Both the Georgia Department of Economic Development and the Georgia Department of Revenue have been extremely open to questions concerning the Georgia Film Credit and very helpful in answering those questions. The State Tax Credit Exchange can also help address many questions you may have concerning the Georgia Film credit. Don’t hesitate to contact us to help you with those concerns.
In general the regulatory posture has been very liberal and helpful to the industry.
The statute was significantly amended in 2008. Consequently the Georgia Department of Revenue has issued new regulations interpreting the statute in December 2008. The new regulations are as follows (please use caution in reading these regulations as there is no guarantee that this reproduction reflects and changes to the regulations made after December 2008):
560-7-8-.45 Film Tax Credit.
(1) Purpose. This rule provides guidance concerning the implementation and
administration of the income tax credits contained within the Georgia Entertainment
Industry Investment Act (hereinafter “Act”) under O.C.G.A. § 48-7-40.26.
(2) Coordination of Agencies. The Department of Economic Development is the state
agency responsible for determining which projects qualify for the tax credits authorized
under the Act.
(3) Definition. “Film Tax Credit” means the credit allowed pursuant to the Georgia
Entertainment Industry Investment Act, O.C.G.A. § 48-7-40.26.
(a) Threshold Determination. O.C.G.A. § 48-7-40.26(c) and (d) discuss the investment
of a production company and its affiliates. The affiliates are included solely to determine
whether or not the $30 million expenditure threshold has been exceeded for the purpose
of determining under which of these subsections the film tax credit will be calculated.
Once that determination is made, the $500,000 base investment threshold or excess base
investment threshold is calculated for each separate production company and the film tax
credit is earned solely by the production company which has qualified investment
expenditures in a state certified production. If more than one affiliated production
company has qualifying productions in Georgia, then each production company will
calculate its film tax credit independently of its affiliates.
(b) Assignment of Credit to Affiliates. Once the production company establishes the
amount of the film tax credit by filing the tax return for the taxable year in which the
credit was earned, the credit may then be assigned to the production company’s affiliates
under the provisions of O.C.G.A. § 48-7-42. When a film tax credit is assigned to an
affiliated entity, the affiliated entity may apply the credit solely against its own income
tax liability. The affiliated entity may not sell or transfer the credit pursuant to paragraph
(10) of this rule and may not claim any excess film tax credit against its withholding tax.
Any unused credit may be carried forward by such affiliated entity until the credit is used
or it expires, whichever occurs first.
(5) Certification of Qualified Production Activities. Prior to claiming the film tax
credit (which includes the additional tax credit for including the qualified Georgia
promotion), each new film, video, or digital project must be certified by the Department
of Economic Development. Production companies that are required to reduce their
investment basis by the amount of expenditures in prior years, must receive certification
from the Department of Economic Development for current year projects prior to
claiming the film tax credit. The Department of Economic Development will provide a
Credit Certificate Number to the production company for each qualifying project which is
approved. The credit certificate number(s) will be used to report any transfer or sale of
film tax credit by the production company for the qualifying project(s).
(6) Production Expenditures.
(a) Base Investment. A production company can aggregate projects over a single tax
year to meet the $500,000 investment threshold or excess base investment threshold. A
television series (which can occur over two or more years), series pilot, or television
movie shall each be considered a single television project. In the case of an episodic
television series, an entire season of episodes is one project.
1. Example 1: A production company produces 20 commercials in one calendar year,
and each commercial has $25,000 in production expenditures. The production company
can aggregate their production expenditures for multiple commercials in one calendar
year (20 x $25,000 = $500,000) to meet the $500,000 base investment threshold.
2. Example 2: A production company has $900,000 in production expenditures during
two years (they spend $300,000 in year 1 and $600,000 in year 2) producing one
television movie. The production company may aggregate their production expenditures
over the two years for this single project (one television movie) to achieve the $500,000
base investment threshold. The production company can claim the credit in the year the
$500,000 base investment has been achieved.
(b) Direct use. A production company may only claim production expenditures that are
directly used in a qualified production activity. In determining whether an expenditure is
directly used in a qualified production activity, the Department of Revenue will consider
the proximity of the expenditure to the activity as well as the causal relationship between
the expenditure and the activity.
(c) Production expenditures include preproduction, production, and postproduction
expenditures incurred in this state that are directly used in a qualified production activity,
including without limitation the following: set construction and operation; wardrobes,
make-up, accessories, and related services; costs associated with photography and sound
synchronization, lighting, and related services and materials; editing and related services;
rental of facilities and equipment; leasing of vehicles; costs of food and lodging; digital
or tape editing, film processing, transfers of film to tape or digital format, sound mixing,
computer graphics services, special effects services, and animation services; total
aggregate payroll; airfare, if purchased through a Georgia based travel agency or travel
company; insurance costs and bonding, if purchased through a Georgia based insurance
agency; and other direct costs of producing the project in accordance with generally
accepted entertainment industry practices. This term shall not include postproduction
expenditures for marketing and distribution.
(d) Depreciation, amortization, or other expense on production expenditures with a
useful life of more than one year. The costs of production expenditures with a useful life
of more than one year are considered “other direct costs of producing the project in
accordance with generally accepted entertainment industry practices.” Such costs shall
be included in the computation of the film tax credit for the taxable year based upon the
depreciation, amortization, or other expense included in the computation of Georgia
taxable income of the production company for the applicable taxable year. Such
depreciation, amortization, or other expense shall be prorated based upon the time the
asset is used in qualified production activities in this state. Depreciation, amortization, or
other expense on expenditures incurred before the pre-production period shall not be
included in the computation of the Film Tax Credit in this state. In order to claim
depreciation, amortization, or other expense, the expenditure for the asset that generated
the depreciation, amortization, or other expense, must have been incurred in this State as
provided in subparagraph (6)(f) of this rule.
(e) Georgia based agency or company. In order to include production expenditures for
airline or insurance costs, the expenditure must have been made through an agency or
company whose headquarters are located in Georgia.
(f) Production expenditures incurred in this state. In order to be considered to have
been incurred in this state, the following rules shall apply:
1. Production expenditures, which are attributable to the performance of services by
individuals and companies directly at the filming site in Georgia who were not employees
of the production company, shall be attributed to Georgia in the same manner as salaries
as provided in subparagraph (6)(g) of this rule.
2. Except as otherwise provided in this regulation, expenditures for services which are
not performed at the filming site (such as insurance, editing and related services, digital
or tape editing, film processing, transfers of film to tape or digital format, sound mixing,
computer graphics services, special effects services, animation services, etc.) will be
allowed if the vendor has a location in Georgia (or in the case of insurance if purchased
from a company whose headquarters are located in Georgia) and will be attributed to
Georgia if the service is rendered in Georgia. If the production company is unable to
track the actual time spent in Georgia, then some other reasonable method which
approximates the actual time spent in Georgia may be used to determine the amount
attributable to Georgia. In the event the services are subcontracted to a company that
would not otherwise qualify and/or such subcontracted company renders the services
outside Georgia, the expenditure for such services shall not be considered to have been
incurred in this state.
3. Purchases and rentals of property will be attributed to Georgia if the property is used
in Georgia and if the vendor has a location in Georgia. Purchase receipts, invoices,
contracts, or other documentation shall be used to determine this.
4. For purposes of this rule, the vendor shall be considered to have a location in
Georgia if they have a physical location in Georgia with at least one individual working
at such location on a regular basis. Registering with the Georgia Secretary of State or
appointing a registered agent in Georgia does not establish a physical location in Georgia.
(g) Salaries. Total aggregate payroll, as such term is used in the Act, includes bonuses,
incentive pay, and other compensation paid to an employee which is included in the
employees Form W-2 “Wage and Tax Statement”. Reimbursed expenses, per diems, or
employer paid benefits and taxes are not included in aggregate payroll unless such
amounts are included as wages, tips, or other compensation in the employee’s Form W-2
“Wage and Tax Statement”. For purposes of this rule, the term “employee” means any
officer of a corporation or any individual who, under the Internal Revenue Service rules
applicable in determining the employer-employee relationship, has the status of an
employee. Only amounts included in total aggregate payroll shall be subject to the
$500,000 limit provided in O.C.G.A. § 48-7-40.26(b)(10). Except as otherwise provided
in this paragraph, if the production company is unable to track the actual time spent by an
employee in Georgia, the production company may calculate the total aggregate payroll
in Georgia by multiplying the total payroll of employees who worked in Georgia by a
ratio. Such ratio shall be computed by dividing the shooting days in Georgia in the state
certified production by the total shooting days spent in the state certified production. For
directors, producers, and other individuals who are paid 20% for preproduction, 60% for
actual production, and 20% for post production, the amount that is incurred in Georgia
shall be based on the amount paid for each such period and prorated based on the actual
time spent in Georgia by the employee in each such period. The following example
illustrates how to apply the shooting days method:
1. Example: A production company has 125 employees on a state certified production
in Georgia. The production company shoots in Georgia for 4 days out of a total of 60
shooting days. The total aggregate payroll for those 125 employees is $400,000. $26,667
[$400,000 multiplied by (4 days divided by 60 days)] of payroll would qualify as a
(h) Fringe Benefits. The following benefits are attributed to Georgia in the same
manner as salaries as provided in subparagraph (6)(g) of this rule:
1. SUI (state unemployment insurance);
2. FUI (federal unemployment insurance);
3. FICA (employer portion);
4. Pension and welfare if the amounts are paid as part of pension, health, and welfare
plans (these would not be required to be paid to a vendor with a location in Georgia);
5. Health insurance premiums if these amounts are paid as part of pension, health, and
welfare plans (these would not be required to be paid to a Georgia based insurance
6. Service fees paid to a payroll company (this includes workers compensation) but
only if the payroll company is a vendor with a location in Georgia.
(i) Other Fringe Benefits. The following fringe benefits are attributed to Georgia as
1. Meal per diems if incurred in Georgia; and
2. Hotel per diems if incurred in Georgia.
(7) Production Company Claiming Credit.
(a) Income tax. For a production company to claim the film tax credit, it must attach
Form IT-FC “Film Tax Credit” and the Department of Economic Development credit
certification(s) to its Georgia income tax return for each tax year in which the qualified
expenditures were incurred.
(b) Withholding Tax. The production company may claim any excess film tax credit
against its withholding tax liability. The withholding tax benefit may only be applied
against the withholding tax account used by the production company for payroll
purposes. In the event the production company is a single member limited liability
company that is disregarded for income tax purposes, the withholding tax benefit may
only be applied against the withholding tax liability that is attributable to wages paid by
the single member limited liability company. Any production company that qualifies to
take all or a part of the film tax credit against withholding tax otherwise due the
Department of Revenue, must make an irrevocable election to do so as a part of its
notification to the Commissioner required under this subparagraph. When this election is
made, the excess film tax credit will not pass through to the shareholders, partners, or
members of the production company if the production company is a pass-through entity.
1. Notice of Intent. To claim any excess film tax credit not used on the income tax
return against the production company’s withholding tax liability, the production
company must file Revenue Form IT-WH Notice of Intent at least thirty (30) days prior to
the due date of the Georgia income tax return (including extensions) or at least thirty (30)
days prior to the filing of the income tax return, whichever occurs first. Failure to file this
form as indicated will result in disallowance of the withholding tax benefit. However, in
the case of a credit which is earned in more than one taxable year, the election to claim
the withholding credit will be available for the credit earned in such subsequent year.
2. Review Period. The Department of Revenue has ninety (90) days from the date the
income tax return claiming the film tax credit is received to review the credit and make a
determination of the amount eligible to be used against withholding tax.
3. Letter of Eligibility. Once the review is completed, a letter will be sent to the
production company stating the film tax credit amount which may be applied against
withholding and when the production company may begin to claim the film tax credit
against withholding tax. The Department of Revenue shall treat this amount as a credit
against future withholding tax payments and will not refund any previous withholding
(c) Use of Other Tax Credits. Production companies claiming the film tax credit may
not claim the job tax credit or headquarters tax credit for employees whose wages are
used to calculate the film tax credit.
(8) Conditions and Limitations.
(a) A production company must provide the Department of Revenue with sufficient
detail of all qualifying expenditures used to meet the base investment and calculate the
film tax credit.
(b) Except as otherwise provided, a taxpayer may utilize the film tax credit only to the
extent of the taxpayer’s income tax liability in a given tax year.
(c) There is a five-year carry forward period from the end of the tax year in which the
qualifying expenditures were made and the production company established the amount
of the film tax credit for such tax year. Any film tax credits that cannot be used against a
taxpayer’s income tax liability in the year established will be carried forward. For
example, the amount of a film tax credit established in the calendar 2005 tax year may be
carried forward until it expires on December 31, 2010.
(d) Film tax credits may not be carried back and applied against a prior year’s income
(e) Any Department of Revenue audit triggered by a production company’s use or
transfer of a film tax credit will require the production company to reimburse the
Department of Revenue for all costs associated with the audit. The Department of
Revenue will inform the production company that the audit is a film tax credit audit and
thus subject to this clause prior to the commencement of the audit. Routine audits of the
taxpayer’s activity in Georgia are not subject to this provision.
(9) Pass-Through Entities. When a production company generating a film tax credit
is a pass-through entity, and has no income tax liability of its own, the film tax credit will
pass to its members, shareholders, or partners based on the year ending profit/loss
percentage. The credit forms will initially be filed with the tax return of the production
company that incurred the qualifying expenditures to establish the amount of the film tax
credit available for pass through. The credit will then pass through to its shareholders,
members, or partners to be applied against the tax liability on their income tax returns.
The shareholders, members, or partners may not claim any excess film tax credit against
their withholding tax liabilities. The credits are available for use as a credit by the
shareholders, members, or partners for their tax year in which the income tax year of the
pass-through entity ends. For example: A partnership earns the credit for its tax year
ending January 31, 2006. The partnership passes the credit to a calendar year partner.
The credit is available for use by the partner beginning with the calendar 2006 tax year.
(10) Selling or Transferring the Film Tax Credit. The production company may sell
or transfer in whole or in part any film tax credit, previously claimed but not used by such
production company against its income tax, to another Georgia taxpayer subject to the
(a) The production company may only make a one-time sale or transfer of film tax
credits earned in each taxable year. However, the sale or transfer may involve more than
one transferee. Such one-time sale may occur in a year or years after the film tax credit is
earned but must occur before the expiration of the carry forward period of such credit.
Carry forward attributable to previously sold or transferred film tax credit cannot be
1. Example: A production company earns and claims $900,000 film tax credit in tax
year 2006. In tax year 2006, the production company uses $100,000 of the film tax credit
earned in tax year 2006 against its income tax liability. In tax year 2008, the production
company sells $600,000 of the film tax credit earned in tax year 2006 to a Georgia
taxpayer. The remaining $200,000 of the film tax credit earned in tax year 2006 is carry
forward attributable to previously sold or transferred film tax credit and thus it cannot be
(b) The film tax credit may be transferred before the tax return is filed by the
production company. However, the amount transferred cannot exceed the amount of the
credit which will be claimed and not used on the income tax return of the transferor.
(c) The film tax credit must be sold for a minimum of 60 percent of the credit amount.
(d) The production company must file Form IT-TRANS “Notice of Tax Credit
Transfer” with both the Department of Economic Development and Department of
Revenue within 30 days of the transfer or sale of the film tax credit.
(e) The production company must provide all required film tax credit detail and transfer
information to the Department of Revenue. Failure to do so will result in the film tax
credit being disallowed until the production company complies with such requirements.
(f) The carry forward period of the film tax credit for the transferee will be the same as
it was for the production company. This credit may be carried forward for five years from
the end of the tax year in which the qualifying expenditures were incurred. For example:
The production company sells a film tax credit on September 15, 2006. This credit is
based on qualifying expenditures from the calendar 2005 tax year. The credit may be
claimed on the 2005 or 2006 return and the carry forward period for this credit will expire
on December 31, 2010. This carry forward treatment applies regardless of whether it is
being claimed by the production company or the transferee.
(g) A transferee shall have only such rights to claim and use the Film Tax Credit that
were available to the production company at the time of the transfer excluding the
withholding tax benefit which is not available to the transferee. Thus, a transferee shall
not have the right to subsequently transfer such credit since that right has been utilized by
(11) How to Sell or Transfer the Tax Credit.
(a) Direct Sale. The production company may sell or transfer the film tax credit
directly to a Georgia taxpayer (or multiple Georgia taxpayers as provided in
subparagraph (10)(a) of this rule). A pass-through entity may make a one-time election
to sell or transfer the unused film tax credit earned in a taxable year at the entity level. If
the pass-through entity makes the election to sell the film tax credit at the entity level, the
credit does not pass through to the shareholders, members, or partners. In all cases, the
effect of the sale of the credit on the income of the seller and buyer of the credit will be
the same as provided in the Internal Revenue Code.
(b) Pass-Through Entity. The production company may be structured as a passthrough
entity. If a pass-through entity does not make a one-time election to sell or
transfer the tax credit at the entity level as provided in subparagraph (11)(a) of this rule,
the tax credit will pass through to the shareholders, partners or members of the entity
based on their year ending profit/loss percentage. The shareholders, members, or partners
may then sell their respective film tax credit to a Georgia taxpayer.
(c) Transferee Pass-Through Entity. The production company, or its shareholders,
members or partners, may sell or transfer the tax credit to a pass-through entity. The passthrough
entity shall elect on behalf of its shareholders, members or partners which year
the credit shall be passed through to its shareholders, members or partners (either the tax
year in which it purchased the credit or the tax year in which the production company
claims the film tax credit as provided in subparagraph (11)(d) of this rule). The passthrough
entity may then pass the credit through to its shareholders, members, or partners
based on the pass-through entity’s year ending profit/loss percentage for such elected
year. For example, if a partnership is buying the credit earned by a production company
in the 2005 tax year and elects to use the credit for such year, then all of the partners
receiving the credit must have been a partner in the partnership no later than the end of
the 2005 tax year in which the credit was established. Only partners who have a
profit/loss percentage as of the end of the applicable tax year may receive their respective
amount of the film tax credit.
(d) The credits are available for use as a credit by the transferee for the transferee’s tax
year in which the transferee purchased the credit or the tax year in which the production
company claims the film tax credit for the project or project(s) associated with the credit
being sold (provided the time has not expired for filing a claim for refund of a tax or fee
erroneously or illegally assessed and collected pursuant to O.C.G.A. § 48-2-35).
1. Example: A production company reaches the $500,000 base investment threshold
and claims the film tax credit in tax year 2009. The production company sells the film
tax credit to a Georgia taxpayer in tax year 2010. The transferee Georgia taxpayer may
claim the purchased film tax credit on either their 2009 return (tax year in which the
production company claimed the film tax credit) or their 2010 return (tax year in which
the transferee purchased the credit).
(12) Effective Date.
(a) The provisions set forth in this regulation will apply to taxable years beginning on
or after January 1, 2008. Taxable years beginning before January 1, 2008 will be
governed by the regulations of Chapter 560-7 as they exist before January 1, 2008 in the
same manner as if the amendments set forth in this regulation had not been promulgated.
Authority O.C.G.A. Secs. 48-2-12, 48-7-40.26. History. Original Rule entitled “Film Tax Credit” adopted.
F. Mar. 6, 2006; eff. Mar. 26, 2006. Amended: F. Nov. 19, 2008; eff. Dec. 9, 2008
Copyright 2008-2010. State Tax Credit Exchange. All rights reserved.
GEORGIA FILM CREDIT REGULATIONS CONTINUED
Film Tax Credit Chapter 159-1-1 1 RULES OF
THE GEORGIA DEPARTMENT OF ECONOMIC DEVELOPMENT
FILM, MUSIC & DIGITAL ENTERTAINMENT DIVISION
FILM TAX CREDIT
TABLE OF CONTENTS
159-1-1-.01 Available Tax Credits for Film, Videotape or Digital Media
159-1-1-.03 Film Tax Credit Certification
159-1-1-.04 Film Tax Credit Certification Application Process
159-1-1-.05 Qualified Productions & Production Activities
159-1-1-.06 Georgia Entertainment Promotion Tax Credit
159-1-1-.07 Qualified Productions
159-1-1-.08 Appeals Process
159-1-1-.09 Effective Date
159-1-1-.01 Available Tax Credits For Film, Videotape or Digital Media.
(1) Purpose. This rule provides guidance concerning the application and qualification guidelines contained within the 2008 Georgia Entertainment Industry Investment Act (hereinafter “Act”) under O.C.G.A. § 48-7-40.26. There are two different credits made available under the Act; the “Base Film Tax Credit” and the “Georgia Entertainment Promotion Tax Credit” (hereinafter “GEP Tax Credit”), and collectively referred to as the “Film Tax Credit.” Each of the two available tax credits requires an independent certification application.
(2) Coordination of Agencies. The Georgia Film, Music and Digital Entertainment Office (GFMDE), a division of the Georgia Department of Economic Development (hereinafter GDEcD), will determine which projects qualify for the film tax credits authorized under the Act, the certification of tax credit applications, and the administration of the GEP logo. The Georgia Department of Revenue (hereinafter Film Tax Credit Chapter 159-1-1 2
“GDOR”) is the state agency responsible for implementing the proper application of the film tax credits.
(3) Cross-Reference. This rule shall be construed in harmony with the Rules of the Department of Revenue, Income Tax Division, Chapter 560-7-8, Returns and Collections, Rule 560-7-8-.45, entitled Film Tax Credit, which governs, among other things, the application of financial thresholds and calculations of the tax credits to be allowed.
Authority: O.C.G.A. §48-7-40.26.
(1) „Animated‟ means, with regard to the GEP Tax Credit, the movement of the GEP logo while it is seen in the finished Film, TV, or Interactive Entertainment Work, as defined by GFMDE (See rule 159-1-1-.02 below). The logo will be delivered to each customer in file formats that will provide producers of movie content, television content, music video content, and interactive video game content various versions of the GEP logo that will meet the requirement of Animated. Options will include a 3D-animated logo with several elements moving to form the GEP logo; a credit roll or scroll; a fade up and out; or a modified GEP logo promotion as agreed upon in advance by the production company or studio and GFMDE. The GEP logo may be placed before the opening titles; within the opening titles; within the content as product placement; or in the end credit roll; preferably before the below the line crew credit crawl. A deal memo, created by the requesting customer and specifically defining a proposed logo placement, must be reviewed, agreed to and signed by both GFMDE and the requesting Customer and must be executed prior to the Customer being awarded the GEP tax credit.
(2) „Certification Letter‟ means a letter from the GDEcD indicating that the requirements to earn the Georgia “Base Film Tax Credit” have been met for the specific project named. If the project has also been certified for the GEP uplift, a designation in the certification letter will indicate that the project is so eligible and qualifies for the additional 10% GEP tax credit. Film Tax Credit Chapter 159-1-1 3
(3) „Commercial Advertisements‟ means advertisements recorded on film, videotape or digital medium for multi-market distribution which extends outside the state of Georgia by way of broadcast television networks, cable, satellite, Internet, DVD, home video or motion picture theaters. Branding, marketing, promotion and/or e-advertising campaigns do not qualify. Certain animated productions do qualify.
(4) „Console Game‟ refers to a form of interactive multimedia consisting of images and sounds generated by a video game console and displayed on a television or similar video/audio display system. The game itself is usually controlled and manipulated using a handheld device connected to the console called a controller. The display, speakers, console, and controls of a console can also be incorporated into one small object known as a handheld game console.
(5) „Development‟ with regards to a film or television project means any activity or expenses incurred in order to prepare the project for the pre-production phase of the project or production. „Development‟ also refers to the creation of a video game, the production process involved in producing a video game, referred to in the industry as video game development, as in the production process normally required to produce a video game.
(6) „Feature Film‟ means, but is not limited to, a dramatic, comedic, animated or documentary film or high definition digital production with no commercial interruption, and originally intended for commercial distribution to motion picture theaters, directly to the home video and/or DVD markets, cable TV, video on demand, or any technology hereafter devised.
(7) „Film Tax Credit‟ means the tax credits allowed pursuant to the 2008 Georgia Entertainment Industry Investment Act, O.C.G.A. § 48-7-40.26.
(a) The „Base Film Tax Credit‟ means the tax credit that provides a 20% tax credit for all qualified and certified entertainment productions, as certified by the GDEcD, which meet the minimum investment threshold, and is effective for all taxable years beginning on or after January 1, 2008. Film Tax Credit Chapter 159-1-1 4
(b) The „Georgia Entertainment Promotion Tax Credit‟ (“GEP Tax Credit”) means the additional 10% tax credit which may be obtained by inclusion of a promotional Georgia logo in the completed production. The logo may be placed before or within the film or TV production‟s opening titles; into or out of bumpers, or in the end credits, preferably before the below the line crew credit crawl; over picture in the last three to five seconds of a music video; in various navigational areas within a video game, or as product placement in any of the above. (See rule 159-1-1-.06 (1) below)
(8) „Interactive Entertainment Work‟ means only the creation of massively multi-player online video games (MMOG), virtual worlds and certain console games as defined and approved by GFMDE and that meets the requirement of multi-market distribution via the Internet or any other channel of exhibition.
„Life of the Project‟ means from the initial release date through all ancillary uses, markets, and distribution channels worldwide that are under the direct control of the studio or production company, unless an exemption is agreed upon by GFMDE.
(10) „Massively-Multi-Player Online Game‟ (MMOG) refers to a video game which is capable of supporting hundreds or thousands of players simultaneously. MMOGs are played on the Internet and feature at least one persistent world.
(11) „Multi-Market Distribution‟ means commercial distribution within the State of Georgia and which must extend to multiple markets outside the State of Georgia.
(12) „Music Video‟ means a filmed or videotaped recorded song, often portraying musicians performing the song or including visual images interpreting the lyrics.
(13) „Preproduction‟ means the process of preparation for actual physical production and is considered to begin with the establishment of a dedicated production office, the hiring of key crew members such as a Unit Production Manager and/or Line Producer, and includes, but is not Film Tax Credit Chapter 159-1-1 5
limited to, activities such as location scouting, hiring of crew, construction of sets, etc. Preproduction does not include the process of „Development‟. (See rule 159-1-1-.02 (5) above)
(14) „Presentation‟ means the entire Feature Film, Television Pilot, Television Series, Television Film, Single Television episode or episodes, Television Specials, Music Videos, or Interactive Entertainment Work. This is not the same as a “pre-pilot” demo presentation.
(15) „Principal Photography Start Date‟ means the first date of principal ongoing filming of significant portions of a qualified film that involves the main lead actors and the director.
(16) „Production Company‟ is defined as a company that is primarily engaged in qualified production activities which have been approved by the Georgia Department of Economic Development and is a company that is solely and regularly involved in the creation and production of original film, television, or video game content in the State of Georgia.
(17) „Promotional Trailers,‟ as defined by GFMDE, means behind the scenes specials and special edition DVD releases where credits are included.
(18) „Television Film,‟ which may also be known as a „movie of-the-week,‟ „MOW,‟ „television special,‟ „made for television movie,‟ „TV movie‟, or „TV mini-series,‟ means a production intended for broadcast on television, whether free or via a subscription-based service.
(19) „Television Pilot‟ means the initial episode produced for a proposed television series that has a running time of at least thirty minutes in length (inclusive of qualified commercial advertisements and qualified interstitial content).
(20) „Television Series,‟ which may also be known as episodic television, means a regularly recurring production intended in its initial run for weekly broadcast on television, whether free or via a subscription-based service, that has a running time of at least thirty (30) Film Tax Credit Chapter 159-1-1 6
minutes in length (inclusive of qualified commercial advertisements and qualified interstitial content).
(21) „Virtual World‟ means a computer-based simulated environment intended for its users to inhabit and interact via avatars. These avatars are typically depicted as textual, two-dimensional, or three dimensional graphic representations of people, although other forms are possible (auditory and touch sensations for example). Some, but not all, virtual worlds allow for multiple users.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.03 Film Tax Credit Certification.
(1) State Certified Production.
Project Certification Requirement. Prior to claiming any Film Tax Credit, each new film, video, television or video game project must be certified as meeting the guidelines and the intent of the Act. Projects are certified by the Georgia Film, Music & Digital Entertainment division (GFMDE) on a project by project basis. Producers may be asked to provide budget information, funding sources, distribution agreements, production schedules, and personnel information. Only one production company may claim the tax credit, per project, and the production company must be regularly and solely in the business of producing original film, television or video game content.
(a) Projects Not Eligible for Certification.
Certain categories of projects do not qualify for the Film Tax Credit or the Georgia Entertainment Promotion including, but not limited to, the following:
1. Live or recorded broadcast or sporting events (except to the extent that any footage used is a minor part of an otherwise qualifying production);
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2. Live or prerecorded news programs & certain awards shows;
3. Local TV talk shows originating in or airing from local TV stations; Call-in talk shows; Live talk shows;
4. Projects and content consisting of footage not shot, recorded or originally produced in Georgia;
5. Music scoring of content shot outside the state of Georgia;
6. Corporate marketing, industrial or training productions;
7. Pornographic films or videos;
8. Trailers promoting theatrical films;
9. Promos or interstitials promoting or marketing entertainment content that was not produced in Georgia
10. Website development;
11. Certain interactive productions; video game platform design and/or manufacturing for purchase; (but see Rule 159-1-1-.05(4) below);
12. Sole platform arcade video games;
13. Games of Chance websites and other games of chance productions.
14. Productions performed strictly „for hire‟, unless the hiring party waives its right to claim the tax credits;
15. Any Qualified Production performed as a „work for hire‟, where the owner of the results of the Qualified Production has filed a Certification Application;
16. Small scale games included in advertising, marketing and promotional websites or microsites; all forms of social media, social networking, marketing and brand promotion;
17. Development costs, marketing and promotion expenses, distribution expenses, or any expenses incurred prior to preproduction or after post production of a feature film, television production or video game;
18. Infomercials, Infotainment, Edutainment content and Solicitation based productions do not qualify as “entertainment” as defined by GFMDE.
19. Auction based TV shows; and Political and Editorial based content do not qualify.
20. Any expenditures made or incurred outside the state of Georgia and productions that do not meet the $500,000 minimum spend requirement.
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(c) Certification Letter. Projects which meet the certification requirements will be sent a Certification Letter with a project certification number and the tax credit percentage level for which the project is eligible. Only one certification letter per project will be awarded. In the instance of Co-Productions or “work for hire” situations, both companies must provide an agreement as to which party will earn the tax credits. The Certification Letter or Letters must be included, along with required GDOR‟s Forms, with the production company‟s Georgia tax return when claiming the tax credit.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.04 Film Tax Credit Certification Application Process.
(1) Film and television production companies or studios must submit a completed certification application not earlier than ninety (90) days prior to the scheduled start of principal photography and a shooting script to GFMDE for all feature films and television projects in order to be considered for approval. Video game and virtual world developers must submit a synopsis of each project(s) along with a certification application not earlier than ninety (90) days before the beginning of game development. Music video producers must submit song lyrics and a basic outline of the storyline elements along with a completed certification application not earlier than thirty (30) days prior to the scheduled start of principal photography. Commercial production companies must submit a listing of the television commercial(s) being produced and a completed certification application(s) not earlier than (30) days prior to the start of principal photography.
(2) For projects which are not completed within the applicant‟s tax year (fiscal year or calendar year), a new project certification must be applied for each successive tax year. A certification letter must be obtained for each project for each year that tax credits are claimed. This rule applies to all multi-year entertainment productions that qualify for the Tax Credits including, but not limited to, feature films, television series, other television productions, music videos, and video game development. Large, multi-year video game productions must apply and be certified for the base Film Tax Credit and the GEP Tax Credit each Film Tax Credit Chapter 159-1-1 9
year a video game production is in development or production. The GEP logo is required to be prominently displayed in agreed upon areas of the game and on the game company‟s website for the duration of the development phase and permanently embedded in the initial version and subsequent versions of the game, website, promotional materials and product packaging for the life of the game series.
(3) All projects must be fully funded and have an existing multi-market distribution contract, or intend in good faith to seek such distribution outside the state of Georgia in order to qualify for the Film Tax Credit. Qualified distribution includes international, national or regional distribution via broadcast television, satellite television, cable television, movie theaters, video on demand, retail outlets, home video, online video game subscription distribution, Internet distribution, DVD sales and distribution, or other forms of distribution that may hereafter be devised. If for any reason the project is not distributed to multiple markets outside the state of Georgia (thereby eliminating any promotional value of the GEP logo), the GEP Tax Credit will be disallowed.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.05 Qualified Productions & Production Activities.
(1) The Film Tax Credit applies to all qualified and certified entertainment productions, as determined solely by GFMDE, including and limited to major studio feature films, independent feature films, television pilots; dramatic/comedic/reality television series; television films, TV specials, TV episodes, TV commercial advertisements; music videos; massively multi-player online video games (MMOG); certain console video games; virtual worlds; animated feature films and animated TV series; and the production of original musical scores used in any of these types of projects which have been approved and certified by the GFMDE.
(2) Production companies must create, produce, and record original content made in the State of Georgia in order to qualify for the film tax credit. Work-for-hire service companies, post production houses, catering Film Tax Credit Chapter 159-1-1 10
companies, equipment rental houses, and motion picture laboratories are not eligible to receive the tax credit, but the producers employing them may include these expenditures as part of their project expenses.
(3) Expenditures for the Development phase of projects do not
Qualify for the Film Tax Credit. Projects must have entered „Preproduction‟ in order for expenditures to qualify for the Film Tax Credit.
(4) Studios designing platforms for outside game developers are not eligible for the film tax credit; however, the studio that buys these platforms from a Georgia vendor with a location in Georgia may claim them as an expense toward the production of a video game project.
(5) Expenditures incurred in Georgia by producers for postproduction of projects produced and recorded in the state qualify for the tax credit, except for postproduction expenditures for Marketing and Distribution, which do not qualify.
(6) Qualified commercial advertisements are eligible for the base Film Tax Credit; however, such commercial advertisements are not eligible for the GEP Tax Credit.
(7) Any misrepresentation of project information may result in denial or revocation of certification.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.06 Georgia Entertainment Promotion Tax Credit.
(1) The GEP Tax Credit is available only for major studio feature films, independent feature films, TV pilots, TV episodes; dramatic/comedic/reality TV series; television films, TV specials, music videos; certain console video games; massively multi-player online video games (MMOG); virtual worlds; and animated feature films and animated TV series which have been approved and certified by the GFMDE. Film Tax Credit Chapter 159-1-1 11
(2) The GEP Tax Credit certification applications must be submitted
to the GFMDE. Applications will be reviewed and decisions will be issued. Projects that are not eligible or approved for the GEP Tax Credit may still be eligible for the base Film Tax Credit. If an applicant has claimed the GEP Tax Credit and fails to include the GEP Logo in the original finished product per the agreed upon placement, the GEP Tax Credit may be disallowed.
(3) Once production of a qualified entertainment project has been completed in Georgia, the applicant or customer will request that the GEP Logo be delivered to said customer. The GFMDE will deliver the GEP Logo to each qualified GEP Tax Credit applicant on a DATA DVD disc at no charge. The GEP Logo will only be provided to customers that the GFMDE has certified as meeting the requirements to receive the GEP Tax Credit. The GFMDE must approve all logo placements, on a case by case basis. Furthermore, it is required that each qualified GEP tax credit applicant provide to GFMDE a DVD verifying the actual placement of the GEP Logo in the completed film, television production, music video or video game.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.07 Qualified Productions.
(1) „Qualified Movie Production‟ means a feature film that has been granted certification by the GFMDE. Feature films must include a shooting script for review along with their film tax credit certification application and GEP application (if applicable). After completion of the project, a digital copy of the project containing the GEP logo must be sent to the GFMDE for review. Depending on the type of project and position within the movie titles or credits, an approximately five second exposure of the GEP logo, as provided by the GFMDE, must be included before or during the opening titles, as product placement within the production, or in the end credits, preferably before the below the line crew credit crawl in the end credit roll to earn the 10% uplift. The GEP logo must be included within the Presentation and in Behind-the-scenes specials and special edition DVD releases where credits are included. Film Tax Credit Chapter 159-1-1 12
(2) „Qualified TV Production‟ means television pilots, television series (in whole or in part), television films, and TV specials which have been given certification by the GFMDE. Television productions must include a shooting script for review with the GEP application. After completion of the project, a digital copy of the project containing the GEP logo must be sent to the GFMDE for review. To qualify for the GEP uplift, the production must include a five second Georgia promotional logo in the body of the program, per each broadcast 30 minutes (inclusive of qualified commercial advertisements and qualified interstitial content); to be placed in the opening title sequence; as a bumper into or out of a commercial break; or in a prominent position in each single project‟s end credits; preferably before the below the line crew credit crawl; however, in no instances may the logo be shrunk or sped up in the credits without prior approval by GFMDE. The logo exposure time may be aggregated, if necessary, in order to meet the five second requirement and must be approved by GFMDE.
(3) „Qualified Music Video‟ means music video projects certified by the GFMDE. To qualify for the GEP uplift, a minimum of a three to five second Georgia logo exposure must occur at the end of the finished product, as well as in all units sold, and included in all online promotions. The finished music video project must be submitted to the GFMDE for review before the GEP uplift will be approved. Music video producers must provide a song lyric sheet and general outline of the storyboard of the music video in advance of production or prior to approval of the GEP certification. Demonstrated Multi-market Distribution outside the state of Georgia is required.
(4) „Qualified Interactive Work‟ means interactive entertainment that is limited to certain console video game products, a massively multi-player online video game (MMOG), or a virtual world product produced in Georgia with multi-market distribution extending outside the State of Georgia. To qualify for the GEP uplift, interactive projects must include a total of fifteen seconds of Georgia promotional logo exposure in units sold, and up to a three second GEP logo adjacency in all online promotions. The fifteen second requirement may be aggregated and met through up to three separate and distinct displays of the GEP logo throughout the video game or virtual world product totaling fifteen seconds. Placement of the GEP logo within a video game or virtual Film Tax Credit Chapter 159-1-1 13
world must be discussed in advance with the GFMDE. Video game developers must provide a synopsis of the game architecture, navigation and story plotlines before the project can be certified.
(5) In all cases, the GDEcD and the GFMDE will have authority for the certification of all projects; the denial of certification for any project; the denial of certification of the GEP; the agreed upon type, style, length and placement of the GEP logo, and the settlement of all disputes regarding the GEP.
(6) Every effort will be made to negotiate in good faith with customers at all times in order to provide the greatest level of promotion, economic impact and jobs creation for the state of Georgia.
Authority: O.C.G.A. §48-7-40.26.
159-1-1-.08 Appeal Process.
If the authorized applicant‟s certification application is disapproved by the GFMDE, or the approved applicant disagrees with the type of tax credits granted by the GFMDE, the applicant shall have the right to appeal. In the case of a disapproval of a certification application, an appeal may be made by sending a letter to the Manager of Community and Government Relations, Georgia Department of Economic Development, 75 Fifth Street, NW, Suite 1200, Atlanta, Georgia 30308, within thirty (30) days from the date of issuance of the denial letter by GFMDE. In the case of an appeal from a disagreement of the percentage of tax credit issued, such appeal shall be made by sending a letter to the same address as listed above within thirty (30) days from the issuance of the certificate of tax credit. Failure to request an appeal within thirty (30) days will finalize the denial decision and/or the percentage of the tax credit.
Upon receipt of a timely letter of appeal, the Manager of Community and Government Relations will address the merits of the appeal and the nature of the dispute with the Commissioner of the GDEcD, who will make the final decision. The GDEcD shall make a report on the appeal to the GFMDE and the GDEcD shall issue a final order within sixty days Film Tax Credit Chapter 159-1-1 14