'Produced By': Film Tax Incentives

At the Made In The USA: Navigating Domestic Tax Incentives panel, part of the “Produced By” Conference, it was emphasized that there’s no such thing as a free lunch for filmmakers. Speakers warned that navigating the red tape of state and local tax incentive waters can be difficult since legislation and regulations are complex and confusing and changing on a daily basis. And that’s not just in New York or California. Sunday’s panelists urged producers to be prepared to read, study and magnify the fine print when considering production incentives available as credits and rebates for qualifying spends). Not only must producers think like a state revenuer, they must prepare for countless conversations with state officials about such arcane tax matters as whether an actor’s loan-out corporation needs to be registered in-state, whether point-of-sale companies are allowed for in-state spends, and what constitutes a “local” employee. Panelist admonished that those chats should be with the same people who actually audit a production — and definitely not after the fact.

The panelists also warned the audience not to be surprised when a production’s confidential deal memos and budget line items filed with local governments (in order to qualify for funds) get made public along with back-and-forths with a location’s film commissioner. All are covered under many government’s Freedom Of Information acts. Finding that out the hard way was MaryAnn Hughes, VP of Film Production Planning for Walt Disney Pictures, who said she discovered that what she thought was a confidential phone conversation with a film commissioner appeared in an article in the Charlotte Observer newspaper.

The panelists said producers also need to be concerned about the certainty of incentives. With many states now in dire economic straits, will they actually be able to deliver on promised incentives? And will legislatures continue to fund incentives? New York ran out of tax incentive money until it was replenished; now the state is considering legislation (Senate Bill #5674) that could lower rebate funds and apply that retroactively — a serious concern. Disney’s Hughes said she was off to meet with NYC Mayor Michael Bloomberg’s office on Monday to discuss this issue. “Producers really have to get into the weeds to know whether a production will get the money in the long run,” she said.

Film commissioners from Georgia, Florida, New Mexico, Oklahoma and Honolulu commented and pitched their states’ benefits. Certainty of payment and tried and true programs (like New Mexico’s and Louisiana’s) are what the panelists recommended investigating. Strangely, no reps from California film commissions spoke, though there was mention of the new state incentive that won’t pay out until 2011.

Joseph Chianese, VP of Business Development & Production Planning for Entertainment Partners, reminded the audience that producers also have to understand that funds may be paid out based on the state’s fiscal year or over an extended period of time. (New York has a deferred payout over two years, which may change to three years.) Chianese cautioned producers to not only ask, “Is there money?” but also, “How quickly can you get it?”, and “When does a state have to get it to you?” All in all, it was a not too negative, not too positive, assessment of where things stand now. — posted by DHD stringer

This article was printed from https://deadline.com/2009/06/produced-by-film-tax-incentives-9537/