NEW YORK STATE
FILM PRODUCTION CREDIT
NEW YORK STATE FILM PRODUCTION TAX CREDIT PROGRAM EXTENDED & EXPANDED
to provide multi-year support of $420 million per year.
Legislation enacted in August 2010 has created an additional pool of funding (“Pool2″) for the NY State Film Production tax credit program_ The new funding allocates to the program $420 million per year for calendar years 2010-2014 inclusive. Up to $7 million per year of this total amount will be available to the newly created, separately administered NY State Post Production credit. Information on and application forms for the Post Production credit will be available soon.
The new legislation changes some aspects of the program, including essential requirements for participation. All potential applicants need to make themselves familiar with the new guidelines as outlined below.
NOTE: If you applied to and were accepted into the program prior to May
2010, your application probably falls under the old rules governing the program (“Poo/1 Applicants’?; if you have already applied to and been accepted into the program and you have any quest;ons about which rules apply, call the State Film Office at 212-803- 2330.
How the New (“Pool 2″) Film Production Tax Credit Works
How much is the credit?
The NY State Film Production credit is a fully refundable 30% tax credit on qualified costs incurred in New York State.
What kind of costs qualify?
“Qualified production costs” are costs for tangible property or services used or performed within New York State directly and predominantly in the production (including post production) of a qualified film. Qualified production costs generally include most below-the line items including costs of technical and crew production, expenditures for facilities, props, makeup, wardrobe, set construction, background talent, etc., and generally exclude costs of stories and scripts, and wages for writers, directors, producers and performers (other than
extras without spoken lines). See Form B. and the Initial Application Instructions below·for detailed information on which specific costs are eligible for the credit.
Are there any project caps or other restrictions?
No, there are no per project caps, and there is rollover in the annual $420 million allocation going forward until 2014.
Who can apply?
The incentive applies to production costs incurred in New York State. Eligible productions include:
• Feature Films
• Episodic television series
• Television pilots and presentations
• Television movies and miniseries
Certain categories of productions are excluded from the program, including, but not limited to, documentaries, news or current affairs programs, interview or talk shows, instructional videos, sport shows or events, daytime soap operas, reality programs, commercials, music videos.
What kind of production are you?
There are now two types of eligible feature film and television productions, Level 1 (aka “independent” productions, as defined in the law) and Level 2 productions. The first step is to determine which type you are_
A LEVEL 1 production is a qualified production that:
a. has a production budget of no more than $15 million, AND
b. is being produced by a company in which NO MORE THAN five percent of the beneficial ownership is owned, directly or indirectly, by a publicly traded entity
A LEVEL 2 production is a qualified production that:
a. has a production budget over $15 million, OR
b. is being produced by a company in which more than five percent of the beneficial ownership is owned, directly or indirectly, by a publicly traded entity
What are the program threshold requirements?
The program has three separate threshold requirements, each of which must be separately met in order to make certain specific types of costs eligible for the credit.
The three threshold requirements are:
Facility Threshold refers to qualified costs incurred during and related to work at a production facility.
Location/Other Threshold refers to principal photography shoot days in NY State outside a production facility
Post Production Threshold refers to qualified costs directly related to post production
A production must meet the facility threshold, but does not have to meet all three of the above thresholds, in order to participate in the program.
What is the Facilitv Threshold requirement?
All productions have a facility threshold they must reach, but the specifics of the threshold differ for Level 1 and Level 2 productions.
In New York City there will now also be two levels of Qualified Production Facilities, called Level 1 and Level 2 facilities. Level 2 productions filming on a QPF within the five boroughs of NY City ONLY, will have to use a Level 2 facility. (Level 2 productions may use any qualified facility outside of NYC.) For a complete list of Level 2 facilities, check the NY State Film Office website at www.nylovesfilm.com or call212-803-2330
For a Level1 feature film or television project to be eligible for the NY State tax credits, the production must:
1. shoot at least one full day on a set built expressly for the production at a NY State Qualified Production Facility (QPF).
2. Any QPF located anywhere in NY State or City, whether is it called a Level 1
or Level 2 facility, will do for a Level1 production.
3. at least 75% of the total of all expenses related to work (excluding post-
production) done at all facilities anywhere utilized by the production must be related to work done at the QPF.
For a Level 2 feature film or television project to be eligible for the NY State tax credits, the production must:
1. shoot on a set built expressly for the production on a stage located in a
Qualified Production Facility;
2. If the QPF is located within the five boroughs of the City of New York, it must
be a Level 2 QPF (if the QPF is located within NY State but outside NYC, there is
no distinction and ank: QPF can be utilized by the Level 2 production) ·
3. at least 10% of the total principal photography shooting days spent in the production of a Level 2 qualified production (OTHER THAN PILOTS) must be spent at the appropriate QPF; AND
4. at least 75% of the total of all expenses related to work (excluding post-production) done at all facilities anywhere utilized by the production must be related to work done at the QPF.
IMPORTANT NOTE FOR PILOTS: Pilots are EXEMPTED from this 10% of principal photography days requirement, even if they are Level2 productions. Pilots will still have to shoot 1 day at a Level 2 stage.
What is .the Location/Other threshold ?
In the Location/Other threshold, there is no distinction between Level1 and Level 2 productions; everything is the same for both types of production.
For location work, pre production and all costs related to work other than post production work done in New York outside the facility to be eligible, EITHER
1) at least 75% of all principal photography days shot on location outside the facility must be in NY York State,
OR
2) the production must spend at least $3 million related to work at the QPF. (In which case, there is no percentage for location days)
If you have met the appropriate Stage filming requirement, and you meet one of these two thresholds, all costs related to stage filming, location filming, pre production and all costs OTHER THAN post production will qualify for the credit.
What is the Post Production threshold?
For post production costs to qualify, you must
• have met the Facility threshold
• have met the Location/Other threshold AND
• at least 75% of the total of all qualified post production costs spent anywhere must be spent in NY State.
Note that in the calculation of thresholds, only qualified costs (as indicated “Yes” on Form B) are counted, so costs for talent, music licenses/rights etc, which are not qualified costs, are not included and do not count against the 75%.
What are the end credit requirements?
Specific end credits requirements have been made mandatory by the new law; failure to comply with the end credit requirements will result in rejection of the final application for the credit.
There are two ways a production can meet the end credit requirements. EITHER:
1) include in the end credits of each qualified film “Filmed With the Support of the New York State Governor’s Office for Motion Picture and Television Development” and the New York ¥ Film logo provided by the Film Office;
OR
2) include in each qualified film distributed by DVD, or other media for the secondary market, a New York promotional video approved by the Governor’s Office for Motion Picture and Television Development
Prior to the issuance of a final Certificate of Tax Credit, every production will be required to provide proof of compliance with the end credit requirements in the form of a still shot, frame grab, edited dvd, or other materials which the Film Office may request.
Am I now required to use onlv vendors based in New York State?
No. The new law states that qualified productions now have to certify they will “purchase taxable tangible property and services, defined as qualified production costs…only from companies registered to collect and remit” NY State and local sales tax.
NY State has declared many kinds of tangible property and services exempt from sales tax when they are used specifically for film and television production: the NYS Dept. of Taxation and Finance Publication 28 “A Guide to Sales Tax for the Film Industry” provides a list of less than 40 line items considered taxable. Items which are exempt from sales tax in the first place are not subject to this certification provision. For more information on sales tax issues go to www.nylovesfilm.com/pdf/SalesTaxExemption.pdf or call the NY State Film Office.
Many film and television industry vendors and service companies located outside NY State are registered to collect and remit sales tax in NY State. To determine if a given individual or company is registered, get their NY State Sales Tax Vendor ID Number, and
Go to: https://www7b.nystax.gov/TIVL!tiv1Gateway
Enter Vendor Tax I.D. number to determine
If the system doesn’t find the sales tax identification number provided by the vendor, we suggest that you:
• contact the vendor to confirm that they provided the correct number
• call the Sales Tax Information Center 518-485-2889 or 800-698-2909 and a representative can search by the vendor’s name.
THIS IS A NEW YORK STATE PROGRAM.
PLEASE DIRECT QUESTIONS TO THE NEW YORK STATE GOVERNOR’S OFFICE FOR MOTION PICTURE AND TELEVISION AT
212-803-2330.
NOTE: If you applied to and were accepted into the program prior to May 2010, your application probably falls under the old rules governing the program (“Pool1
Applicants’?; if you have already applied to and been accepted into the program and you have any questions about which rules and forms apply, call the State Film Office at 212-803- 2330.
Amended forms and regulations for the NEW PROGRAM
are currently being developed.
Please continue to check our website for updates.