PRODUCTION INCENTIVES

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• Updates by Jurisdiction
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The Essential Guide to U.S. & International Production Incentives, 2010, 3rd Edition, edited by Joseph Chianese, Marco Cordova, and Barbara Rosenfeld, is now available. Contact our Incentives Group to order your copy at no charge.

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

Recent Updates, as of October 28, 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.

CALIFORNIA
The State Board of Equalization (BOE) issued a letter regarding assignment of the film and television sales and use tax credit, and its usage by "affiliates." The letter clarifies that the election to assign a credit and the actual assignment are two different events. The credit can be assigned when an assignor's franchise or income tax return is filed or when its tax liability is otherwise assessed. An affiliate cannot apply the credit amounts against its sales and use tax liability before an actual assignment of the credit. The letter clarifies which entities will qualify as "affiliated corporations," noting that a limited liability company (LLC) can have an affiliated corporation provided the LLC is being taxed as a corporation rather than as a partnership under California law.

The Franchise Tax Board has published draft form FTB 3551, Sale of Credit Attributable to an Independent Film, for reporting the sale of an "independent film" tax credit. Comments are due by November 5, 2010.

CALIFORNIA - Culver City
City Council members are considering a cap on the business tax for long-term production work at studios, an exemption from tax for short-term projects, and a flat tax for long-term filming at non-studio locations. The issue will be discussed at the November 8 meeting, and a revised ordinance could be adopted by year's end. (See The Hollywood Reporter.)

CALIFORNIA - Los Angeles
The City Council requested the city attorney's office to draft an ordinance that would lower the entertainment production tax on projects budgeted between $2.5 million and $5 million. The reduction would apply to films, TV shows, and commercials. The proposed change "would lower the cap on any taxes a production company would pay from $12,495 to $9,245." (See Variety.)

HAWAII
The Hawaii Department of Taxation has issued Letter Ruling No. 2010-22, which addresses the qualified high-technology business credit.

LOUISIANA
The Department of Revenue is reminding taxpayers that a recent amendment to the Administrative Code requires a $200 transfer fee be paid per transferee to whom a motion picture investor credit is transferred before the transferee claims the credit on a tax return. Therefore, taxpayers should not claim motion picture credits that are transferred on or after October 1, 2010, on a tax return without first paying the $200 transfer fee to the Department of Economic Development. The Department of Revenue will disallow a credit claimed on a return if the required transfer fee has not already been paid.

MARYLAND
Maryland has $3 million available in incentive funds for a film looking to go into production by the end of the year. Please contact Jack Gerbes at 410.767.6343 for more information.

NEW JERSEY
Proposed legislation to expand the film and digital media production tax credit programs has been referred to the Assembly Appropriations Committee. The legislation would increase the annual funding caps for the two programs to $50 million and $10 million, respectively, and increase the incentive rate to 22% in Urban Enterprise Zones, among other changes.

NEW MEXICO
The New Mexico Taxation and Revenue Department has adopted regulations that define the terms "direct production expenditures" and "performing artist" for purposes of the film production tax credit. "Direct production expenditures" include only those expenditures directly incurred and paid by the qualified production company to the vendor of the services or property and do not include expenditures incurred and paid by a third party even if incurred on behalf of the qualified production company. "Performing artist" includes "stunt coordinators" when the stunt coordinator contracts with the production company under a standard stunt performer's contract. (See New Mexico Commission of Public Records.)

NORTH CAROLINA
The Department of Revenue has released a list of Frequently Asked Questions regarding the tax credit for qualifying expenses of a production company taken against corporate and personal income tax. Information is provided regarding the typical audit process, recent legislative changes to the credit, withholding requirements on payments to loan-out corporations, payments to companies that can be classified as "qualifying expenses," and filing and reporting requirements.

PENNSYLVANIA
The Department of Community and Economic Development published its draft proposal to add Chapter 36 with rules to provide guidance and clarification concerning the ability to qualify, receive, utilize or transfer film production tax credits. The proposed rulemaking will become effective 60-days after final form publication. Written comments are invited before the early November deadline.

UTAH
The Office of Economic Development is set to present a proposal to state lawmakers calling for an increase in the rebate from 20% to 30%. (See Business Week.)

WISCONSIN
Recent articles report that both gubernatorial candidates support the film tax credits. Efforts are underway to increase the existing incentive benefits. (See The Business Journal -- subscription required to view -- and Milwaukee Journal Sentinel.)

International Updates

411 Publishing Webinar Series:
"Spotlight on New York, North Carolina, Michigan, and Oregon"
Thursday, November 18, 2010, 11:00 am (Pacific) / 2:00 pm (Eastern)
411 Publishing in partnership with Entertainment Partners and the Producers Guild of America present a webinar aimed at highlighting the recent advancements in the production incentive structures and film offices. Joseph Chianese will moderate the panel of film commissioners as they share a practical conversation about production incentives. Panelists include Pat Kaufman (Executive Director, New York State Governor's Office for Motion Picture and Television Development), Aaron Syrett (Executive Director, North Carolina Governor's Office of Film and Television), Carrie Jones (Director, Michigan Film Office), and Vince Porter (Executive Director, Oregon Governor's Office of Film and Television). Registration is free and open to everyone. Register Today!

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