House passes film, TV credit bill

Mar. 5—Proposed legislation seeks to overhaul the requirements for companies to qualify for Georgia's film and television tax credits.

House Bill 1180 was introduced to the Georgia General Assembly on Feb. 7. The bill is sponsored by one Democrat and five Republicans, including District 4 Rep. Kasey Carpenter of Dalton.

The Georgia House Committee on Ways and Means favorably reported HB 1180 on Feb. 21, with substitutions. Members of the State House voted 131-34 to pass the bill on Feb. 29.

Alternately known as the Georgia Entertainment Industry Investment Act, HB 1180 totals 41 pages.

"For any production company and its affiliates that invest in a state certified production approved by the Department of Economic Development and whose average annual total production expenditures in this state did not exceed $30 million for 2002, 2003 and 2004, there shall be allowed an income tax credit against the tax imposed under this article," the bill language reads.

To qualify for the credits, the base investment has to be at least $500,000 or "a single state certified production or $10 million for all state certified productions."

Production companies would be able to claim a tax credit equal to 20% of their respective base investment in Georgia, with the option of claiming an additional 10% tax credit pending said company checks off at least four out of nine criteria points.

Among other conditionals, that includes requirements that at least 50% of crew members are Georgia residents, at least 50% of vendors are licensed in Georgia and/or total production expenditures hit at least $30 million.

Production companies with annual expenditures surpassing $30 million would likewise be eligible for the 20% tax credit, with eligibility for an additional 10% credit determined by Georgia Department of Revenue audit results.

"Any tax credits with respect to a state certified production earned by a production company and previously claimed but not used by such production company against its income tax liability may be transferred or sold in whole or in part by such production company to another Georgia taxpayer," the bill text reads.

That provision, however, comes with several conditions.

"The total amount of such transfers or sales in a calendar year shall not exceed an amount equal to 2.5% of the total budget in the General Appropriations Act as passed and signed into law for the corresponding fiscal year," the bill indicates. "Such production company may make only a single transfer or sale of tax credits earned in a taxable year; provided, however, that the transfer or sale may involve one or more transferees."

HB 1180's definition of "production expenditures" covers a broad swath, ranging from licensing fees for music and leasing of vehicles to rental of facilities and equipment and food and lodging expenses.

The "qualified Georgia promotion" element of the bill references a five-second-long promotional logo shot, which is required to appear in films' end credits or television broadcasts "for the life of the project."

Excluded from eligibility as "qualified production activities" are coverage of news and athletics events, instructional videos and "any project that is not intended for multi-market commercial distribution."

Under the bill, the Georgia Department of Economic Development is tasked with certifying each qualifying production as well as establishing rules and regulations.

"The Department of Economic Development may charge reasonable fees associated with the certification process," the bill reads. "If the Department of Economic Development prevails in court in an appeal of the denial of the certification, the production company or interactive entertainment production company shall pay all court costs."

HB 1180 also incudes a separate subsection, alternately titled "The Georgia Interactive Entertainment Industry Investment Act."

As currently written, the proposal would allow some qualified interactive entertainment production companies and affiliates to claim tax credits equivalent to 20% of their base investment in Georgia, with the ability to claim an additional 10% tax credit if their products include a "qualified Georgia promotion."

The subsection delineates separate criteria for companies and affiliates with total production expenditures in Georgia exceeding $30 million — for the years 2002, 2003 and 2004.

"If the excess base investment in this state equals or exceeds $250,000, the qualified interactive entertainment production company and its affiliates shall be allowed a tax credit of 20% of such excess base investment," the bill text reads.

Such entities would also be eligible for an additional 10% tax credit for the inclusion of "qualified Georgia promotion" in their products.

"In lieu of the inclusion of the Georgia promotional logo, the qualified interactive entertainment production company may offer marketing opportunities to be evaluated by the Department of Economic Development to ensure that they offer equal or greater promotional value to the state of Georgia," the bill language reads.

Companies and affiliates that qualify for the tax credits would be capped at $1.5 million for each taxable year.

"In no event shall the aggregate amount of tax credits allowed under this code section for qualified interactive entertainment production companies and affiliates exceed $12.5 million for each taxable year," the bill continues.

To be eligible for the credits, companies would have to maintain a physical business location within Georgia, with an aggregate payroll of at least $250,000.

"In no event shall the amount of the tax credit under this code section for a taxable year exceed the qualified interactive entertainment production company's income tax liability," the bill reads. "Any unused credit amount shall be allowed to be carried forward for five years from the close of the taxable year in which the investment occurred."