HOUSE BILL 359

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

Ben Lujan

AN ACT

RELATING TO TAXATION; INCREASING THE FILM PRODUCTION TAX CREDIT; REPEALING THE NEW MEXICO FILMMAKER TAX CREDIT; AMENDING AND REPEALING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. Section 7-2F-1 NMSA 1978 (being Laws 2002, Chapter 36, Section 1, as amended) is amended to read:

     "7-2F-1. FILM PRODUCTION TAX CREDIT.--

          A. The tax credit created by this section may be referred to as the "film production tax credit". An eligible film production company may apply for, and the taxation and revenue department may allow, a tax credit in an amount equal to [fifteen] twenty percent of:

                (1) direct production expenditures made in New Mexico that are directly attributable to the production in New Mexico of a film or commercial audiovisual product and that are subject to taxation by the state of New Mexico; and

                (2) postproduction expenditures made in New Mexico that are:

                     (a) directly attributable to the production of a commercial film or audiovisual product;

                     (b) for services performed in New Mexico; and

                     (c) subject to taxation by the state of New Mexico.

          B. The film production tax credit shall not be claimed with respect to direct production expenditures or postproduction expenditures for which the film production company has delivered a nontaxable transaction certificate pursuant to Section 7-9-86 NMSA 1978.

          C. A long-form narrative film production for which the film production tax credit is claimed pursuant to Paragraph (1) of Subsection A of this section shall contain an acknowledgment that the production was filmed in New Mexico.

          D. To be eligible for the film production tax credit, a film production company shall submit to the New Mexico film division of the economic development department information required by the division to demonstrate conformity with the requirements of this section and shall agree in writing:

                (1) to pay all obligations the film production company has incurred in New Mexico;

                (2) to publish, at completion of principal photography, a notice at least once a week for three consecutive weeks in local newspapers in regions where filming has taken place to notify the public of the need to file creditor claims against the film production company by a specified date;

                (3) that outstanding obligations are not waived should a creditor fail to file by the specified date; and

                (4) to delay filing of a claim for the film production tax credit until the New Mexico film division delivers written notification to the taxation and revenue department that the film production company has fulfilled all requirements for the credit.

          E. The New Mexico film division shall determine the eligibility of the company and shall report this information to the taxation and revenue department in a manner and at times the economic development department and the taxation and revenue department shall agree upon.

          F. To receive a film production tax credit, a film production company shall apply to the taxation and revenue department on forms and in the manner the department may prescribe. The application shall include a certification of the amount of direct production expenditures or postproduction expenditures made in New Mexico with respect to the film production for which the film production company is seeking the film production tax credit. If the requirements of this section have been complied with, the taxation and revenue department shall approve the film production tax credit and issue a document granting the tax credit.

          G. The film production company may apply all or a portion of the film production tax credit granted against personal income tax liability or corporate income tax liability. If the amount of the film production tax credit claimed exceeds the film production company's tax liability for the taxable year in which the credit is being claimed, the excess shall be refunded."

     Section 2. REPEAL.--Section 7-2G-1 NMSA 1978 (being Laws 2005, Chapter 337, Section 1) is repealed.

     Section 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2006.

- 4 -