Spring 2012 issue of Horizons

Media & Entertainment

Focusing the Lens on Film Tax Credits By Leah McCormick The idea behind film tax credits is growth—to encourage film production in the state issuing the credit, which in turn creates jobs and revenue within that state. While most states have participated in the film tax credit program at one time, only 35 currently have programs available. Some states offer an actual tax credit, while others offer a rebate program. Most states will offer other incentives such as waiving the hotel occupancy tax for production employees if their stay exceeds a certain number of days (usually 30 days). Film tax credits have been in a constant state of change. When financing a film, it is important to be knowledgeable about the differences in the various state options to determine where to produce a film project. This is especially important in the current state of our economy as financing is difficult to obtain without these incentives. Some states require an audit to be completed by a CPA as part of obtaining film credits. More and more states are also requiring training for audit firms that perform audits of film tax credits. Below is an overview of film credit programs in the states where RubinBrown has offices, but we are qualified to perform these audits and assist in planning in many other states as well. Colorado Colorado currently offers a rebate program in lieu of film tax credits. It offers a 10% rebate for productions that spend at least $100,000 in qualified local expenditures or qualified payroll. In order to qualify, the production must originate in Colorado. For productions that do not originate in Colorado, a 10% rebate is available for productions

that spend at least $250,000 on qualified local expenditures or qualified payroll. Origination of the production is based upon the company’s headquarters and principal place of business. The application process must be started prior to any production activities beginning in Colorado. Colorado also offers a waiver of hotel occupancy tax for stays over 30 days. Kansas Kansas currently offers a non-transferable, non- refundable credit. This makes usage of the tax credit difficult because the film investors must have an actual Kansas tax liability in order to use the Kansas tax credit. The tax credit is 30% of direct production expenditures, meaning any expenditure incurred in the state of Kansas that directly relates to the production. The budget of the film must be at least $50,000 if less than 30 minutes in length and $100,000 if over 30 minutes in length. The credit is currently limited to productions filming during 2011 - 2013 and are limited to $2 million per year. Kansas also offers a waiver of hotel occupancy tax for stays over 28 days.

Missouri Although The Missouri Film Commission is no longer being funded, the film tax credit law still exists.

Raise Your Expectations

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