SB 970

This bill creates a refundable digital interactive media income and franchise

tax credit. The credit is equal to the sum of the following 1) 30 percent of the salary

or wages paid by a claimant to employees residing in this state for producing digital

interactive media or entertainment; and 2) 30 percent of the eligible expenditures.

Under the bill, “digital interactive media or entertainment” is generally a product or

platform intended for commercial use that uses text, sound, fixed images, animated

images, video, or three-dimensional geometry and that uses a system in which users

are able to input information or data in response to the information or data provided

through the system. “Digital interactive media or entertainment” does not include

largely static Internet sites, social media, and gambling products or services. The

bill also defines “eligible expenditures” as expenditures related to creating digital

interactive media or entertainment, such as testing, source code development, and

leases of facilities and equipment. The credit under the bill is refundable, which

means that if the credit exceeds the claimant's tax liability, the claimant will receive

the difference as a refund check.

To claim the credit for a taxable year, a person must file an application with the

Department of Revenue and receive a certificate of eligibility for the credit. To grant

a certificate, DOR must determine that the applicant will have at least $25,000 in

eligible expenditures in the taxable year, and DOR, or an auditor certified by DOR,

must conduct an audit of the applicant. The bill requires auditors to comply with

various requirements in conducting the audits, including using sampling methods

adopted by DOR and verifying each expenditure covered by the audit. Applicants

must reimburse DOR for its costs related to the audits. DOR must also certify as

eligible to conduct those audits certified public accountants who submit an

application and satisfy various requirements under the bill. Every two years, DOR

must submit a report to the governor and standing committees of the legislature

related to taxation that includes the number of applications approved for the credit,

the amount of credits claimed, the number of people employed in the state in the

industries eligible for the credit, the economic impact of the credit, and the

community impact of the industries eligible for the credit.