PRODUCTION INCENTIVES

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Recent Updates, as of February 11, 2011, have been posted to the website.

North Carolina Expansion
Entertainment Partners is proud to announce our recent expansion in North Carolina. Learn more.

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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.

ALASKA
Proposed legislation was introduced on January 18, 2011, providing that the total amount of tax credits may not exceed (1) $100,000,000 before July 1, 2018; and (2) $200,000,000 in the aggregate. In addition, the minimum local spend would equal $100,000 in a consecutive 36-month period.

The Alaska Film Group is encouraging all parties interested in the Alaska film tax credit bill to participate by writing a letter of support. See the Alaska Film Group for details.

ARIZONA
Proposed legislation (SB 1159) was introduced for motion picture production credit for years from and after December 31, 2010, through December 31, 2040, in the amount of 20% of qualified production expenditures exceeding $250,000. An additional 5% credit is available if during 50% of production time, a privately funded facility is used. Additionally, there is proposed a $70,000,000 cap per year on the program, a $15,000,000 cap per project, elimination of the tiered system based on amount spent in AZ, and elimination of the AZ resident hire requirements and strengthening the definition of an AZ resident.

CALIFORNIA
Claiming a Sales and Use Tax Credit Overview: The State Board of Equalization (BOE) has issued information to assist certified Tax Credit Certificate holders to claim refunds against sales and use tax. (See detailed FAQs on the Franchise Tax Board website.) The new rules do not apply to assigned credits against sales and use taxes. Those procedures will be available beginning January 1, 2012.

Procedure to Claim Refund: Once a Tax Credit Certificate is issued, the taxpayer may: (1) apply the credits against CA franchise OR income tax, or may (2) irrevocably elect to apply all or a portion of the credits to obtain a refund of qualified sales and use taxes. Tax credits can only be claimed against the "general fund" portion of the sales and use tax (expected to be 5% on July 1, 2011). No interest is payable on amounts refunded or credited. Taxpayer must complete form BOE-318, and file form BOE-101.

CONNECTICUT
Proposed legislation has been introduced in the senate to expand eligibility for the maximum film tax credit (SB 61). The amendment will provide for resident filmmakers the full 30% credit against all eligible production expenses greater than $250,000 rather than the current $1,000,000.

Additional legislation (SB 125) was introduced January 14, 2011, to include the following requirements in the film tax credit program: (1) 35% of all union crews working on a state-certified qualified production must be state residents, including core crew and day players; (2) 35% of all non-union production and office staff must be state residents; and (3) there must be parity in the wages and benefits paid to state residents and to other similarly situated employees on the production.

GEORGIA
The Georgia Special Council on Tax Fairness for Georgians released a report on January 7, 2011, on its study of the state's revenue and structure, including the state's economic development credits. In its study, the Council was unable to verify or refute the cost-benefit value of the film tax credit and has recommended eliminating the credit in 2012. A special study of the cost-benefit value of the film tax credit has been undertaken with expected completion in early 2011. The Council has also recommended the elimination of the sales tax exemption on sales of certain production equipment to film producers effective June 30, 2011. There has been no action by the Georgia legislature at this point.

KANSAS
As of January 1, 2011, the Kansas film tax credit has been reinstated from its two-year suspension unless the state legislature takes further action to extend the suspension.

MASSACHUSETTS
The Department of Revenue has issued its third annual report of the Massachusetts film industry tax incentive program. Per the report, in calendar year 2009 the film tax credit program resulted in $32,600,000 in new spending in the Massachusetts economy and generated additional Massachusetts state Gross Domestic Product (GDP) of $168,500,000, and personal income of $25,200,000.

NEW JERSEY
The Garden State Film and Digital Media Jobs Act (S690/A2905) was approved by both the New Jersey Senate and Assembly on January 10, 2011, and is now being reviewed by Governor Chris Christie. This legislation increases the cap on New Jersey's tax credit program for filmmakers to $50,000,000 annually and the cap on digital media production to $10,000,000 annually beginning with fiscal year 2012 and for each fiscal year thereafter. The bill also provides for a tax credit equal to 22%, instead of the current 20%, of eligible production expenses if the expenses represent purchases of goods from businesses located in Urban Enterprise Zones (UEZ), or purchases of services performed by residents of a UEZ. The legislation also extends the digital media tax credit to salaries and wages paid to full-time employees who are not new employees and eliminates the recapture of tax credit amounts if new full-time employees are not maintained. The Act shall take effect immediately upon signing into law.

NOTE: No film or digital media tax credits (whether earned or purchased) can be utilized to reduce the corporation business tax or the gross income tax on a tax liability with an original due date after June 30, 2010, and before July 1, 2011. The suspension does not prevent the processing or approving of applications for credits or applications for transfer/sale during the suspension.

NEW MEXICO
Newly-elected Governor Susana Martinez has proposed in her Executive Budget Recommendation for fiscal year 2012 to change the state's film incentive program by reducing the tax rebate to 15% from its current level of 25%. The proposal estimates the state will save approximately $25,000,000 in fiscal year 2012.

Proposed legislation (HB 19) was introduced on January 18, 2011 to repeal the film production tax credit to be effective July 1, 2011. However, the House Labor and Human Resources Committee voted 5-4 along party lines Thursday, January 27, 2011, to table a proposal to eliminate the state's movie production incentives. The bill, sponsored by Rep. Dennis Kintigh, R-Roswell, could die in committee unless it is brought up for consideration again and passed with a majority vote. (See KRQE.com.)

Another proposed bill (SB 44) was introduced on January 18, 2011, enacting the film production tax credit act, providing tracking requirements for the film production tax credits, and providing for review of the film production tax credit.

NEW YORK
Legislation was pre-filed on January 5, 2011 (S880/A1377), proposing amendments to the tax law relating to the empire state film production credit. The proposed legislation adds a new definition of "qualified independent film production company." It also increases the aggregate amount of the tax credits allowed by the City of New York by an additional $24,000,000 a year in 2011, 2012, and 2013. These new credits may not be claimed before taxable years beginning January 1, 2011, and payout in any year is capped at $24,000,000, with any amount in excess to be claimed in the subsequent year. There is an exception for qualified independent film production companies, which may claim credits up to $250,000 per qualified film in the taxable year in which film production is completed.

PENNSYLVANIA
The Pennsylvania Film Office reports that tax credit funding for the current fiscal year remains intact. Applications are being accepted. Review of new applications is currently on hold. You are encouraged to contact any of the Pennsylvania Film Offices for more detailed information.

Proposed legislation has been re-introduced that would cap the annual film incentive at $50,000,000 rather than the current $75,000,0000 for tax years beginning in 2012. That bill has been referred to the Finance Committee.

Governor Tom Corbett’s proposed fiscal year 2011-2012 budget is expected to be released on March 8, and will be effective for the fiscal year beginning July 1, 2011. (See philly.com and pennlive.com.)

WASHINGTON
Enhancements to the Washington Motion Picture Competitiveness Program were introduced through HB 1554 on January 24, 2011. The proposed legislation: (1) extends the sunset date for the film incentive from July 1, 2011, to July 1, 2017; (2) increases annual funding incrementally from $7,000,000 in 2011 to $10,000,000 in 2014, remaining at $10,000,000 through 2017; (3) broadens definition of qualified projects; (4) increases funding percentages from 30% to 35% for television projects; and (5) modifies certain definitions.

WYOMING
On January 11, 2011, a bill was introduced in the Senate (S 41) to amend the current Film Industry Financial Incentive Program and to eliminate the sunset of the program thereby making it permanent.

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 - Nova Scotia
For productions commencing principal photography on or after December 1, 2010, the Film Industry Tax Credit will be calculated based on eligible Nova Scotia labor without any production cap. Previously, the Film Industry Tax Credit was based on what was less, either 50% of the costs of eligible labor or 25% of total production costs. To be an eligible employee, one must be a resident in Nova Scotia for tax purposes during the project or production period.

CANADA - Quebec
Finance Quebec issued a Bulletin outlining some technical changes to the refundable tax credit for film productions services. 

Change to the definition of qualified labor cost: The tax legislation will be amended so that the cost of a service contract incurred by a qualified corporation in relation to a qualified production and paid to a subcontractor that is a corporation not at arm's length with a broadcaster is no longer excluded from the cost of qualified labor of the qualified corporation, for the purposes of the services credit, provided such cost relates to services supplied exclusively regarding the post-production stage of the qualified production.

Change to the definition of cost of qualified properties: The tax legislation will be amended so that the cost incurred regarding the acquisition or rental of a property by a qualified corporation and paid to a subcontractor that is a corporation not at arm's length with a broadcaster is no longer excluded from the cost of qualified properties of the qualified corporation, for the purposes of the services credit, provided the property is used exclusively regarding the post-production stage of the qualified production.

DOMINICAN REPUBLIC
The Dominican Republic passed legislation during 2010 for new incentives to promote cinematic and television activity in the country for both domestic and foreign production. The new incentives have been effective since the beginning of 2011. Additional information will be provided in the near future.

ITALY
The government has extended the film tax credit through June 2011. The credit was set to expire December 31, 2010. (See Screen Daily -- subscription required to view article.)

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Entertainment Partners is proud to announce our recent expansion in North Carolina. We will be providing both payroll and procurement services - through EPPS Purchasing, Inc. - in Wilmington, North Carolina. Entertainment Partners recently secured office space at EUE Screen Gems Studios, 1223 23rd Street North, Wilmington, NC 28405. The production activity and resources available at EUE Screen Gems Studios will complement the services and products offered by Entertainment Partners and EPPS Purchasing, Inc. For more information regarding our services and products available in North Carolina, please contact Marco Cordova by email or at 818.955.6278. For information regarding EUE Screen Gems Studios in Wilmington, please contact Bill Vassar at 910.343.3500.

Entertainment Partners also hired a new account representative, Hillary Meinheit, to service our North Carolina clients. Hillary will work primarily from our new office at EUE Screen Gems Studios, but she will service all clients located throughout the state. Contact Hillary by email or at 910.409.5104.

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411 Publishing Webinar Series: Oscar Nominated Film Financing
February 24, 2011, 11:00 am (Pacific)/2:00 pm (Eastern)
The next installment of the 411 Publishing webinar series will focus on the impact of production incentives on Oscar nominated films Black Swan, The King's Speech, The Social Network, and True Grit. Moderated by EP Incentive Solutions' Joseph Chianese, panelists will include Jim Davidson (Associate Producer, The Social Network), Amy Lemisch (Executive Director, California Film Commission), Iain Canning (Producer, The King's Speech), Andy Weltman (SVP, US Film Production, UK Film Council), Pat Kaufman (Executive Director, New York State Governor's Office for Motion Picture and Television Development), Lisa Strout (Producer and former Director, New Mexico Film Office), as well as producers from Black Swan and True Grit that are yet to be announced. These webinars are presented by 411 Publishing and Variety.com in partnership with the Producers Guild of America. Register for Free

Lights! Glamour! Action!
Pittsburgh, PA
February 27, 2011
EP is a supporting sponsor of the 11th annual "Lights! Glamour! Action!" Academy Awards fundraising event on February 27, benefiting the Pittsburgh Film Office. EP Incentive Solutions representative Mary Ann McBride will be attending the event. Visit the website to purchase tickets. 

International Film and TV Finance Summit
Los Angeles, CA
March 3 - 4, 2011
Joseph Chianese will moderate the "Current Developments in the Use of US State Tax Incentives" panel at the International Film & TV Finance Summit, presented by BNA Tax and Accounting and ATLAS. This panel takes place on Thursday, March 3, at 9:45 am. Register for the summit here. 

Film Finance Forum
Los Angeles, CA
March 8 - 10, 2011
EP will be participating in the 3rd annual Film Finance Forum, produced by Winston Baker. Joe Chianese will be a panelist on the "Controlling Volatility and Mitigating Risk" panel on Wednesday, March 9 at 2:45pm. Pick up the latest edition of The Essential Guide to U.S. & International Production Incentives at EP's booth and meet our EP Incentive Solutions team! Register online for the forum.  

UCLA Entertainment Symposium
Los Angeles, CA
March 11 - 12, 2011
EP is sponsoring the 35th Annual UCLA Entertainment Symposium: "Technotainment - RU Prepared 4 It?" EP will have a display table, so stop by and pick up our latest edition of The Essential Guide to U.S. & International Production Incentives and meet our EP team. Purchase tickets for the symposium. 

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