AN ACT relating to the entertainment industry.

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AN ACT relating to the entertainment industry. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 141.383 is amended to read as follows: 3
(1) As used in this section: 4
(a) "Above-the-line production crew" has the same meaning as in KRS 154.61 -5
010; 6
(b) "Approved company" has the same meaning as in KRS 154.61-010; 7
(c) "Below-the-line production crew" has the same meaning as in KRS 154.61 -8
010; 9
(d) "Continuous film production" has the same meaning as in KRS 154.61-010; 10
(e) "Council" means the Kentucky Film Leadership Council created in KRS 11
154.12-282; 12
(f) "Loan-out entity" has the same meaning as in KRS 154.61-010; 13
(g) "Office" means the Kentucky Film Office created in Section 2 of this Act; 14
(h) "Qualifying expenditure" has the same meaning as in KRS 154.61-010; 15
(i)[(h)] "Qualifying payroll expenditure" has the same me aning as in KRS 16
154.61-010; 17
(j)[(i)] "Secretary" has the same meaning as in KRS 154.61-010; and 18
(k)[(j)] "Tax incentive agreement" has the same meaning as in KRS 154.61 -19
010. 20
(2) (a) There is hereby created a tax credit against the tax imposed under KRS 21
141.020 or 141.040 and 141.0401, with the ordering of credits as provided in 22
KRS 141.0205. 23
(b) The incentive available under paragraph (a) of this section is: 24
1. A refundable credit for applications approved prior to April 27, 2018; 25
2. A nonrefundable and nontransferable credit for applications approved on 26
or after April 27, 2018, but before January 1, 2022; and 27
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3. A refundable credit for applications approved on or after January 1, 1
2022, if the provisions of paragraph (c) of this subsection are met. 2
(c) 1. The total tax incentive approved under KRS 154.61 -020 shall be limited 3
to: 4
a. [One hundred million dollars ($100,000,000) for calendar year 5
2018 and each calendar year through the calendar year 2021; 6
b. ]Seventy-five million dollars ($75,000,000) for the cal endar year 7
2022 and each calendar year thereafter;[ and] 8
b.[c.] Beginning with calendar year 2024, the amount in subdivision 9
a.[b.] of this subparagraph shall be allocated accordingly: 10
i. Twenty-five million dollars ($25,000,000) shall be allocated 11
for all approved companies with a continuous film 12
production; and 13
ii. On the first day of April 2025, and on April 1 of each 14
calendar year thereafter, any unused balance allocated under 15
subpart i. of this subdivision for continuous film productions 16
shall be made available for all approved companies with a 17
motion picture or entertainment production; and 18
c. 1. Beginning with calendar year 2026, any unallocated 19
balance of the amount allocated in subdivision a. of this 20
subparagraph for the previous calendar year shall carry 21
forward into the subsequent calendar year to be made 22
available for approved companies with high -impact motion 23
pictures, continuous film productions, or entertainment 24
productions. 25
2. For purposes of this subdivision and Section 5 of this Act, 26
the det ermination of a high -impact motion picture or 27
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entertainment production shall be based upon criteria 1
established in administrative regulations promulgated 2
under subsection (4)(c) of Section 5 of this Act. 3
2. To qualify for the refundable credit, all applicants shall: 4
a. Begin filming or production in Kentucky within one hundred 5
eighty (180) days [six (6) months] of approval by the 6
office[council]; and 7
b. Complete filming or production in Kentucky within two (2) years 8
of their production start date. 9
(3) An approved company may receive a refundable tax credit if: 10
(a) The department has received notification from the office[council] that the 11
approved company has satisfied all requirements of KRS 154.61 -020 and 12
154.61-030; and 13
(b) The approved company has provided a detailed cost report and sufficient 14
documentation to the office[council], which has been forwarded by the 15
office[council] to the department, that: 16
1. The purchases of qualifying expenditures were made after the execution 17
of the tax incentive agreement; and 18
2. The approved company or loan -out entity has withheld income tax as 19
required by KRS 141.310 on all qualified payroll expenditures, and 20
remitted and certified the withheld amount to the department. 21
(4) Interest shall not be allowed or paid on any refundable credits provided under this 22
section. 23
(5) The department may promulgate administrative regulations under KRS Chapter 24
13A to administer this section. 25
(6) On or before September 1, 2010, and on or before each September 1 thereafter, for 26
the immediately preceding fiscal year, the department shall report to the 27
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office[council] and the Interim Joint Committee on Appropriations and Revenue the 1
names of the approved companies and the amounts of refundable income tax credit 2
claimed. 3
(7) No later than September 1, 2021, and by November 1 every four (4) years 4
thereafter, the department and the Cabinet for Economic Development shall 5
cooperatively provide historical data related to the tax credit allowed in this section 6
and KRS 154.61 -020 and 154.61 -030, including data items beginning with tax 7
credits claimed for taxable years beginning on or after January 1, 2018: 8
(a) The name of the taxpayer claiming the tax credit; 9
(b) The date that the application was approved and the date the filming or 10
production was completed; 11
(c) The taxable year in which the taxpayer claimed the tax credit; 12
(d) The total amount of the tax credit, including any amount denied, any amount 13
applied against a tax liability, any amount refunded, and any amount 14
remaining that may be claimed on a return filed in the future; 15
(e) Whether the taxpayer is a Kentucky -based company as defined in KRS 16
154.61-010; 17
(f) Whether the taxpayer films or produces a: 18
1. Feature-length film, television program, [or ]industrial film, video game, 19
music video, or commercial; 20
2. National touring production of a Broadway show; or 21
3. Documentary; 22
(g) Whether the filming or production was performed: 23
1. Entirely in an enhanced county; or 24
2. In whole or in part in any Kentucky county other than in an enhanced 25
incentive county; 26
(h) The amount of qualifying expenditures incurred by the taxpayer; 27
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(i) The amount of qualifying payroll expenditures paid to: 1
1. Resident below-the-line crew; and 2
2. Nonresident below-the-line production crew; 3
including the number of crew members in each category; 4
(j) The amount of qualifying payroll expenditures paid to: 5
1. Resident above-the-line crew; and 6
2. Nonresident above-the-line crew; 7
including the number of crew members in each category; and 8
(k) A brief description of the type of motion picture or entertainment production 9
project. 10
(8) The information required to be reported under this section shall not be considered 11
confidential taxpayer information and shall not be subject to KRS Chapter 131 or 12
any other provisions of the Kentucky Revised Statutes prohibiting disclosure or 13
reporting of information. 14
Section 2. KRS 154.12-280 is amended to read as follows: 15
(1) There is created the Kentucky Film Office, which shall be attached to the Cabinet 16
for Economic Development for administrative purposes only. The office shall be 17
headed by an executive director selected and compens ated as provided in KRS 18
154.12-282(2)(g)[(e)]. The executive director shall have the authority to hire staff, 19
including a marketing and development director, contract for services, expend 20
funds, and operate the normal business activities of the council. 21
(2) The duties of the [Kentucky Film ]office shall include but not be limited to: 22
(a) Reviewing all applications submitted for tax incentives in accordance with 23
Section 6 of this Act; 24
(b) Notifying the applicant within thirty (30) days of receipt and that: 25
1. The application is complete; or 26
2. Additional information is required; 27
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(c) Forwarding each eligible application to the cabinet for an economic 1
analysis of the project; 2
(d) Submitting the application and all related documents to the Kentucky Film 3
Leadership Council for a final decision, if the analysis supports the project; 4
(e) Coordinating with local and regional film offices or local tourism 5
commissions on issues impacting the film industry in Kentucky, including 6
streamlining local permitting processes; 7
(f)[(b)] Marketing Kentucky as a location for film production; 8
(g)[(c)] Providing assistance to production companies for compliance with 9
Subchapter 61 of KRS Chapter 154; 10
(h)[(d)] Assisting film studios and workforce training programs to increase the 11
film production workforce; 12
(i)[(e)] Coordinating with the Kentucky Film Leadership Council established in 13
KRS 154.12 -282 to develop marketing strategies to promote and grow the 14
film production industry in Kentucky; 15
(j)[(f)] Creating a [Kentucky Film Office ] website and a one -stop portal to 16
provide information to film producers regarding studios, local and regional 17
commissions, personnel, filming locations, permitting, and other matters 18
relevant to the film industry; and 19
(k)[(g)] Adopting the recommendations of the council created pursuant to KRS 20
154.12-282 and promulgating regulations in accordance with KRS Chapter 21
13A necessary to conduct the operations of the office. 22
(3) The office shall receive and retain all tax incentive application fees collected 23
pursuant to KRS 154.61 -030. The nonrefundable application fee that is [that's] 24
currently payable to the office upon submission of a tax incentive application shall 25
be determined by the total amount of qualifying expenditures and qualifying payroll 26
expenditures, as defined in KRS 154.61-010. If the total is: 27
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(a) Less than fifty thousand dollars ($50,000), the application fee shall be two 1
hundred fifty dollars ($250); 2
(b) Between fifty thousand dollars ($50,000) and one hundred thousand dollars 3
($100,000), the application fee shall be five hundred dollars ($500); or 4
(c) More than one hundred thousand dollars ($100,000), the application fee shall 5
be one thousand dollars ($1,000). 6
(4) The office may accept contributions, grants, and other property of value to hold and 7
apply to projects for which the office is created. Any funds not expended at the 8
close of a fiscal year shall not lapse but shall be carried forward into the next fiscal 9
year. Notwithstanding KRS 142.40 6, for the period beginning July 1, 2025, and 10
ending June 30, 2028[2027], two and one-half percent (2.5%) of the transient room 11
tax collected pursuant to KRS 142.400, up to the maximum amount of five hundred 12
thousand dollars ($500,000) in each fiscal year , shall be transferred to the office 13
and dedicated to staff and operational costs. 14
Section 3. KRS 154.12-282 is amended to read as follows: 15
(1) There is hereby established the Kentucky Film Leadership Council. The council 16
shall be administratively attached to the Kentucky Film Office established in KRS 17
154.12-280. 18
(2) The functions and purposes of the council shall be to: 19
(a) Review all applications for tax incentives under KRS 141.383 and Subchapter 20
61 of KRS Chapter 154; 21
(b) Review all related documents presented by the office; 22
(c) [to determine eligibility within twenty (20) days of receipt and forward each 23
eligible application to the cabinet for an economic analysis of the project. 24
Notwithstanding KRS 154.61 -020, if the analysis supports the project, the 25
application and all related documents shall be submitted back to the council to 26
]Make a[the] final decision at a meeting held at the call of the chair regarding 27
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whether to authorize a tax incentive agreement if the cabin et's economic 1
analysis supports the project. The cabinet shall be responsible for negotiating, 2
preparing, and executing tax incentive agreements under this section; 3
(d)[(b)] Recommend policies and standards for the Kentucky Film Office [ 4
created in KRS 154.12-280]; 5
(e)[(c)] Develop comprehensive film industry strategies in partnership with the 6
Cabinet for Economic Development, the Tourism, Arts and Heritage Cabinet, 7
and the Education and Labor Cabinet; 8
(f)[(d)] Partner with local and regional film offices, p roduction studios, and 9
relevant workforce training programs in Kentucky; and 10
(g)[(e)] Conduct a nationwide search for the executive director of the Kentucky 11
Film Office and make decisions regarding hiring and compensation. The 12
salary of the executive director of the [Kentucky Film ]office shall not exceed 13
two hundred twenty -five thousand dollars ($225,000) and shall be exempt 14
from KRS 64.640. 15
(3) (a) The council shall consist of the following seven (7) voting members: 16
1. The secretary of the Cabinet for Economic Development or his or her 17
designee; 18
2. The secretary of the Tourism, Arts and Heritage Cabinet or his or her 19
designee; 20
3. The secretary of the Education and Labor Cabinet or his or her designee; 21
and 22
4. Four (4) members who shall be appointed by the Governor as follows: 23
a. Two (2) representatives from Kentucky film production 24
companies; 25
b. One (1) representative from a film profession, including but not 26
limited to producers, actors, production accountants with film 27
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industry experience, or film financiers; and 1
c. One (1) representative who is the head of a local or regional film 2
commission. 3
(b) All members appointed by the Governor under [paragraph (a)4. of ] this 4
subsection shall have knowledge of or experience in the Kentucky film 5
industry. After the expiration of their initial terms, the appointed members 6
shall serve a term of four (4) years and until a successor is appointed and 7
qualified[ in accordance with paragraph (a)4. of this subsection]. Any vacancy 8
that occurs shall be filled for the unexpired term in the same manner as the 9
original appointment. All members appointed by the Governor shall be 10
subject to confirmation by the Senate as provided in KRS 11.160. 11
(c) A majority of the members shall appoint the chair from among the members 12
of the council. 13
(d) Members shall serve without compensation but shall be reimbursed for 14
necessary travel expenses. 15
(e) The council shall meet at the call of the chair, but not less than quarterly. 16
(f) A quorum shall be a majority of the membership of the council. 17
(g) A member of the council shall not be subject to any personal liability or 18
accountability by reason of the execution of any obligation duly authorized 19
by the council. 20
Section 4. KRS 154.61-010 is amended to read as follows: 21
As used in this subchapter: 22
(1) "Above-the-line production crew" means employees involved with the production 23
of a motion picture or entertainment production whose salaries are negotiated prior 24
to commencement of production, such as actors, directors, producers, and writers; 25
(2) "Animated production" means a nationally distributed feature -length film created 26
with the rapid display of a sequence of images using 2 -D or 3 -D graphics of 27
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artwork or model positions in order to create an illusion of movement; 1
(3) "Approved company" means an eligible company approved for incentives provided 2
under KRS 141.383 and 154.61-020; 3
(4) "Below-the-line production crew" means employees involved with the production 4
of a motion picture or entertainment production except abov e-the-line production 5
crew. "Below-the-line production crew" includes but is not limited to: 6
(a) Casting assistants; 7
(b) Costume design; 8
(c) Extras; 9
(d) Gaffers; 10
(e) Grips; 11
(f) Location managers; 12
(g) Production assistants; 13
(h) Set construction staff; and 14
(i) Set design staff; 15
(5) "Cabinet" means the Cabinet for Economic Development; 16
(6) "Certified audit" means an audit that: 17
(a) Contains production-related expenditures; 18
(b) Is completed within one hundred eighty (180) days of the completion of 19
production in Kentucky; and 20
(c) Is conducted in accordance with the office's standards established by 21
administrative regulations promulgated in accordance with KRS Chapter 22
13A, including the adoption of expenditure sampling procedures; 23
(7) "Commonwealth" means the Commonwealth of Kentucky; 24
(8)[(7)] "Compensation" means: 25
(a) Compensation included in adjusted gross income as calculated in KRS 26
141.019[defined in KRS 141.010]; and 27
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(b) The following: 1
1. Employer-paid payroll taxes; 2
2. Union and guild benefits; 3
3. Workers' compensation insurance premiums; 4
4. Payroll service fees; and 5
5. Qualifying per diem; 6
(9)[(8)] "Continuous film production" means a motion picture or entertainment 7
production that: 8
(a) 1. Has a projected [budget of a ] minimum spend of ten million dollars 9
($10,000,000) [per calendar year ] for qualifying expenditures and 10
qualifying payroll expenditures , which may be a prorated amount 11
based on the total budget of the production [ allocated to all qualifying 12
motion picture or entertainment productions to be filmed or produced in 13
Kentucky, with a minimum of one million five hundred thousand dollars 14
($1,500,000) per production in Kentucky]; and 15
2. Has a minimum of fifty percent (50%) of the funds available and the 16
ability to ra ise the remaining funds necessary to complete the filming 17
and production, which may be verified by: 18
a. Bank statements or other financial documents; or 19
b. A fundraising plan at the request of the office[council]; 20
(b) Demonstrates a distribution contract fo r each motion or entertainment 21
production; and 22
(c) [Films and produces a minimum of twelve (12) or more days per production 23
within the Commonwealth; and 24
(d) ]Maintains: 25
1. An apprenticeship program or on -the-job training program as defined in 26
KRS 343.010; or 27
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2. Partners with a film studies program with an accredited institution of 1
postsecondary education located in the Commonwealth; 2
(10)[(9)] "Council" means the Kentucky Film Leadership Council created in KRS 3
154.12-282; 4
(11)[(10)] "Documentary" means a pr oduction based upon factual information and not 5
subjective interjections; 6
(12)[(11)] "Eligible company" means any person that intends to film or produce a 7
motion picture or entertainment production in the Commonwealth; 8
(13)[(12)] "Employee" has the same me aning as in KRS 141.010, and, for purposes of 9
this subchapter, also may include the employees or independent contractors of an 10
approved company or the employees of a loan -out entity engaged by an approved 11
company if they meet the requirements of KRS 141.310; 12
(14)[(13)] "Employer-paid payroll taxes" means the tax paid by an approved company 13
as an employer under the Federal Insurance Contributions Act, 26 U.S.C. sec. 14
3101 et seq., and the approved company's share of contributions required under 15
KRS Chapter 341; 16
(15) "Enhanced incentive county" has the same meaning as in KRS 154.32-010; 17
(16)[(14)] "Feature-length film" means a live-action or animated production that is: 18
(a) More than thirty (30) minutes in length; and 19
(b) Produced for distribution in theaters or via digital format, including 20
broadcast, cable, and streaming [but not limited to DVD, Internet, or mobile 21
electronic devices]; 22
(17)[(15)] "Industrial film" means a business-to-business film that may be viewed by the 23
public, including but not limited to videos used for training or for viewing at a trade 24
show; 25
(18)[(16)] "Kentucky-based company" has the same meaning as in KRS 164.6011; 26
(19)[(17)] "Loan-out entity" means a corporation, partnership, limited liability company, 27
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or other entity through which an artist or other person is loaned out to perform 1
services for the approved company. A loan -out entity shall be registered and in 2
good standing wi th the Kentucky Secretary of State. Notwithstanding the business 3
organization, the loan-out entity and all employees of and other persons performing 4
services for the loan -out entity shall be subject to all applicable provisions of the 5
Kentucky personal income tax and any applicable payroll or other tax provisions; 6
(20)[(18)] (a) "Motion picture or entertainment production" means: 7
1. The following if filmed in whole or in part, or produced in whole or in 8
part, in the Commonwealth: 9
a. A feature-length film; 10
b. A television program; 11
c. An industrial film;[ or] 12
d. A documentary;[ or] 13
e. A video game; 14
f. A music video; or 15
g. A commercial; or 16
2. A national touring production of a Broadway show produced in 17
Kentucky. 18
(b) "Motion picture or entertainment production" does not include the filming or 19
production of obscene material or television coverage of news or athletic 20
events; 21
(21)[(19)] "Obscene" has the same meaning as in KRS 531.010; 22
(22)[(20)] "Office" means the Kentucky Film Office created in Section 2 of this Act; 23
(23) "Payroll service fees" means administrative fees paid by an approved company to 24
a third -party payroll service company providing Kentucky -based payroll 25
processing for above-the-line and below-the-line production crew members; 26
(24) "Person" has the same meaning as in KRS 141.010; 27
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(25)[(21)] (a) "Qualifying expenditure" means expenditures made in the 1
Commonwealth for the following if directly used in or for a motion picture or 2
entertainment production: 3
1. The production script and synopsis; 4
2. Set con struction and operations, wardrobe, accessories, and related 5
services; 6
3. Lease or rental of real property in Kentucky as a set location; 7
4. Photography, sound synchronization, lighting, and related services; 8
5. Editing and related services; 9
6. Rental of facilities and equipment; 10
7. Vehicle leases; 11
8. Food; and 12
9. Accommodations. 13
(b) "Qualifying expenditure" does not include: 14
1. Kentucky sales and use tax paid by the approved company on the 15
qualifying expenditure; or 16
2. Distribution expenses; 17
(26)[(22)] "Qualifying payroll expenditure" means compensation paid to above -the-line 18
crew and below -the line crew while working on a motion picture or entertainment 19
production in the Commonwealth if the compensation is for services performed in 20
the Commonwealth; 21
(27)[(23)] "Qualifying per diem": 22
(a) Means: 23
1. Meal and incidental allowance per diems, including those not taken 24
on set, in the am ounts established by the United States General 25
Services Administration, if incurred in the Commonwealth; and 26
2. Hotel and other overnight living accommodations per diems, in the 27
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amounts established by the United States General Services 1
Administration, if incurred in the Commonwealth; and 2
(b) Includes any amounts that: 3
1. Exceed the limits in paragraph (a)1. and 2. of this subsection; and 4
2. Are included in taxable compensation and subject to the withholding 5
required under KRS Chapter 341; 6
(28) "Resident" has the same meaning as in KRS 141.010; 7
(29)[(24)] "Secretary" means the secretary of the Cabinet for Economic Development; 8
(30)[(25)] "Tax incentive agreement" means the agreement entered into pursuant to KRS 9
154.61-030 between the council and the approved company;[ and] 10
(31)[(26)] "Television program" means any live -action or animated production or 11
documentary, including but not limited to: 12
(a) An episodic series; 13
(b) A miniseries; 14
(c) A television movie; or 15
(d) A television pilot; 16
that is produced for dis tribution on television via broadcast, cable, or any digital 17
format, including but not limited to cable, satellite, internet, or mobile electronic 18
devices; 19
(32) "Union and guild benefits" means any mandatory contributions to pension, 20
health, and welfare p lans paid by an approved company or a third -party payroll 21
service company pursuant to a union or guild agreement entered into for the 22
provision of services by above -the-line or below -the-line production crew 23
members; and 24
(33) "Workers' compensation insuran ce premiums" means premiums paid by an 25
approved company or a third -party payroll service company for the provision of 26
workers' compensation covering above-the-line or below-the-line production crew 27
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members. 1
Section 5. KRS 154.61-020 is amended to read as follows: 2
(1) The purposes of KRS 141.383 and this subchapter are to encourage: 3
(a) The film and entertainment industry to choose locations in the 4
Commonwealth for the filming and production of motion picture or 5
entertainment productions; 6
(b) The development of a film and entertainment industry in Kentucky; 7
(c) Increased employment opportunities for the citizens of the Commonwealth 8
within the film and entertainment industry; and 9
(d) The development of a production and postproduction infrastructure in the 10
Commonwealth for film production and touring Broadway show production 11
facilities containing state-of-the-art technologies. 12
(2) The council, together with the Department of Revenue, shall administer the tax 13
credit established by KRS 141.383, this section, and KRS 154.61-030. 14
(3) To qualify for the tax incentive pro vided in subsection (5) of this section, the 15
following requirements shall be met: 16
(a) For an approved company that films or produces a commercial in whole or 17
in part in the Commonwealth, the minimum combined total of qualifying 18
expenditures and qualifying payroll expenditures shall be two hundred 19
thousand dollars ($200,000); and 20
(b) For an approved company that is also a Kentucky-based company that: 21
1. Films or produces a feature -length film, television program, [or 22
]industrial film, video game, or music vi deo in whole or in part in the 23
Commonwealth, the minimum combined total of qualifying 24
expenditures and qualifying payroll expenditures shall be two 25
hundred[one hundred twenty -five] thousand dollars 26
($200,000)[($125,000)]; 27
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2. Produces a national touring production of a Broadway show in whole or 1
in part in the Commonwealth, the minimum combined total of 2
qualifying expenditures and qualifying payroll expenditures shall be 3
twenty thousand dollars ($20,000); or 4
3. Films or produces a documentary in whole or in p art in the 5
Commonwealth, the minimum combined total of qualifying 6
expenditures and qualifying payroll expenditures shall be ten thousand 7
dollars ($10,000); and 8
(c)[(b)] For an approved company that is not a Kentucky-based company that: 9
1. Films or produces a feature -length film, television program, [or 10
]industrial film, video game, or music video in whole or in part in the 11
Commonwealth, the minimum combined total of qualifying 12
expenditures and qualifying payroll expenditures shall be four 13
hundred[two hundred fifty] thousand dollars ($400,000)[($250,000)]; or 14
2. Films or produces a documentary in whole or in part in the 15
Commonwealth or that produces a national touring production of a 16
Broadway show, the minimum combined total of qualifying 17
expenditures and qua lifying payroll expenditures shall be twenty 18
thousand dollars ($20,000). 19
(4) (a) Beginning on January 1, 2022, the total tax incentive approved under KRS 20
141.383 and this subchapter shall be limited to seventy -five million dollars 21
($75,000,000) for calendar year 2022 and each calendar year thereafter. 22
(b) Beginning with calendar year 2024: 23
1. Twenty-five million dollars ($25,000,000) shall be allocated for all 24
approved companies with a continuous film production; and 25
2. On the first day of July of each cale ndar year, any unused balance of the 26
amount allocated under subparagraph 1. of this paragraph for continuous 27
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film productions shall be made available for all approved companies 1
with motion picture or entertainment productions. 2
(c) Beginning with calendar year 2026, any unallocated balance of the amount 3
allocated in paragraph (a) of this subsection for the previous calendar year 4
shall carry forward into the subsequent calendar year to be made available 5
for approved companies with high -impact motion pictures, continuous film 6
productions, or entertainment productions. The council shall promulgate 7
administrative regulations in accordance with KRS Chapter 13A to establish 8
the criteria for a high-impact motion picture or entertainment production. 9
(5) (a) To qualif y for the tax incentive available under KRS 141.383 and this 10
subchapter, all applicants shall: 11
1. Begin filming or production in Kentucky within one hundred eighty 12
days (180)[six (6) months ]of approval by the council;[ and] 13
2. Complete filming or production in Kentucky within two (2) years of the 14
filming or production start date; and 15
3. Submit a certified audit to the office. 16
(b) The tax credit shall be against the Kentucky income tax imposed under KRS 17
141.020 or 141.040, and the limited liability entity t ax imposed under KRS 18
141.0401, and shall be refundable as provided in KRS 141.383. 19
(c) 1. For a continuous film production filmed or produced in any Kentucky 20
county; or a feature -length film, television program, industrial film, 21
documentary, video game, music video, or national touring production 22
of a Broadway show [motion picture or entertainment production or 23
continuous film production] filmed or produced in its entirety in an 24
enhanced incentive county;[,] 25
the amount of the incentive shall be equal to thirty-five percent (35%) of 26
the approved company's: 27
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a. Qualifying expenditures; 1
b. Qualifying payroll expenditures paid to resident and nonresident 2
below-the-line production crew; and 3
c. Qualifying payroll expenditures paid to resident and nonresident 4
above-the-line production crew not to exceed one million dollars 5
($1,000,000) in payroll expenditures per employee. 6
2. a. To the extent the approved company films or produces a motion 7
picture or [entertainment production or ] continuous film 8
production in part in an enhanced incentive county and in part a 9
Kentucky county that is not an enhanc ed incentive county, the 10
approved company shall be eligible to receive the incentives 11
provided in this paragraph for those expenditures incurred in the 12
enhanced incentive county and all other expenditures shall be 13
subject to the incentives provided in para graph (d) of this 14
subsection. 15
b. The approved company shall track the requisite expenditures by 16
county. If the approved company can demonstrate to the 17
satisfaction of the cabinet that it is not practical to use a separate 18
accounting method to determine the expenditures by county, the 19
approved company shall determine the correct expenditures by 20
county using an alternative method approved by the cabinet. 21
(d) For a commercial filmed or produced in any Kentucky county; or a feature -22
length film, television progr am, industrial film, documentary, video game, 23
music video or national touring production of a Broadway show [motion 24
picture or entertainment production or continuous film production] filmed or 25
produced in whole or in part in any Kentucky county other than i n an 26
enhanced incentive county;[,] the amount of the incentive shall be equal to: 27
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1. Thirty percent (30%) of the approved company's: 1
a. Qualifying expenditures; 2
b. Qualifying payroll expenditures paid to below -the-line production 3
crew that are not residents; and 4
c. Qualifying payroll expenditures paid to above -the-line production 5
crew that are not residents, not to exceed one million dollars 6
($1,000,000) in payroll expenditures per employee; and 7
2. Thirty-five percent (35%) of the approved company's: 8
a. Qualifying payroll expenditures paid to resident below -the-line 9
production crew; and 10
b. Qualifying payroll expenditures paid to resident above -the-line 11
production crew not to exceed one million dollars ($1,000,000) in 12
payroll expenditures per employee. 13
Section 6. KRS 154.61-030 is amended to read as follows: 14
(1) An eligible company shall, [at least thirty (30) days ] prior to incurring any 15
expenditure for which recovery will be sought, file an application for tax incentives 16
with the office[council]. The application shall include: 17
(a) The name and address of the applicant; 18
(b) Verification that the applicant is a Kentucky-based company; 19
(c) The preliminary production script or a detailed synopsis of the script; 20
(d) The locations where the filming or production will occur; 21
(e) The anticipated date on which filming or production shall begin in Kentucky; 22
(f) The anticipated date on which the applicant will complete incurring 23
expenditures in Kentucky; 24
(g) The total anticipated qualifying expenditures; 25
(h) The total anticipated qualifying payroll expenditures for resident and 26
nonresident above-the-line crew by county; 27
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(i) The total anticipated qualifying payroll expenditures for resident and 1
nonresident below-the-line crew by county; 2
(j) The address of a Kentucky location at which records of the production will be 3
kept; 4
(k) An affirmation that if not for the incentive offered under this subchapter, the 5
eligible company would not film or produce the production in the 6
Commonwealth; and 7
(l) Any other information the office[council] may require. 8
(2) The office[council] shall notify the eligible company within thirty (30) days after 9
receiving the application that: 10
(a) The application is complete; or 11
(b) Additional information is required[ of its status]. 12
(3) Upon receipt of the application and any additional information submitted by the 13
office and cabinet , the council shall consider all submitted information and, if 14
appropriate, authorize the execution of a tax incentive agreement between the 15
council and the approved company, if the amount of anticipated tax credit from t he 16
application would not make the total tax credit approved for the calendar year 17
exceed the annual tax credit cap under KRS 154.61-020(4). 18
(4) The tax incentive agreement shall include the following provisions: 19
(a) The duties and responsibilities of the parties; 20
(b) A detailed description of the motion picture or entertainment production for 21
which incentives are requested; 22
(c) The anticipated qualifying expenditures and qualifying payroll expenditures 23
for resident and nonresident above -the-line and below -the-line crews by 24
county; 25
(d) The minimum combined total of qualifying expenditures and qualifying 26
payroll expenditures necessary for the approved company to qualify for 27
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incentives; 1
(e) That the approved company shall: 2
1. Begin filming or production in Kent ucky within one hundred eighty 3
(180) days[six (6) months] of approval by the council; and 4
2. Complete production in Kentucky within two (2) years of their 5
production start date; 6
(f) That the motion picture or entertainment production shall not include obsc ene 7
materials and shall not negatively impact the economy or the tourism industry 8
of the Commonwealth; 9
(g) That the execution of the agreement is not a guarantee of tax incentives and 10
that actual receipt of the incentives shall be contingent upon the appro ved 11
company meeting the requirements established by the tax incentive 12
agreement; 13
(h) That the approved company shall submit to the office and cabinet [council] 14
within one hundred eighty (180) days of the completion of production in 15
Kentucky for the motion picture or entertainment production: 16
1. A detailed cost report of the qualifying expenditures and[,] qualifying 17
payroll expenditures;[,] 18
2. Certified audit; and 19
3. The latest version of the production script at the time of cost report 20
submission; 21
(i) That the approved company shall provide the office and cabinet[council] with 22
documentation that the approved company or the associated loan -out entity 23
has withheld income tax as required by KRS 141.310 or the individual income 24
tax rate imposed by KRS 141.020 on all qualified payroll expenditures for 25
which an incentive under this subchapter is sought; 26
(j) That, if the cabinet[council] determines that the approved company has failed 27
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to comply with any of its obligations under the tax incentive agreement: 1
1. The cou ncil may deny the incentives available to the approved 2
company; 3
2. Both the council and the Department of Revenue may pursue any 4
remedy provided under the tax incentive agreement; 5
3. The council may terminate the tax incentive agreement; and 6
4. Both the council and the Department of Revenue may pursue any other 7
remedy at law to which it may be entitled; 8
(k) That the cabinet[council] and the Department of Revenue shall monitor the 9
tax incentive agreement; 10
(l) That the approved company shall provide to the cabinet[council] and the 11
Department of Revenue all information necessary to monitor the tax incentive 12
agreement; 13
(m) That the council may share information with the Department of Revenue and 14
the Interim Joint Committee on Appropriations and Revenue or any other 15
entity the cabinet[council] determines is necessary for the purposes of 16
monitoring and enforcing the terms of the tax incentive agreement; 17
(n) That the motion picture or entertainment production shall co ntain an 18
acknowledgment that the motion picture or entertainment production was 19
produced or filmed in the Commonwealth of Kentucky; 20
(o) That the approved company shall include screen credits in its final production, 21
indicating the approved company received tax incentives from the 22
Commonwealth of Kentucky; 23
(p) Terms of default; 24
(q) The method and procedures by which the approved company shall request and 25
receive the incentive provided under KRS 141.383 and 154.61-020; 26
(r) That the approved company may be req uired to pay an administrative fee as 27
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authorized under subsection (5) of this section;[ and] 1
(s) The approved company may be required to pay a fee of two thousand dollars 2
($2,000) for expenses incurred as a result of preparation of the tax incentive 3
agreement; and 4
(t) Any other provisions deemed necessary or appropriate by the parties to the tax 5
incentive agreement. 6
(5) The council may require the approved company to pay an administrative fee, the 7
amount of which shall be established by administrative regul ation promulgated in 8
accordance with KRS Chapter 13A. The administrative fee shall not exceed one -9
half of one percent (0.5%) of the estimated amount of tax incentive sought or five 10
hundred dollars ($500), whichever is greater. 11
(6) Prior to commencement of activity as provided in a tax incentive agreement, the tax 12
incentive agreement shall be approved by the council. Following approval by the 13
council, the tax incentive agreement shall be submitted to the Government Contract 14
Review Committee established by KR S 45A.705 for review, as provided in KRS 15
45A.695, 45A.705, and 45A.725. 16
(7) The council shall notify the Department of Revenue following approval of an 17
approved company. The notification shall include the name of the approved 18
company, the name of the motion picture or entertainment production, the estimated 19
amount of qualifying expenditures, the estimated date on which the approved 20
company will complete filming or production in Kentucky, and any other 21
information required by the department. 22
(8) Within one h undred eighty days (180) days of completion of production in 23
Kentucky for the motion picture or entertainment production, the approved 24
company shall submit to the council: 25
(a) A detailed cost report of: 26
1.[(a)] Qualifying expenditures; 27
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2.[(b)] Qualifying p ayroll expenditures for resident and nonresident 1
above-the-line crew by county; and 2
3.[(c)] Qualifying payroll expenditures for resident and nonresident 3
below-the-line crew by county;[ and] 4
(b)[(d)] The latest version of the production script available at the time of cost 5
report submission; and 6
(c) The certified audit. 7
(9) (a) Cabinet staff shall review all information submitted for accuracy and shall 8
confirm that all relevant provisions of the tax incentive agreement have been 9
met. 10
(b) Upon confirmation th at all requirements of the tax incentive agreement have 11
been met, cabinet staff shall review the latest version of the production script 12
available at the time of cost report submission, and if they determine that the 13
motion picture or entertainment production does not: 14
1. Contain visual or implied scenes that are obscene; or 15
2. Negatively impact the economy or the tourism industry of the 16
Commonwealth; 17
the council shall forward the detailed cost report to the Department of 18
Revenue for calculation of the refundable credit. 19
(10) The Department of Revenue shall: 20
(a) Verify that the approved company withheld the proper amount of income tax 21
on qualifying payroll expenditures; and 22
(b) Notify the council of the total amount of refundable credit available on 23
qualifying expenditures and qualifying payroll expenditures. 24
Section 7. Whereas, musicians and music venues are vital to the economy of the 25
Commonwealth, the Kentucky Film Leadership Council is directed to study, examine, 26
and evaluate the needs of Kentucky's musicians and music venues. The study shall be 27
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conducted by the e xecutive director of the Kentucky Film Office or his or her designee, 1
the secretary of the Cabinet for Economic Development or his or her designee, and the 2
secretary of the Education and Labor Cabinet or his or her designee. The study shall 3
assess the need s of Kentucky musicians and music venues in this state and provide 4
strategies regarding how the Commonwealth may further facilitate industry growth and 5
the development of partnerships between state agencies, universities, and this vital 6
industry. The study shall identify both opportunities and barriers this industry faces in 7
expanding within the state. The findings and results of this study shall be submitted to the 8
Legislative Research Commission by November 1, 2026, for referral to the Interim Joint 9
Committee on Economic Development and Workforce Investment. 10