LAWS: La. R.S. 47:1121. Citation The provisions of this Chapter shall be known and cited as the "Louisiana Motion Picture Incentive Act". La. R.S. 47:1122. Findings and purpose A. It is hereby found and determined that the natural beauty, diverse topography, and architectural heritage of the state, the wilderness qualities and ecological regimen of its scenic rivers system, and the profusion of subtropical plants and wildlife provide a variety of excellent settings from which the motion picture industry might choose a location for filming a motion picture or television program, and together with those natural settings, the availability of labor, materials, climate, and hospitality of its people have been instrumental in the filming of several successful motion pictures. B. It is recognized that the motion picture industry brings with it a much needed infusion of capital into areas of the state which may be economically depressed and the multiplier effect of the infusion of capital resulting from the filming of a motion picture or television program serves to stimulate economic activity beyond that immediately apparent on the film set. C. Since a significant portion of the cost of a motion picture or television production will not be eligible for existing tax incentives due to the fact that portions of the production are carried out in another state, it is the purpose of this Chapter to provide a financial incentive to the film industry in order that the state might compete with other states for filming locations. La. R.S. 47:1123. Definitions The following words and phrases as used in this Chapter shall have the following meanings unless the context of use clearly indicates otherwise: (1) "Company" means a corporation, partnership, limited liability company, or other business entity. (2) "Department" means the Louisiana Department of Economic Development. (3) "Financial institution" or "institution" means any bank or savings and loan in the state which is insured by the FDIC. (4) "Motion picture" means a nationally distributed feature-length film, video, television series, or commercial made in Louisiana, in whole or in part, for theatrical or television viewing or as a television pilot. The term "motion picture" shall not include the production of television coverage of news and athletic events. (5) "Motion picture production company" means a company engaged in the business of producing nationally distributed motion pictures, videos, television series, or commercials intended for a theatrical release or for television viewing. Motion picture production company shall not mean or include any company owned, affiliated, or controlled, in whole or in part, by any company or person which is in default on a loan made by the state or a loan guaranteed by the state. (6) Repealed by Acts 2001, No. 9, § 10, eff. July 1, 2001. (7) "Payroll" means salary, wages, or other compensation including related benefits. (8) "Resident" or "resident of Louisiana" means a natural person, and for the purpose of determining eligibility for the tax incentives provided by this Chapter, any person domiciled in the state of Louisiana and any other person who maintains a permanent place of abode within the state and spends in the aggregate more than six months of each year within the state. (9) "Secretary" means the secretary of the Louisiana Department of Economic Development. (10) "State-certified production" shall mean a production approved by the Governor’s Office of Film and Television Development and the Department of Economic Development produced by a motion picture production company domiciled and headquartered in Louisiana which has a viable multi-market commercial distribution plan. La. R.S. 47:1124. Relief from payment of state sales and use tax Until January 1, 2006, any motion picture production company that intends to expend in the aggregate two hundred fifty thousand dollars or more in connection with the filming or production of one or more state-certified productions in the state of Louisiana within any consecutive twelve-month period shall, upon making application for and meeting the requirements as provided in this Chapter, be relieved from the payment of state sales and use taxes on funds so expended in Louisiana in connection with the filming or production of a state-certified production. The production of television coverage of news and athletic events is specifically excluded from the provisions of this Chapter. The provisions of this Chapter shall not apply to any sales and use tax levied by any local governmental subdivision. La. R.S. 47:1125. Application for relief from the payment of state sales and use taxes A. Any motion picture production company that intends to film all, or parts of, a motion picture or television program in Louisiana and desires to be relieved from the payment of state sales and use tax as provided for in this Chapter shall provide an estimate of total expenditures to be made in Louisiana in connection with the filming or production of such motion picture or television program. The estimate of expenditures shall be filed with the department prior to the commencement of filming in Louisiana. B. At the time the motion picture production company provides the estimate of expenditures to the department, it shall also designate a member, or representative, of the motion picture production company to work with the Department of Economic Development and the Department of Revenue on the reporting of expenditures and other information necessary to take advantage of the tax relief afforded by this Chapter. C. Applications for the tax relief provided by this Chapter shall be accepted only from those motion picture production companies which report anticipated expenditures in the state which in the aggregate equal or exceed two hundred fifty thousand dollars in connection with the filming or production of one or more motion pictures in the state within a consecutive twelve-month period. In order to be eligible for the tax relief provided for by this Chapter, expenditures shall be made from a checking account at any financial institution in Louisiana. Applications shall be approved by a majority vote of the Board of Commerce and Industry, after the application has been reviewed by the board and the recommendation of the secretary of the department has been considered. D. (1) Any motion picture production company that has been approved for relief from the payment of sales and use taxes as provided for by this Chapter and which fails to expend two hundred fifty thousand dollars within a consecutive twelve-month period shall be liable for the sales and use taxes that would have been paid had the approval not been granted. The sales and use taxes shall be considered due as of the date that taxable expenditures were made. (2) The secretary of the Department of Revenue shall promulgate rules for the implementation of this Subsection. La. R.S. 47:1125.1. Employment tax credit A. For state-certified productions that have received an effective certification date prior to December 31, 2005, a motion picture production company shall be entitled to a tax credit for the employment of residents of Louisiana in connection with production of a state-certified production. The credit shall be equal to ten percent of the total aggregate payroll for residents employed in connection with such production when total production costs in Louisiana equal or exceed three hundred thousand dollars but total less than one million dollars during the taxable year. The credit shall be equal to twenty percent of the total aggregate payroll for residents employed in connection with such production when total production costs in Louisiana equal or exceed one million dollars during the taxable year. For purposes of this Section, the term "total aggregate payroll" shall not include the salary of any employee whose salary is equal to or greater than one million dollars. B. The credit may be applied to any income tax or corporation franchise tax liability applicable to the motion picture production company. C. If the motion picture production company is an entity not subject to income or franchise tax, the credit shall flow through to its partners or members as follows: (1) Corporate partners or members shall claim their share of the credit on their corporation income or corporation franchise tax returns. (2) Individual partners or members shall claim their share of the credit on their individual income tax returns. (3) Partners or members that are estates or trusts shall claim their share of the credit on their fiduciary income tax returns. D. Any unused credit may be carried forward no more than ten years from the date the credit was earned. E. The secretary of the Department of Revenue shall promulgate such rules and regulations as may be necessary to administer this Section. F. Employment tax credits not previously claimed by any taxpayer against its income or franchise tax liability and that are held by the motion picture production company or that have been allocated to another person may be transferred by the motion picture production company or the person allocated such credits in the same manner and subject to the same conditions and procedures provided for Motion Picture Investor Tax Credits in R.S. 47:6007(C)(4) and the rules and regulations pertaining thereto. La. R.S. 47:1126. Disclaimer The state of Louisiana reserves the right to refuse the use of Louisiana's name in the credits of any motion picture filmed and/or produced in the state. La. R.S. 47:1127. Audit The Department of Revenue may require that reported expenditures and the application for a tax incentive from the motion picture production company be subjected to an audit by the department to verify expenditures. La. R.S. 47:1128. Rules and regulations The Department of Economic Development shall promulgate rules and regulations to carry out the intent and purposes of this Chapter. La. R.S. 47:6007. Motion picture investor tax credit A. Purpose. The primary objective of this Section is to encourage development in Louisiana of a strong capital and infrastructure base for motion picture film, videotape, digital, and television program productions, in order to achieve an independent, self-supporting industry. This objective is divided into immediate and long-term objectives as follows: (1) Immediate objectives are to: (a) Attract private investment for the production of motion pictures, videotape productions, and television programs in Louisiana. (b) Develop a tax and capital infrastructure which encourages private investment. This infrastructure will provide for state participation in the form of tax credits to encourage investment in state-certified productions and infrastructure projects. (c) Develop a tax infrastructure utilizing tax credits which encourage investments in multiple state-certified production and infrastructure projects. (2) Long-term objectives are to: (a) Encourage increased employment opportunities within this sector and increased global competition with other states in fully developing economic development options within the film and video industry. (b) Encourage new education curricula in order to provide a labor force trained in all aspects of film and digital production. (c) Encourage development of a Louisiana film, video, television, and digital production and post-production infrastructure with state-of-the-art facilities. B. Definitions. For the purposes of this Section: (1) "Base investment" shall mean the actual investment made and expanded by: (a) A state-certified production in the state as production expenditures incurred in this state that are directly used in a state-certified production or productions. (b) A person in the development of a state-certified infrastructure project. (2) "Expended in the state" in the case of tangible property shall mean property which is acquired from a source within the state, and in the case of services, shall mean services procured and performed in the state. (3) "Headquartered in Louisiana" shall mean a corporation incorporated in Louisiana or a partnership, limited liability company, or other business entity domiciled and headquartered in Louisiana for the purpose of producing nationally distributed motion pictures as defined in this Section. (4) "Motion picture" means a nationally distributed feature-length film, video, television series, or commercial made in Louisiana, in whole or in part, for theatrical or television viewing or as a television pilot. The term "motion picture" shall not include the production of television coverage of news and athletic events. (5) "Motion picture production company" shall mean a company engaged in the business of producing nationally distributed motion pictures as defined in this Section. Motion picture production company shall not mean or include any company owned, affiliated, or controlled, in whole or in part, by any company or person which is in default on a loan made by the state or a loan guaranteed by the state, nor with any company or person who has ever declared bankruptcy under which an obligation of the company or person to pay or repay public funds or monies was discharged as a part of such bankruptcy. (6) "Payroll" shall include all salary, wages, and other compensation, including related benefits sourced or apportioned to Louisiana. (7) "Production expenditures" means preproduction, production, and postproduction expenditures directly incurred in this state that are directly used in a state-certified production, 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, transfer of film to tape or digital format, sound mixing, special and visual effects; total aggregate payroll; music, if performed, composed, or recorded by a Louisiana musician, or released or published by a Louisiana-domiciled and headquartered company; airfare, if purchased through a Louisiana-based travel agency or travel company; insurance costs or bonding, if purchased through a Louisiana-based insurance agency; or other similar production expenditures as determined by rule. This term shall not include postproduction expenditures for marketing and distribution, any indirect costs, any amounts that are later reimbursed, any costs related to the transfer of tax credits, or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of the production. (8) "Resident" or "resident of Louisiana" means a natural person and, for the purpose of determining eligibility for the tax incentives provided by this Chapter, any person domiciled in the state of Louisiana and any other person who maintains a permanent place of abode within the state and spends in the aggregate more than six months of each year within the state. (9) "State-certified infrastructure project" shall mean an infrastructure project approved by the Governor’s Office of Film and Television Development and the Department of Economic Development. The term "infrastructure project" shall not include movie theaters or other commercial exhibition facilities. (10) "State-certified production" shall mean a production approved by the Governor’s Office of Film and Television Development and the Department of Economic Development produced by a motion picture production company domiciled and headquartered in Louisiana which has a viable multi-market commercial distribution plan. C. Investor tax credit; specific projects. (1) There is hereby authorized a tax credit against state income tax for Louisiana taxpayers, other than motion picture production companies. The tax credit shall be earned by investors at the time expenditures are made by a motion picture production company in a state-certified production. However, credits cannot be applied against a tax or transferred until the expenditures are certified by the Governor’s Office of Film and Television Development and the Department of Economic Development. For state-certified productions, expenditures shall be certified no more than twice during the duration of a state-certified production unless the motion picture production company agrees to reimburse the Governor’s Office of Film and Television Development and the Department of Economic Development for the costs of any additional certifications. The tax credit shall be calculated as a percentage of the total base investment dollars certified per project. (a) For state-certified productions approved by the Governor’s Office of Film and Television Development, on or after January 1, 2004: (i) If the total base investment is greater than three hundred thousand dollars and less than or equal to eight million dollars, each taxpayer shall be allowed a tax credit of ten percent of the actual investment made by that taxpayer. (ii) If the total base investment is greater than eight million dollars, each taxpayer shall be allowed a tax credit of fifteen percent of the actual investment made by that taxpayer. (b) For state-certified productions approved by the Governor’s Office of Film and Television Development, on or after January 1, 2006, and for state-certified infrastructure projects approved by the Governor’s Office of Film and Television Development, on or after July 1, 2005: (i) If the total base investment is greater than three hundred thousand dollars, each investor shall be allowed a tax credit of twenty-five percent of the base investment made by that investor. (ii) To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars. (iii) Until January 1, 2008, if the total base investment is greater than three hundred thousand dollars, each taxpayer shall be allowed a tax credit of fifteen percent of the base investment made by that taxpayer that is expended in this state on a state-certified infrastructure project as certified by the Governor’s Office of Film and Televisions Development, the Department of Economic Development, and approved by the division of administration. (c) For state-certified productions approved by the Governor’s Office of Film and Television Development and the Department of Economic Development, on or after July 1, 2010: (i) If the total base investment is greater than three hundred thousand dollars, each investor shall be allowed a tax credit of twenty percent of the base investment made by that investor. (ii) To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars. (d) For state-certified productions approved by the Governor’s Office of Film and Television Development and the Department of Economic Development, on or after July 1, 2012: (i) If the total base investment is greater than three hundred thousand dollars, each investor shall be allowed a tax credit of fifteen percent of the base investment made by that investor. (ii) To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars. (e) Motion picture investor tax credits associated with a state-certified production shall never exceed the total base investment in that production. (2) The credit shall be allowed against the income tax for the taxable period in which the credit is earned. If the tax credit allowed pursuant to this Section exceeds the amount of such taxes due, then any unused credit may be carried forward as a credit against subsequent tax liability for a period not to exceed ten years. (3) Application of the credit (a) All entities taxed as corporations for Louisiana income tax purposes shall claim any credit allowed under this Section on their corporation income tax return. (b) Individuals, estates, and trusts shall claim any credit allowed under this Section on their income tax return. (c) Entities not taxed as corporations shall claim any credit allowed under this Section on the returns of the partners or members as follows: (i) Corporate partners or members shall claim their share of the credit on their corporation income tax returns. (ii) Individual partners or members shall claim their share of the credit on their individual income tax returns. (iii) Partners or members that are estates or trusts shall claim their share of the credit on their fiduciary income tax returns. (4) Transferability of the credit. Any motion picture tax credits not previously claimed by any taxpayer against its income tax may be transferred or sold to another Louisiana taxpayer or to the Governor’s Office of Film and Television Development, subject to the following conditions: (a) A single transfer or sale may involve one or more transferees. The transferee of the tax credits may transfer or sell such tax credits subject to the conditions of this Subsection. (b) Transferors and transferees shall submit to the Governor’s Office of Film and Television Development, and to the Department of Revenue in writing, a notification of any transfer or sale of tax credits within thirty days after the transfer or sale of such tax credits. The notification shall include the transferor's tax credit balance prior to transfer, a copy of any tax credit certification letter(s) issued by the Governor’s Office of Film and Television Development and the Department of Economic Development, the name of the state-certified production, the transferor’s remaining tax credit balance after transfer, all tax identification numbers for both transferor and transferee, the date of transfer, the amount transferred, a copy of the credit certificate, price paid by the transferee to the transferor, in the case when the transferor is a state-certified production or state-certified infrastructure project, for the tax credits, and any other information required by the Governor’s Office of Film and Television Development, or the Department of Revenue. For the purpose of reporting transfer prices, the term "transfer" shall include allocations pursuant to R.S. 47:6007(C)(3) as provided by rule. The Governor’s Office of Film and Television Development may post on its website an average tax credit transfer value, as determined by the Governor’s Office of Film and Television Development and the secretary of the Department of Economic Development to reflect adequately the current average tax credit transfer value. The tax credit transfer value means the percentage as determined by the price paid by the transferee to the transferor divided by the dollar value of the tax credits that were transferred in return. The notification submitted to the Governor’s Office of Film and Television Development shall include a processing fee of up to two hundred dollars per transferee and any pricing information submitted by a transferor or transferee shall be treated by the Governor’s Office of Film and Television Development, the Department of Economic Development, and the Department of Revenue as proprietary to the entity reporting such information and therefore confidential. However, this shall not prevent the publication of summary data that includes no fewer than three transactions. (c) Failure to comply with this Paragraph will result in the disallowance of the tax credit until the taxpayers are in full compliance. (d) The transfer or sale of this credit does not extend the time in which the credit can be used. The carry forward period for credit that is transferred or sold begins on the date on which the credit was originally earned. (e) To the extent that the transferor did not have rights to claim or use the credit at the time of the transfer, the Department of Revenue shall either disallow the credit claimed by the transferee or recapture the credit from the transferee through any collection method authorized by R.S. 47:1561. The transferee’s recourse is against the transferor. (f) Beginning on and after January 1, 2007, the investor who earned the motion picture investor tax credits may transfer the credits to the Governor’s Office of Film and Television Development for seventy-two percent of the face value of the credits. Beginning January 1, 2009, and every second year thereafter, the percent of the face value of the tax credits allowed for transferring credits to the Governor’s Office of Film and Television Development shall increase two percent until the percentage reaches eighty percent. Upon the transfer, the Department of Economic Development shall notify the Department of Revenue and shall provide it with a copy of the transfer documentation. The Department of Revenue may require the transferor to submit such additional information as may be necessary to administer the provisions of this Section. The secretary of the Department of Revenue shall make payment to the investor in the amount to which he is entitled from the current collections of the taxes collected pursuant to Chapter 1 of such Subtitle II provided such credits are transferred to the Governor’s Office of Film and Televisions Development within one calendar year of certification. (5) The transferee shall apply such credits in the same manner and against the same taxes as the taxpayer originally awarded the credit. (6) Notwithstanding any other provision of law, on or after January 1, 2006, a state-certified production which receives tax credits pursuant to the provisions of this Chapter shall not be eligible to receive the rebates provided for in R.S. 51:2451 through 2461 in connection with the activity for which the tax credits were received. D. Certification and administration. (1) The secretary of the Department of Economic Development and the Governor’s Office of Film and Television Development shall determine through the promulgation of rules what projects and expenses including amounts expended in this state on state-certified infrastructure projects qualify according to this Section. Prior to adoption, these rules shall be approved by the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs. When determining what projects qualify, the Governor’s Office of Film and Television Development and the Department of Economic Development shall take the following factors into consideration: (a) The impact of the production on the immediate and long-term objectives of this Section. (b) The impact of the production on the employment of Louisiana residents. (c) The impact of the production on the overall economy of the state. (2)(a) Application. An applicant for the motion picture investor credit shall submit an application for initial certification to the Governor’s Office of Film and Television Development that includes the following information: (i) For state-certified productions the application shall include: (aa) The distribution plan. (bb) A preliminary budget including estimated Louisiana payroll and estimated base investment. (cc) The script, including a synopsis. (dd) A list of the principal creative elements including the cast, producer, and director. (ee) A statement that the production will qualify as a state-certified production. (ff) Estimated start and completion dates. (ii) For state-certified infrastructure projects the application shall include: (aa) A detailed description of the infrastructure project. (bb) A preliminary budget. (cc) A statement that the project meets the definition of state-certified infrastructure project. (dd) Estimated start and completion dates. (b) If the application is incomplete, additional information may be requested prior to further action by the Governor’s Office of Film and Television Development and the Department of Economic Development. An application fee shall be submitted with the application based on the following: (i) 0.2 percent times the estimated total incentive tax credits. (ii) The minimum application fee is two hundred dollars, and the maximum application fee is five thousand dollars. (c) The Governor’s Office of Film and Television Development shall submit its initial certification of a project as a state-certified production to investors and to the secretary of the Department of Revenue. The initial certification shall include a unique identifying number for each state-certified production. (d)(i) Prior to any certification of the state-certified production, the motion picture production company shall submit to the Governor’s Office of Film and Television Development a cost report of production expenditures audited and certified by an independent certified public accountant as determined by rule. The Governors’ Office of Film and Television Development shall review the production expenses and will issue a tax credit certification letter indicating the amount of tax credits certified for the state-certified production or state-certified infrastructure project to the investors. (3) The secretary of the Department of Revenue, in consultation with the Department of Economic Development and the director of the Governor’s Office of Film and Television Development, shall promulgate such rules and regulations as are necessary to carry out the intent and purposes of this Section in accordance with the general guidelines provided herein. (4) Any taxpayer applying for the credit shall be required to reimburse the Governor’s Office of Film and Televisions Development and the Department of Economic Development for any audits required in relation to granting the credit. (5) A motion picture production company applying for the additional credit for the employment of Louisiana residents must remit a schedule to the Department of Revenue, in a machine-sensible format approved by the secretary of the Department of Revenue, that includes the following information: the names of all persons who received salary, wagers or other compensation for services performed in Louisiana in connection with the state-certified production, and the address, taxpayer identification number, permanent address of, and the amount of compensation for services performed in Louisiana received by each such person. (6) With input from the Legislative Fiscal Office, the Governor’s Office of Film and Television Development and the Department of Economic Development shall prepare a written report to be submitted to the Senate Committee on Revenue and Fiscal Affairs and the House of Representatives Committee on Ways and Means no less than sixty days prior to the start of the Regular Session of the Legislature in 2007, and every second year thereafter. The report shall include the overall impact of the tax credits, the amount of the tax credits issued, the number of net new jobs created, the amount of Louisiana payroll created, the economic impact of the tax credits and film industry, the amount of new infrastructure that has been developed in the state, and any other factors that describe the impact of the program. (7) Either the Department of Economic Development or the Department of Revenue may audit the cost report submitted by the motion picture production company. E. Recapture of credits. If the Governor’s Office of Film and Television Development and the Department of Economic Development find that funds for which an investor received credits according to this Section are not invested in and expended with respect to a state-certified production within twenty-four months of the date that such credits are earned, then the investor's state income tax for such taxable period shall be increased by such amount necessary for the recapture of credit provided by this Section. F. Recovery of credits by Department of Revenue. (1) Credits previously granted to a taxpayer, but later disallowed, may be recovered by the secretary of the Department of Revenue through any collection remedy authorized by R.S. 47:1561 and initiated within three years from December thirty-first of the year in which the twenty-four month investment period specified in R.S. 47:6007(E) ends. (2) The only interest that may be assessed and collected on recovered credits is interest at a rate three percentage points above the rate provided in Civil Code Article 2924(B)(1), which shall be computed from the original due date of the return on which the credit was taken. (3) The provisions of this Subsection are in addition to and shall not limit the authority of the secretary of the Department of Revenue to assess or to collect under any other provision of law.