Film, TV and Commercials has become a global industry. In order to be competitive, many states offer a film incentive program. There are currently over 30 states that have some sort of a film incentive program.
Without a program of our own, Michigan loses that work, or gets overlooked in favor of other states that do.
MIFIA’s plan for a sustainable film tax credit program.
1.) A two-tiered program that covers both commercials/industrials and also feature film/television/streaming productions.
2.) It is a transferable tax credit, based system, rather than a grant or rebate based one. This means no money paid out of the general fund to applicants.
3.) Also, applicants may sell off unused tax credits to other Michigan based companies. Typically, at a percentage on the dollar, making them attractive to purchase. The tax credit stays in Michigan and benefits Michigan companies.
4.) Available tax credit ‘funds’ (Feature and Commercial) are independent of each other. The cap for each, increases at regular 3-year intervals over a 10-year period.
For Film, $50 Million, $75 Million and $100 Million.
For Commercials, $2 Million, $4 Million and $10 Million.
Any unused funds, roll over into the next calendar year.
5.) To qualify, production companies must start production within 90 days of approval, with the following minimum spend:
$300,000.00 minimum for feature film, television productions 20 minutes or longer.
$50,000.00 minimum for a single commercial, campaign, industrial or other projects under 20 minutes in final runtime.
6.) Application Fees.
$2,000.00 for Feature film, Television and Streaming productions 20 minutes or longer.
$1,000.00 for commercial, industrial projects under 20 minutes.
Application Fees are non-refundable.
7.) The base tax credit awarded starts at 25% for in state spending with an additional 5% awarded for the inclusion of a TBD ‘Filmed in Michigan’ logo.
8.) Almost all aspects of film/commercial production ranging from pre-production, production and post production qualify. ‘Development’ costs do not qualify.
9.) We are putting Michigan workers first by awarding a 30% tax credit for hiring Michigan residents. Non-residents are awarded at 20%. Any wages paid out to a single person, per project, in excess of $500,000.00 do not qualify for a tax credit.
10.) The bill includes language defining what constitutes a “Full time employee.” This will help support a more accurate count when tracking increased jobs creation in the film industry as a result of the tax credit.
11.) Protecting Michigan based companies and encouraging new business investment by including language that excludes ‘Pass-Through’ transactions and businesses from qualifying for the Film tax credit. Qualified vendors will need to show a brick and mortar / Inventory / full time employee presence.
12). Speed. Under a tax credit based system, there is less initial burden on the film office and treasury, applications can be processed faster. Qualified expenditures are proven on the back end before a credit amount is issued.
13.) Accountability. The bill includes language that requires verification by an independent CPA to submit qualified expenditures for approval. It also states that no tax credits will be authorized or issued to any applicant until there is confirmation that all qualified vendor and employee invoices have been fully satisfied and paid in full. This ensures that the Treasury can collect the taxes before issuing a credit.