New Jersey § 54a:4-12b

§ 54a:4-12b.

a. (1) A taxpayer, upon approval of an application to the authority and the director,

shall be allowed a credit against the tax otherwise due for the taxable year under

the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , in an amount equal to , in the case of a taxpayer designated as a New Jersey studio partner or New Jersey

film-lease production company, 40 percent, and in the case of a taxpayer other than

a New Jersey studio partner or New Jersey film-lease production company, 35 percent , of the qualified film production expenses of the taxpayer during a taxable year commencing

on or after July 1, 2018 but before July 1, 2039 , provided that: (a) at least 60 percent of the total film production expenses, exclusive of post-production

costs, of the taxpayer are incurred for services performed, and goods purchased through

vendors authorized to do business, in New Jersey, or the qualified film production

expenses of the taxpayer during the taxable year for services performed, and goods

purchased, through vendors authorized to do business in New Jersey, exceed $1,000,000

per production; (b) principal photography of the film commences within 180 days from the date of the

original application for the tax credit; (c) the film includes, when determined to be appropriate by the commission, at no

cost to the State, marketing materials promoting this State as a film and entertainment

production destination, which materials shall include placement of a “Filmed in New

Jersey” or “Produced in New Jersey” statement, or an appropriate logo approved by

the commission, in the end credits of the film; (d) the taxpayer submits a tax credit verification report prepared by an independent

certified public accountant licensed in this State in accordance with subsection g.

of this section; and (e) the taxpayer complies with the withholding requirements provided for payments

to loan out companies and independent contractors in accordance with subsection h.

of this section. (2) Notwithstanding the provisions of paragraph (1) of subsection a. of this section

to the contrary, the tax credit allowed pursuant to this subsection against the tax

otherwise due for the taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , shall be in an amount equal to , in the case of a taxpayer designated as a New Jersey studio partner or New Jersey

film-lease production company, 35 percent, and in the case of a taxpayer other than

a New Jersey studio partner or New Jersey film-lease production company, 30 percent , of the qualified film production expenses of the taxpayer during a taxable year that

are incurred for services performed and tangible personal property purchased for use

at a sound stage or other location that is located in the State within a 30-mile radius

of the intersection of Eighth Avenue/Central Park West, Broadway, and West 59th Street/Central

Park South, New York, New York. b. (1) A taxpayer, upon approval of an application to the authority and the director,

shall be allowed a credit against the tax otherwise due for the taxable year under

the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , in an amount equal to: 30 percent of the qualified digital media content production

expenses of the taxpayer during a taxable year commencing on or after July 1, 2018

but before July 1, 2039 , provided that: (a) at least $2,000,000 of the total digital media content production expenses of

the taxpayer are incurred for services performed, and goods purchased through vendors

authorized to do business, in New Jersey; (b) at least 50 percent of the qualified digital media content production expenses

of the taxpayer are for wages and salaries paid to full-time or full-time equivalent

employees in New Jersey; (c) the taxpayer submits a tax credit verification report prepared by an independent

certified public accountant licensed in this State in accordance with subsection g.

of this section; and (d) the taxpayer complies with the withholding requirements provided for payments

to loan out companies and independent contractors in accordance with subsection h.

of this section. (2) Notwithstanding the provisions of paragraph (1) of subsection b. of this section

to the contrary, the tax credit allowed pursuant to this subsection against the tax

otherwise due for the taxable year under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , shall be in an amount equal to 35 percent for the qualified digital media content

production expenses of the taxpayer during a taxable year that are incurred for services

performed and tangible personal property purchased through vendors whose primary place

of business is located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester,

Mercer, or Salem County. c. No tax credit shall be allowed pursuant to this section for any costs or expenses

included in the calculation of any other tax credit or exemption granted pursuant

to a claim made on a tax return filed with the director, or included in the calculation

of an award of business assistance or incentive, for a period of time that coincides

with the taxable year for which a tax credit authorized pursuant to this section is

allowed. The order of priority in which the tax credit allowed pursuant to this section and

any other tax credits allowed by law may be taken shall be as prescribed by the director.

The amount of the tax credit applied under this section against the tax otherwise

due under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , for a taxable year, when taken together with any other payments, credits, deductions,

and adjustments allowed by law shall not reduce the tax liability of the taxpayer

to an amount less than zero. The amount of the tax credit otherwise allowable under this section which cannot be

applied for the taxable year due to the limitations of this subsection or under other

provisions of N.J.S.54A:1-1 et seq. , may be carried forward, if necessary, to the seven taxable years following the taxable

year for which the tax credit was allowed. d. (1) A business entity that is classified as a partnership for federal income tax

purposes shall not be allowed a tax credit pursuant to this section directly, but

the amount of tax credit of a taxpayer in respect of a distributive share of entity

income, shall be determined by allocating to the taxpayer that proportion of the tax

credit acquired by the entity that is equal to the taxpayer's share, whether or not

distributed, of the total distributive income or gain of the entity for its taxable

year ending within or with the taxpayer's taxable year. (2) A New Jersey S Corporation shall not be allowed a tax credit pursuant to this

section directly, but the amount of tax credit of a taxpayer in respect of a pro rata

share of S Corporation income, shall be determined by allocating to the taxpayer that

proportion of the tax credit acquired by the New Jersey S Corporation that is equal

to the taxpayer's share, whether or not distributed, of the total pro rata share of

S Corporation income of the New Jersey S Corporation for its privilege period ending

within or with the taxpayer's taxable year. A business entity that is not a gross income “ taxpayer ” as defined and used in the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , and therefore is not directly allowed a credit under this section, but otherwise

meets all the other requirements of this section, shall be considered an eligible

applicant and “taxpayer” as that term is used in this section, and the application

of an otherwise allowed credit amount shall be distributed to appropriate gross income

taxpayers pursuant to the other requirements of this subsection. e. A taxpayer, with an application for a tax credit provided for in subsection a.

or subsection b. of this section, may apply to the authority and the director for

a tax credit transfer certificate in lieu of the taxpayer being allowed any amount

of the tax credit against the tax liability of the taxpayer. The tax credit transfer certificate, upon receipt thereof by the taxpayer from the

authority and the director, may be sold or assigned, in full or in part, to any other

taxpayer that may have a tax liability under the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , or the “Corporation Business Tax Act (1945),” P.L.1945, c. 162 ( C.54:10A-1 et seq. ), in exchange for private financial assistance to be provided by the purchaser or

assignee to the taxpayer that has applied for and been granted the tax credit. The tax credit transfer certificate provided to the taxpayer shall include a statement

waiving the taxpayer's right to claim that amount of the tax credit against the tax

imposed pursuant to N.J.S.54A:1-1 et seq. that the taxpayer has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed

under this section shall not be exchanged for consideration received by the taxpayer

of less than 75 percent of the transferred tax credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against

a tax liability under N.J.S.54A:1-1 et seq. shall be subject to the same limitations and conditions that apply to the use of

a tax credit pursuant to subsections c. and d. of this section. Any amount of a tax credit transfer certificate obtained by a purchaser or assignee

under subsection e. of this section may be applied against the purchaser's or assignee's

tax liability under P.L.1945, c. 162 ( C.54:10A-1 et seq. ) and shall be subject to the same limitations and conditions that apply to the use

of a credit pursuant to subsection c. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ). f. (1) The value of tax credits, including tax credits allowed through the granting

of tax credit transfer certificates, approved by the director and the authority pursuant

to subsection a. of this section and pursuant to subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) to taxpayers, other than New Jersey studio partners and New Jersey film-lease production companies , shall not exceed a cumulative total of $100,000,000 in fiscal year 2019 and in each

fiscal year thereafter prior to fiscal year 2040 to apply against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , and pursuant to section 5 of P.L.1945, c. 162 ( C.54:10A-5 ). In addition to the limitation on the value of tax credits approved by the director for New Jersey film-lease production companies and the limitation on the value of tax credits approved by the director for other taxpayers

imposed by this paragraph, and except as provided in section 98 of P.L.2020, c. 156 ( C.34:1B-362 ), the value of tax credits, including tax credits allowed through the granting of tax

credit transfer certificates, approved by the director and the authority pursuant

to subsection a. of this section and pursuant to subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) to New Jersey studio partners shall not exceed a cumulative total of $100,000,000

in fiscal year 2021 and in each fiscal year thereafter prior to fiscal year 2024, and shall not exceed a cumulative total of $150,000,000 in fiscal year 2024

and in each fiscal year thereafter prior to fiscal year 2040, to apply against the tax imposed pursuant to section 5 of P.L.1945, c. 162 ( C.54:10A-5 ) and the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. Beginning in fiscal year 2023 , in addition to the cumulative total tax credits made available for New Jersey studio partners pursuant to this paragraph and subsection d. of section 98 of P.L.2020, c. 156 ( C.34:1B-362 ) , up to an additional $400,000,000 may be made available annually, in the discretion of the authority, to New Jersey

studio partners for the award of tax credits, including tax credits allowed through

the granting of tax credit transfer certificates, pursuant to subsection a. of this

section and subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ), from the funds made available pursuant to subparagraph (i) of paragraph (1) of

subsection b. of section 98 of P.L.2020, c. 156 ( C.34:1B-362 ). In addition to the limitation on the value of tax credits approved by the director for New Jersey studio

partners and the limitation on the value of tax credits approved by the director for other taxpayers

imposed by this paragraph, and except as provided in section 98 of P.L.2020, c. 156 ( C.34:1B-362 ), the value of tax credits, including tax credits allowed through the granting of tax

credit transfer certificates, approved by the director and the authority pursuant

to subsection a. of this section and pursuant to subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) to New Jersey film-lease production companies shall not exceed a cumulative total of $100,000,000 in fiscal year 2021 and in each

fiscal year thereafter prior to fiscal year 2024, and shall not exceed a cumulative total of $150,000,000 in fiscal year 2024

and in each fiscal year thereafter prior to fiscal year 2040, to apply against the tax imposed pursuant to section 5 of P.L.1945, c. 162 ( C.54:10A-5 ) and the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. Beginning in fiscal year 2023 , in addition to the cumulative total tax credits made available for New Jersey film-lease production companies pursuant to this paragraph and subsection d. of section 98 of P.L.2020, c. 156 ( C.34:1B-362 ) , up to an additional $250,000,000 may be made available annually, in the discretion of the authority, to New Jersey

film-lease production companies for the award of tax credits, including tax credits allowed through the granting

of tax credit transfer certificates, pursuant to subsection a. of this section and

subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ), from the funds made available pursuant to subparagraph (i) of paragraph (1) of

subsection b. of section 98 of P.L.2020, c. 156 ( C.34:1B-362 ). Approvals made to New Jersey studio partners and New Jersey film-lease production companies shall be subject to award agreements with the authority detailing obligations of

the awardee and outcomes relating to events of default, including, but not limited

to, recapture, forfeiture, and termination. Notwithstanding any provision of this subsection or other law to the contrary, if

a film production company designated as a New Jersey studio partner ceases to qualify

for its designation as a New Jersey film studio partner and becomes designated as

a New Jersey film-lease partner facility, the authority shall reduce the cumulative

total amount of tax credits, including tax credits allowed through the granting of

tax credit transfer certificates, made available to New Jersey studio partners in

each fiscal year and shall increase the cumulative total amount of tax credits permitted

to be approved for New Jersey film-lease production companies in each fiscal year

by a corresponding amount pursuant to a formula established in rules adopted by the

authority which shall consider the volume of applications submitted by New Jersey

studio partners and New Jersey film-lease production facilities, the cumulative total

amount of tax credits allowed to New Jersey studio partners and New Jersey film-lease

production facilities in the prior fiscal year, the total square footage of facility

space occupied in the State by New Jersey studio partners and New Jersey film-lease

production facilities, and any other factors that the authority deems appropriate.

Award agreements between the authority and New Jersey studio partners shall include

a requirement for each New Jersey studio partner to occupy the production facility

developed, purchased, or leased as a condition of designation as a New Jersey studio

partner for the duration of the commitment period. If a New Jersey studio partner fails to occupy the production facility developed,

purchased, or leased as a condition of designation as a New Jersey studio partner

for the duration of the commitment period or otherwise fails to satisfy the conditions

for designation as a New Jersey studio partner, the authority shall recapture the

portion of the tax credit that was only available to the taxpayer by virtue of the

taxpayer's designation as a New Jersey studio partner, and all films for which an

initial approval has been given, but for which the authority has not approved final

documentation, shall terminate. The authority shall establish a non-binding, administrative pre-certification process

for potentially eligible projects. If the cumulative total amount of tax credits, and tax credit transfer certificates,

allowed to taxpayers for taxable years or privilege periods commencing during a single

fiscal year under subsection a. of this section and subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) exceeds the amount of tax credits available in that fiscal year, then taxpayers

who have first applied for and have not been allowed a tax credit or tax credit transfer

certificate amount for that reason shall have their applications approved by the authority, provided the application otherwise

satisfies the requirements of this section, and shall be allowed the amount of tax credit or tax credit transfer certificate on the first day of the

next succeeding fiscal year in which tax credits and tax credit transfer certificates

under subsection a. of this section and subsection a. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) are not in excess of the amount of credits available. Notwithstanding any provision of this paragraph to the contrary, for any fiscal year

in which the amount of tax credits approved to New Jersey studio partners, New Jersey

film-lease production companies , or taxpayers other than New Jersey studio partners and New Jersey film-lease production companies pursuant to this paragraph is less than the cumulative total amount of tax credits

permitted to be approved to each such category in that fiscal year, the authority shall certify the amount of the remaining tax

credits available for approval to each such category in that fiscal year, and shall increase the cumulative total amount of tax credits

permitted to be approved for New Jersey studio partners, New Jersey film-lease production companies , or taxpayers other than New Jersey studio partners and New Jersey film-lease production companies in the subsequent fiscal year by the certified amount remaining from the prior fiscal

year. The authority shall also certify, for each fiscal year, the amount of tax credits

that were previously approved, but that the taxpayer is not able to redeem or transfer

to another taxpayer under this section, and shall increase the cumulative total amount

of tax credits permitted to be approved for New Jersey studio partners, New Jersey

film-lease production companies , or taxpayers other than New Jersey studio partners and New Jersey film-lease production companies in the subsequent fiscal year by the amount of tax credits previously approved for each such category , but not subject to redemption or transfer. (2) The value of tax credits, including tax credits allowed through the granting of

tax credit transfer certificates, approved by the authority and the director pursuant

to subsection b. of this section and pursuant to subsection b. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) shall not exceed a cumulative total of $30,000,000 in fiscal year 2019 and in each

fiscal year thereafter prior to fiscal year 2040 to apply against the tax imposed pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. and the tax imposed pursuant to section 5 of P.L.1945, c. 162 ( C.54:10A-5 ). If the total amount of tax credits and tax credit transfer certificates allowed to

taxpayers for taxable years or privilege periods commencing during a single fiscal

year under subsection b. of this section and subsection b. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) exceeds the amount of tax credits available in that year, then taxpayers who have

first applied for and have not been allowed a tax credit or tax credit transfer certificate

amount for that reason shall be allowed, in the order in which they have submitted

an application, the amount of tax credit or tax credit transfer certificate on the

first day of the next succeeding fiscal year in which tax credits and tax credit transfer

certificates under subsection b. of this section and subsection b. of section 1 of P.L.2018, c. 56 ( C.54:10A-5.39b ) are not in excess of the amount of credits available. Notwithstanding any provision of this paragraph to the contrary, for any fiscal year

in which the amount of tax credits approved pursuant to this paragraph is less than

the cumulative total amount of tax credits permitted to be approved in that fiscal

year, the authority shall certify the amount of the remaining tax credits available

for approval in that fiscal year, and shall increase the cumulative total amount of

tax credits permitted to be approved in the subsequent fiscal year by the certified

amount remaining from the prior fiscal year. The authority shall also certify, for each fiscal year, the amount of tax credits

that were previously approved, but that the taxpayer is not able to redeem or transfer

to another taxpayer under this section, and shall increase the cumulative total amount

of tax credits permitted to be approved in the subsequent fiscal year by the amount

of tax credits previously approved, but not subject to redemption or transfer. g. A taxpayer shall submit to the authority and the director a report prepared by

an independent certified public accountant licensed in this State to verify the taxpayer's

tax credit claim following the completion of the production. A New Jersey studio partner that makes deferred compensation payments based on work

or services provided on a production may file a supplemental report prepared by an

independent certified public accountant, pursuant to agreed-upon procedures prescribed

by the authority and the director, no later than two years after the date on which

the production concludes. The deferred compensation payments shall constitute qualified film production expenses

as if the expenses were incurred at the time of production, provided there are credits

available and subject to the authority's review. The report shall be prepared by the independent certified public accountant pursuant

to agreed-upon procedures prescribed by the authority and the director, and shall

include such information and documentation as shall be determined to be necessary

by the authority and the director to substantiate the qualified film production expenses

or the qualified digital media content production expenses of the taxpayer. A single report with attachments deemed necessary by the authority shall be submitted

electronically. Upon receipt of the report, the authority and the director shall review the findings

of the independent certified public accountant's report, and shall make a determination

as to the qualified film production expenses or the qualified digital media content

production expenses of the taxpayer. The authority's and the director's review shall include, but shall not be limited

to: a review of all non-payroll qualified film production expense items and non-payroll

digital media content production expense items over $20,000; a review of 100 randomly

selected non-payroll qualified film production expense items and non-payroll digital

media content production expense items that are greater than $2,500, but less than

$20,000; a review of 100 randomly selected non-payroll qualified film production expense

items and non-payroll digital media content production expense items that are less

than $2,500; a review of the qualified wages for the 15 employees, independent contractors,

or loan-out companies with the highest qualified wages; and a review of the qualified

wages for 35 randomly selected employees, independent contractors, or loan-out companies

with qualified wages other than the 15 employees, independent contractors, or loan-out

companies with the highest qualified wages. The taxpayer's qualified film production expenses and digital media content production

expenses shall be adjusted based on any discrepancies identified for the reviewed

non-payroll qualified film production expense items, non-payroll digital media content

production expense items and qualified wages. The taxpayer's qualified film production expenses and digital media content production

expenses also shall be adjusted based on the projection of any discrepancies identified

based on the review of randomly selected expense items or wages pursuant to this subsection

to the extent that the discrepancies exceed one percent of the total reviewed non-payroll

qualified film production expense items, non-payroll digital media content production

expense items, or qualified wages. The determination shall be provided in writing to the taxpayer, and a copy of the

written determination shall be included in the filing of a return that includes a

claim for a tax credit allowed pursuant to this section. h. A taxpayer shall withhold from each payment to a loan out company , to an independent contractor , or to a homeowner for the use of a personal residence an amount equal to 6.37 percent of the payment otherwise due. The amounts withheld shall be deemed to be withholding of liability pursuant to the

“New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , and the taxpayer shall be deemed to have the rights, duties, and responsibilities

of an employer pursuant to chapter 7 of Title 54A of the New Jersey Statutes. The director shall allocate the amounts withheld for a taxable year to the accounts

of the individuals who are employees of a loan out company in proportion to the employee's

payment by the loan out company in connection with a trade, profession, or occupation

carried on in this State or for the rendition of personal services performed in this

State during the taxable year. A loan out company that reports its payments to employees in connection with a trade,

profession, or occupation carried on in this State or for the rendition of personal

services performed in this State during a taxable year shall be relieved of its duties

and responsibilities as an employer pursuant to chapter 7 of Title 54A of the New

Jersey Statutes for the taxable year for any payments relating to the payments on

which the taxpayer withheld. i. As used in this section: “ Authority ” means the New Jersey Economic Development Authority. “ Business assistance or incentive ” means “business assistance or incentive” as that term is defined pursuant to section

1 of P.L.2007, c. 101 ( C.54:50-39 ). “ Commission ” means the Motion Picture and Television Development Commission. “ Commitment period ” means, for New Jersey studio partners, the period beginning with the commencement

of the eligibility period and expiring 10 years following: (1) in the case of a taxpayer developing or purchasing a production facility, the

issuance of a temporary certificate of occupancy for the production facility developed

or purchased as a condition of designation as a New Jersey studio partner; or (2) in the case of a taxpayer leasing a production facility, commencement of the lease

term for the production facility leased as a condition of designation as a New Jersey

studio partner. “ Digital media content ” means any data or information that is produced in digital form, including data or

information created in analog form but reformatted in digital form, text, graphics,

photographs, animation, sound, and video content. “ Digital media content ” shall not mean content offerings generated by the end user (including postings on

electronic bulletin boards and chat rooms); content offerings comprised primarily

of local news, events, weather, or local market reports; public service content; electronic

commerce platforms (such as retail and wholesale websites); websites or content offerings

that contain obscene material as defined pursuant to N.J.S.2C:34-2 and N.J.S.2C:34-3 ; websites or content that are produced or maintained primarily for private, industrial,

corporate, or institutional purposes; or digital media content acquired or licensed

by the taxpayer for distribution or incorporation into the taxpayer's digital media

content. “ Eligibility period ” means, with respect to New Jersey studio partners, the period in which a New Jersey

studio partner may claim a tax credit for qualified film production expenses, including

expenses that would not constitute qualified film production expenses but for the

taxpayer's designation as a New Jersey studio partner, beginning the earlier of the

commencement of the principal photography for the New Jersey studio partner's initial

film in New Jersey or, in the case of a taxpayer developing or purchasing a production

facility, at the issuance of a temporary certificate of occupancy for the production

facility developed or purchased as a condition of designation as a New Jersey studio

partner and, in the case of a taxpayer leasing a production facility, at the commencement

of the lease term for the production facility leased as a condition of designation

as a New Jersey studio partner, and extending thereafter for a term of not more than

10 years. “ Film ” means a feature film, a television series, or a television show of 22 minutes or

more in length, intended for a national audience, or a television series or a television

show of 22 minutes or more in length intended for a national or regional audience,

including, but not limited to, a game show, award show, talk show, competition or variety show filmed before a live audience, or other gala event filmed and produced at a nonprofit arts and cultural venue receiving

State funding. “Film” shall not include a production featuring news, current events, weather, and

market reports or public programming, sports event, or reality show, a production that solicits funds, a production containing

obscene material as defined under N.J.S.2C:34-2 and N.J.S.2C:34-3 , or a production primarily for private, industrial, corporate, or institutional purposes.

“Film” shall not include an award show or other gala event that is not filmed and

produced at a nonprofit arts and cultural venue receiving State funding. “ Full-time or full-time equivalent employee ” means an individual employed by the taxpayer for consideration for at least 35 hours

a week, or who renders any other standard of service generally accepted by custom

or practice as full-time or full-time equivalent employment, whose wages are subject

to withholding as provided in the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. , regardless of whether the individual is a resident or nonresident taxpayer, or who is a partner of a taxpayer, who works for the partnership for at least 35

hours a week, or who renders any other standard of service generally accepted by custom

or practice as full-time or full-time equivalent employment, and whose distributive

share of income, gain, loss, or deduction, or whose guaranteed payments, or any combination

thereof, is subject to the payment of estimated taxes, as provided in the “New Jersey

Gross Income Tax Act,” N.J.S.54A:1-1 et seq. “Full-time or full-time equivalent employee” shall not include an individual who

works as an independent contractor or on a consulting basis for the taxpayer. “ Highly compensated individual ” means an individual who directly or indirectly receives compensation in excess of

$500,000 for the performance of services used directly in a production. An individual receives compensation indirectly when the taxpayer pays a loan out company

that, in turn, pays the individual for the performance of services. “ Incurred in New Jersey ” means, for any application submitted after the effective date of P.L.2018, c. 56 ( C.54:10A-5.39b et al.), pursuant to which a tax credit has not been allowed prior to the effective

date of P.L.2021, c. 160, service performed within New Jersey and tangible personal property used or consumed

in New Jersey. A service is performed in New Jersey to the extent that the individual performing

the service is physically located in New Jersey while performing the service. Notwithstanding where the property is delivered or acquired, rented tangible property

is used or consumed in New Jersey to the extent that the property is located in New

Jersey during its use or consumption and is rented from a vendor authorized to do

business in New Jersey or the film production company provides to the authority the

vendor's information in a form and manner prescribed by the authority. Purchased tangible property is not used and consumed in New Jersey unless it is purchased

from a vendor authorized to do business in New Jersey and is delivered to or acquired

within New Jersey; provided, however, that if a production is also located in another

jurisdiction, the purchased tangible property is used and consumed in New Jersey if

the acquisition and delivery of purchased tangible property is located in either New

Jersey or another jurisdiction where the production takes place. Payment made to a homeowner for the use of a personal residence located in the State

for filming shall be deemed an expense incurred in New Jersey notwithstanding the

fact that such homeowner is not a vendor authorized to do business in New Jersey,

provided the taxpayer has made the withholding required by subsection h. of this section. “ Independent contractor ” means an individual treated as an independent contractor for federal and State tax

purposes who is contracted with by the taxpayer for the performance of services used

directly in a production. “ Loan out company ” means a personal service corporation or other entity that is contracted with by

the taxpayer to provide specified individual personnel, such as artists, crew, actors,

producers, or directors for the performance of services used directly in a production.

“Loan out company” shall not include entities contracted with by the taxpayer to provide

goods or ancillary contractor services such as catering, construction, trailers, equipment,

or transportation. “ New Jersey film-lease partner facility ” means: (1)(a) a production facility in New Jersey whose owner or developer has made the commitment

to build, lease, or operate a production facility of 250,000 square feet or more,

including a sound stage and production support space, such as production offices,

mill space, or a backlot, for a period of five or more successive years, as evidenced

by site plan approval or an executed redevelopment agreement with a governmental entity

for the purpose of developing a production facility of 250,000 square feet or more; (b) a production facility built, leased, or operated by a production company designated

as a New Jersey studio partner and which the New Jersey studio partner no longer occupies;

or (c) a portion of a production facility owned by a New Jersey studio partner that is

in excess of the space being utilized by the New Jersey studio partner; provided the

spaces utilized and unutilized by the New Jersey studio partner both exceed 250,000

square feet. (2) A film production company that executes at least a 10-year lease for 250,000 square

feet or more from a New Jersey film-lease partner facility shall be eligible to be

designated as a New Jersey studio partner, provided the film production company otherwise

complies with the eligibility requirements of the program. (3) Except for a production facility, or portion thereof, owned, built, leased, or

operated by a film production company designated as a New Jersey studio partner by

the authority on or before the 181st day next following the effective date of P.L.2023, c. 97 ( C.34:1B-4.2 et al.), in order for a production facility to be designated as a New Jersey film-lease

partner facility, the owner or developer shall accept the acquisition by the authority,

at the authority's discretion, of equity in the production facility, on commercially

reasonable and customary terms and conditions determined by the authority and the

New Jersey film-lease partner facility. A film production facility may receive its film-lease partner facility designation

prior to executing an equity agreement with the authority provided final approval

of such agreement occurs on or before the date on which production commences at the

facility. (4) No more than three New Jersey production facilities may be designated as a New

Jersey film-lease partner facility; provided, however, this limitation shall not apply

to production facilities, or portions thereof, owned, built, leased, or operated by

a film production company designated as a New Jersey studio partner. “ New Jersey film-lease partnerproduction company ” means a taxpayer, including any taxpayer that is a member of a combined group under

section 23 of P.L.2018, c. 48 ( C.54:10A-4.11 ) or any other entity in which the film-lease production company has a material ownership

interest and material operational role in the production , that otherwise complies with the eligibility requirements of the Film and Digital Media

Tax Credit Program and has made a commitment to lease or otherwise occupy production space in a New Jersey film-lease partner facility and who will shoot at least 50 percent of the total principal

photography shoot days of the project within New Jersey and who will shoot at least

50 percent of the total principal photography shoot days within New Jersey at the

New Jersey film-lease partner facility. A “ New Jersey film-lease production company ” may include any other member of a taxpayer's combined group, pursuant to P.L.2018, c. 131 ( C.54:10A-4.11 ), or an unrelated entity principally engaged in the production of a film or other

commercial audiovisual product with whom a designated New Jersey film-lease production

company contracts to perform film production services on its behalf such that the

designated New Jersey film-lease production company controls such film or product

during preproduction, production, and postproduction and all results and proceeds

of such services constitute, from the moment of creation, “works made for hire” for

the New Jersey film-lease production company pursuant to the provisions of the federal

“Copyright Act of 1976” ( 17 U.S.C. s.101 et seq. ) . “ New Jersey studio partner ” means a film production company that has made a commitment to produce films or commercial

audiovisual products in New Jersey and has developed, purchased, or executed a 10-year

contract to lease a production facility of 250,000 square feet or more , or has executed a purchase contract with a governmental authority for the purpose

of developing a production facility of 250,000 square feet or more within 48 months

from the date of designation as a New Jersey studio partner; provided, however, the

board, in its discretion, may extend the time to execute a purchase contract for an

additional 12 months. Effective upon designation as a New Jersey studio partner, a film production company

shall be eligible for a credit pursuant to this section, provided the film production

company otherwise complies with the eligibility requirements of Film and Digital Media

Tax Credit Program. In the event the authority determines that a film production company has failed to

meet the qualifications of a New Jersey studio partner or otherwise comply with the

provisions of this section, the authority may rescind the New Jersey studio partner

designation and may recapture from that film production company the portion of any

tax credit that had been awarded to that film production company that was only available

to the film production company by virtue of the film production company's designation

as a New Jersey studio partner. A “ New Jersey studio partner ” may include any other member of a taxpayer's combined group, pursuant to P.L.2018, c. 131 ( C.54:10A-4.11 ), or an unrelated entity principally engaged in the production of a film or other

commercial audiovisual product with whom a designated New Jersey studio partner contracts

to perform film production services on its behalf such that the designated New Jersey

studio partner controls such film or product during pre-production, production, and

post-production, and all results and proceeds of such services constitute, from the

moment of creation, “works made for hire” for the New Jersey studio partner pursuant

to the provisions of the federal “Copyright Act of 1976,” ( 17 U.S.C. s.101 et seq. ) . No more than three film production companies may be designated as a New Jersey studio

partner. “ Partnership ” means an entity classified as a partnership for federal income tax purposes. “ Post-production costs ” means the costs of the phase of production of a film that follows principal photography,

in which raw footage is cut and assembled into a finished film with sound synchronization

and visual effects. “ Pre-production costs ” means the costs of the phase of production of a film that precedes principal photography,

in which a detailed schedule and budget for the production is prepared, the script

and location is finalized, and contracts with vendors are negotiated. “ Qualified digital media content production expenses ” means an expense incurred in New Jersey for the production of digital media content.

“ Qualified digital media content production expenses ” shall include but not be limited to: wages and salaries of individuals employed

in the production of digital media content on which the tax imposed by the “New Jersey

Gross Income Tax Act,” N.J.S.54A:1-1 et seq. has been paid or is due; and the costs of computer software and hardware, data processing,

visualization technologies, sound synchronization, editing, and the rental of facilities

and equipment. Payment made to a loan out company or to an independent contractor shall not be deemed

a “qualified digital media content production expense” unless the payment is made

in connection with a trade, profession, or occupation carried on in this State or

for the rendition of personal services performed in this State and the taxpayer has

made the withholding required pursuant to subsection h. of this section. “Qualified digital media content production expenses” shall not include expenses incurred

in marketing, promotion, or advertising digital media or other costs not directly

related to the production of digital media content. Costs related to the acquisition or licensing of digital media content by the taxpayer

for distribution or incorporation into the taxpayer's digital media content shall

not be deemed “qualified digital media content production expenses.” “ Qualified film production expenses ” means an expense incurred in New Jersey for the production of a film including pre-production

costs and post-production costs incurred in New Jersey. “ Qualified film production expenses ” shall include but not be limited to: wages and salaries of individuals employed

in the production of a film on which the tax imposed by the “New Jersey Gross Income

Tax Act,” N.J.S.54A:1-1 et seq. has been paid or is due; and the costs for tangible personal property used, and services

performed, directly and exclusively in the production of a film, such as expenditures

for film production facilities, props, makeup, wardrobe, film processing, camera,

sound recording, set construction, lighting, shooting, editing, and meals. Payment made to a loan out company or to an independent contractor shall not be deemed

a “qualified film production expense” unless the payment is made in connection with

a trade, profession, or occupation carried on in this State or for the rendition of

personal services performed in this State and the taxpayer has made the withholding

required by subsection h. of this section. Payment made to a homeowner, who is otherwise not a vendor authorized to do business

in New Jersey, for the use of a personal residence for filming shall not be deemed

a “qualified film production expense” unless the taxpayer has made the withholding

required by subsection h. of this section. For the purposes of this definition, wages and salaries of individuals employed in

the production of a film shall include deferred compensation, including advances on

deferred compensation, incurred by New Jersey studio partners, provided the New Jersey

studio partner files a supplemental report prepared by an independent certified public

accountant, pursuant to agreed-upon procedures prescribed by the authority and the

director, no later than two years after the date on which the production concludes. “Qualified film production expenses” shall not include: expenses incurred in marketing

or advertising a film; and payment in excess of $500,000 to a highly compensated individual

for costs for a story, script, or scenario used in the production of a film and wages

or salaries or other compensation for writers, directors, including music directors,

producers, and performers, other than background actors with no scripted lines, except

as follows: (1) for a New Jersey studio partner that incurs less than $50,000,000 in qualified film production expenses in the State, in excess of amounts paid to highly compensated individuals, an additional amount, not to exceed $18,000,000 , of the wages or salaries or other compensation for writers, directors, including

music directors, producers, and performers, other than background actors with no scripted

lines, shall constitute qualified film production expenses; (2) (Deleted by amendment, P.L.2023, c. 97 ) (3) (Deleted by amendment, P.L.2023, c. 97 ) (4) for a New Jersey studio partner that incurs $50,000,000 or more in qualified film production expenses in the State, in excess of amounts paid to highly compensated individuals, an additional amount, not to exceed $72,000,000 , of the wages or salaries or other compensation for writers, directors, including

music directors, producers, and performers, other than background actors with no scripted

lines, shall constitute qualified film production expenses ; (5) for a New Jersey film-lease production company that incurs less than $50,000,000

in qualified film production expenses in the State, in excess of amounts paid to highly

compensated individuals, an additional amount, not to exceed $15,000,000, of the wages

or salaries or other compensation for writers, directors, including music directors,

producers, and performers, other than background actors with no scripted lines, shall

constitute qualified film production expenses; and (6) for a New Jersey film-lease production company that incurs $50,000,000 or more

in qualified film production expenses in the State, in excess of amounts paid to highly

compensated individuals, an additional amount, not to exceed $60,000,000, of the wages

or salaries or other compensation for writers, directors, including music directors,

producers, and performers, other than background actors with no scripted lines, shall

constitute qualified film production expenses . “ Total digital media content production expenses ” means costs for services performed and property used or consumed in the production

of digital media content. “ Total film production expenses ” means costs for services performed and tangible personal property used or consumed

in the production of a film.