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Friday, 01 April 2011 22:37

U.S. Incentive Update

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Cast and Crew Entertainment Services, LLC reports on the changes in tax incentives that various states within the U.S. are proposing in an effort to attract more productions.

Enacted Legislation - Signed by the Governor
Mississippi has enhanced their rebate program by increasing the rebate on local spend and nonresident labor from 20% to 25%; and, also increasing the rebate on resident labor from 25% to 30%.  Other changes include: increasing the minimum spend from $20,000 to $50,000; and, allowing per diems and housing expenditures to qualify for the rebate.  Mississippi has an annual cap of $20 million to award and a per project cap of $8 million.  The 1st one million dollars of resident and nonresident wages subject to withholding may qualify for the rebate. The sales tax exemption for sales of certain production items used in the production of a motion picture has been repealed.  However, the reduced sales and use tax rate of 1.5% on production machinery and equipment remains in effect.  

UTAH (H 99)
Governor Herbert has signed legislation giving a production company the opportunity to increase the existing 20% tax credit incentive by an additional 5% provided the production fulfills requirements such as: (1) employing a significant percentage of cast and crew from Utah; (2) highlighting the state and the Utah Film Commission in the motion picture credits; or (3) other promotion opportunities as agreed upon by the office and the production company. The office may issue up to $6,793,700 in tax credit certificates under these provisions in fiscal year ending 6/30/2012. If the office does not issue the maximum amount of tax credits authorized for a fiscal year, it may carry over the excess for issuance in subsequent fiscal years.

On the Governor's Desk - Awaiting Signature

This bill would make a number of changes to the film incentive. The first change would be to implement a $50 million annual statewide cap on the program. Additionally, the refund would be staggered as follows: (1) refunds less than $2 million would be awarded immediately upon authorization of the payment; (2) refunds between $2 million and less than $5 million would be awarded in two equal payments, with the first payment coming immediately upon authorization of the payment and the second payment to be made 12 months following the date of the first payment and; (3) refunds of $5 million or more would be divided into three equal payments, with the first payment coming immediately upon authorization of the payment, the second payment to be made 12 months following the date of the first payment, and the third payment to be made 24 months following the date of the first payment.

Proposed Legislation - Still in the House or Senate

This bill clarifies the incentive language of the existing program. No rebate is available on expenditures incurred after the first $10 million of instate expenditures. A single episode in a television series or miniseries may be considered a single production, however, each individual episode filmed within a period of 12 consecutive months may be aggregated to meet the $10 million threshold of the incentive program. Additionally, the bill clarifies that the current exemption on sales, use and lodging taxes is limited to the state portion only, and the exemption is not available on expenditures in excess of the first $10 million of instate production expenditures.

If enacted, this bill would increase the Arkansas rebates on both production and postproduction from 15% to 20%. For purposes of this rebate, resident actors, directors, and writers are considered below-the-line and therefore eligible for the additional 10% earned on below-the-line resident labor. Under the existing incentive, the entire salary of an individual who earns more than $500,000 is excluded from eligibility from the rebate; however, in the new bill the first $500,000 of a highly compensated individual's salary would qualify.  Fringe contributions being paid for work performed in Arkansas including pension, health, and welfare contributions; stipends; and living allowances are considered eligible expenditures.

FLORIDA (S 1188)
A Senate bill in Florida modifies the definition of the term "off-season certified production" to include a high-impact television series as a type of production which would qualify for the additional 5% incentive if it films principal photography during at least 75% of the days between June 1 through November 30.

Representative Stephens has introduced a bill in Georgia to allow a production company to sell unused tax credits to one or more purchasers in any increment in any number of installments over one or more tax years; provided, however, that no purchaser of tax credits shall subsequently resell, transfer, or assign such credits. The bill would also add language allowing for a production company to petition the state revenue commissioner to perform an audit of its tax credits. In the event that a production decides to petition for a voluntary audit, the production company would be required to reimburse the state revenue commissioner for the cost of the audit by paying the lesser of 0.1% of the credit claimed or $5,000.

MAINE (H 804)
House Representative Valentino has introduced a bill in Maine that would create a new grant program. The program would provide grants of up to $500,000 for eligible feature film projects, not to exceed 40% of the feature film's production budget, to be paid upon the film's completion. In order to qualify for the grant program, a project would have to; (1) have a production budget over $250,000, (2) feature at least one primary State industry, (3) film at least 75% of the feature film on location in Maine (4) set at least 75% of the story in Maine and, (5) showcase Maine's outdoor locations for at least 25% of the feature film.

NEVADA (A 418)
A bill has been introduced to create a film incentive program which would allow qualifying productions to earn a transferrable tax credit the amount of which is still to be determined. There is a minimum spend requirement of at least $250,000 for a film or television project, or $100,000 or more for a commercial or digital media project. In addition to the minimum spend requirement, a project must film, shoot, tape or record at least 60% of the production in state. The Commission of Economic Development is tasked with creating the details of the program.

NEW YORK (S 4199)
This bill will allow the first $50,000 of each resident writer's fees and salaries as qualified production costs.  No more than $5 million in tax credits per year will be awarded for production costs for resident writer's fees and salaries.  In addition, when more than three writers are to be hired on an eligible production, at least one writer must be a member of a minority group or a woman in order for the costs to be eligible for the credit.


Michigan is operating under the budget proposed by Governor Snyder. There is currently a $25 million statewide cap for the fiscal year ending 9/30/2011. At this point in time, $8.1 million of the $25 million has been spoken for and there are approximately 46 applications on file seeking to earn a share of the remaining $16.9 million. The application process is taking a minimum of 4-5 weeks. Any costs incurred prior to the approval date do not qualify for the incentive.

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