North Carolina SB 525: Video Game Producer Tax Credit.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
S 1
SENATE BILL 525

Short Title: Video Game Producer Tax Credit. (Public)
Sponsors: Senator Boseman.
Referred to: Finance.
March 11, 2009
*S525-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO ALLOW A TAX CREDIT FOR VIDEO GAME PRODUCERS. 2
The General Assembly of North Carolina enacts: 3
SECTION 1. Part 1 of Article 4 of Chapter 105 of the General Statutes is amended 4
by adding a new section to read: 5
"§ 105-130.49. Credit for producers of digital interactive media. 6
(a) Definitions. – The following definitions apply in this section: 7
(1) Digital interactive media. – Products that are intended for commercial use or 8
distribution and that satisfy each of the conditions listed in this subsection. 9
The term does not include products that are interpersonal communications 10
services such as videoconferencing, wireless communications, text-based 11
channels, or chat rooms. 12
a. The product is produced for distribution on electronic media, 13
including file downloads over the Internet. 14
b. The product contains a computer-controlled virtual universe with 15
which users may interact in order to achieve a goal. 16
c. The product contains an appreciable amount of at least three of the 17
five following types of data: text, sound, fixed images, animated 18
images, and 3-D geometry. 19
(2) Qualifying expenses. – The sum of the total amount spent in this State for 20
the following by a producer of digital interactive media in connection with 21
the production of digital interactive media: 22
a. Production property purchased or leased. 23
b. Compensation and wages on which withholding payments are 24
remitted to the Department of Revenue under Article 4A of this 25
Chapter. 26
(3) Production property. – Tangible personal property and intangible property 27
that is directly used in the production of digital interactive media. The term 28
includes such items as software, computer code, image files, music files, 29
scripts and plays, concept mockups, software tools, and testing procedures. 30
(b) Credit. – A taxpayer that produces digital interactive media is allowed a credit 31
against the taxes imposed by this Part equal to fifteen percent (15%) of the taxpayer's 32
qualifying expenses. The credit allowed by this section may not exceed the amount of tax 33
imposed by this Part for the taxable year reduced by the sum of all credits allowable. This 34
limitation applies to the cumulative amount of a credit allowed in any tax year, including 35
carryforwards. Any unused portion of a credit allowed under this section may be carried 36
forward for the next succeeding five years. 37

General Assembly of North Carolina Session 2009
Page 2 Senate Bill 525-First Edition
(c) Limitation. – No credit is allowed under this section for qualifying expenses with 1
respect to digital interactive media that contain material that is obscene, as defined in 2
G.S. 14-190.1. 3
(d) Substantiation. – A taxpayer allowed a credit under this section must maintain and 4
make available for inspection any information or records required by the Secretary. The 5
taxpayer has the burden of proving eligibility for a credit and the amount of the credit. 6
(e) Report. – The Department must publish by May 1 of each year the following 7
information, itemized by taxpayer for the 12-month period ending the preceding December 31: 8
(1) The qualifying expenses for which a credit was claimed, classified by 9
whether the expenses were production property or compensation or wages. 10
(2) The number of people employed in the State with respect to credits claimed. 11
(3) The total cost to the General Fund of the credits claimed. 12
(f) Sunset. – This section is repealed for taxable years beginning on or after January 1, 13
2013." 14
SECTION 2. Part 2 of Article 4 of Chapter 105 of the General Statutes is amended 15
by adding a new section to read: 16
"§ 105-151.33. Credit for producers of digital interactive media. 17
(a) Definitions. – The following definitions apply in this section: 18
(1) Digital interactive media. – Products that are intended for commercial use or 19
distribution and that satisfy each of the conditions listed in this subsection. 20
The term does not include products that are interpersonal communications 21
services such as videoconferencing, wireless communications, text-based 22
channels, or chat rooms. 23
a. The product is produced for distribution on electronic media, 24
including file downloads over the Internet. 25
b. The product contains a computer-controlled virtual universe with 26
which users may interact in order to achieve a goal. 27
c. The product contains an appreciable amount of at least three of the 28
five following types of data: text, sound, fixed images, animated 29
images, and 3-D geometry. 30
(2) Qualifying expenses. – The sum of the total amount spent in this State for 31
the following by a producer of digital interactive media in connection with 32
the production of digital int