Section 1 of the bill modifies the definition of qualified local
expenditure for purposes of the performance-based incentive for film production in Colorado to include payment by a production company to a personal services corporation to pay the wages or salaries of an employee-owner of the personal service corporation. Personal service corporation and employee-owner of a personal service corporation have the same meaning as set forth in the internal revenue code. A payment by a production company to a personal service corporation is a qualified local expenditure only if the production company documents the payment in an information income tax return and payments in excess of $1 million per calendar year per personal service corporation are excluded from the calculation of the performance-based incentive. Section 2 adds the information income tax return requirement for
production companies to state income tax law and specifies that a production company is generally not required to deduct and withhold state income tax from a payment to a personal service corporation for services. However, if the information return fails to provide a taxpayer identification number for the personal service corporation that can be validated through the taxpayer identification number matching program administered by the internal revenue service, or provides a taxpayer identification number issued for a nonresident alien, then such deduction, withholding, and payment of state income tax to the department of revenue is required.
Section 2 also eliminates the withholding exemption for a payment
to a nonresident individual who performs services in connection with a film production for less than 120 days in a calendar year.
