Understanding Georgia Film, Television and Digital Tax Incentives
While there are many states who offer film tax incentives, New Mexico and Louisiana shine bright at a total possible 30% and 40%. (However, the base is 25%, and many restrictions and qualifications are applied to get beyond the base.) Georgia rises above other states with a much more simple approach by offering up to 30% without all the qualifications and restrictions. The base is a 20% transferable tax credit and all you need for the additional 10% Georgia Entertainment Promotion (GEP) uplift is to include an embedded Georgia logo on approved projects and a link to Explore Georgia on the project’s landing page.
What it means
What are all the production incentives for filming or doing post-production in Georgia? Who can I hire? What expenditures qualify?
-Both resident and non-resident workers’ payrolls and FICA, SUI, FUI qualify.
-No limits or caps on Georgia spending.
-No sunset clause, which, in the film industry, is a Godsend since so many productions end up in unforeseen halts that can take weeks or months to move past. However, if the projects don't begin filming within 30 days of the date of the certification letter, amendments will have to be made in writing to the GDEcD.
-No salary cap on individuals paid by 1099, personal service contract or loan out. If you are a California filmmaker looking to hire your crew in GA, check with your lawyer to see if you can legally hire independent contractors in another state. The law is a little vague regarding the effect of AB-5 for CA employers who temp-hire across state lines.
-Payments made to a loan-out company will require 6 percent Georgia income tax withholding.
-Development costs, promotion, marketing, story rights, and most fees do not qualify.
-Qualified expenditures include materials, services, and labor. The credit applies equally to Georgia residents and non-residents. There is a salary cap of $500,000 per person, per production, when the employee is paid by “salary,” which is defined as being properly paid by W2. If the production company pays an individual for services as a loan-out, as a personal services contract or a 1099 individual meets the criteria for a loan-out, then 6% Georgia income tax must be withheld and remitted by the production company.
-The income tax credit may be used against Georgia income tax liability or the production company’s Georgia withholding, or it can be sold or transferred to one or more Georgia taxpayers.
-A Georgia taxpayer may purchase Georgia Entertainment Credits, generally for around $.88 per credit, and apply them to their current year or future tax returns. Unused credits carryover for five years.
How to get them
What kinds of projects are eligible for the Georgia tax credits? How do I apply?
-Production expenditures must be made in Georgia from a Georgia vendor to qualify.
-For a project to be eligible for the 20% transferable tax credit, the Georgia Department of Economic Development (GDEcD) must certify the project. Certification for live-action projects will be through the Georgia Film Office. Certification may be applied for within 90 days of the start of principal photography but before the end of principal photography. The best time to submit the application is when the project is green-lit, fully funded and ready to open a production office. An additional 10 percent uplift can be earned by including an imbedded Georgia promotional logo provided by the Georgia Film Office within certain approved projects with a link to Explore Georgia on the project’s landing page.
-Only production companies are eligible to apply. Production companies do not have to be incorporated or headquartered in Georgia or hold a Georgia bank account to qualify for the tax credit.
-Eligible projects include feature films, television films, pilots or series, televised specials, televised commercials, and music videos that are distributed outside of Georgia. The $500,000 annual minimum expenditure threshold can be met with one project or the total of multiple projects aggregated in a single tax year.
-Post-production of Georgia-filmed movies and television projects qualifies only if post-production is done in Georgia.
Once the project is certified, the production company will receive a certification letter from GDEcD. The letter will indicate whether the tax credit should be awarded at the 20% or 30% level, based on approval of the GEP Uplift. If the project does not begin filming within thirty (30) days of the date of the certification letter, amendments to the application must be made in writing to GDEcD.
Once the base investment requirement has been met, the film tax credit can be claimed when a Georgia tax return is filed. Attach the following to the Georgia tax return:
-The certification letter. -Description of qualified production activities and expenditures proving the base investment has been met. -A list of employees including names, Social Security numbers, and Georgia wages. -Completed GDOR FORM IT-FC. -If the GEP Uplift has been awarded, a digital version illustrating the placement of the GEP logo must be submitted to GDEcD after completion of the project and within twenty-four months from the end of principal photography.
Though an audit is not required, the Georgia Department of Revenue offers a voluntary program. The costs of any audit do not count toward the tax credit and the verification reviews will be done on a first-come/first-served basis. The program provides taxpayers the opportunity to verify costs that are eligible for the credit. This review will require a fee. This fee will be determined based upon the total production costs within the State of Georgia. The fee cost is outlined below:
Production costs of $500,000 to $1,000,000 $ 5,000 Fee Production costs of $1,000,000 to $5,000,000 $10,000 Fee Production costs of $5,000,000 to $10,000,000 $20,000 Fee Production costs in excess of $10,000,000 $25,000 Fee
To request an audit, a Voluntary Film Tax Credit Audit Application form must be completed and submitted to the Department, as well as, a copy of the approved certification letter(s) from the Department of Economic Development, Georgia Film, Music & Digital Entertainment Office along with the fee, for each application. Upon receipt of the application and fee, the authorized person named on the application will be contacted to coordinate this review. Verification documents will be discussed with each requestor, and a date/time will be scheduled to coordinate the audit. Voluntary film tax audits will be performed on a first-come/first-serve basis, and all pertinent transaction documents, accounting source documents, and other requested data must be made available at the time of the scheduled review.
Once the audit is complete, the Department will issue a letter certifying the number of credits for which the Department believes the taxpayer is entitled. If the Department certifies an amount that is smaller than the taxpayer believes they are entitled to (and the tax return has not yet been filed by the taxpayer), the taxpayer may claim the larger amount on their tax return when it is filed. Once the department disallows the differences, an assessment will be issued, and the taxpayer will have the normal appeal rights that are available with respect to credits that are disallowed on a tax return.
Georgia does make it relatively easy to hit that 30% mark once the 20% is verified, however, it is quite the process and, if you don’t choose a voluntary audit, you will be audited when you file your taxes to ensure the credit was earned. You’ll want to make sure you have all your ducks in a row to avoid a catastrophe that will cost you way more money than the potential tax break was worth. Also, consider speaking with an accountant and a tax preparer to make sure you truly do come out ahead by moving your production across the country. Keep in mind, there may be tax incentives in the state you are currently located in that would be worth staying local for. Regardless, Topsheet is prepared to partner with you on your production, near or far. From payroll to WCI, call sheets, time cards, and crew management, we got you covered.