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Film Industry Leaders Ready for Negotiations on Louisiana’s Controversial Tax Credit Program

March 1, 2015


Movie industry leaders in the state of Louisiana have said that they are prepared for negotiations with state authorities and concerned parties about the controversial tax credit program. The motive they explained would be to come up with a tax credit program which would keep film makers, movie studios and tax payers happy.


The Louisiana tax credit program for film makers allows for 30% transferable tax credits on all in-state expenditures exceeding $300,000. There are no cap values at all and expenses include amounts spent on resident and non-resident labor and for productions where in-state labors are used, there is an extra payroll tax credit of 5%.


The features of the tax credit program at a glance include a 35% transferable tax credit which could be transferred to the state at 85% of the face value, or to other Louisiana tax payers. The tax credits can also be used to set off personal or corporate income tax liabilities. There are currently no cap values but there is an in-state minimum spending requirement of $300,000.


Eligible companies include all motion picture production companies that are based and have their headquarters in Louisiana and the tax credit covers all nationally and internationally produced and distributed motion pictures with spending budgets exceeding $300,000. Qualified productions would also include feature length motion pictures, television pilots, series or movies of the week, animated feature films, animated feature short films, webisodes, documentaries, commercials, and all digitally distributed motion pictures.


Programs which do not qualify for the tax credit program include sporting events productions and televised news.


Qualifying expenses would also include spending on hotel accommodations, catering and craft services, make up, wardrobe, props rental, lighting and grip, vehicle leasing, camera rentals, sound stage rentals and sound mixing. Other items that would qualify only if they are done in Louisiana by an indigenous company include editing services, film processing, visual FX packages for services done in Louisiana, producer fees and salaries for services performed in Louisiana and directly related to the state-certified productions, rental and purchases of tangible goods from a source within the state and used for a state certified production.


Expenditure items that do not qualify for the tax credit program include application fees, marketing and distribution expenses, state and local taxes, costs related to transfer of tax credits, related-party finance fees, rentals and purchase of goods outside Louisiana and salaries for services performed outside Louisiana and non-production related overhead.


All other rules for the programs can be found in the motion picture tax credit statutes.


However, law makers in the state have referred to the tax credit program a case of and corporate welfare gone too far, and have said that they are now working on new bills that would make ‘comprehensive reforms’ to the tax credit program ahead of the 2015/2016 budget for the state.


State Sen. JP Morrell and his Colleague, State. Rep Julie stokes has said that it’s important that the program is adjusted because of some imminent flaws like the inability to predict what the program might cost the state each year.


The proposed changes include;

  • Adjusting the credit transferability benefits of the program as it gives room for fraud by brokers who often buy these tax credits and sell them off at a higher rate to residents looking to reduce tax burdens.

  • The bill also proposes to enforce payment of withholding taxes to the state by beneficiary actors as this would put money in the state coffers, which could garner some interests before tax season is due.

  • The bill would also see that a soft cap is introduced and for a movie to qualify for the tax credit, the budget for the film’s above-the-line expenses cannot exceed 50% of the project’s overall budget.


They proposed bill is scheduled to be presented to the Entertainment Industry Development Advisory Commission on March 4.


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