I recently attended a seminar with representatives from Amper, Politzner & Mattia, certified public accountants and consultants in New Jersey, who are familiar with the accounting procedures associated with applying for a Film Production Tax Rebate or Credit. They had some very interesting things to say about how productions need to prepare properly for getting the most out of the production credit and rebate programs offered by states. I have taken the liberty of extracting some of the notes and outlining them below, and encourage everyone involved in this process to educate themselves as much as possible so we are better informed about what needs to be done to get the most from the tax incentive programs.
If you need more information, you can contact the firm directly at 732-919-1400 or visit their website at www.amper.com
Payroll Testing Procedure (for final audit with the state)
• Agree wages recorded in the bible to paycheck stubs or payroll register.
• Review time cards to determine location worked
• Review production reports to determine location worked
Non-Payroll Testing Procedures (for final audit with the state)
• Agree expenditures per bible to vendor invoice
• Verify if expense is incurred in State
• Verify type of expenditure
Qualifying Expenses
• Compensation paid for services within the state
o Paid to individual employees
o Paid to loan-out companies
o Employer payroll taxes/fringes
• Payments for goods and services within the state
• Payments for rental of property and equipment within the state
Common Pitfalls
• Applying for too little credit (better to overestimate your expenditure in the initial application)
• Not Obtaining proof of loan-out
o May be required prior to the initial payment to loan out
• Poor record keeping for petty cash
Best Practices
• When recording payroll transactions include employee name as the vendor name
• Make sure employees indicate work state/locality on time card for every day worked
o locality may be required in certain states
• Get Loan out companies to register up front
o Consult with legal council
o Incorporate registration requirement in the contract
• Take care when recording petty cash receipts
• Educate production staff on state guidelines before they spend petty cash in order to maximize the credit
• Consult with the state film department regarding local vendors that can be used
• Educate those involved in the process early
• Keep an open dialogue with the state department issuing credit
• When in doubt, consult with a qualified CPA with industry experience
Film Credit Trivia
Q: I need to purchase an item not sold in the state issuing the credit. Is there any way to get the expense to qualify?
• In NJ? Have the item shipped by the vendor via common carrier or by the vendor’s own vehicle.
• In MA? As long as the item is used in MA the expense will qualify. Make sure there is adequate documentation of the item’s use to hold up during audit.
• In PA? Consider using a qualified intermediary in the state/locality
Saturday, March 21, 2009
Tuesday, March 17, 2009
3 Strikes Against NY Production-Winter 2009
There have been 3 strikes that put NY Independent Film Production out of business this winter. Number one is the World Financial Crisis; number two is the end to the Guaranteed Completion Contracts offered by SAG and their continued inability to sign a new contract with the AMPTP; and number three is the empty funding pool for the NY State Tax Incentive.
In the fall, we saw many films loose their green light due to the fallout in the world economic crisis, when investors stepped to the sidelines of their financing commitments. Even though some were saying that financing a movie seemed like a safer gamble than anything in banking or the markets, those with money were not in the mood for risk. As well, so many people with money lost the money which they had to play with, the money they had for financing independent features.
Just as producers started to regroup and find alternative means of financing their indy productions, the Screen Actors Guild decided to end the existence of the Guaranteed Completion Contracts, which they had been extending to independent productions, since the last contract expired July 1, 2008. Those GC Contracts, which people called waivers, had allowed films, which were independent of companies already signatory with SAG, to produce movies without the threat of the potential SAG strike. With no GC Contracts available, bond companies like Film Finances would not bond movies against a strike, unless, in some cases, the actor contracts were written with the provision that the actors would return to that production immediately following the resolve of any strike that interrupted the production, and there was money set aside in the budget, for the cost of shutting down and restarting at the most expensive time during the production.
As if these two factors weren't enough, it became public, that all the NY State Tax Incentive Funds had been committed and essentially spent, reflecting on one hand, the giant success of the incentive program, but, on the other, grinding to a halt, almost all movie production in New York. Many of the independent productions were being funded in part by a bank loan, and in many cases that loan was based on the bank being guaranteed repayment through the tax credit money. Where there used to be no guarantee that an independent film would recoup any of the money invested in making it, with the Tax Incentive there was a guarantee. But suddenly, with the funding pool run dry, the banks were no longer willing to lend, and what had become a cornerstone of independent film financing, for New York, was no longer.
The winter is traditionally a frigid time for making movies in New York, but this winter has been the worst I have seen in the 22 years I've been in the business. Even TV pilots scheduled for the early Spring, many written for New York because of the draw of the Tax Incentive, were carted to Toronto, Vancouver, Providence, Boston, Michigan and other States that could still offer financial incentives, leaving New York production people high and dry. We all look forward to the Spring, where the promise of warming weather brings hope for a resolve to the potential SAG strike, a renewing of the Tax Incentive funding, and an end to the downward slide of our general economy.
In the fall, we saw many films loose their green light due to the fallout in the world economic crisis, when investors stepped to the sidelines of their financing commitments. Even though some were saying that financing a movie seemed like a safer gamble than anything in banking or the markets, those with money were not in the mood for risk. As well, so many people with money lost the money which they had to play with, the money they had for financing independent features.
Just as producers started to regroup and find alternative means of financing their indy productions, the Screen Actors Guild decided to end the existence of the Guaranteed Completion Contracts, which they had been extending to independent productions, since the last contract expired July 1, 2008. Those GC Contracts, which people called waivers, had allowed films, which were independent of companies already signatory with SAG, to produce movies without the threat of the potential SAG strike. With no GC Contracts available, bond companies like Film Finances would not bond movies against a strike, unless, in some cases, the actor contracts were written with the provision that the actors would return to that production immediately following the resolve of any strike that interrupted the production, and there was money set aside in the budget, for the cost of shutting down and restarting at the most expensive time during the production.
As if these two factors weren't enough, it became public, that all the NY State Tax Incentive Funds had been committed and essentially spent, reflecting on one hand, the giant success of the incentive program, but, on the other, grinding to a halt, almost all movie production in New York. Many of the independent productions were being funded in part by a bank loan, and in many cases that loan was based on the bank being guaranteed repayment through the tax credit money. Where there used to be no guarantee that an independent film would recoup any of the money invested in making it, with the Tax Incentive there was a guarantee. But suddenly, with the funding pool run dry, the banks were no longer willing to lend, and what had become a cornerstone of independent film financing, for New York, was no longer.
The winter is traditionally a frigid time for making movies in New York, but this winter has been the worst I have seen in the 22 years I've been in the business. Even TV pilots scheduled for the early Spring, many written for New York because of the draw of the Tax Incentive, were carted to Toronto, Vancouver, Providence, Boston, Michigan and other States that could still offer financial incentives, leaving New York production people high and dry. We all look forward to the Spring, where the promise of warming weather brings hope for a resolve to the potential SAG strike, a renewing of the Tax Incentive funding, and an end to the downward slide of our general economy.
Monday, March 16, 2009
Greener Production
I attended the DGA "Shoot it Green" meeting on Saturday and learned a lot about how we can make our productions "Greener",
which means basically, finding ways to reduce our carbon footprint in the act of making movies and tv shows.
There will soon be a web-site dedicated to all the on-going efforts that are being made by productions who have implemented greener production techniques and I plan to work with that list to produce a memo at the start of each production, outlining how we will be implementing these new practices. In many cases the greener production practices will reduce the overall cost of production.
Some of the green practices that have already begun include using water canteens instead of buying water bottles, using bio-diesel fuel, reducing trucking, re-using lumber from set construction, using glasses and real plates, separating and recycling garbage, economizing office supplies, recycling unit supplies, and using less paper.
which means basically, finding ways to reduce our carbon footprint in the act of making movies and tv shows.
There will soon be a web-site dedicated to all the on-going efforts that are being made by productions who have implemented greener production techniques and I plan to work with that list to produce a memo at the start of each production, outlining how we will be implementing these new practices. In many cases the greener production practices will reduce the overall cost of production.
Some of the green practices that have already begun include using water canteens instead of buying water bottles, using bio-diesel fuel, reducing trucking, re-using lumber from set construction, using glasses and real plates, separating and recycling garbage, economizing office supplies, recycling unit supplies, and using less paper.
Sunday, March 15, 2009
Why Twitter?
Briefly, I'm really just beginning to start using Twitter, but I can see that it is part of the way that I can keep informed and keep others informed about what is going on right now in our changing business and world. Twitter is a way that I can follow what the people I share interests with are doing, reading, seeing, hearing, feeling, on a moment by moment basis. As well, it's a way for me to communicate with people who share my interests, and inform them of what's happening. I can search for information that interests me that are out there, but Twitter brings me information that other people, with like-interests, are discovering.
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