D.E.D “Fact Sheet” on Film Office

Just as the Iowa Motion Picture Association and others in the film industry are holding a news conference to call to resumption of the state program that extends tax credits to movie makers, a spokesman for the Department of Economic Development emails a “fact sheet” about the program. Read D.E.D. public information officer Erin Seidler’s memo below.

Iowa Film, Television, and Video Project Promotion Program

This fact sheet has been prepared to provide background information on the Iowa Film tax credit program, including the guidelines for tax credit contracts (including that expenses for production are to be submitted after completion of a project), the top five tax credit recipients, and requirements for projects to be eligible.

Procedures for Tax Credits Contracts:

• Upon completion of the project (or completion of the activities occurring in Iowa), the production company must submit a final expenditure report and any requested supporting documentation to the Department.
• Upon review and qualification of the expenditures, the Department will issue tax credit certificates to the production company and the project’s investors based on the actual amount of qualified Iowa expenditures.
• The tax credits awarded under this program cannot be claimed without a valid tax credit certificate.
• As of July 1, 2009, the film tax credits are subject to a $50 million cap, part of a $185 million cap imposed on several economic development tax credits.
• To date, 22 film projects have received $32 million in tax credits.
• Producers seeking to participate in the program must submit a formal application by the monthly deadline established by the Department.
• Projects approved for participation in the program will be asked to enter into a contract with the Department of Economic Development.
• As of July 1, 2009, projects must commence within four months of executing the contract.  One two-month extension may be granted by the Department.

Top Five Tax Credit Recipients – The following five productions are

1. Ticket Out Productions (“Ticket Out”)
2. Iowa Film Productions Services (“Splatter”)
3. Cornfield Productions (“Peacock”)
4. Changing Horses Productions (Saddle Up Documentary DVDs)
5. Changing Horses Productions (“Saddle Up with Dennis Brouse”)

Project Eligibility Requirements:

• Project must be film, television, or video episode or segment.  Advertising projects in a film, television, or video medium are also eligible.
• Project must be shot in Iowa.
• Project must expend at least $100,000 in qualified Iowa expenditures.
• Project must have an economic impact on the economy of the state or locality sufficient to justify assistance under the program.
• Project must further tourism, economic development, and population retention or growth in the state or locality.
• Project must be widely distributed beyond the Midwest region.
• Project cannot depict or describe any obscene material, as defined by Iowa Code section 728.1.
• As of July 1, 2009, project must have commitments for at least 50% of the funding before applying for assistance under the program.

Qualified Expenditures – A qualified expenditure is a payment to an Iowa resident or an Iowa-based business for the sale, rental, or furnishing of tangible personal property or for services directly related to the registered project including but not limited to:

Aircraft
; Vehicles; 
Equipment; 
Materials
; Supplies
; Accounting; 
Animals and animal care; Artistic and design services; Graphics
; Construction; 
Data and information services
; Delivery and pickup services
;Labor and personnel

**
Lighting
Makeup and hairdressing Film
Music
Photography
Sound, 
Video and related services,
Printing, 
Research
Site fees and rental
Travel related to Iowa distant locations
Trash removal and cleanup
Wardrobe

** Prior to July 1, 2009, labor and personnel does not include the director, producers, or cast members.

** After July 1, 2009, labor and personnel includes compensation paid to the principal producer, principal director, and principal cast members if they are Iowa residents or an Iowa-based business.  The amount to include is based on the following formulas:

Minimum Qualified Iowa Expenditure Maximum Compensation for Producer, Director, and Principal Cast Members Maximum Compensation for All Other Labor and Personnel

$100,000 $0 $150,000 per line item/per job category
$10 million $250,000 per person $200,000 per line item/per job category
$20 million $1 million per person $300,000 per line item/per job category

Program Details

Qualified Expenditure Tax Credit

• Prior to July 1, 2009, equal to 25% of qualified Iowa expenditures.
• After July 1, 2009, up to 25% of qualified Iowa expenditures (negotiable).
• May be transferred up to 2 times.
• May be carried-forward for up to 5 years.
Qualified Investment Tax Credit
• Prior to July 1, 2009, equal to 25% of investment in the project or 25% of qualified Iowa expenditures, whichever is less.
• After July 1, 2009, up to 25% investment in the project or 25% of qualified Iowa expenditures, whichever is less (negotiable).
• May be transferred up to 2 times.
• May be carried-forward for up to 5 years.
Income Exclusion for Qualified Vendors (administered by the Dept. of Revenue)
• Prior to July 1, 2009, Iowa-based vendors may exclude 100% of the income from a qualified expenditure directly related to the production of an approved project for Iowa-income tax purposes.
• After July 1, 2009, Iowa-based vendors may exclude 25% of the income from a qualified expenditure each year for four years.

A taxpayer claiming a qualified expenditure tax credit; a business in which such taxpayer has an equity interest; or a business in whose management such taxpayer participates is not eligible to receive this income-exclusion benefit.