DISTRICT OF COLUMBIA
Congress has approved DC 's production incentive program. The program provides for a rebate equal to: 42% of the production's qualified production expenditures (which includes above-the-line resident and nonresident earnings) that are subject to taxation in the District; 21% of the company's qualified production expenditures that are not subject to taxation in the District; 30% of below-the-line resident's wages that are subject to taxation in the District; and, 50% of the company's qualified job training expenditures. To qualify for the incentive, the production company must; spend at least $250,000 in DC for development, preproduction, production, or postproduction; file an application with the Mayor; enter into an incentive agreement; and, not be delinquent in a tax or other obligation owed to the District. Click here for the full text of DC B 583.
PROPOSED LEGISLATION (Still in the House or Senate)
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COLORADO
In addition to allowing television commercials to apply for an incentive, the bill removes the requirement that a production company must spend at least 75% of its production expenditures on qualified local expenditures. Also, the minimum spend for a production originating out-of-state is reduced from $1 million to $250,000. Previously, the actual qualified local expenditures had to equal or exceed the projected qualified local expenditures on a project. The new bill would only require the actual qualified local expenditures to equal or exceed the minimum spend requirements.
FLORIDA
The proposed bill would create a 20% transferable tax credit (plus an additional 5% for filming 75% of principal photography days during the off-season, 6/1 - 11/30, plus an additional 5% for family-friendly productions) to replace the current rebate program. The tax credits may be claimed against income tax and/or sales & use tax liabilities. However, the tax credits may not be applied, regardless of when the credits are awarded, to returns filed for any tax period beginning before July 1, 2011. The cap on qualified labor would be increased from $400,000 to $650,000 per Florida resident hired. In order to be considered a qualified production: for the first two years, 50% or more, and thereafter, 60% or more of the positions that make up the production cast and below-the-line production crew must be filled by legal Florida residents. An annual allocation of $75 million will be available with no per project cap should the new bill be enacted. Tax credits purchased in good faith are not subject to forfeiture unless the transferee submitted fraudulent information in the purchase or failed to meet certain other requirements. The proposed program would sunset on July 1, 2015.
HAWAII
There have been several bills introduce in Hawaii mainly relating to housekeeping issues. The Hawaii film office special fund is used to fund the Hawaii film office operations, including personnel costs of staff positions, provided those personnel work exclusively on Hawaii film office operations.
A separate bill in Hawaii transfers the television and film industry activities and responsibilities under the department of business, economic development, and tourism to the Hawaii tourism authority.
MASSACHUSETTS
On January 27, Governor Deval Patrick suggested to the legislature that the qualified spending on film & TV production in Massachusetts be temporarily capped in response to the state budget crisis. The proposed cap would be $50 million in tax credits per year for the next two years. This equates to $200 million of qualified production spend per year. If enacted, all above-the-line spending would still qualify without limitation, and the proposed temporary cap would automatically expire in 2012, returning the incentive program to its current "no cap" status. Stay tuned, if you remember last year Massachusetts implemented a salary cap only to immediately remove it.
MISSOURI
Other than increasing the annual cap from $4.5 million to $10 million for qualified productions, Missouri's production incentive program would remain largely unchanged under the proposed bill. That is, resident labor and other qualified production expenditures will earn a 35% transferable tax credit while nonresident labor may earn a credit equal to 30% of the wages that are subject to withholding. If compensation to any individual exceeds $1 million, no part of the payments will qualify. Unused credits may be carried forwards for up to 5 years.
NEBRASKA
Nebraska has introduced legislation that would form the state's first production incentive program. The bill outlines a comprehensive incentive program which would provide up to a 17% tax credit on all documented expenditures made in Nebraska. An additional 2% will be awarded on all documented expenditures if the production company spends at least $20,000 for the use of music created by a Nebraska resident that is recorded in-state, or for the cost of recording songs or music in Nebraska for use in the production. An additional 3% will be awarded if the production shoots in non-metropolitan areas of Nebraska. To qualify, the production must have a budget of at least $50,000 of which not less than $25,000 is to be expended in-state. While there would be an annual cap of $5 million there is no per project cap. Resident and nonresident above-the-line labor may qualify but only resident crew wages will qualify. The qualifying above-the-line salaries cannot comprise more than 25% of the total expenditures.
NEW YORK
The proposed bill would provide $420 million worth of tax credits annually thru 2014. The Governor's Office must notify the taxpayer of their "allocation year" because any credits earned under the new bill cannot be claimed before the later of (1) the taxable year the qualified production is complete, or (2) the taxable year immediately following the "allocation year" for which the film has been allocated credit by the Governor's office. Credits of at least $1 million but less than $5 million will be paid out pro ratably over a two year period beginning in the FIRST taxable year in which the credit may be claimed. For credits of $5 million or more, the credits are paid out pro ratably over a three year period beginning in the FIRST taxable year in which the credit may be claimed. Post production costs incurred in New York will only qualify for the incentive if 75% or more of all post production costs are incurred in New York. In addition, except with respect to an independent film or pilot, at least 10% of the total principal photography days must be spent in a qualified film production facility. It is anticipated that some form of this proposed bill will be passed in early April.
VIRGINIA
The proposed legislation looks to make major changes to the state film incentive program. The bill would implement a tax credit equal to 15% of qualifying expenses or 20% of such expenses if the production is filmed in an economically distressed area of Virginia. The production company may earn an additional credit equal to 10% of the total aggregate payroll for Virginia residents working on a production if total in-state production costs are between $250,000 and $1 million or 20% of the total aggregate payroll for Virginia residents working on a production when total in-state production costs exceed $1 million. The first $1 million of compensation for each resident and nonresident will qualify. There is an in-state minimum spend requirement of at least $250,000. The current version of the bill includes a state cap equal to $5 million per biennium but this may be changed to "as appropriated". |
