PRODUCTION INCENTIVES

• Updates by Jurisdiction
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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.

ALABAMA
Legislation (SB 255) has been introduced that would expand the scope of productions qualified for the 25% to 35% refundable credit, but limit the credit base to the first $10,000,000 of qualified expenditures.

ALASKA
Proposed legislation (SB 23) to extend the film tax incentive for ten years passed unanimously in the Senate. The bill would authorize aggregate credits of $200,000,000, among other changes. The bill now moves on to the House for further consideration.

ARIZONA
Proposed legislation (SB 1159) to replace the film incentive that expired at the end of 2010 was "held" without a hearing, thus killing it.

CALIFORNIA
The California Film Commission has posted the approved modified Regulations, Agreed Upon Procedures (AUP), Forms (Revised Application Form, Fiscal Year End Expenditure Report, Expenditure Summary Report), and Guidelines for the Film & TV Tax Credit Program, which will become effective April 15, 2011.

The most significant changes include: a 100 calendar day aggregate cap on hiatuses in principal photography; a requirement to document the total dollar amount of work performed within the state for visual effects, post sound, digital effects, etc.; new rules regarding eligible CPAs for AUP; and the requirement of additional documentation for the AUP.

Legislation has been introduced (AB 1069) which would extend the sunset date and funding for the 20% to 25% film and television tax credit through 2018-2019.

GEORGIA
Proposed legislation (HB 387) to make a comprehensive revision to the tax code, including repeal of the film tax credit, has been amended. The current bill "reported favorably in the House" no longer contains this proposed repeal.

The Department of Revenue has published Notice IT-2011-1, containing a proposed amendment to the "Film Tax Credit" rules. The proposed changes would permit multiple transfers with a $100,000 minimum for each sale (to one or more transferees). Comments will be accepted through April 27, 2011.

NEW MEXICO
Governor Martinez signed legislation (HB 607 and HB 622) to create a new film production credit with an annual aggregate cap of $50,000,000 per fiscal year (July 1 to June 30). The tax credit remains refundable at the rate of 25% of qualifying goods and services. However, refunds of $2,000,000 or more but less than $5,000,000 will be payable in two equal installments; refunds of $5,000,000 or more will be spread over three equal installments. Each installment will come out of the $50,000,000 cap for the year of payment (not from the cap for the year the claim is filed).

The Taxation and Revenue Department will post monthly aggregate balances remaining on its website. The website will also include "non-confidential" information provided by the production company.

The new law also limits the amount of qualifying expenditures, spells out the timing for claiming the credit, requires an audit in certain circumstances, contains a physical presence requirement for qualifying vendors, and provides for performing artist withholding. The law is effective on July 1, 2011.

NORTH CAROLINA
Proposed legislation (SB 539) has been introduced to make the film tax credit non-refundable. (See Wilmington Star News.)

UTAH
Governor Herbert signed legislation (HB 99) late last month to increase the refundable tax credit and cash rebate up to 25% of the "dollars left in the state." The tax credit is offered without a per project cap. Funding for the tax credit is capped at $6,793,700 per fiscal year.

The legislation makes other changes as well, such as making funding for the Motion Picture Incentive Account "nonlapsing," expanding the definition of state approved productions, and providing for the carryover of unused funding amounts.

The existing cash rebate remains available with a maximum cap of $500,000 per project, but no additional funding for the 2011-2012 fiscal year has been provided. (The balance remaining as of March 16, 2011, for the 2010-2011 fiscal year is $3,700,000.) The minimum local spend for both incentives remains at $1,000,000. The new law is effective May 10, 2011.

WYOMING
Governor Mead signed legislation (SF 41) to extend the film production cash rebate to June 30, 2016. The rate remains up to 15% of local qualifying spend with a minimum local spend of $200,000. (See Film Festival Today)

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

CANADA - New Brunswick
The Government announced that the film tax credit will be phased out due to economic pressures. (See New Brunswick Film)

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The Business of Entertainment
Woodbury University, Burbank, CA
April 16, 2011, 10:00 am - 5:00 pm
Shawn K. Gillespie and Julie Harris Walker will speak at the fourth edition of The Business of Entertainment lecture series. The series is a continuing dialogue on the business practices, issues, and challenges facing today's filmed-entertainment industry. Shawn will speak on a presentation entitled "How Soft Money 'Production Incentives' Can Be Used to Help Finance Your Blockbuster," while Julie will present on "Paying the Crew: The Ins-And-Outs of Production Payroll." The event will occur from 10:00 am - 5:00 pm in the Fletcher-Jones Foundation Auditorium on the campus of Woodbury University, 7500 Glenoaks Blvd., Burbank, CA. Register online.

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