Friday, January 25, 2008

Wisconsin’s Film Tax Credits - Four Types of Credits

The January 23 post gave an introduction to the Wisconsin film tax credits that are now available to productions accredited by the Wisconsin Department of Commerce. In more detail, these credits are:

1) Film Production Services Credit. The Film Production Services Credit is equal to 25% of salary or wages paid for services rendered in Wisconsin to produce an accredited production and paid to Wisconsin employees. The credit for salary or wages paid must not exceed an amount equal to the first $25,000 of salary or wages paid to each employee, not including the salary or wages paid to the two highest paid employees.

2) Film Production Expenditures Credit. The Film Production Expenditures Credit is equal to 25% of qualifying production expenditures incurred in the state. Qualifying expenditures include: set construction, wardrobe and makeup, photography, sound recording and mixing, lighting, editing and processing, special effects, rental or lease of facilities and equipment, food, lodging and more. Expenditures not eligible include those for distribution and marketing. Music by a resident of the state, or published or distributed by an entity headquartered in the state, air travel purchased by a travel agency headquartered in the state, and insurance purchased from a company headquartered in the state are also eligible. Expenditures not eligible include those for distribution and marketing.

3) Sales and Use Tax Credit. The Sales and Use Tax Credit is equal to the amount of sales and use taxes paid in the taxable year on the purchase of tangible personal property and taxable services that are used directly in producing an accredited production in Wisconsin, including all stages from the final script stage to the distribution of the finished production.

4) Film Production Company Investment Credit. The Film Production Company Investment Credit allows a credit for the first three taxable years that the claimant is doing business in Wisconsin as a film production company. The credit is equal to 15% of the purchase price of depreciable, tangible personal property and the amount expended to acquire, construct, rehabilitate, remodel or repair real property. For purposes of this credit, a film production company means an entity that creates films, videos, electronic games, broadcast advertisement, or television productions (but not those explicitly excluded from an accredited production).

The Film Production Expenditures Credit is a refundable credit that may be taken even if the amount of the credit exceeds the tax due. That is, you can get a refund in connection with this credit even if you haven’t actually paid any tax. The other credits are non refundable, however, they may be carried over to offset tax due for a period of up to 15 years.

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