MFG NEWS / NOUVELLES DU MFG

U.S. Production Incentives Update

February 20, 2007

ARIZONA has allocated all of the $40 million available for 2007; applications for 2008 will be accepted starting in November. However, legislation has been submitted that will increase the total amount available for 2009 to $100,000,000. If approved, the incentive will be increased to 30% for all films over $1 million. In 2008 the single picture cap will be increased to $10 million, and again to $20 million in 2009. Unfortunately, starting in 2008 at least 50% of the full-time employees must be Arizona residents for the production to qualify at all.

SOUTH CAROLINA has allocated all of the remaining 20% labor rebate funds for this fiscal year, although there are still funds available for the 30% supplier rebate. Additional funds will be available July 1; applications will be accepted starting May 1.

FLORIDA has $1 million still available of the $20 million allocated for 2006-2007; this can provide the full 15% incentive for a film with a budget of around $8 million. However, the Governor has asked for $75 million for the fiscal year starting July, 2007. The legislature will vote once they are back in session; details will be available soon. The state has simplified its procedures, combining the TV and feature queues.

MISSISSIPPI will soon have a new incentive; both the state house and senate unanimously approved the legislation. The bill now goes to committee to resolve some minor differences, and will then be sent to the governor for signature. This legislation provides a rebatable tax credit, scaling up to 30% of qualified expenses; cast and crew must be Mississippi residents to qualify, and registered loan-outs should qualify as well.

NEW JERSEY has about $1 million available from last year, with new funds probable on July 1st. There is the possibility of an increase to $25 million, but legislation is still being worked on.

WISCONSIN expects action on improvements to their new incentives act within two weeks, which will provide either a tax credit or rebate of 25% (final decision as to the type of incentive has not been made). Currently proposed is a waiver of the residency requirement for at least two years, and requiring that local vendors be used, if available.

LOUISIANA will soon publish guidelines for CPAs who are auditing Louisiana productions.

KANSAS is working on a new production incentive. Legislation for a film incentive has been initiated; proposed are a transferable credit based on the in-state spend, a refundable investment tax credit for investment in Kansas-based films, and a waiver of sales tax for certain production expenditures.

FILM COMMISSION NEWS - After four years, Brenda Sexton has resigned as the Illinois Film Commissioner to pursue other interests, and been replaced by Betsy Steinberg. Tennessee's new commissioner is Perry Gibson. And Massachussetts has finally appointed a new commissioner, Nicholas Paleologos, a producer and Tony Award winner. Welcome all!

A number of states, including Massachusetts and Connecticut, now require loan-out companies to register to do business in the state for salaries to be included as qualified expenses. Massachusetts requires that state income tax be withheld as well.

NEW OFFICES - Axium now has offices in Illinois, North and South Carolina, Arizona, Connecticut, and Louisiana. The New Mexico office will re-locate from Rio Rancho to Albuquerque by the end of the month. Using a local vendor for payroll generally increases the tax credits or rebates by 1% to 2% of the total payroll.

INDEPENDENT FILM FINANCE, which manages the incentives process for producers, has been acquired by Axium. IFF assists with evaluating the incentive, preparing the applications, properly setting up the accounting system for incentives, coordinating the necessary reports, preparing and filing the final documents, and tracking the rebate or credits. They can also assist with arranging to cash- flow the credits or rebate. For more information, EMAIL either Laura Polley or Len Pendergast

NEW INCENTIVES GUIDE - The Sundance edition of our Guide to U.S. Production Incentives is still available. To download a copy click the DOWNLOAD link. If you also want a printed copy click the PRINTED COPY link, use PRINT as the subject, and include mailing information in the message body.

The next issue is planned for March 15, 2007.

For more information, please call Jeff Begun at 323- 988-2965, or email jeffb@axium.com.