this State for the previous fiscal year must be appropriated to the department for the exclusive use of the South Carolina Film Commission for the promotion of collaborative production and educational efforts between institutions of higher learning in South Carolina and motion picture related entities. These appropriations must be appropriated annually by September first to the department for the exclusive use of the South Carolina Film Commission. The South Carolina Film Commission may prescribe procedures necessary to administer this section. Unexpended funds from this appropriation carry forward to the next and succeeding fiscal years and must be used for the same purpose.
Section 12-64-70. (A) An additional one percent of the general fund portion of admissions tax collected by this State for the previous year must be allocated to the South Carolina Film Commission for the development and funding of a trainee wage reimbursement program, apprenticeship programs, and other qualified production activity training programs for South Carolina residents. These appropriations must be appropriated annually to the department in the general appropriations act and must be made available annually by September first to the department for the exclusive use of the South Carolina Film Commission. Unexpended funds from this source may be carried over to the next and succeeding fiscal years and must be used for the same purpose. The South Carolina Film Commission may develop these programs in conjunction with South Carolina universities and colleges that have academic departments instructing students in qualified production activities. The South Carolina Film Commission shall offer a fifty percent reimbursement of wages for on-the-job training of South Carolina residents in advanced crew positions for up to 1,040 hours a year. To be eligible and to be pre-approved by the South Carolina Film Commission, participants in the program must:
(1) be a South Carolina resident;
(2) be certified as a film and multimedia trainee by the South Carolina Film Commission;
(3) employed by the production company in a qualified production activity in South Carolina.
(B) After approval by the South Carolina Film Commission, the department may provide for reimbursement of fifty percent of salaries paid to the personnel for whom information is submitted in accordance with the South Carolina Film Commission's regulations.
(C) This section does not apply to production company employees receiving rebates pursuant to Section 12-64-40.
(D) The South Carolina Film Commission may prescribe procedures necessary to administer this section.
(E) The provisions of this section are effective only for the five consecutive state fiscal years beginning after the effective date of this chapter.
Section 12-64-80. (A)(1) Upon a determination by the director of the General Services Division of the State Budget and Control Board of the underutilization of state property by a state agency, the South Carolina Film Commission may negotiate below-market rates for temporary use, no more than twelve months, of space for the underutilized property. The negotiations and temporary use are exempt from the provisions of the South Carolina Consolidated Procurement Code. State-owned or political subdivision-owned properties may recoup all costs they expend on behalf of and at the direction of the production company at normal and customary rates incurred by the state agency. State-owned or political subdivision-owned properties also may recoup costs required to repair damage caused by the production company to real or personal property of the state agency or political subdivision at normal and customary rates incurred by the state agency.
(2) The state agency that owns the property determined to be underutilized may appeal within three business days that determination of underutilization to the State Budget and Control Board.
(B) The State or its political subdivisions may not charge a location or facility fee for properties they own to a production company if the properties are used for ten or fewer days as a location or facility in the production of a qualified production activity, but only properties used directly in filming and not as support locations are covered by this provision. A property may be used for a total of only thirty days without location or facility fees in a calendar year. The production company may be on site no longer than ten days within a thirty-day period without a location or facility fee charge. State-owned or political subdivision-owned properties may recoup all costs they expend on behalf and at the direction of the production company at the normal and customary rates incurred by the state agency or political subdivision. State-owned or political subdivision-owned properties also may recoup a location or facility fee, after the first ten days, not to exceed two thousand five hundred dollars a day. State-owned or political subdivision-owned properties also may recoup costs required to repair damage caused by the production company to real or personal property of the state agency or political subdivision at the normal and customary rates incurred by the state agency or political subdivision. The production company shall reimburse all location or facility costs to the state agency or political subdivision within twenty-one calendar days of completion of production activities on site. The production company may use the publicly-owned property only on the days agreed to and approved by the state agency or political subdivision.
Section 12-64-90. The South Carolina Film Commission may form a South Carolina Film Foundation to solicit donations for the recruitment and development of qualified production activities in furtherance of the purposes of this chapter.
Section 12-64-100. The end credit roll of a qualified production activity that utilizes a South Carolina tax credit or rebate must recognize the State of South Carolina with the following statement as a condition of receiving incentive funding under this section, when appropriate, at no cost to the State. The recognition must at a minimum include placement in the end credits of 'Filmed in South Carolina - www.FilmSC.com' with size and placement commensurate to other logos included in the end credits or, if no logos are used, the statement 'Filmed in South Carolina - www.FilmSC.com' or a similar statement approved by the South Carolina Film Commission before the placement. The State of South Carolina reserves the right to refuse the use of South Carolina's name in the credits of a production produced in the State.
Section 12-64-110. To the extent not already provided, the South Carolina Film Commission may prescribe rules and procedures and promulgate regulations to carry out the intent and purposes of this chapter."
SECTION 2. Chapter 62, Title 12 of the 1976 Code is repealed.
SECTION 3. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
SECTION 4. This act takes effect upon approval by the Governor.
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