PRODUCTION INCENTIVES

• Tools for 2010
• Updates by Jurisdiction
• What's New at EP?
• Maximize Your Incentives with EP
• Upcoming Appearances

The Essential Guide to U.S. & International Production Incentives, 2010, 1st Edition, edited by Joseph Chianese, Marco Cordova, and Barbara Rosenfeld, is now available. Contact our group to order your copy at no charge.

Monthly Production Incentives Email Updates Archive of previous newsletters is now available. Click here to sign up for our newsletter.

Follow the EP Production Incentives Group on Twitter for instant updates on incentives and events at www.twitter.com/filmincentives.

Recent Updates, as of March 31, 2010, have been posted to the website.

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U.S. Updates
For more information on incentives in each state, visit the U.S. Overview on our website and click on the state of interest.

U.S. FEDERAL
The Senate approved legislation that would retroactively extend for one year the special expensing rules for certain film and television productions under section 181. The bill now must be reconciled with House-passed legislation before a final bill can be sent to the White House. The House legislation also includes a one-year extension of this provision.

ARIZONA
The current transferable credit is set to expire December 31, 2010; new legislation (SB 1409) has been introduced to provide a 20% to 30% refundable tax credit through December 31, 2015, with a 25% resident crew requirement. The proposed legislation would decrease the minimum spend to $100,000 from $250,000.

CALIFORNIA - Los Angeles
The City Council approved steps to continue allowing companies to film in municipal buildings at no cost, open city parking lots to productions, create a film coordinator post, and have the Department of Water and Power install energy nodes around the city to accommodate filming equipment (see council file 08-1783-S3 and press release).

CONNECTICUT
A number of bills have been introduced to repeal or amend the existing incentive legislation. Only three of those bills have progressed this month. The most detailed changes are included in SB 176, which would convert the transferable credit to a 10% to 30% rebate and require a minimum 50% local studio usage. (See also SB 5357 and SB 432.)

The Department of Revenue Services issued a special notice summarizing the 2009 legislative changes to the film production tax credit, the film production infrastructure tax credit and the digital animation tax credit, applicable to income years beginning on or after January 1, 2010.  

FLORIDA
Legislation (S1430, S1752, and H0697) has been proposed to revise the film incentive program to convert from a rebate to income and sales and use tax credits. These bills also contain a number of other revisions to the definitions, procedures, etc.

GEORGIA
The Department of Revenue issued an Informational Bulletin (CRED-2010-3-10) that provides examples of vendors that do and do not qualify as a “Georgia vendor” under recently adopted Revenue Regulations (Regulation 560-7-8-.45). These examples illustrate that a “Georgia vendor” must have an inventory of the type of property rented or sold for the expenditure to qualify. This Bulletin sets an effective date for the new regulation of January 7, 2010.

HAWAII
Various proposals have been introduced to transfer the television and film industry activities and responsibilities and its special fund to the Hawaii tourism authority. HB 2690, which passed the House and has been recommended for passage by the Senate Ways and Means Committee, would establish a film office to administer the film tax credits.

IDAHO
The film and television production business rebate fund has been expanded to include “grants, federal moneys donations and funds from any other source.” This legislation gives the state more options to find money to attract local production, including funds from private donors.

IOWA
Legislation (SF 2380) passed by both the House and Senate would suspend registration of eligible film projects until July 1, 2013. The bill will now go to Governor Culver for signature.

KENTUCKY
Legislation (HB530 and HB290) has been introduced to implement a budget for 2010-2012. HB530 declares a fiscal emergency and proposes to cap the film industry tax credit at $5 million during the fiscal year 2010-2011, with a cap of $7.5 million during the 2011-2012 fiscal year. A Senate amendment would make the credit non-refundable. HB530 will likely be rolled into the budget bill.

LOUISIANA
Prior to any certification of the issuance of an initial certification, the motion picture production company shall submit to the Office of Entertainment Industry Development a notarized statement agreeing to pay all vendors. Click here for a copy of the statement and here for Act 478 (for exact language on this statement, please see page 15, lines 13-28).

MAINE
Governor Baldacci signed legislation (LD1449/HP1005) that reduces the minimum spend from $250,000 to $75,000, reduces the cap on wages/compensation from $1 million to $50,000 per person for the 10% to 12% wage rebate, and adds a 5% non-refundable, non-transferable tax credit on local non-wage spend. The legislation is to be effective 90 days after the close of the legislative session.

MASSACHUSETTS
Governor Patrick released a fiscal year 2011 Budget and a 2010 Supplemental Budget, including a temporary cap of $50 million on the film tax credit for fiscal years 2011 and 2012. Proposed legislation (H4572) to implement the cap has been rejected by the full House and will now be considered by the Senate.

New Massachusetts (MA) regulations require production companies to register for “Performer Withholding” and withhold on payments to loan-outs and independent contractors under the production company's federal Tax Identification Number. Additionally, the production company must submit, for each loan-out company employed in MA, Form LOA (Loan-Out Affidavit/Allocation) with the submission of the Film Credit Application. The LOA must be signed by both an authorized representative of the Loanout and the Performer.

We have had several discussions with our contacts at the MA Department of Revenue due to concern over the ability for Entertainment Partners (EP) to continue to provide Workers' Compensation coverage (and claims management), Pension Health and Welfare reporting, long-term data storage, and retrieval for the Unions, State Agencies, and Accountants under the new requirements.

EP will be able to provide the above services if the production company (1) registers for Performer Withholding with the MA Department of Labor (DOL) online and (2) designates our subsidiary, GEP ATL, LLC, as the Professional Tax Preparer for the MA Motion Picture Company/Performer withholding tax. Once GEP ALT is designated as the Professional Tax Preparer, we are then able to remit withholding taxes and file returns on behalf of the production company.

If there is an administrative error in withholding tax (keying errors, paperwork errors, etc.) and MA DOL agrees to return funds, the refunds will be sent to the production company, not to EP. EP will send the production company a manual invoice for the amount of the refund.

We are continuing to work with MA DOL on the annual (year-end) reporting requirements. As the requirements stand now, the production company would have to issue 1099 forms; we will keep you posted on our progress to relieve the Production Companies of this obligation.

MINNESOTA
A number of bills have been introduced to modify the film rebate program. Governor Pawlenty’s supplemental budget reduces the 2010 annual funding to $525,000 from $1,250,000, and eliminates the funding for 2011. In addition, the proposal would zero-out the Film Board’s administrative budget by the end of June. House and Senate budget committees have passed bills with less drastic reductions, but the governor retains the ability to line-item veto provisions that impede his goals. (See Star Tribune and page 50 of the supplemental budget.)

NEW JERSEY
Governor Christie has unveiled a fiscal 2011 budget that would eliminate the film production and digital media production tax credits in fiscal 2011. Current funding for the transferable tax credits are $10 million and $5 million, respectively. A review of the effectiveness of the tax credits in creating permanent, full-time jobs will be evaluated during the year. (See pages 39 and 40 of the budget.)

NEW MEXICO
The New Mexico regular and special legislative sessions have ended, leaving the film incentive intact. All efforts to reduce the film incentive have failed and the incentive remains a 25% refundable credit with a cap only on performing artists’ compensation, which is $5 million per project (or $20 million in compensation). The next legislative session begins in January 2011.

NEW YORK
The Senate has passed a budget blueprint. The Assembly has unveiled its 2010-2011 budget proposal. Once the Assembly has passed a budget, representatives of the Governor, Senate, and Assembly will negotiate a budget they all agree on. Legislation for this version will then be drafted, voted on, and signed by the Governor. The target for completion of the process is April 1 (the start of the State fiscal year). For the past few years, the budget has generally been on time; however, the difficulty of the negotiations will determine the timeliness.

Support for the film tax credit is bolstered by the NY Comptroller’s Report 22-2010, which summarizes the favorable economic impact of the credit since its inception. (See 3-22-2010 press release and 3-24-2010 press release.)

OKLAHOMA
Recent headlines regarding OK tax credits were unrelated to the 35% to 37% Film Enhancement rebate. Both the Governor and Treasurer confirmed to the Film Office that the incentive is not in jeopardy. (The issue in the news related to the Rural Venture Capital Formation Incentive Act, which does provide the basis for another incentive accessed by filmmakers for an additional 12% savings on their budgets.) See engrossed HB 3397.

PENNSYLVANIA
The Three Rivers Workforce Investment Board released the results of a workforce study that shows the strength and impact of the local motion picture and television industry, and the importance of the film production tax credit in creating high paying jobs and job growth.  The study was conducted by The Entertainment Economy Institute and funded by the Commonwealth of Pennsylvania’s Labor and Industry Department. (See news article.)

SOUTH CAROLINA
The proposed 2010-2011 budget contains a provision that would allow unused film incentive money allotted for employee wages, roughly $10 million a year, to be directed to the Parks and Recreation Destination Specific Tourism Program. In addition, the annual operations budget would be decreased by more than $100,000. These must go through the Senate and be ratified by both Houses before they would become law (see pages 181 and 730 of the budget).

UTAH
Governor Herbert signed legislation that modifies the administration of the Motion Picture Incentive Fund, without changing any of the key substantive provisions.

VIRGINIA
Legislation (HB861 and SB257) has passed to create a refundable tax credit for years beginning January 1, 2011, in addition to the Motion Picture Opportunity Fund (with funding of $2 million for the biennium beginning July 1, 2010). The minimum local spend is $250,000, with a funding cap of $2.5 million for the 2010-2012 biennium and $5 million for subsequent biennia. The credit is calculated at 15% of qualifying expenses (20% in economically distressed areas), with an additional 10% to 20% of aggregate resident payroll (depending on local spend), plus 10% of the total aggregate resident payroll for “first time cast and crew.” Qualifying compensation is capped at $1 million.

International Updates

For more information on incentives around the world, visit the International Overview page on our website and click on the region or country of interest.

CANADA - British Columbia
The government introduced legislation this month to increase the DAVE credit to 17.5% from 15% for productions with principal photography beginning after February 28, 2010 (see Tax Bulletin).

CANADA - Manitoba
The government announced a new tax credit that will give producers the option of choosing either a 30% tax credit on all local expenditures, including labor, or the existing credit up to 65% of all labor. The new option is available for productions that start principal photography after March 2010. The province also renewed the existing labor credit that was set to expire March 1, 2011, through March 1, 2014. Details of implementing the new credit, e.g., which costs will be considered eligible for the spend credit, how the election between the two credits will take place, etc., will be determined in the near future. (See press release.)

LATVIA
The Riga Film Fund has been launched to provide cash rebates to feature films and documentaries with a minimum budget of LVL 500,000 (approximately US$ 969,000). (See ScreenDaily - subscription required to view and Film New Europe).

MEXICO
According to reports in Variety and Reuters, the Mexican incentive has a minimum spend of 70 million pesos approximately US$5.6 million) and/or 20 million pesos (approximately US$1.5 million) or more in post-production, and provides a rebate of 7.5% on local spend and reimbursement of the 11% to 16% IVA (value added tax). The overall cap can be increased to US$40 million if demand so requires.

TAIWAN
The GIO increased subsidies to foreign productions in Taiwan to encourage more international productions to shoot there. The subsidy on Republic of China (ROC) nationals employed as cast and crew has been raised to 30% from 20% and 15%, respectively. The rebate on local spend has been raised from 15% to 25%. The additional rebate for transport and accommodations, and for certain insurance on ROC nationals, has increased from 5% to 15%. (See Taipei Film Commission - click English at top of page first for translation; and ScreenDaily - subscription required to view.)

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EP and EPPS Expansion in Connecticut
We have a new account representative, Scott Brant, to work closely with all our Connecticut clients from our new office in Stamford, CT. Please email Scott for additional information regarding our Connecticut services or to schedule a meeting.

Website and Comparison Tool
Visit www.epincentivesolutions.com for the most up-to-date incentives information, including a new extensive glossary covering types of incentives, eligibility criteria, benefit limits, and other key issues to consider. Be sure to check out the Comparison Tool that enables you to compare incentives in up to three different jurisdictions.

EPPS Participating Vendor List
A participating vendor list is now available for EPPS Purchasing, Inc., which provides production equipment and supplies, at competitive rates, in certain states to help maximize your production incentives. Please contact Marco Cordova at 818.955.6278 regarding our EPPS Purchasing, Inc., services.

Want to be a participating EPPS Purchasing, Inc., vendor? Please contact Mary Ann McBride at 412.956.7325 for more information.

EP Incentive Solutions
Please contact EP's production incentives specialists by email or by phone at 818.955.6216 if you have any questions regarding your next production. We can help you budget your next production and find the most beneficial incentives at no charge. We also provide fee-based services for production incentives administration, finance facilitation, corporate-structure planning, and agreed-upon consulting projects. Visit our Services section for more information and contact information for our EP Incentive Solutions specialists.

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Entertainment Partners has purchased Workers' Compensation policies from local brokers throughout the United States to help maximize your production incentives! Listed below are those production incentives states where EP currently has a local policy.

Florida
Hawaii
Illinois
Louisiana
Mississippi
New Jersey
New Mexico
Pennsylvania
Texas

More policies to be announced soon!


Entertainment Partners has an office in each of the following states to help maximize your production incentives (more to open soon!):

California
Connecticut *
Florida
Georgia **
Illinois
Louisiana ***
Michigan ****
Massachusetts
New Mexico *****
New York
Pennsylvania ******
South Carolina
Utah




* EP and EPPS Purchasing, Inc., have a full-time Account Representative in Connecticut to help maximize your production incentives benefits. Please contact Scott Brant at 203.291.9399 for more information regarding our services in Connecticut.

** EP and EPPS Purchasing, Inc., have a full-time Account Representative in Georgia to help maximize your production incentives benefits. Please contact Karen Sortor at 678.690.8469 for more information regarding our services in Georgia.

*** EP and EPPS Purchasing, Inc. have full-time employees working in our Jefferson Parish office to help maximize your production incentives. Please contact Ryan Broussard at 504.296.2502 for more information regarding our services in Louisiana.

**** EP and EPPS Purchasing, Inc. have an office at The Ford Building in Detroit to help maximize your production incentives. Please contact Blane Hailemichael at 313.573.0018 for more information regarding our services in Michigan.

***** EP and EPPS Purchasing, Inc., have an office at Albuquerque Studios. EP provides super loan-out services in New Mexico to help maximize your production incentives. For more information contact the EP Production Incentives Group.

****** EP and EPPS Purchasing, Inc., have a full-time Account Representative in Pennsylvania to help maximize your production incentive benefits. Please contact Mary Ann McBride at 412.956.7325 for more information regarding our services in Pennsylvania.

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411 Publishing Webinar Series
April 13, 2010
This next installment of the webinar series will be co-moderated by EP's Marco Cordova and Rich Guay. The series is presented by 411 Publishing and Variety.com in partnership with the Producers Guild of America. Film Commissioners from Illinois (Betsy Steinberg), Louisiana (Chris Stelly), Massachusetts (Nick Paleologos), and Texas (Bob Hudgins), along with several production executives/producers, including Lou Phillips (Executive Producer, Shutter Island) Bryan Yaconelli (VP of Production Management and Finance, Overture Films) and Robert Del Valle (Line Producer, Knucklehead), will participate in the webinar. Register for Free

AFCI Locations Tradeshow
Santa Monica Civic Auditorium
April 15 - 17, 2010
The world's premier tradeshow for location filmmaking, the Locations Trade Show offers a unique opportunity to connect with a targeted audience and participate in discussions on issues facing the industry today. Visit us at the EP booth (#934) to pick up a copy of the latest edition of The Essentials Guide and see Movie Magic product demos!

Please visit the Happenings section of our website for more information on upcoming events as it becomes available.

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