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<ns0:Id>20250AB__231998AMD</ns0:Id>
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<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
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<ns0:Action>
<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>2319</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Schultz</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Schultz</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title>An act to add Sections 17053.98.5 and 23698.5 to the Revenue and Taxation Code, relating to taxation, and making an appropriation therefor.</ns0:Title>
<ns0:RelatingClause>taxation, and making an appropriation therefor</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Personal Income Tax Law: Corporation Tax Law: credits: qualified motion picture: postproduction.</ns0:Subject>
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<ns0:DigestText>
<html:p>The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission in differing amounts equal to specified percentages of the qualified expenditures of a qualified motion picture in this state. Existing law establishes the continuously appropriated Tax Relief and Refund Account and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account.</html:p>
<html:p>This bill would allow a credit against those taxes in an amount between 35% and 50% of qualified
expenses relating to the postproduction of a qualified motion picture in California to be allocated by the California Film Commission, as specified. The bill would require the credit to be administered in the same manner as the motion picture credit 4.0, except as specified. This bill would allow a qualified taxpayer to elect to be paid a refund if the amount allowable as a credit exceeds the qualified taxpayer’s tax liability for the taxable year, as specified. By requiring moneys to be paid from the Tax Relief and Refund Account, the bill would make an appropriation.</html:p>
<html:p>Existing law requires any bill authorizing a new tax expenditure, as defined, to include tax credits, to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.</html:p>
<html:p>This bill would include findings and reporting requirements in compliance with this
requirement.</html:p>
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<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
<ns0:Appropriation>YES</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_7855AA72-E667-41A8-9B56-75E6A8D3DC48">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Legislature finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
California film and TV productions greatly benefit from the current motion picture tax credit 4.0.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
That credit does not cover postproduction when principal photography takes place outside of California or the project otherwise did not qualify for a motion picture tax credit, leaving a significant gap in the state’s incentive framework.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Postproduction expenditures have increasingly migrated to competing domestic and international jurisdictions offering targeted incentives. These jurisdictions include New York, Louisiana, New Mexico, New Jersey, Georgia, Pennsylvania, the United Kingdom, Ireland, Canada, Australia, Spain, France, Italy, and
Qatar. This ever-increasing migration is resulting in reduced utilization of California’s existing postproduction ecosystem and a massive decline in taxable wages.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Major scoring facilities and stages, such as Sony, Fox, Warner Brothers, and Skywalker, are not generating as much revenue as in previous years and are at risk of closure. Editorial houses are also losing revenue and talent due to projects posting out of state.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Editorial houses and postproduction service companies throughout California are losing revenue and skilled workers to out-of-state productions.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Protecting the future of California’s film and television industry aligns with the California Jobs First State Economic Blueprint, which recognizes that targeted incentive programs produce substantial returns on public investment by supporting good-paying jobs, increasing taxable wages, expanding local vendor spending, and generating broader economic activity.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The tax credit program created by this act is not intended to compete with or replace California’s principal photography incentive, but to complement it by capturing postproduction activity not otherwise eligible for existing credits.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This act shall be known as the “California Postproduction Tax Credit,” a post-only tax credit program to incentivize film and television productions to choose to complete their postproduction work within California, wherein the project either did not film principal photography in California or otherwise did not receive the California Film and Television Tax Credit.
</html:p>
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<ns0:BillSection id="id_17F591DB-6B82-4CAD-96DE-B72DFE00D189">
<ns0:Num>SEC. 2.</ns0:Num>
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Section 17053.98.5 is added to the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
, to read:
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<ns0:Num>17053.98.5.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2027, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to a computation and ranking by the California Film Commission in subdivision (e) and the allocation amount categories described in subdivision (g), in an amount described in paragraph (4), of the qualified expenditures for the postproduction of a qualified motion picture in California. A credit shall not be allowed under this section for a qualified motion picture for which a credit has been claimed under Section 17053.98.1.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Except as otherwise provided in this section, the credit shall be allowed for the taxable year in which the
California Film Commission issues the credit certificate pursuant to subdivision (e) for the qualified motion picture, but in no instance prior to July 1, 2027, and shall be for the applicable percentage of all qualified expenditures paid or incurred by the qualified taxpayer in all taxable years for that qualified motion picture.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The amount of the credit allowed to a qualified taxpayer shall be limited to the amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In determining the amount specified in the credit certificate in subparagraph (A), the California Film Commission shall be limited to the following amounts of qualified expenditures for each qualified motion picture:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
In the case of
qualified expenditures, excluding those relating to visual effects, up to six million dollars ($6,000,000).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
In the case of qualified expenditures relating to visual effects, up to six million dollars ($6,000,000).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For purposes of paragraphs (1) and (2), the credit shall be in an amount equal to the sum of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Thirty-five percent of qualified expenditures attributable to qualified editorial expenditures of the postproduction of a qualified motion picture in California.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Additional credits shall be allowed for the postproduction of a qualified motion picture in an aggregate amount not to exceed 15 percent of qualified expenditures, as follows:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Five percent of
qualified expenditures for expenditures relating to postproduction outside the Los Angeles zone, excluding qualified wages described in clause (ii).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Ten percent of qualified expenditures for qualified wages paid for services performed relating to postproduction outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Fifteen percent of qualified expenditures for expenditures relating to qualified music scoring.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Ancillary product” means any article for sale to the public that contains a portion of, or any element of, the qualified motion picture.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Applicable period” means the
period that commences with the first day of principal photography and ends when postproduction concludes. The applicable period includes the time necessary to strike a remote location and return to the Los Angeles zone.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Budget” means an estimate of all expenses paid or incurred during the production period of a qualified motion picture. It shall be the same budget used by the qualified taxpayer and production company for all qualified motion picture purposes.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Clip use” means a use of any portion of a motion picture, other than the qualified motion picture, used in the qualified motion picture.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Credit certificate” means the certificate issued by the California Film Commission pursuant to subparagraph (D) of paragraph (3) of subdivision (e).
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Diversity workplan checklist” means a checklist developed by regulation by the California Film Commission that may include consideration of inclusive hiring above the line, inclusive hiring below the line, equity education, industry capacity building and supplier diversity as part of any diversity workplan.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Employee fringe benefits” means the amount allowable as a deduction under this part to the qualified taxpayer involved in the production of the qualified motion picture, exclusive of any amounts contributed by employees, for any year during the production period with respect to any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Employer contributions under any pension, profit sharing, annuity, or similar plan.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Employer-provided coverage under any accident or health plan for
employees.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The employer’s cost of life or disability insurance provided to employees.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Any amount treated as wages under clause (i) of subparagraph (A) of paragraph (23) shall not be taken into account under this paragraph.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
“Independent film” means a motion picture with a minimum budget of one million dollars ($1,000,000) that is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 30 percent of the producing company.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
“Licensing” means any grant of rights to distribute the qualified motion picture, in whole or in part.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
“Los Angeles zone” means the area within a circle 30 miles in radius from
Beverly Boulevard and La Cienega Boulevard, Los Angeles, California, and includes Agua Dulce, Castaic, including Castaic Lake, Leo Carrillo State Beach, Ontario International Airport, Piru, and Pomona, including the Los Angeles County Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch property is within the Los Angeles zone.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
“New use” means any use of a motion picture in a medium other than the medium for which it was initially created.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
“Pilot for a new television series” means the initial episode produced for a proposed television series.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Postproduction” means the final activities in a qualified motion picture’s production, including editing, foley recording, automatic dialogue replacement, sound editing, scoring, music track recording by musicians and music editing,
beginning and end credits, negative cutting, negative processing and duplication, the addition of sound and visual effects, sound mixing, film-to-tape transfers, encoding, and color correction.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Postproduction” does not include the manufacture or shipping of release prints or their equivalent.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
“Preproduction” means the process of preparation for actual physical production which begins after a qualified motion picture has received a firm agreement of financial commitment, or is greenlit, with, for example, the establishment of a dedicated production office, the hiring of key crew members, and includes, but is not limited to, activities that include location scouting and execution of contracts with vendors of equipment and stage space.
</html:p>
<html:p>
(15)
<html:span class="EnSpace"/>
“Principal photography” means the phase of production during which the
motion picture is actually shot, as distinguished from preproduction and postproduction.
</html:p>
<html:p>
(16)
<html:span class="EnSpace"/>
“Production period” means the period beginning with preproduction and ending upon completion of postproduction.
</html:p>
<html:p>
(17)
<html:span class="EnSpace"/>
“Qualified entity” means a personal service corporation as defined in Section 269A(b)(1) of the Internal Revenue Code, a payroll services corporation, or any entity receiving qualified wages with respect to services performed by a qualified individual.
</html:p>
<html:p>
(18)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified expenditures” means amounts paid or incurred for tangible personal property purchased or leased, and used, within this state in the postproduction of a qualified motion picture and payments, including qualified wages, for services performed within this state in the postproduction of a qualified motion picture.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified expenditures” includes only those amounts paid or incurred after filing an application with the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
“Qualified expenditures” does not include expenditures relating to music scoring unless at least 75 percent of postproduction music scoring labor is performed at a facility located within the state and one of the following is met:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
For a motion picture with a total production budget of less than fifteen million dollars ($15,000,000), at least two thousand five hundred dollars ($2,500) of postproduction expenses relating to music scoring are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
For a motion
picture with a total production budget of at least fifteen million dollars ($15,000,000), at least ten thousand dollars ($10,000) of postproduction expenses relating to music scoring are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(19)
<html:span class="EnSpace"/>
“Qualified expenditures relating to postproduction outside the Los Angeles zone” means amounts paid or incurred during the applicable period for tangible personal property purchased or leased and used or consumed outside the Los Angeles zone and relating to postproduction outside the Los Angeles zone and qualified wages paid for services performed outside the Los Angeles zone and relating to postproduction outside the Los Angeles zone.
</html:p>
<html:p>
(20)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified individual” means any individual who performs services during the production period in an
activity related to the postproduction of a qualified motion picture.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified individual” shall not include either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Any individual related to the qualified taxpayer as described in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal Revenue Code.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Any 5-percent owner, as defined in Section 416(i)(1)(B) of the Internal Revenue Code, of the qualified taxpayer.
</html:p>
<html:p>
(21)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified motion picture” means a motion picture that is produced for distribution to the general public, regardless of medium, that is one of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A feature, including an animated film and an independent film, with a minimum production budget
of one million dollars ($1,000,000).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A miniseries or limited series consisting of two or more episodes, each longer than 40 minutes of running time, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A pilot for a new live action or animated television series that is at least 20 minutes of running time, exclusive of commercials, and with a minimum production budget of one million dollars ($1,000,000).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
A live action or animated series, averaging across a season at least 20 minutes of running time per episode, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
A large-scale competition show, not including traditional
reality, game shows, talk shows, or docufollow television programming, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
To qualify as a “qualified motion picture,” all of the following conditions shall be satisfied:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
At least 75 percent, or one million dollars ($1,000,000), whichever is greater, of postproduction expenses are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Postproduction of the qualified motion picture is completed within 30 months from the date on which the qualified taxpayer’s application is approved by the California Film Commission.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The copyright for the motion picture is registered with the United States
Copyright Office pursuant to Title 17 of the United States Code.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Except as provided in subclause (II), principal photography of the qualified motion picture commences after the date on which the application is approved by the California Film Commission, but no later than 180 days after the date of that approval if the qualified motion picture has a budget with qualified expenditures of less than one hundred million dollars ($100,000,000), and no later than 240 days after the date of that approval in the case of a qualified motion picture with a budget of qualified expenditures with at least one hundred million dollars ($100,000,000), unless death, disability, or disfigurement of the director or of a principal cast member; an act of God, including, but not limited to, fire, flood, earthquake, storm, hurricane, or other natural disaster; terrorist activities; or government sanction has directly prevented a
production’s ability to begin principal photography within the prescribed 180- or 240-day commencement period.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Notwithstanding subclause (I), a production that completed principal photography of the previous season more than 48 months prior to the application for a credit allocation under this section, shall be deemed not to have commenced principal photography prior to the date on which the application for an allocation of credit under this section is approved by the California Film Commission.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Notwithstanding subclauses (I) and (II), a television series that did not commence principal photography prior to July 1, 2027, and applied for but did not receive an allocation under this section for its first season filming in California and makes an application for allocation of credit for its second season filming in California shall be deemed not to have commenced principal
photography prior to the date on which the application for an allocation of credit under this section is approved by the California Film Commission.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Provides a diversity workplan checklist.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
Pays a prevailing wage rate determined by the Director of Industrial Relations under Sections 1773 and 1773.9 of the Labor Code where a rate has been established for that position. This requirement shall apply to services performed by a workforce that is employed directly, indirectly through a motion picture payroll services company, or through a loan-out corporation where the underlying services are performed in California.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For the purposes of subparagraph (A), in computing the total wages paid or incurred for the postproduction of a qualified motion picture, all amounts paid or incurred by all persons or entities
that share in the costs of the qualified motion picture shall be aggregated.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
“Qualified motion picture” shall not include commercial advertising, music videos, a motion picture produced for private noncommercial use, such as weddings, graduations, or as part of an educational course and made by students, a news program, current events or public events program, talk show, game show, sporting event or activity, awards show, telethon or other production that solicits funds, reality television program, except as specified in clause (v) of subparagraph (A), clip-based programming if more than 50 percent of the content is comprised of licensed footage, documentaries, variety programs, daytime dramas, strip shows, or any production that falls within the recordkeeping requirements of Section 2257 of Title 18 of the United States Code.
</html:p>
<html:p>
(22)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified
taxpayer” means a taxpayer, or a single member limited liability company that is disregarded for tax purposes pursuant to Section 23038, who has paid or incurred qualified expenditures, participated in the Career Readiness requirement in Section 17053.95, and has been issued a credit certificate by the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section is not allowed to the pass-thru entity, but shall be passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, “pass-thru entity” means any entity taxed as a partnership or “S” corporation.
</html:p>
<html:p>
(23)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified wages” means all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Any wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code that were paid or incurred by any taxpayer involved in the postproduction of a qualified motion picture with respect to a qualified individual for services performed on the qualified motion picture production within this state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The portion of any employee fringe benefits paid or incurred by any taxpayer involved in the postproduction of the qualified motion picture that are properly allocable to qualified wage amounts described in clauses (i), (iii), and (iv).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Any payments made to a qualified entity for services performed in this state by qualified individuals within the meaning of paragraph
(20).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Remuneration paid to an independent contractor who is a qualified individual for services performed within this state by that qualified individual.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified wages” shall not include any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Expenses, including wages, related to new use, reuse, clip use, licensing, secondary markets, or residual compensation, or the creation of any ancillary product, including, but not limited to, a soundtrack album, toy, game, trailer, or teaser.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Expenses, including wages, paid or incurred with respect to acquisition, development, turnaround, or any rights thereto.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Expenses, including wages, related to financing, overhead, marketing, promotion, or distribution
of a qualified motion picture.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Expenses, including wages, paid per person per qualified motion picture for writers, directors, music directors, music composers, music supervisors, producers, and performers, other than background actors with no scripted lines.
</html:p>
<html:p>
(24)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Recurring television allocation amount” means the sum of the base year allocation and the product of all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The base year allocation.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The number of subsequent years.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Three percent.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of this paragraph, the following definitions apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Base year allocation” means the amount received by the recurring television series in its fiscal year 2025–26 Credit Allocation Letter or Letters, or if no amounts were reserved in fiscal year 2025–26, in the next fiscal year in which a Credit Allocation Letter or Letters were received.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
“The number of subsequent years” means the number of full or partial fiscal years that have elapsed since the fiscal year in which the base year allocation was made.
</html:p>
<html:p>
(25)
<html:span class="EnSpace"/>
“Recurring television series” means any television series that was previously approved and issued a credit allocation letter under this section.
</html:p>
<html:p>
(26)
<html:span class="EnSpace"/>
“Residual compensation” means supplemental compensation paid at the time that a motion picture is exhibited through new use, reuse, clip use, or in secondary markets, as distinguished from
payments made during production.
</html:p>
<html:p>
(27)
<html:span class="EnSpace"/>
“Reuse” means any use of a qualified motion picture in the same medium for which it was created, following the initial use in that medium.
</html:p>
<html:p>
(28)
<html:span class="EnSpace"/>
“Secondary markets” means media in which a qualified motion picture is exhibited following the initial media in which it is exhibited.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding any other law, a qualified taxpayer may sell any credit allowed under this section that is attributable to an independent film, as defined in paragraph (8) of subdivision (b), to an unrelated party.
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The qualified taxpayer shall report to the Franchise Tax Board prior to the sale of the credit, in the form and manner specified by the Franchise Tax Board, all required information regarding the
purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the qualified taxpayer for the sale of the credit.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A credit shall not be sold pursuant to this subdivision to more than one taxpayer, nor may the credit be resold by the unrelated party to another taxpayer or other party.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
A party that has acquired tax credits under this subdivision shall be subject to the requirements of this section.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
In no event may a qualified taxpayer assign or sell any tax credit to the extent the tax credit allowed by this section is claimed on any tax return of the qualified taxpayer.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
In the event that both the taxpayer originally allocated a credit under this section by the California Film Commission and a taxpayer to whom the credit has been sold both claim the same amount of credit on their tax returns, the Franchise Tax Board may disallow the credit of either taxpayer, so long as the statute of limitations upon assessment remains open.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this subdivision.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Subdivision (g) of Section 17039 shall not apply to any credit sold pursuant to this subdivision.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
For purposes of this subdivision, the unrelated party or
parties that purchase a credit pursuant to this subdivision shall be treated as a qualified taxpayer pursuant to paragraph (1) of subdivision (a).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
In the case where the credit allowed under this section exceeds the “net tax,” the excess credit may be carried over to reduce the “net tax” in the following taxable year, and succeeding eight taxable years, if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the California Film Commission shall prescribe rules and regulations to carry out the purposes of this section, including, but not limited to, the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Subparagraph (B) of paragraph (4) of subdivision
(a) and clause (iv) of subparagraph (D) of paragraph (2) of subdivision (e).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Any rules and regulations necessary to establish procedures, processes, requirements, and applications.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding any other law, prior to preparing a notice of proposed action pursuant to Section 11346.4 of the Government Code and prior to making any revision to the proposed regulation other than a change that is nonsubstantial or solely grammatical in nature, the Governor’s Office of Business and Economic Development shall first approve the proposed regulation or proposed change to a proposed regulation regarding allocating the credit pursuant to subdivision (g).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The California Film Commission shall not be required to prepare an economic impact analysis pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) with regard to any rules and regulations adopted pursuant to this subdivision.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For purposes of this section, the California Film Commission shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Subject to the requirements of subparagraphs (A) to (E), inclusive, of paragraph (2), on or after July 1, 2027, and before July 1, 2032, in four or more allocation periods per fiscal year, allocate tax credits to applicants.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The California Film Commission shall increase the total credit amount allocated to an applicant by up to 2 percent of the initial credit amount allocated under this section, as determined by the California Film Commission, for qualified productions that employ trainees from a Career Pathways Program.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Establish a procedure for applicants to file with the California Film Commission a written application, on a form jointly prescribed by the California Film Commission and the Franchise Tax Board for the allocation of the tax credit. The application shall include, but not be limited to, all of the following information:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The budget for the motion picture production.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The number of postproduction days.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A financing plan for the postproduction.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The diversity of the workforce employed by the applicant, including, but not limited to, the ethnic and racial makeup of the individuals employed by the applicant during the postproduction of the qualified
motion picture, to the extent possible.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The amount of qualified wages the applicant expects to pay to qualified individuals.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The amount of tax credit the applicant computes the qualified motion picture will receive pursuant to paragraph (4) of subdivision (a).
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
A statement establishing that the tax credit described in this section is a significant factor in the applicant’s choice of location for the postproduction of the qualified motion picture. The statement shall include information about whether the qualified motion picture is at risk of not being filmed or specify the jurisdiction or jurisdictions in which the postproduction will occur in the absence of the tax credit. The statement shall be signed by an officer or executive of the applicant.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
The applicant’s written policy against unlawful harassment, including, but not limited to, sexual harassment, which includes procedures for reporting and investigating harassment claims, a phone number for an individual who will be responsible for receiving harassment claims, and a statement that the company will not retaliate against an individual who reports harassment. The applicant shall also indicate how the policy will be distributed to employees and include a summary of education training resources, including the prohibition against, and prevention and correction of, sexual harassment and remedies available.
</html:p>
<html:p>
(ix)
<html:span class="EnSpace"/>
If applicable, summary of the applicant’s voluntary programs to increase the representation of minorities and women in the job classifications that are not included in qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (23) of subdivision (b) and information about how these programs are
publicized to interested parties. The officer or executive referenced in clause (vii) who is signing the statement shall provide additional information about these programs, if needed and upon request, to the California Film Commission.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
Any other information deemed relevant by the California Film Commission or the Franchise Tax Board.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Establish criteria, consistent with the requirements of this section, for allocating tax credits.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Determine and designate applicants who meet the requirements of this section.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For purposes of allocating the credit amounts subject to the categories described in subdivision (i) in any fiscal year, the California Film Commission shall do all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Notwithstanding any other law, any television series or any new television series based on a pilot for a new television series that has been approved and issued a credit allocation by the California Film Commission under this section or Section 23698.5 shall be issued a credit for each subsequent season, for the life of that television series whenever credits are allocated within a fiscal year.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), a recurring television series that does not request a credit allocation within 18 months from the date of completion of principal photography of the previous season is deemed to have waived the credit allocation guarantee provided by this clause and must reapply for a credit allocation. The California Film Commission may by regulation determine the appropriate priority to be given in a reapplication process for a recurring series reapplying pursuant to this clause.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The California Film Commission shall limit the amount of credits any recurring television series receives in a subsequent season to no more than the recurring television allocation amount.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
In the event that insufficient tax credits are available to fund all recurring television series pursuant to this clause for any fiscal year or in the event the California Film Commission projects, in collaboration with the Department of Finance, that there will be insufficient tax credits available to fund all recurring television series in either of the subsequent two fiscal years, the California Film Commission shall make the following adjustments in the order given until the shortfall, or any projected shortfall for the two subsequent fiscal years, for recurring television series is eliminated:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Notwithstanding
paragraph (2) of subdivision (g), the California Film Commission may redirect up to ____ percent of the credit allocations from the features category to the television series category for that fiscal year until the shortfall is eliminated.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Allocate up to 25 percent of total credit allocations that would otherwise be allocated in the 2029–30 fiscal year to recurring television series in the current fiscal year until the shortfall is eliminated. Any amounts transferred for allocation in the current fiscal year shall be subtracted from the amount allowed to be allocated in the 2029–30 fiscal year as specified in subdivision (g). Notwithstanding paragraph (3), the credit allocations that are subtracted from the 2029–30 fiscal year shall not be certified until July 1, 2030, or later.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The California Film Commission shall consult with the qualified taxpayers who are producing
the recurring television series for purposes of negotiating a minimally impactful reduction in the amount of credits awarded to each recurring television series for that fiscal year until the shortfall is eliminated.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Subject to the annual cap and the allocation credit amounts based on categories described in subdivision (g), allocate an aggregate amount of credits under this section and Section 23698.5.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Certify tax credits allocated to qualified taxpayers and do all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Establish a verification procedure to update the information in subparagraph (A) of paragraph (2), including, but not limited to, the amounts of qualified expenditures paid or incurred by the applicant.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Establish audit requirements that shall be satisfied
before a credit certificate may be issued by the California Film Commission.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Issue a credit certificate to a qualified taxpayer upon completion of the qualified motion picture reflecting the credit amount allocated after qualified expenditures have been verified. The amount of credit shown on the credit certificate shall not exceed the amount of credit allocated to that qualified taxpayer pursuant to this section.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Notwithstanding any other law, the California Film Commission shall certify a credit amount equal to 96 percent of the total credit allocated to the qualified taxpayer, unless the qualified taxpayer chooses to submit a diversity workplan and the California Film Commission determines that the qualified taxpayer has met or made a good-faith effort to meet the diversity goals in its diversity workplan, pursuant to clause (ii).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The California Film Commission shall certify an additional credit amount equal to 4 percent of the total credit allocated to the qualified taxpayer if a qualified taxpayer submits to the California Film Commission, in the form and manner required by the commission, all of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
A diversity workplan within 30 days after receiving a credit allocation letter. The workplan shall be consistent with the diversity workplan checklist to address diversity and be broadly reflective of California’s population in terms of race, ethnicity, gender, disability status, and veteran status, and shall include all of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
A statement of the diversity goals the motion picture will seek to achieve in terms of qualified wages.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
A statement of
the diversity goals the motion picture will seek to achieve for individuals whose wages are excluded from qualified wages.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
A plan of what strategies the motion picture will employ to achieve the goals in this subclause and subclause (II).
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
Other requirements as the California Film Commission shall determine by regulation.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
An interim assessment on the qualified taxpayer’s efforts to meet the diversity workplan prior to the commencement of postproduction. Upon review pursuant to a procedure prescribed in regulations, the California Film Commission shall determine whether the interim assessment indicates that the qualified motion picture is making a good-faith effort to meet the goals of the diversity workplan and shall notify the qualified motion picture of its findings.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
A final diversity assessment that includes information about how the project met or made a good-faith effort to meet the diversity workplan, including, but not limited to, aggregate data, voluntarily self-reported by individuals whose wages are included in qualified wages and individuals whose wages are excluded from qualified wages, with regard to their race, ethnicity, gender, disability status, veteran status, and ZIP Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The California Film Commission, in consultation with the Governor’s Office of Business and Economic Development, shall establish guidelines to evaluate diversity workplans as described in this subparagraph. The guidelines shall be posted on the California Film Commission’s internet website.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The California Film Commission shall approve or reject the diversity workplan of an
applicant, to the extent allowed by federal and state law.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
This subparagraph shall not apply to an independent film with qualified expenditures of ten million dollars ($10,000,000) or less.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Obtain, when possible, the following information from applicants that do not receive an allocation of credit:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Whether the qualified motion picture that was the subject of the application was completed.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
If completed, in which state or foreign jurisdiction was postproduction completed.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Whether the applicant received any financial incentives from the state or foreign jurisdiction to complete postproduction in that location.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Provide the Legislative Analyst’s Office, upon request, any or all application materials or any other materials received from, or submitted by, applicants for which a credit allocation decision has been made, including, but not limited to, applicants that did not receive a credit allocation. Materials provided to the Legislative Analyst’s Office shall be in electronic format when available and include, but not be limited to, information provided pursuant to subclauses (I) to (III), inclusive, of clause (ii) of subparagraph (D) of paragraph (3).
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The information provided to the California Film Commission pursuant to this section shall constitute confidential tax information for purposes of Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Notwithstanding any other law, on or after July 1, 2030, the California Film
Commission may allocate, pursuant to this section, any previously allocated credits not certified that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of this section, “previously allocated credits not certified” means either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Credits allocated under paragraph (1) for which the qualified taxpayer to which the credit amounts were originally allocated has notified the California Film Commission in writing that the qualified taxpayer will not request certification for the allocated credits.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The difference between the amount of credits allocated under paragraph (1) to a qualified taxpayer and the amount of credits the California Film Commission certified, for that qualified taxpayer. For purposes of
calculating the difference, the California Film Commission shall not consider any credit amounts for which the qualified taxpayer notifies the California Film Commission under clause (i).
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Notwithstanding any other law, on or after July 1, 2030, the California Film Commission may allocate, pursuant to this section, any credit amount described in subparagraph (B) of paragraph (1) of subdivision (g) that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
The California Film Commission shall submit a report to the Legislature, on an annual basis beginning June 30, 2029, containing diversity data provided by the applicants. The report shall contain, in the aggregate and per project, an assessment of whether the diversity workplan goals required by this section were met for qualified motion pictures
that submitted the final assessment to the California Film Commission in the prior fiscal year. The assessment shall contain an account of diversity workplans submitted, interim assessments submitted, and final assessments submitted, as well as which categories of the diversity workplan checklist established pursuant to paragraph (6) of subdivision (b) were included. In the event that a report is required pursuant to Section 17053.98 or 17053.98.1 and Section 23698 or 23698.1 in the same year as a report is required under this paragraph, the reports may be combined into one report. The California Film Commission shall submit each such assessment to the Legislature in compliance with Section 9795 of the Government Code.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The California Film Commission shall annually provide the Legislative Analyst’s Office, the Franchise Tax Board, and the California Department of Tax and Fee Administration with a list of qualified
taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission. The list shall include the names and taxpayer identification numbers, including taxpayer identification numbers of each partner or shareholder, as applicable, of the qualified taxpayer.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Notwithstanding paragraph (6) of subdivision (e), the California Film Commission shall annually post on its internet website and make available for public release all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A table which includes all of the following information: a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission, the number of production days in California the qualified taxpayer represented in its application would occur, the number of California jobs that the qualified taxpayer represented in its
application would be directly created by the postproduction, and the total amount of qualified expenditures expected to be spent by the postproduction.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A narrative staff summary describing the postproduction of the qualified taxpayer as well as background information regarding the qualified taxpayer contained in the qualified taxpayer’s application for the credit.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The diversity report submitted annually to the Legislature described in paragraph (9) of subdivision (e) organized per production and an aggregate compilation describing the voluntary programs collected pursuant to clause (xiii) of subparagraph (A) of paragraph (2) of subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Nothing in this subdivision shall be construed to make the information submitted by an applicant for a tax credit under this section a public record, including
for the purposes of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The aggregate amount of credits that may be allocated for a fiscal year pursuant to this section and Section 23698.5, is ____ dollars ($____), plus any amount described in subparagraph (B) or (C) in credits for the 2027–28 fiscal year and each fiscal year thereafter, through and including the 2032–33 fiscal year, except as provided in paragraph (7) of subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The unused allocation credit amount, if any, for the preceding fiscal year.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The amount of previously allocated credits not certified.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Subject to changes in allocations pursuant to clause
(iv) of subparagraph (D) of paragraph (2) of subdivision (e), the California Film Commission shall allocate the credit amounts subject to the following categories, but shall have discretion to reallocate up to ____ percent of the funds within one category to the other category to maximize the amount of total credits allocated:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Features, independent films, and animated films shall be allocated 50 percent of the amount specified in paragraph (1).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
A television series, miniseries, limited series, and animated series shall be allocated 50 percent of the amount specified in paragraph (1).
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Any act that reduces the amount that may be allocated pursuant to paragraph (1) constitutes a change in state taxes for the purpose of increasing revenues within the meaning of Section 3 of Article XIII
<html:span class="ThinSpace"/>
A of the California Constitution and may be passed by not less than two-thirds of all Members elected to each of the two houses of the Legislature.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
The California Film Commission shall have the authority to allocate tax credits in accordance with this section and in accordance with any regulations prescribed pursuant to subdivision (d) upon adoption.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
A qualified taxpayer may make a one-time election to be paid a refund for each taxable year of the refundable period, not to exceed the annual refundable amount.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
For purposes of this subdivision, the following definitions shall apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
“Annual refundable amount” means 20 percent of the total refundable amount.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
“Credit amount” means the credit amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
In the case of a pass-thru entity, the “credit amount” described in paragraphs (2) and (3) means the pro rata share or distributive share of the credit passed through to the partner or shareholder of the qualified taxpayer. For purposes of this subclause, the term “pass-thru entity” means any partnership, “S” corporation, or limited liability company treated as a partnership.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
In the case of an assigned credit, the “credit amount” means the credit amount that was assigned to the taxpayer.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
“Refundable period” means the first taxable year that
the credit certificate is issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e), and the succeeding four taxable years.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
“Total refundable amount” means 90 percent of the credit amount that exceeds the “net tax” in the first taxable year of the refundable period.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The refund shall be computed as follows:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
In the first taxable year of the refundable period, the credit amount shall be allowed against the “net tax” computed under this part for the taxable year.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
If the credit allowed by this section exceeds the “net tax” in the first taxable year of the refundable period, the annual refundable amount shall be refunded to the qualified taxpayer.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
In each taxable year after the first taxable year of the refundable period, the annual refundable amount shall be allowed as a credit against the “net tax” computed under this part for the taxable year, and the excess, if any, shall be refunded to the qualified taxpayer.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
If the qualified taxpayer’s tax liability for the taxable year exceeds the annual refundable amount, only the annual refundable amount shall be allowed as a credit against the qualified taxpayer’s “net tax.”
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
In the first taxable year of the refundable period, the total refundable amount, less the annual refundable amount, shall be carried over to the succeeding taxable year.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In each taxable year other than the first
taxable year of the refundable period, the total refundable amount, less the annual refundable amount allowed as a credit against the qualified taxpayer’s “net tax” or refunded in the current and prior taxable years in the refundable period, shall be carried over to the next succeeding year of the refundable period.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Notwithstanding paragraph (2) of subdivision (c), if an election is made pursuant to this subdivision, no amount of credit shall be allowed after the refundable period.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Any refund pursuant to this subdivision shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the qualified taxpayer upon their election.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
An election made pursuant to this subdivision shall be irrevocable and shall be made on an
original, timely filed return required under Part 10.2 (commencing with Section 18401) for the taxable year that the credit certificate is issued in the form and manner as prescribed by the Franchise Tax Board.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
A taxpayer that purchases a credit pursuant to paragraph (1) of subdivision (c) cannot elect to be paid a refund pursuant to this subdivision.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
For the purposes of complying with Section 41 with respect to this section and Section 23698.5, the Legislature finds and declares all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The specific goals, purposes, and objectives that the credits allowed by this section and Section 23698.5 will achieve include all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
To maintain and expand motion picture and television postproductions, and the quality of
the jobs they provide, in California.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
To keep California’s Film Tax Credit competitive with postproduction incentives offered by other states and other countries.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
To increase the competitiveness of the tax credits allowed by this section and Section 23698.5 relative to previous California motion picture tax credit programs authorized by Sections 17053.85, 17053.95, 17053.98, 23685, 23695, and 23698 by allowing the tax credit to be refundable.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The performance indicators for the Legislature to use in determining if the credits accomplish the specific goals, purposes, and objectives may include, but are not limited to, all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The number and types of postproductions that apply for the tax credits allowed by this section and
Section 23698.5.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The total amount of credit allocations applied for under this section and Section 23698.5.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The total amount of credits allocated under this section and Section 23698.5.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The total amount of credits certified as eligible to be claimed on a tax return under this section and Section 23698.5.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The number of jobs included in the budgets of postproductions receiving the tax credits allocated by this section and Section 23698.5.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
A comparison of the performance indicators specified in paragraphs (1) to (6), inclusive, with results from California motion picture tax credit programs authorized by Sections 17053.85, 17053.95, 17053.98, 17053.98.1, 23685, 23695,
23698, and 23698.1.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
The total amount of credits allocated by this section and Section 23698.5 that are claimed as a refund on a tax return.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
On or before May 1, 2030, the Legislative Analyst’s Office shall provide to the Assembly Committee on Revenue and Taxation, the Senate Committee on Governance and Finance, and the public a report evaluating the effectiveness of the tax credits allowed by this section and Section 23698.5 in achieving the metrics outlined in subdivision (a), including an assessment of the refundability of the tax credit in achieving those metrics. In researching the reports, the Legislative Analyst’s Office may do all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Request and receive all information of California Film Commission applicants for which a credit allocation decision has been made, including, but not
limited to, applicants that did not receive a credit allocation, provided to the California Film Commission pursuant to subdivision (e) of this section and Sections 17053.95, 17053.98, 17053.98.1, 23695, 23698, and 23698.1.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Request and receive all information provided to the Franchise Tax Board relating to the sale or assignment of credits pursuant to paragraph (1) of subdivision (c) of this section and Sections 17053.95, 17053.98, 17053.98.1, 23695, 23698, 23698.1, and 23698.5.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Request and receive all information provided to the California Department of Tax and Fee Administration pursuant to subdivisions (c) and (g) of Section 6902.5.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Notwithstanding Section 19542, the California Film Commission, the California Department of Tax and Fee Administration, the Franchise Tax Board, the Employment Development
Department, and all other relevant state agencies shall provide additional information, as requested by the Legislative Analyst’s Office, as necessary to research the report required by this subdivision.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The information received by the Legislative Analyst’s Office pursuant to this section shall be considered confidential taxpayer information subject to Sections 7056, 7056.5, and 19542 of this code and Section 1094 of the Unemployment Insurance Code, and shall be subject to the appropriate confidentiality requirements of the participating state agency.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The Legislative Analyst’s Office may publish statistics in conjunction with the reports required by this section that are derived from information provided to the Legislative Analyst’s Office pursuant to this section, if the published statistics are classified to prevent the identification of
particular taxpayers, reports, and tax returns and the publication of the percentage of dividends paid by a corporation that is deductible by the recipient under Part 11 (commencing with Section 23001) of Division 2.
</html:p>
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</ns0:LawSection>
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</ns0:BillSection>
<ns0:BillSection id="id_32A62858-710A-4723-841C-356F9686DF30">
<ns0:Num>SEC. 3.</ns0:Num>
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Section 23698.5 is added to the
<ns0:DocName>Revenue and Taxation Code</ns0:DocName>
, to read:
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<ns0:Fragment>
<ns0:LawSection id="id_F4E61F9D-FBD6-490D-8B95-FE843FB85236">
<ns0:Num>23698.5.</ns0:Num>
<ns0:LawSectionVersion id="id_04A907C8-A96A-4F69-8004-2EC89FE075FC">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
For taxable years beginning on or after January 1, 2027, there shall be allowed to a qualified taxpayer a credit against the “tax,” as defined in Section 23036, subject to a computation and ranking by the California Film Commission in subdivision (e) and the allocation amount categories described in subdivision (g), in an amount described in paragraph (4), of the qualified expenditures for the postproduction of a qualified motion picture in California. A credit shall not be allowed under this section for a qualified motion picture for which a credit has been claimed under Section 23698.1.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Except as otherwise provided in this section, the credit shall be allowed for the taxable year in which the California
Film Commission issues the credit certificate pursuant to subdivision (e) for the qualified motion picture, but in no instance prior to July 1, 2027, and shall be for the applicable percentage of all qualified expenditures paid or incurred by the qualified taxpayer in all taxable years for that qualified motion picture.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
The amount of the credit allowed to a qualified taxpayer shall be limited to the amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In determining the amount specified in the credit certificate in subparagraph (A), the California Film Commission shall be limited to the following amounts of qualified expenditures for each qualified motion picture:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
In the case of qualified
expenditures, excluding those relating to visual effects, up to six million dollars ($6,000,000).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
In the case of qualified expenditures relating to visual effects, up to six million dollars ($6,000,000).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For purposes of paragraphs (1) and (2), the credit shall be in an amount equal to the sum of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Thirty-five percent of qualified expenditures attributable to qualified editorial expenditures of the postproduction of a qualified motion picture in California.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Additional credits shall be allowed for the postproduction of a qualified motion picture in an aggregate amount not to exceed 15 percent of qualified expenditures, as follows:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Five percent of qualified
expenditures for expenditures relating to postproduction outside the Los Angeles zone, excluding qualified wages described in clause (ii).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Ten percent of qualified expenditures for qualified wages paid for services performed relating to postproduction outside of the Los Angeles zone to qualified individuals who reside in California but outside the Los Angeles zone.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Fifteen percent of qualified expenditures for expenditures relating to qualified music scoring.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
For purposes of this section:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Ancillary product” means any article for sale to the public that contains a portion of, or any element of, the qualified motion picture.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Applicable period” means the period that
commences with the first day of principal photography and ends when postproduction concludes. The applicable period includes the time necessary to strike a remote location and return to the Los Angeles zone.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Budget” means an estimate of all expenses paid or incurred during the production period of a qualified motion picture. It shall be the same budget used by the qualified taxpayer and production company for all qualified motion picture purposes.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Clip use” means a use of any portion of a motion picture, other than the qualified motion picture, used in the qualified motion picture.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Credit certificate” means the certificate issued by the California Film Commission pursuant to subparagraph (D) of paragraph (3) of subdivision (e).
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
“Diversity workplan checklist” means a checklist developed by regulation by the California Film Commission that may include consideration of inclusive hiring above the line, inclusive hiring below the line, equity education, industry capacity building and supplier diversity as part of any diversity workplan.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Employee fringe benefits” means the amount allowable as a deduction under this part to the qualified taxpayer involved in the production of the qualified motion picture, exclusive of any amounts contributed by employees, for any year during the production period with respect to any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Employer contributions under any pension, profit sharing, annuity, or similar plan.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Employer-provided coverage under any accident or health plan for
employees.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The employer’s cost of life or disability insurance provided to employees.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Any amount treated as wages under clause (i) of subparagraph (A) of paragraph (23) shall not be taken into account under this paragraph.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
“Independent film” means a motion picture with a minimum budget of one million dollars ($1,000,000) that is produced by a company that is not publicly traded and publicly traded companies do not own, directly or indirectly, more than 30 percent of the producing company.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
“Licensing” means any grant of rights to distribute the qualified motion picture, in whole or in part.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
“Los Angeles zone” means the area within a circle 30 miles in radius from
Beverly Boulevard and La Cienega Boulevard, Los Angeles, California, and includes Agua Dulce, Castaic, including Castaic Lake, Leo Carrillo State Beach, Ontario International Airport, Piru, and Pomona, including the Los Angeles County Fairgrounds. The Metro-Goldwyn-Mayer, Inc. Conejo Ranch property is within the Los Angeles zone.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
“New use” means any use of a motion picture in a medium other than the medium for which it was initially created.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
“Pilot for a new television series” means the initial episode produced for a proposed television series.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Postproduction” means the final activities in a qualified motion picture’s production, including editing, foley recording, automatic dialogue replacement, sound editing, scoring, music track recording by musicians and music editing,
beginning and end credits, negative cutting, negative processing and duplication, the addition of sound and visual effects, sound mixing, film-to-tape transfers, encoding, and color correction.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Postproduction” does not include the manufacture or shipping of release prints or their equivalent.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
“Preproduction” means the process of preparation for actual physical production which begins after a qualified motion picture has received a firm agreement of financial commitment, or is greenlit, with, for example, the establishment of a dedicated production office, the hiring of key crew members, and includes, but is not limited to, activities that include location scouting and execution of contracts with vendors of equipment and stage space.
</html:p>
<html:p>
(15)
<html:span class="EnSpace"/>
“Principal photography” means the phase of production during which the
motion picture is actually shot, as distinguished from preproduction and postproduction.
</html:p>
<html:p>
(16)
<html:span class="EnSpace"/>
“Production period” means the period beginning with preproduction and ending upon completion of postproduction.
</html:p>
<html:p>
(17)
<html:span class="EnSpace"/>
“Qualified entity” means a personal service corporation as defined in Section 269A(b)(1) of the Internal Revenue Code, a payroll services corporation, or any entity receiving qualified wages with respect to services performed by a qualified individual.
</html:p>
<html:p>
(18)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified expenditures” means amounts paid or incurred for tangible personal property purchased or leased, and used, within this state in the postproduction of a qualified motion picture and payments, including qualified wages, for services performed within this state in the postproduction of a qualified motion picture.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified expenditures” includes only those amounts paid or incurred after filing an application with the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
“Qualified expenditures” does not include expenditures relating to music scoring unless at least 75 percent of postproduction music scoring labor is performed at a facility located within the state and one of the following is met:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
For a motion picture with a total production budget of less than fifteen million dollars ($15,000,000), at least two thousand five hundred dollars ($2,500) of postproduction expenses relating to music scoring are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
For a motion
picture with a total production budget of at least fifteen million dollars ($15,000,000), at least ten thousand dollars ($10,000) of postproduction expenses relating to music scoring are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(19)
<html:span class="EnSpace"/>
“Qualified expenditures relating to postproduction outside the Los Angeles zone” means amounts paid or incurred during the applicable period for tangible personal property purchased or leased and used or consumed outside the Los Angeles zone and relating to postproduction outside the Los Angeles zone and qualified wages paid for services performed outside the Los Angeles zone and relating to postproduction outside the Los Angeles zone.
</html:p>
<html:p>
(20)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified individual” means any individual who performs services during the production period in an
activity related to the postproduction of a qualified motion picture.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified individual” shall not include either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Any individual related to the qualified taxpayer as described in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal Revenue Code.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Any 5-percent owner, as defined in Section 416(i)(1)(B) of the Internal Revenue Code, of the qualified taxpayer.
</html:p>
<html:p>
(21)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified motion picture” means a motion picture that is produced for distribution to the general public, regardless of medium, that is one of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A feature, including an animated film and an independent film, with a minimum production budget
of one million dollars ($1,000,000).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A miniseries or limited series consisting of two or more episodes, each longer than 40 minutes of running time, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A pilot for a new live action or animated television series that is at least 20 minutes of running time, exclusive of commercials, and with a minimum production budget of one million dollars ($1,000,000).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
A live action or animated series, averaging across a season at least 20 minutes of running time per episode, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
A large-scale competition show, not including traditional
reality, game shows, talk shows, or docufollow television programming, with a minimum production budget of one million dollars ($1,000,000) per episode.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
To qualify as a “qualified motion picture,” all of the following conditions shall be satisfied:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
At least 75 percent, or one million dollars ($1,000,000), whichever is greater, of postproduction expenses are incurred for payment for services performed within the state and the purchase or rental of property used within the state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Postproduction of the qualified motion picture is completed within 30 months from the date on which the qualified taxpayer’s application is approved by the California Film Commission.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The copyright for the motion picture is registered with the United States
Copyright Office pursuant to Title 17 of the United States Code.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
(I)
<html:span class="EnSpace"/>
Except as provided in subclause (II), principal photography of the qualified motion picture commences after the date on which the application is approved by the California Film Commission, but no later than 180 days after the date of that approval if the qualified motion picture has a budget with qualified expenditures of less than one hundred million dollars ($100,000,000), and no later than 240 days after the date of that approval in the case of a qualified motion picture with a budget of qualified expenditures with at least one hundred million dollars ($100,000,000), unless death, disability, or disfigurement of the director or of a principal cast member; an act of God, including, but not limited to, fire, flood, earthquake, storm, hurricane, or other natural disaster; terrorist activities; or government sanction has directly prevented a
production’s ability to begin principal photography within the prescribed 180- or 240-day commencement period.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Notwithstanding subclause (I), a production that completed principal photography of the previous season more than 48 months prior to the application for a credit allocation under this section, shall be deemed not to have commenced principal photography prior to the date on which the application for an allocation of credit under this section is approved by the California Film Commission.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
Notwithstanding subclauses (I) and (II), a television series that did not commence principal photography prior to July 1, 2027, and applied for but did not receive an allocation under this section for its first season filming in California and makes an application for allocation of credit for its second season filming in California shall be deemed not to have commenced principal
photography prior to the date on which the application for an allocation of credit under this section is approved by the California Film Commission.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
Provides a diversity workplan checklist.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
Pays a prevailing wage rate determined by the Director of Industrial Relations under Sections 1773 and 1773.9 of the Labor Code where a rate has been established for that position. This requirement shall apply to services performed by a workforce that is employed directly, indirectly through a motion picture payroll services company, or through a loan-out corporation where the underlying services are performed in California.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For the purposes of subparagraph (A), in computing the total wages paid or incurred for the postproduction of a qualified motion picture, all amounts paid or incurred by all persons or entities
that share in the costs of the qualified motion picture shall be aggregated.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
“Qualified motion picture” shall not include commercial advertising, music videos, a motion picture produced for private noncommercial use, such as weddings, graduations, or as part of an educational course and made by students, a news program, current events or public events program, talk show, game show, sporting event or activity, awards show, telethon or other production that solicits funds, reality television program, except as specified in clause (v) of subparagraph (A), clip-based programming if more than 50 percent of the content is comprised of licensed footage, documentaries, variety programs, daytime dramas, strip shows, or any production that falls within the recordkeeping requirements of Section 2257 of Title 18 of the United States Code.
</html:p>
<html:p>
(22)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified
taxpayer” means a taxpayer, or a single member limited liability company that is disregarded for tax purposes pursuant to Section 23038, who has paid or incurred qualified expenditures, participated in the Career Readiness requirement in Section 23695, and has been issued a credit certificate by the California Film Commission pursuant to subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
In the case of any pass-thru entity, the determination of whether a taxpayer is a qualified taxpayer under this section shall be made at the entity level and any credit under this section is not allowed to the pass-thru entity, but shall be passed through to the partners or shareholders in accordance with applicable provisions of Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001). For purposes of this paragraph, “pass-thru entity” means any entity taxed as a partnership or “S” corporation.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
In the case of an “S” corporation, the credit allowed under this section shall not be used by an “S” corporation against a tax imposed under Chapter 4.5 (commencing with Section 23800).
</html:p>
<html:p>
(23)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Qualified wages” means all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Any wages subject to withholding under Division 6 (commencing with Section 13000) of the Unemployment Insurance Code that were paid or incurred by any taxpayer involved in the postproduction of a qualified motion picture with respect to a qualified individual for services performed on the qualified motion picture production within this state.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The portion of any employee fringe benefits paid or incurred by any taxpayer involved in the postproduction of the qualified motion picture that are properly allocable to qualified wage amounts
described in clauses (i), (iii), and (iv).
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Any payments made to a qualified entity for services performed in this state by qualified individuals within the meaning of paragraph (20).
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Remuneration paid to an independent contractor who is a qualified individual for services performed within this state by that qualified individual.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
“Qualified wages” shall not include any of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Expenses, including wages, related to new use, reuse, clip use, licensing, secondary markets, or residual compensation, or the creation of any ancillary product, including, but not limited to, a soundtrack album, toy, game, trailer, or teaser.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Expenses, including wages, paid or
incurred with respect to acquisition, development, turnaround, or any rights thereto.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Expenses, including wages, related to financing, overhead, marketing, promotion, or distribution of a qualified motion picture.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Expenses, including wages, paid per person per qualified motion picture for writers, directors, music directors, music composers, music supervisors, producers, and performers, other than background actors with no scripted lines.
</html:p>
<html:p>
(24)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
“Recurring television allocation amount” means the sum of the base year allocation and the product of all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The base year allocation.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The number of subsequent years.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Three percent.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of this paragraph, the following definitions apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“Base year allocation” means the amount received by the recurring television series in its fiscal year 2025–26 Credit Allocation Letter or Letters, or if no amounts were reserved in fiscal year 2025–26, in the next fiscal year in which a Credit Allocation Letter or Letters were received.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
“The number of subsequent years” means the number of full or partial fiscal years that have elapsed since the fiscal year in which the base year allocation was made.
</html:p>
<html:p>
(25)
<html:span class="EnSpace"/>
“Recurring television series” means any television series that was previously approved and issued a credit allocation letter under this
section.
</html:p>
<html:p>
(26)
<html:span class="EnSpace"/>
“Residual compensation” means supplemental compensation paid at the time that a motion picture is exhibited through new use, reuse, clip use, or in secondary markets, as distinguished from payments made during production.
</html:p>
<html:p>
(27)
<html:span class="EnSpace"/>
“Reuse” means any use of a qualified motion picture in the same medium for which it was created, following the initial use in that medium.
</html:p>
<html:p>
(28)
<html:span class="EnSpace"/>
“Secondary markets” means media in which a qualified motion picture is exhibited following the initial media in which it is exhibited.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
A qualified taxpayer may elect to assign any portion of the credit allowed under this section to one or more affiliated corporations for each taxable year in which the credit is allowed.
In the event the qualified taxpayer is a single member limited liability company that is disregarded for tax purposes pursuant to Section 23038, the qualified taxpayer may elect to assign any portion of the credit allowed under this section to one or more affiliated corporations as if that single member limited liability company made the federal election to be classified as an association taxable as a corporation.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of the election provided in subparagraph (A), all of the following shall apply:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The election may be based on any method selected by the qualified taxpayer that originally receives the credit.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Once the election is made, it shall be irrevocable for the taxable year the credit is allowed.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The election may be
changed for any subsequent taxable year if the election to make the assignment is expressly shown on each of the returns of the qualified taxpayer and the qualified taxpayer’s affiliated corporations that assign and receive the credits.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The election shall be reported to the Franchise Tax Board, in the form and manner specified by the Franchise Tax Board, along with all required information regarding the assignment of the credit, including the corporation number, the federal employer identification number, or other taxpayer identification number of the assignee, and the amount of the credit assigned.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
For purposes of this paragraph, “affiliated corporation” has the same meaning provided in subdivision (b) of Section 25110, as of the last day of the taxable year in which the credit is allowed, except that “100 percent” is substituted for “more than 50 percent” wherever it
appears in the section, and “voting common stock” is substituted for “voting stock” wherever it appears in the section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Notwithstanding any other law, a qualified taxpayer may sell any credit allowed under this section that is attributable to an independent film, as defined in paragraph (8) of subdivision (b), to an unrelated party.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The qualified taxpayer shall report to the Franchise Tax Board prior to the sale of the credit, in the form and manner specified by the Franchise Tax Board, all required information regarding the purchase and sale of the credit, including the social security or other taxpayer identification number of the unrelated party to whom the credit has been sold, the face amount of the credit sold, and the amount of consideration received by the qualified taxpayer for the sale of the credit.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A credit shall not be sold pursuant to this subdivision to more than one taxpayer, nor may the credit be resold by the unrelated party to another taxpayer or other party.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A party that has been assigned or acquired tax credits under this subdivision shall be subject to the requirements of this section.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
In no event may a qualified taxpayer assign or sell any tax credit to the extent the tax credit allowed by this section is claimed on any tax return of the qualified taxpayer.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
In the event that both the taxpayer originally allocated a credit under this section by the California Film Commission and a taxpayer to whom the credit has been sold both claim the same amount of credit on their tax returns, the Franchise Tax Board may disallow the credit of either taxpayer, so long as the statute of
limitations upon assessment remains open.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this subdivision.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Subdivision (g) or (i) of Section 23036 shall not apply to any credit sold pursuant to this subdivision.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
For purposes of this subdivision, the following shall apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The unrelated party or parties that purchase a credit pursuant to paragraphs (2) to (9), inclusive, shall be treated as a qualified taxpayer pursuant to paragraph (1) of subdivision (a).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
An
affiliated corporation or corporations that are assigned a credit pursuant to paragraph (1) shall be treated as a qualified taxpayer pursuant to paragraph (1) of subdivision (a).
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
In the case where the credit allowed under this section exceeds the “tax,” the excess credit may be carried over to reduce the “tax” in the following taxable year, and succeeding eight taxable years, if necessary, until the credit has been exhausted.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the California Film Commission shall prescribe rules and regulations to carry out the purposes of this section, including, but not limited to, the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Subparagraph (B) of
paragraph (4) of subdivision (a) and clause (iv) of subparagraph (D) of paragraph (2) of subdivision (e).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Any rules and regulations necessary to establish procedures, processes, requirements, and applications.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Notwithstanding any other law, prior to preparing a notice of proposed action pursuant to Section 11346.4 of the Government Code and prior to making any revision to the proposed regulation other than a change that is nonsubstantial or solely grammatical in nature, the Governor’s Office of Business and Economic Development shall first approve the proposed regulation or proposed change to a proposed regulation regarding allocating the credit pursuant to subdivision (g).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The California Film Commission shall not be required to prepare an economic impact analysis pursuant to the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) with regard to any rules and regulations adopted pursuant to this subdivision.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
For purposes of this section, the California Film Commission shall do all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Subject to the requirements of subparagraphs (A) to (E), inclusive, of paragraph (2), on or after July 1, 2027, and before July 1, 2032, in four or more allocation periods per fiscal year, allocate tax credits to applicants.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The California Film Commission shall increase the total credit amount allocated to an applicant by up to 2 percent of the initial credit amount allocated under this section, as determined by the California Film Commission, for qualified productions that employ trainees from a Career
Pathways Program.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Establish a procedure for applicants to file with the California Film Commission a written application, on a form jointly prescribed by the California Film Commission and the Franchise Tax Board for the allocation of the tax credit. The application shall include, but not be limited to, all of the following information:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The budget for the motion picture production.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The number of postproduction days.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
A financing plan for the postproduction.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The diversity of the workforce employed by the applicant, including, but not limited to, the ethnic and racial makeup of the individuals employed by the applicant during the
postproduction of the qualified motion picture, to the extent possible.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
The amount of qualified wages the applicant expects to pay to qualified individuals.
</html:p>
<html:p>
(vi)
<html:span class="EnSpace"/>
The amount of tax credit the applicant computes the qualified motion picture will receive pursuant to paragraph (4) of subdivision (a).
</html:p>
<html:p>
(vii)
<html:span class="EnSpace"/>
A statement establishing that the tax credit described in this section is a significant factor in the applicant’s choice of location for the postproduction of the qualified motion picture. The statement shall include information about whether the qualified motion picture is at risk of not being filmed or specify the jurisdiction or jurisdictions in which the postproduction will occur in the absence of the tax credit. The statement shall be signed by an officer or executive of the applicant.
</html:p>
<html:p>
(viii)
<html:span class="EnSpace"/>
The applicant’s written policy against unlawful harassment, including, but not limited to, sexual harassment, which includes procedures for reporting and investigating harassment claims, a phone number for an individual who will be responsible for receiving harassment claims, and a statement that the company will not retaliate against an individual who reports harassment. The applicant shall also indicate how the policy will be distributed to employees and include a summary of education training resources, including the prohibition against, and prevention and correction of, sexual harassment and remedies available.
</html:p>
<html:p>
(ix)
<html:span class="EnSpace"/>
If applicable, summary of the applicant’s voluntary programs to increase the representation of minorities and women in the job classifications that are not included in qualified wages as set forth in clause (iv) of subparagraph (B) of paragraph (23) of
subdivision (b) and information about how these programs are publicized to interested parties. The officer or executive referenced in clause (vii) who is signing the statement shall provide additional information about these programs, if needed and upon request, to the California Film Commission.
</html:p>
<html:p>
(x)
<html:span class="EnSpace"/>
Any other information deemed relevant by the California Film Commission or the Franchise Tax Board.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Establish criteria, consistent with the requirements of this section, for allocating tax credits.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Determine and designate applicants who meet the requirements of this section.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
For purposes of allocating the credit amounts subject to the categories described in subdivision (i) in any fiscal year, the California Film Commission shall do all of the
following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Notwithstanding any other law, any television series or any new television series based on a pilot for a new television series that has been approved and issued a credit allocation by the California Film Commission under this section or Section 17053.98.5 shall be issued a credit for each subsequent season, for the life of that television series whenever credits are allocated within a fiscal year.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Notwithstanding clause (i), a recurring television series that does not request a credit allocation within 18 months from the date of completion of principal photography of the previous season is deemed to have waived the credit allocation guarantee provided by this clause and must reapply for a credit allocation. The California Film Commission may by regulation determine the appropriate priority to be given in a reapplication process for a recurring series reapplying
pursuant to this clause.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The California Film Commission shall limit the amount of credits any recurring television series receives in a subsequent season to no more than the recurring television allocation amount.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
In the event that insufficient tax credits are available to fund all recurring television series pursuant to this clause for any fiscal year or in the event the California Film Commission projects, in collaboration with the Department of Finance, that there will be insufficient tax credits available to fund all recurring television series in either of the subsequent two fiscal years, the California Film Commission shall make the following adjustments in the order given until the shortfall, or any projected shortfall for the two subsequent fiscal years, for recurring television series is eliminated:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
Notwithstanding paragraph (2) of subdivision (g), the California Film Commission may redirect up to ____ percent of the credit allocations from the features category to the television series category for that fiscal year until the shortfall is eliminated.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
Allocate up to 25 percent of total credit allocations that would otherwise be allocated in the 2029–30 fiscal year to recurring television series in the current fiscal year until the shortfall is eliminated. Any amounts transferred for allocation in the current fiscal year shall be subtracted from the amount allowed to be allocated in the 2029–30 fiscal year as specified in subdivision (g). Notwithstanding paragraph (3), the credit allocations that are subtracted from the 2029–30 fiscal year shall not be certified until July 1, 2030, or later.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
The California Film Commission shall consult with the
qualified taxpayers who are producing the recurring television series for purposes of negotiating a minimally impactful reduction in the amount of credits awarded to each recurring television series for that fiscal year until the shortfall is eliminated.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Subject to the annual cap and the allocation credit amounts based on categories described in subdivision (g), allocate an aggregate amount of credits under this section and Section 17053.98.5.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Certify tax credits allocated to qualified taxpayers and do all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Establish a verification procedure to update the information in subparagraph (A) of paragraph (2), including, but not limited to, the amounts of qualified expenditures paid or incurred by the applicant.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Establish
audit requirements that shall be satisfied before a credit certificate may be issued by the California Film Commission.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Issue a credit certificate to a qualified taxpayer upon completion of the qualified motion picture reflecting the credit amount allocated after qualified expenditures have been verified. The amount of credit shown on the credit certificate shall not exceed the amount of credit allocated to that qualified taxpayer pursuant to this section.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
Notwithstanding any other law, the California Film Commission shall certify a credit amount equal to 96 percent of the total credit allocated to the qualified taxpayer, unless the qualified taxpayer chooses to submit a diversity workplan and the California Film Commission determines that the qualified taxpayer has met or made a good-faith effort to meet the diversity goals in its diversity
workplan, pursuant to clause (ii).
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The California Film Commission shall certify an additional credit amount equal to 4 percent of the total credit allocated to the qualified taxpayer if a qualified taxpayer submits to the California Film Commission, in the form and manner required by the commission, all of the following:
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
A diversity workplan within 30 days after receiving a credit allocation letter. The workplan shall be consistent with the diversity workplan checklist to address diversity and be broadly reflective of California’s population in terms of race, ethnicity, gender, disability status, and veteran status, and shall include all of the following:
</html:p>
<html:p>
(ia)
<html:span class="EnSpace"/>
A statement of the diversity goals the motion picture will seek to achieve in terms of qualified wages.
</html:p>
<html:p>
(ib)
<html:span class="EnSpace"/>
A statement of the diversity goals the motion picture will seek to achieve for individuals whose wages are excluded from qualified wages.
</html:p>
<html:p>
(ic)
<html:span class="EnSpace"/>
A plan of what strategies the motion picture will employ to achieve the goals in this subclause and subclause (II).
</html:p>
<html:p>
(id)
<html:span class="EnSpace"/>
Other requirements as the California Film Commission shall determine by regulation.
</html:p>
<html:p>
(II)
<html:span class="EnSpace"/>
An interim assessment on the qualified taxpayer’s efforts to meet the diversity workplan prior to the commencement of postproduction. Upon review pursuant to a procedure prescribed in regulations, the California Film Commission shall determine whether the interim assessment indicates that the qualified motion picture is making a good-faith effort to meet the goals of the diversity workplan and shall notify
the qualified motion picture of its findings.
</html:p>
<html:p>
(III)
<html:span class="EnSpace"/>
A final diversity assessment that includes information about how the project met or made a good-faith effort to meet the diversity workplan, including, but not limited to, aggregate data, voluntarily self-reported by individuals whose wages are included in qualified wages and individuals whose wages are excluded from qualified wages, with regard to their race, ethnicity, gender, disability status, veteran status, and ZIP Code.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The California Film Commission, in consultation with the Governor’s Office of Business and Economic Development, shall establish guidelines to evaluate diversity workplans as described in this subparagraph. The guidelines shall be posted on the California Film Commission’s internet website.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
The California Film Commission shall
approve or reject the diversity workplan of an applicant, to the extent allowed by federal and state law.
</html:p>
<html:p>
(v)
<html:span class="EnSpace"/>
This subparagraph shall not apply to an independent film with qualified expenditures of ten million dollars ($10,000,000) or less.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Obtain, when possible, the following information from applicants that do not receive an allocation of credit:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Whether the qualified motion picture that was the subject of the application was completed.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
If completed, in which state or foreign jurisdiction was postproduction completed.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Whether the applicant received any financial incentives from the state or foreign jurisdiction to complete postproduction in that location.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Provide the Legislative Analyst’s Office, upon request, any or all application materials or any other materials received from, or submitted by, applicants for which a credit allocation decision has been made, including, but not limited to, applicants that did not receive a credit allocation. Materials provided to the Legislative Analyst’s Office shall be in electronic format when available and include, but not be limited to, information provided pursuant to subclauses (I) to (III), inclusive, of clause (ii) of subparagraph (D) of paragraph (3).
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The information provided to the California Film Commission pursuant to this section shall constitute confidential tax information for purposes of Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Notwithstanding any other
law, on or after July 1, 2030, the California Film Commission may allocate, pursuant to this section, any previously allocated credits not certified that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of this section, “previously allocated credits not certified” means either of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
Credits allocated under paragraph (1) for which the qualified taxpayer to which the credit amounts were originally allocated has notified the California Film Commission in writing that the qualified taxpayer will not request certification for the allocated credits.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The difference between the amount of credits allocated under paragraph (1) to a qualified taxpayer and the amount of credits the California Film Commission
certified, for that qualified taxpayer. For purposes of calculating the difference, the California Film Commission shall not consider any credit amounts for which the qualified taxpayer notifies the California Film Commission under clause (i).
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Notwithstanding any other law, on or after July 1, 2030, the California Film Commission may allocate, pursuant to this section, any credit amount described in subparagraph (B) of paragraph (1) of subdivision (g) that have not previously been added to credit amounts available for allocation under this section or a successor section or sections.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
The California Film Commission shall submit a report to the Legislature, on an annual basis beginning June 30, 2029, containing diversity data provided by the applicants. The report shall contain, in the aggregate and per project, an assessment of whether the diversity workplan goals required
by this section were met for qualified motion pictures that submitted the final assessment to the California Film Commission in the prior fiscal year. The assessment shall contain an account of diversity workplans submitted, interim assessments submitted, and final assessments submitted, as well as which categories of the diversity workplan checklist established pursuant to paragraph (6) of subdivision (b) were included. In the event that a report is required pursuant to Section 17053.98 or 17053.98.1 and Section 23698 or 23698.1 in the same year as a report is required under this paragraph, the reports may be combined into one report. The California Film Commission shall submit each such assessment to the Legislature in compliance with Section 9795 of the Government Code.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The California Film Commission shall annually provide the Legislative Analyst’s Office, the Franchise Tax Board, and the California Department
of Tax and Fee Administration with a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission. The list shall include the names and taxpayer identification numbers, including taxpayer identification numbers of each partner or shareholder, as applicable, of the qualified taxpayer.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
(A)
<html:span class="EnSpace"/>
Notwithstanding paragraph (6) of subdivision (e), the California Film Commission shall annually post on its internet website and make available for public release all of the following:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
A table which includes all of the following information: a list of qualified taxpayers and the tax credit amounts allocated to each qualified taxpayer by the California Film Commission, the number of production days in California the qualified taxpayer represented in its application would occur, the number of California
jobs that the qualified taxpayer represented in its application would be directly created by the postproduction, and the total amount of qualified expenditures expected to be spent by the postproduction.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
A narrative staff summary describing the postproduction of the qualified taxpayer as well as background information regarding the qualified taxpayer contained in the qualified taxpayer’s application for the credit.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
The diversity report submitted annually to the Legislature described in paragraph (9) of subdivision (e) organized per production and an aggregate compilation describing the voluntary programs collected pursuant to clause (xiii) of subparagraph (A) of paragraph (2) of subdivision (e).
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Nothing in this subdivision shall be construed to make the information submitted by an applicant for a tax
credit under this section a public record, including for the purposes of the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
(A)
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The aggregate amount of credits that may be allocated for a fiscal year pursuant to this section and Section 17053.98.5 is ____ dollars ($____), plus any amount described in subparagraph (B) or (C) in credits for the 2027–28 fiscal year and each fiscal year thereafter, through and including the 2032–33 fiscal year, except as provided in paragraph (7) of subdivision (e).
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(B)
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The unused allocation credit amount, if any, for the preceding fiscal year.
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(C)
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The amount of previously allocated credits not certified.
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(2)
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Subject to changes in allocations pursuant to clause (iv) of subparagraph (D) of paragraph (2) of subdivision (e), the California Film Commission shall allocate the credit amounts subject to the following categories, but shall have discretion to reallocate up to ____ percent of the funds within one category to the other category to maximize the amount of total credits allocated:
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(A)
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Features, independent films, and animated films shall be allocated 50 percent of the amount specified in paragraph (1).
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(B)
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A television series, miniseries, limited series, and animated series shall be allocated 50 percent of the amount specified in paragraph (1).
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(3)
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Any act that reduces the amount that may be allocated pursuant to paragraph (1) constitutes a change in state taxes for the purpose of increasing revenues
within the meaning of Section 3 of Article XIII
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A of the California Constitution and may be passed by not less than two-thirds of all Members elected to each of the two houses of the Legislature.
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(h)
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The California Film Commission shall have the authority to allocate tax credits in accordance with this section and in accordance with any regulations prescribed pursuant to subdivision (d) upon adoption.
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(i)
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(1)
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A qualified taxpayer may make a one-time election to be paid a refund for each taxable year of the refundable period, not to exceed the annual refundable amount.
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(2)
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For purposes of this subdivision, the following definitions shall apply:
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(A)
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“Annual refundable amount” means 20 percent of the total
refundable amount.
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(B)
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(i)
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“Credit amount” means the credit amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e).
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(ii)
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In the case of a pass-thru entity, the “credit amount” means the pro rata share or distributive share of the credit passed through to the partner or shareholder of the qualified taxpayer. For purposes of this clause, the term “pass-thru entity” means any partnership, “S” corporation, or limited liability company treated as a partnership.
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(iii)
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In the case of an assigned credit, the “credit amount” means the credit amount that was assigned to the taxpayer.
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(C)
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“Refundable period” means the first taxable year that the credit
certificate is issued to the qualified taxpayer by the California Film Commission pursuant to subdivision (e), and the succeeding four taxable years.
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(D)
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“Total refundable amount” means 90 percent of the credit amount that exceeds the “tax” in the first taxable year of the refundable period.
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(3)
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The refund shall be computed as follows:
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(A)
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(i)
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In the first taxable year of the refundable period, the credit amount shall be allowed against the “tax” computed under this part for the taxable year.
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(ii)
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If the credit allowed by this section exceeds the “tax” in the first taxable year of the refundable period, the annual refundable amount shall be refunded to the qualified taxpayer.
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(B)
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(i)
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In each taxable year after the first taxable year of the refundable period, the annual refundable amount shall be allowed as a credit against the “tax” computed under this part for the taxable year, and the excess, if any, shall be refunded to the qualified taxpayer.
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(ii)
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If the qualified taxpayer’s tax liability for the taxable year exceeds the annual refundable amount, only the annual refundable amount shall be allowed as a credit against the qualified taxpayer’s “tax.”
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(4)
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(A)
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In the first taxable year of the refundable period, the total refundable amount, less the annual refundable amount, shall be carried over to the succeeding taxable year.
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(B)
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In each taxable year other than the first taxable year of the refundable period, the total refundable
amount, less the annual refundable amount allowed as a credit against the qualified taxpayer’s “tax” or refunded in the current and prior taxable years in the refundable period, shall be carried over to the next succeeding year of the refundable period.
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(C)
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Notwithstanding paragraph (11) of subdivision (c), if an election is made pursuant to this subdivision, no amount of credit shall be allowed after the refundable period.
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(5)
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Any refund pursuant to this subdivision shall be credited against other amounts due, if any, and the balance, if any, shall be paid from the Tax Relief and Refund Account and refunded to the qualified taxpayer upon their election.
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(6)
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An election made pursuant to this subdivision shall be irrevocable and shall be made on an original, timely filed return required under Part 10.2 (commencing
with Section 18401) for the taxable year that the credit certificate is issued in the form and manner as prescribed by the Franchise Tax Board.
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(7)
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A taxpayer that purchases a credit pursuant to paragraph (1) of subdivision (c) cannot elect to be paid a refund pursuant to this subdivision.
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