Georgia Legislators looking to tighten up on Film Tax Credits

Film Finance, Mania Entertainment News | 8,013 comments

 

Mania Entertainment is involved in several Productions in Georgia, and as such is one of many Companies that rely heavily on the Georgia Incentives. We are following this News with interest!

 

 

ATLANTA

February 2020

 Georgia lawmakers are moving to tighten the state’s tax subsidies for television and movies, but are proposing a new tax subsidy aimed at luring major sporting events.

 The House Working Group on Creative Arts and Entertainment is considering House Bill 1037, by Rep. Matt Dollar, a Marietta Republican. Dollar told committee members Thursday that it’s time for Georgia to overhaul its rules. 

“I think the industry has definitely matured, and we’re in a different situation than we were in 2008,” Dollar told the committee.

Television and movie production has boomed in Georgia, but so has the amount of state income tax money that Georgia is giving back to production companies. The film tax credit, which rebates up to 30% of a production’s value, cost nearly $900 million in foregone tax revenue last year.

 But two audits this year were highly critical of the tax credit, finding that some companies receiving tax credits didn’t earn them. Georgia requires no audit and relatively little documentation of industry spending, though, despite giving out more in subsidies than any other state. A company spending $1 million gets up to $300,000 tax credits, which it can use to defray taxes or sell to others who can then use them to defray taxes.

 The subject has new relevance this year with lagging revenues prompting budget cuts by Gov. Brian Kemp.

 The new sports event tax breaks were suggested by the Metro Atlanta Chamber of Commerce, which is trying to lure five to seven matches of soccer’s 2026 World Cup, as well as the international broadcast center, which could bring 15,000 or more journalists. The state has subsidized some major sports events, including the Super Bowl and college basketball’s Final Four, on a one-at-a-time basis in the past.

 The new subsidies would be granted to any sporting event certified as having an economic impact of $50 million or more. The media companies that broadcast the events would get the money, not the sports league or governing body.

 Some lawmakers expressed concern over the new subsidies, especially when Atlanta is already successful in luring them.

 “I’m just concerned, if we add this in, how much exposure are we potentially looking at?” asked Rep. Winifred Dukes, an Albany Democrat.

 Beyond the sports incentives, the bill would cut the redemption time for credits from five years to three years. The additional 10% that a company gets for promoting Georgia wouldn’t be awarded until a show or movie is released.

 The bill would not eliminate the resale of credits. Any individual or corporation owing income tax can buy them, typically at a discount, and use them. The sale allows businesses to get cash immediately, or get cash when they have accumulated more tax credits than they owe in state taxes.

 There would be a three-year phase in of audits, with the most expensive projects audited first. Companies would hire auditors from a list. Dollar said the Department of Revenue has said it needs time to build up its abilities, plus the list of qualified auditors. Dollar said the vast majority of spending would be captured in the first year.

 The bill is likely to be voted on by the working group early next week. After that, it would head for more consideration by the House Ways and Means Committee before a floor vote.

 Post by

 Nuala Quinn-Barton

 Original Article CBS News and AP

 

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