280-RICR-20-20-5
280-RICR-20-20-5. Rules and Regulations for the Certification of Motion Picture Production Tax Credits (version Amendment, 03/18/2018 to 01/04/2022)
5.1 Purpose
These rules implement R.I.
Gen. Laws Chapter 44-31. These rules govern the procedures for the
application, certification, and issuance of these tax credits.
5.2 Authority
These rules and regulations
are jointly promulgated by the Rhode Island Division of Taxation
(within the Department of Revenue) and the Rhode Island Film and
Television Office (within the Rhode Island State Council on the Arts)
pursuant to R.I. Gen. Laws § 44-31.2-6.
5.3 Application
The terms and provisions of
these rules and regulations shall be liberally construed to permit
the Rhode Island Division of Taxation, within the Department of
Revenue, and the Rhode Island Film and Television office, within the
Rhode Island Council on the Arts, to effectuate the purposes of R.I.
Gen. Laws Chapter 44-31.2 and other applicable state laws and
regulations.
5.4 Severability
If any provision of these
Rules and Regulations, or the application thereof to any person or
circumstances, is held invalid by a court of competent jurisdiction,
the validity of the remainder of the Rules and Regulations shall not
be affected thereby.
5.5 Definitions
A. “Above-the-line person”
means a motion picture director, writer, producer or featured actor.
Motion picture directors, writers, producers, featured actors and
their fees are grouped within the “pre-production,” “production”
and/or “post-production section of a typical motion picture budget,
above a solid, bold line, separating these few “above-the-line”
persons from the majority of the “below-the-line” crew, other
production and post-production expenses.
B. “Accountant’s
certification” means a certified audit by a Rhode Island certified
public accountant licensed in accordance with R.I. Gen. Laws §
5-3.1-5.
C. “Act” means R.I. Gen.
Laws Chapter 44-31.2, as amended.
D. “Alternative distribution
method” for the purposes of the production tax credit means an
executed agreement among all participants of a pass-through entity,
or among all owners of a motion picture having multiple owners,
setting forth the method for allocation of the motion picture
production tax credit agreed upon by and among the participants or
co-owners. An alternative distribution method may include, without
limitation, a partnership agreement, an operating agreement of a
limited liability company, a shareholders agreement, or any other
instrument executed by all participants or co-owners.
E. “Amended production”
means one additional separate and distinct application that is
allowable for the same production for purposes such as “re-shoots”,
“retakes”, added scenes or any additional production expenditures
incurred and paid within the State of Rhode Island (but not
previously included in the cost report) provided that the motion
picture has already met the conditions required for, and has already
been approved for final certification by the film office and the
Division of Taxation. The amended application must individually meet
the statutory requirements for a state certified production
including, but not limited to, a total production budget of a minimum
of one hundred thousand dollars ($100,000). The additional production
expenditures shall be included in a separate cost report, require a
separate accountant’s certification, and be subject to a separate
review by the Division of Taxation.
F. “Applicant” means a
motion picture production company domiciled in Rhode Island, which is
a corporation, partnership, limited partnership, or other entity or
individual, submitting an application to the film office and the
Division of Taxation for initial or final certification of a
production.
G. “Application year”
means within the calendar year the motion picture production company
files any application for the tax credit.
H. “Certificate of motion
picture production tax credit” means a certificate issued by the
Division of Taxation, which states the amount of the motion picture
production tax credit for which the production has qualified. A
motion picture production company is prohibited from using State
funds, State loans or State guaranteed loans to qualify for the
motion picture tax credit. The certificate shall include, but not be
limited to, the following information: specific and unique
certificate number, name and address of the approved applicant, name
of the state certified production, name of the qualified film to
which the credit applies, date on which production completed, date of
final certification by the Division of Taxation, the name and
taxpayer identification number of production company that incurred
and paid state certified Rhode Island production expenditures, total
amount of state certified Rhode Island production expenditures, name
of initial holder of this certificate, taxpayer identification number
of initial holder of this certificate, and amount of credit allocated
to initial holder of this Certificate.
I. “Completion of a
production” means the date of completion of a motion picture’s
production in the State of Rhode Island as certified to the film
office and the Division of Taxation as part of the production’s
cost report.
J. “Costs”
1. include, but are not
limited to, the following pre-production, production and
post-production expenses which shall qualify when incurred within the
State of Rhode Island and paid to a qualified vendor:
a. set construction, set
dressing and operation - labor and materials provided by a
qualified vendor where the labor and materials are actually and
physically provided, supplied, consumed or used within Rhode Island;
b. wardrobes, make-up,
accessories, props, expendables, supplies and related services;
c. costs associated with
photography and sound synchronization, lighting, and related services
and materials including animation costs - labor and materials
provided by a qualified vendor where the labor and materials are
actually and physically provided, supplied, consumed or used within
Rhode Island;
d. editing and related
services including, but not limited to, film processing, transfers of
film to tape or digital format, sound mixing, computer graphics
services, special effects, and animation services - provided the
work is performed or procured in the state of Rhode Island;
e. salary, wages, and other
compensation, including related benefits paid by the employer for
health insurance, pension/retirement benefits, and life insurance of
persons employed, either directly or indirectly, in the production of
a film including, but not limited to, writer, actor, motion picture
director, and producer (provided the work is performed in the State
of Rhode Island);
f. rental of facilities, site
locations, including preparation, security, clean-up and equipment
located and procured in the State of Rhode Island;
g. leasing of vehicles from a
qualified vendor where the vehicles are actually and physically
delivered, provided, supplied, consumed or used within Rhode Island;
h. costs of food and lodging -
procured or performed by a qualified vendor where the food and
lodging are actually and physically provided, delivered, supplied,
consumed or used within Rhode Island;
i music, if performed,
composed, or recorded by a Rhode Island musician, or released or
published by a person domiciled in Rhode Island;
j. travel expenses incurred to
bring persons employed, either directly or indirectly, in the
production of the film to Rhode Island (but not expenses of such
persons departing from Rhode Island); and
k. legal (but not expense of
completion bond or insurance) and accounting fees and expenses
related to the production’s activities in Rhode Island provided
such services are provided by Rhode Island licensed attorneys or
accountants.
2. costs that do not qualify
as state certified production costs, include without limitation, the
following:
a. any salaries, wages, and
other compensation, including related benefits to individuals who are
performing services outside the State of Rhode Island;
b. any travel expenses for
persons departing from the State of Rhode Island;
c. any expense attributable to
a completion bond;
d. insurance expenses,
including workers’ compensation insurance and temporary disability
insurance;
e. any cost associated with
the promotion or marketing of the production including premier
showings, special screenings and advertising;
f. costs that were not
incurred in Rhode Island;
g. costs that have not been
paid at the time of the application for final certification;
h. costs which have not been
the subject of the Rhode Island accountant’s certification;
i. bank fees or charges;
j. federal and state
withholding tax amounts;
k. payments to the Rhode
Island Secretary of State’s office;
l. payments to the Rhode
Island Division of Taxation, including, but not limited to, payments
for tax filings, letter of good standing requests, and audits
conducted under R.I. Gen. Laws Chapter 44-31.2;
m. payments to the Rhode
Island film office;
n. expenses incurred for the
preparation of the cost report;
o. payments made to a
nonqualified vendor;
p. costs incurred prior to
filing a completed initial certification application with the film
office; and
q. costs that are not
arms-length transactions.
3. In the case where props and
other production assets, with a cost of more than two thousand five
hundred dollars ($2,500), are purchased, created or acquired for a
Rhode Island production and kept in inventory for future use, there
must be deducted from the cost incurred in Rhode Island the fair
market value of the assets remaining after initial use in Rhode
Island. The fair market value shall be attested to by an independent
appraiser in a manner prescribed by the director of the Rhode Island
film office in conjunction with the Rhode Island Division of
Taxation.
a. Example:
(1) A prop is purchased from a
qualified vendor for use in a production in the State of Rhode Island
at a cost of $5,000 and placed in storage at the end of production.
The fair market value of the prop at the end of production is
certified to be $4,000 by an independent appraiser. For purposes of
the cost report, only the $1,000 value consumed during production
will be allowed.
K. “Costs incurred within
the state” means, in the case of tangible property, which is
acquired from or through a qualified vendor will constitute a cost
incurred within the State of Rhode Island where goods and materials
are actually and physically provided, supplied, consumed or used
within Rhode Island and, in the case of services, shall mean services
performed within the State of Rhode Island.
1. Examples
a. Wardrobe purchased or
rented from a qualified vendor where the labor and materials are
actually and physically provided, supplied, consumed or used within
Rhode Island will constitute a cost incurred within the state.
However, wardrobe purchased or rented from a non-qualified vendor and
shipped to Rhode Island will not constitute a cost incurred within
the state.
b. Catering expenses and
services provided by a qualified vendor where the labor and materials
are actually and physically provided, supplied, consumed or used
within Rhode Island will constitute a cost incurred within the state.
However, catering services rendered outside of Rhode Island or by a
non-qualified vendor will not constitute a cost incurred within the
state.
c. Props purchased or rented
from a qualified vendor where the labor and materials are actually
and physically provided, supplied, consumed or used within Rhode
Island will constitute a cost incurred within the state. However,
props acquired from a non-qualified vendor or created outside of
Rhode Island will not constitute a cost incurred within the state.
d. Set construction materials,
such as lumber and steel, purchased or rented from a qualified vendor
where the labor and materials are actually and physically provided,
supplied, consumed or used within Rhode Island will constitute a cost
incurred within the state. However, materials acquired from a
non-qualified vendor or constructed outside of Rhode Island will not
constitute a cost incurred within the state.
e. Shipping expenses incurred
to send materials and supplies to Rhode Island will constitute a cost
incurred within the state. However, shipping expenses for materials
and supplies shipped from Rhode Island to an out of state location
will not constitute a cost incurred within the state.
L. “Division of Taxation”
means that office within the Department of Revenue that operates
under the authority and direction of the tax administrator, pursuant
to R.I. Gen. Laws § 44-1-1 et seq.
M. “Documentary production”
means a non-fiction production intended for educational or commercial
distribution that may require out of state principal photography.
N. “Domiciled in Rhode
Island” means a corporation incorporated in Rhode Island or a
partnership, limited liability company, or other business entity
formed under the laws of the State of Rhode Island for the purpose of
producing motion pictures, or an individual who is a domiciled
resident of Rhode Island as defined in the R.I. Gen. Laws § 44-30-5.
Such individual, corporation, partnership, limited liability company,
or other entity, is subject to the General Laws of the State of Rhode
Island including, but not limited to, R.I. Gen. Laws Chapters 44-11
and 44-30.
O. “Feature-length film”
means a production intended for commercial distribution to a motion
picture theater or directly to the home video market that has a
running time of at least seventy-five (75) minutes in length.
P. “Film office” means an
office within the Rhode Island State Council on the Arts that has
been established in order to promote and encourage the locating of
film and television productions within the State of Rhode Island. The
office is also referred to within as the “Rhode Island film and
television office.”
Q. “Film office director”
means the Director of the Rhode Island Film and Television Office.
R. “Final production budget”
means and includes the total pre-production, production and
post-production out of pocket costs incurred and paid in connection
with the making of the motion picture. The final production budget
excludes costs associated with the promotion or marketing of the
motion picture.
S. “Inspection” means a
visit by an authorized representative of the film office and/or the
Division of Taxation to a property, including a set, a soundstage, a
location or a production office for services performed in Rhode
Island.
T. “Loan-out company”
means and includes a corporation, partnership, limited liability
company, S-corporation, association, nominee trust, or any other
entity through which an artist or other person is loaned out to
perform services for the motion picture production company.
Regardless of structure, employees or other persons of such loan-out
companies and the loan out company itself shall be subject to all
applicable provisions of the Rhode Island personal income tax and any
applicable payroll or other tax provisions. A loan-out company shall
be registered with the Rhode Island Secretary of State and the Rhode
Island Division of Taxation.
U. “Motion picture” means
feature-length film, documentary production, video, television
series, or commercial made in Rhode Island, in whole or in part, for
theatrical or television viewing or as a television pilot or for
educational distribution. Motion picture shall not include the
production of television coverage of news or athletic events, nor
shall it apply to any film, video, television series or commercial or
production for which records are required under 18 U.S.C. § 2257, to
be maintained with respect to any performer in such production or
reporting of books, films, etc. with respect to sexually explicit
conduct.
V. “Motion picture
production company” means
1. a corporation, partnership,
limited liability company, or other business entity, domiciled in
Rhode Island, and engaged in the business of producing one or more
motion pictures. Generally, the motion picture production company
controls the state certified motion picture during production and is
responsible for payment of the direct production expenses (including
pre- and post-production), and is a signatory to the state certified
motion picture’s contracts with its payroll company and facility
operators.
2. motion picture production
company shall not mean or include:
a. any company owned,
affiliated, or controlled, in whole or in part by any company or
person which is in default:
(1) on taxes owed to the
state; or
(2) on a loan made by the
state in the application year; or
(3) on a loan guaranteed by
the state in the application year; or
b. any company or person who
has discharged an obligation to pay or repay public funds or monies
by:
(1) filing a petition under
any federal bankruptcy, or state receivership, or insolvency law
against such company or person;
(2) having a petition filed
under any federal bankruptcy, or state receivership, or insolvency
law against such company or person;
(3) consenting to, acquiescing
in, or joining in a petition named in §§ 5.5(V)(2)(b)((1)) or ((2))
of this Part above;
(4) consenting to, acquiescing
in, joining in the appointment of a custodian, receiver, trustee, or
examiner for such company’s or person’s property; or
(5) making an assignment for
the benefit of creditors, or admitting in writing or in any legal
proceeding its insolvency or inability to pay debts as they become
due.
W. “Participant” means a
partner in a partnership, member of a limited liability company,
shareholder of an S-corporation, a beneficial owner of a trust, or
any other person having an interest in a pass-through entity.
X. “Pass-through entity”
means a partnership, limited liability company, S-corporation,
association, nominee trust, or any other entity, the tax attributes
of which are passed through to the participants in such entity.
Y. “Post-production” means
the final stage in a state certified motion picture’s production
after principal and ongoing photography is completed, including, but
not limited to, editing, Foley recording, automatic dialogue
replacement, sound editing, special effects, scoring and music
editing, beginning and end credits, negative cutting, soundtrack
production, the addition of sound/visual effects, dubbing, and
subtitling. Advertising and marketing activities and expenses are not
included in post-production.
Z. “Pre-production” means
costs directly related to the production, which are incurred prior to
the first day of principal photography for a state certified motion
picture. For example, the establishment of a dedicated production
office, the hiring of key crew members such as a unit production
manager, line producer and location manager, and includes, but is not
limited to, activities such as location scouting, hiring of crew, and
execution of contracts with vendors of equipment and stage space.
AA. “Primary locations”
means the locations within which
1. at least fifty-one percent
(51%) of the motion picture’s total principal photography days are
filmed; or
2. at least fifty-one percent
(51%) of the motion picture’s final production budget is spent and
at least five (5) individuals were employed by the production company
during the production in this State; or
3. for documentary
productions, the location of at least fifty-one percent (51%) of the
total productions days, which shall include pre-production and
post-production locations.
BB. “Principal photography
and/or animation” means the filming and/or animation of major and
significant portions of a state certified production that involves
the lead actors and/or animators.
CC. “Qualified vendor”
means any individual, partnership, corporation, limited liability
company or other business entity that
1. provides goods and services
in this state to a state certified motion picture during production;
2. maintains a place of
business in Rhode Island;
3. is subject to Rhode Island
taxation;
4. is registered with the
Rhode Island Division of Taxation; and
5. is registered with the
Rhode Island Secretary of State’s office and is qualified to do
business in Rhode Island.
DD. “Rhode Island film and
television office” means an office within the Rhode Island Council
on the Arts that has been established in order to promote and
encourage the locating of film and television productions within the
State of Rhode Island. The office is also referred to within as the
“film office.”
EE. “State certified
production” means a motion picture production approved by the Rhode
Island film and television office and produced by a motion picture
production company domiciled in Rhode Island, whether or not such
company owns or controls the copyright and distribution rights in the
motion picture; provided that such company has either:
1. signed a viable
distribution plan; or
2. is producing the motion
picture; or
a. a major motion picture
distributor; or
b. a major theatrical
exhibitor; or
c. a television network; or
d. a cable television
programmer; or
e. web-based streaming
distribution.
3. Additionally, the
production must be produced with the motion picture’s “primary
locations” being filmed within the State of Rhode Island and with a
“total production budget” of a minimum of one hundred thousand
dollars ($100,000).
FF. “State certified
production costs” means any pre-production, production, and
post-production cost directly attributable to activity within this
state that a motion picture company incurs and pays to the extent
that it occurs within the State of Rhode Island. The term refers to a
production certified by the State of Rhode Island under the Act and
should not be taken to infer that the State of Rhode Island is
certifying the production costs. State certified production costs do
not include costs paid for using State funds, State loans or State
guaranteed loans to qualify for the motion picture tax credit.
GG. “Television pilot”
means the initial episode produced for a proposed episodic television
series. This category will include shorter formats which are known as
“television presentation”, a production of at least fifteen (15)
minutes in length, produced for the purposes of selling a proposed
television series, but not intended for broadcast.
HH. “Television series”
which may also be known as “episodic television series” means a
regularly occurring production, live action, animation or a
combination of the two, intended in its initial run for broadcast on
television, whether free or via subscription-based service, that has
a running time of at least thirty (30) minutes in length (inclusive
of commercial advertisement and interstitial programming).
II. “Total production
budget” means and includes the motion picture production company’s
pre-production, production and post-production costs incurred for the
production activities of the production company in Rhode Island in
connection with the making of the state certified production. The
budget shall not include costs associated with the promotion or
marketing of the film, video, or television product; costs not
incurred within Rhode Island; costs not paid; or costs provided by
nonqualified vendors.
5.6 Overview
A. The process of applying for
and receiving motion picture production tax credit certificates
consist of the following steps:
1. The production company
files an application for initial certification with the film office.
(For details see § 5.7 of this Part)
2. The film office prepares an
impact analysis based on information provided by the production
company on its initial application. The analysis is available for
public inspection and is posted on the Division of Taxation’s
website. (For details see § 5.8 of this Part)
3. The film office, following
review and approval of the initial certification request, issues an
initial certification notice to the motion picture production company
and to the tax administrator. If the film office rejects an initial
certification request, a written notification will be sent to the
applicant. (For details see § 5.9 of this Part)
4. The production company
notifies the film office in writing of the commencement of
production. (For details see § 5.11 of this Part)
5. The production company,
after completion of a production, files an application for final
certification of the production with the film office and the Division
of Taxation. (For details see §§ 5.7 and 5.9 of this Part)
6. The Division of Taxation
makes a determination of the amount of tax credit based on its review
of state certified production costs. (For details see § 5.13 of this
Part)
7. The Division of Taxation,
upon determination that the production company has complied with all
necessary requirements, issues tax credit certificates to the
production company. (For details see § 5.14 of this Part)
B. In addition, all recipients
of motion picture production tax credits are required to file annual
reports with the tax administrator, for the year they receive a tax
credit, as follows:
1. Rhode Island Form TC-100
must be filed by August 15th. (For details see § 5.8 of this Part)
2. Rhode Island Form 8201A
must be filed by September 1st. (For details see § 5.8 of this Part)
5.7 Applications
A. Applications for
designation of a motion picture production as a state certified
production shall be made on State Certification Application forms.
These forms are available from the film office at One Capitol Hill,
Third Floor, Providence, Rhode Island 02908 or from the film office’s
website at www.film.ri.gov and the Division of Taxation’s website
at www.tax.ri.gov. The Initial Application is used to request initial
certification of a motion picture production and shall be filed with
the film office before the commencement of Rhode Island production
activities. The Final Application is used after the completion of
Rhode Island production activities to request final certification of
the production and the issuance by the Division of Taxation of any
credit documents relating to the completion of a state certified
production.
B. Application for initial
certification of a production.
1. The applicant shall
properly prepare, sign and submit the Initial Certification
Application form to the film office. This part of the application,
when completed, contains information regarding both the motion
picture production company and a specific Rhode Island motion picture
such that the film office may make a determination pertaining to the
initial certification of the production.
2. Any costs incurred prior to
filing a complete initial certification application shall not be
allowed for purposes of meeting the one hundred thousand dollars
($100,000) minimum Rhode Island production budget or as a cost in
calculating the motion picture production tax credits.
3. The information submitted
shall include the following and any other data the film office
determines necessary for the proper evaluation and administration of
the application:
a. identification information:
name and address of applicant, name of contact person, telephone
numbers and email addresses; federal employer identification
number[s]; the production company’s Rhode Island address (including
federal employer identification number, contact person, telephone
numbers and email addresses); brief background and structure of the
company, and information (including name, address and federal
employer identification number) about other companies which are
related, affiliated, or controlled by the motion picture production
company and which are expected to be involved in the production.
b. timing information:
anticipated start date; anticipated completion date; proposed
schedule; and estimated number of principal photography days to be
filmed in Rhode Island and outside of Rhode Island.
c. financial information:
proposed total production budget, estimated motion picture budget
(expenditures within the State of Rhode Island), and information for
each of the “above the line” individuals as to whether they will
be employees of the motion picture production company or, if not, the
name, address, and federal employer identification number of the
entity by which they will be employed. Additionally, the applicant
will estimate the anticipated amount of Rhode Island motion picture
production tax credit from this production.
d. operational information:
brief description of the motion picture production, including:
(1) story synopsis and
screenplay for proposed motion picture production; and;
(2) a statement as to whether
the company owns or controls the copyright and distribution rights in
the motion picture; and,
(3) a copy of the signed
viable distribution plan or evidence that the production company is
producing the motion picture for a major motion picture distributor,
a major theatrical exhibitor, a television network or a cable
television programmer.
e. payroll company
information: name, address, and federal employer identification
number of any company or other entity who will make withholding tax
payments and employer tax payments on behalf of the production
company. The payroll company must be a qualified vendor.
f. other information: the
anticipated days each “above the line” person (i.e., producers,
motion picture director, writers and featured actors) is scheduled to
perform work in Rhode Island; copies of documents evidencing that the
motion picture production company is formed under the laws of the
State of Rhode Island; and one paragraph each regarding production
plans for internship, diversity and training programs in Rhode
Island.
C. Application for Final
Certification of a Production.
1. When production is
completed, the applicant shall submit a completed application for
final certification to the film office and the Division of Taxation.
Such application must contain the signature of the applicant,
including title and date. This application contains information
regarding both the motion picture production company and the specific
Rhode Island motion picture (which has previously been granted
initial certification from the film office and provides documentation
that the completed state certified motion picture production is
consistent with the work described in the initial certification. Such
final application shall be filed within three (3) years after the
date Rhode Island production activities have finished. The final
application must also contain a cost report as prescribed by the tax
administrator and an “accountant’s certification” to evidence
the motion picture production company’s compliance with all
provisions of R.I. Gen. Laws Chapter 44-31.2. The film office and the
Division of Taxation may rely, without independent investigation,
upon the accountant’s certification confirming the accuracy of the
information included in the cost report.
2. The application for final
certification information shall, in addition to the items above,
include all the following information, and any other information that
the Division of Taxation determines necessary for proper evaluation
and administration of the application. The following information is
to be submitted to both the film office and the Division of Taxation:
a. identification data: name
and address of applicant (including contact person, telephone numbers
and email addresses); federal employer identification number[s]; the
production company’s Rhode Island address, (including federal
employer identification number, contact person, telephone numbers and
email addresses); and, for compliance purposes, the name, address and
federal employer identification number or social security number of
each company related, affiliated or controlled by the motion picture
production company as of the production’s completion date, a
description and amount of the relationship, affiliation or control,
and a copy of the initial certification notice showing the unique
identifying number assigned by the film office.
b. timing information: actual
start date; actual completion date; the daily schedule of the entire
production and of all employees and personnel, above the line and
below the line; and actual number of principal photography days
filmed in Rhode Island and outside of Rhode Island.
c. financial information:
actual data for the total production budget, including final combined
expenditures within the State of Rhode Island and outside the State
of Rhode Island.
d. operational information:
final script for the motion picture production; all travel schedules
and data for “above-the-line” persons arriving and departing the
State of Rhode Island including the actual number of days each
performed work in Rhode Island; location of soundstage and one
paragraph each regarding how the production applied internship,
diversity and training programs.
e. maximum credit calculation:
based on the production costs incurred and paid and other information
in the application for final certification, the applicant will
calculate an estimate of the total amount of production credits
associated with the production and show a comparison between the
estimated total credits and the total production budget.
3. In addition to the above,
the following information must also be provided to the Division of
Taxation in order to verify the credit amount (all lists shall
include the name, address, federal employer identification number or
social security number, amount paid and dates paid, and be in a
manner prescribed by the tax administrator):
a. a list of the loan out
companies, temporary agencies, employee leasing companies, and
professional employee organizations that have provided services to
the motion picture production company within the State of Rhode
Island;
b. a list of qualified vendors
that have sold and/or rented goods to the motion picture production
company for use within the State of Rhode Island,
c. a list of all personnel
involved in the production;
d. a complete general ledger
as certified by a Rhode Island certified public accountant;
e. payroll records for all
cast and crew working on the production;
f. copies of all invoices and
receipts broken down by expense categories as prescribed by the tax
administrator;
g. the production “bible;”
and
h any other information the
tax administrator considers necessary.
D. Disclosure of Application
Information.
1. Records maintained by the
Division of Taxation may not be publicly disclosed as provided in
R.I. Gen. Laws § 38-2-2.
2. Access to Public Records
a. In the event a request for
access to public records is made, application information submitted
to the film office may be publicly disclosed under the Access to
Public Records Act, R.I. Gen. Laws Chapter 38-2, as amended, unless
it comes within one of the exemptions set forth R.I. Gen. Laws §
38-2-2.
b. Records that are exempt
from disclosure are described in R.I. Gen. Laws § 38-2-2(4). For
example, R.I. Gen. Laws § 38-2-2(4)(B) provides an exemption that
“Trade secrets and commercial or financial information obtained
from a person, firm, or corporation which is of a privileged or
confidential nature” are not deemed public.
c. If an Applicant believes
that certain information submitted as part of its applications is
exempt from public disclosure, on the submitted record such
information should be marked or labeled “Exempt from Public
Disclosure”. This label should also set forth the applicable
statutory exemption. For the example above, please reference R.I.
Gen. Laws § 38-2-2(4)(B).
d. In the event that a person
requests that all or part of a submitted record be publicly
disclosed, the person must submit such a request to the film office.
As stated in the Access to Public Records Act, the film office must
respond in writing within 10 business days of receipt. If any
submitted record has been described as exempt from disclosure, the
film office will consider whether or not the exempted record falls
within a particular exemption.
5.8 Impact Analysis and Periodic
Reporting
A. Impact Analysis and
Periodic Reporting shall be done in accordance with R.I. Gen. Laws §
44-31.2-6.1.
1. Motion Picture Production
companies shall file the Rhode Island Form TC-100 when fulfilling the
periodic reporting requirements set forth in R.I. Gen. Laws §
44-31.2-6.1(f).
2. Motion picture production
companies shall file the Rhode Island Form 8201A when fulfilling the
period reporting requirement set forth in R.I. Gen. Laws §
44-31.2-6.1(h).
5.9 Certification of a Production
A. Initial Certification of a
Production:
1. Where necessary
documentation is not provided, review and evaluation will be delayed
and initial certification may be denied on the basis of lack of
information. Because the circumstances of each production are unique,
initial certifications that have been granted to one production shall
not be used nor relied upon by applicants for other productions.
2. Any costs incurred prior to
filing a complete initial certification application shall not be
allowed for purposes of meeting the one hundred thousand dollars
($100,000) minimum Rhode Island production budget or as a cost in
calculating the motion picture production company tax credits.
3. The film office will
complete its review for initial certification requests within thirty
(30) business days of receiving a complete, adequately documented
application. Where adequate information is not provided, the film
office will notify the applicant of the additional information needed
to complete the review. The film office will adhere to this time
period as closely as possible, but failure to complete a review
within the designated period does not waive or alter any
certification requirement nor does it imply approval.
4. Initial Certification
Notice:
a. Once the review is
completed, the film office will issue initial certification of the
motion picture production in the form of a notice issued to the
motion picture production company and to the tax administrator. The
notice states that, after appropriate review, the initial application
meets the appropriate criteria for conditional eligibility. The
notice of initial certification is only a statement of conditional
eligibility for the production and, as such, does not grant or convey
any Rhode Island tax benefits. If the film office denies initial
certification, the applicant may appeal that decision under the
provisions of R.I. Gen. Laws § 44-31.2-8.
b. The notice of initial
certification includes, but is not limited to, the following
information: name and address of the applicant, the name of the
motion picture production, the effective date for the production,
taxpayer identification number of the motion picture production
company, and a unique identifying number assigned by the film office
and required for each production. The notice also gives notice that,
upon completion of the production, the application for final
certification must be completed including the receipt of a Rhode
Island Certificate of Good Standing for the production company to
verify the production company’s compliance with all provisions of
R.I. Gen. Laws § 44-31.2.
B. Final Certification of a
Production:
1. Where necessary
documentation is not provided, review and evaluation will be delayed
and final certification may be denied on the basis of lack of
information. Because the circumstances of each production are unique,
final certifications that have been granted to one production shall
not be used nor relied upon by applicants for other productions.
2. Within ninety (90) business
days after the Division of Taxation’s receipt of the motion picture
production company’s application for final certification and fully
documented cost report, the Division of Taxation shall issue a
certification of the amount of credit for which the motion picture
production company qualifies under R.I. Gen. Laws § 44-31.2-5. When
adequate information is not provided, the Division of Taxation will
notify the applicant of the additional information needed to complete
the review. The Division of Taxation will adhere to this time period
as closely as possible, but failure to complete a review within the
designated period does not waive or alter any certification
requirement nor does it imply approval.
3. The Division of Taxation
will determine the final certification of the production and issue a
written determination to the applicant either denying or granting
certification. Depending upon the determination, the Division of
Taxation will calculate the amount of Rhode Island Motion Picture
Production Tax Credit and issue the applicable Certificate[s]. To
claim the tax credit, the tax credit certificate issued by Division
of Taxation shall be attached to the state tax return on which the
credit is initially claimed. If the Division of Taxation denies final
certification, the applicant may appeal the Division of Taxation’s
decision under the provisions of R.I. Gen. Laws § 44-31.2-8 (For
details see § 5.15 of this Part).
C. Decisions, Reliance on
Application:
1. Initial certifications are
only issued in writing by the film office director or other duly
authorized representative of the film office. Final certifications
are only issued in writing by the tax administrator or other duly
authorized representative of the Division of Taxation. Decisions with
respect to initial and final certifications are made on the basis of
the information contained in the application form and other available
information. The applicant’s signature on any application form is a
representation to the film office and the Division of Taxation that
the facts contained therein are true and correct, and the film office
and the Division of Taxation is entitled to rely thereon. If, at any
time, it comes to the attention of the film office or the Division of
Taxation that information is/was misstated, misrepresented or omitted
or is materially inconsistent with representations made in an
application, the film office or the Division of Taxation may deny the
requested certification or revoke a certification previously given.
Upon revocation of any certification, the production company must
surrender any and all issued certificates or remit payment equal to
the face value of any previously transferred certificates. In such
cases, the applicant may appeal the film office’s or the Division
of Taxation’s decision under the provisions of R.I. Gen. Laws §
44-31.2-8.
2. Because the circumstances
of each production are unique, certifications that may have been
granted to other productions that are not specifically applicable may
not be relied on by applicants as applicable to other projects.
5.10 Priority and Allocation of
Credits
A. Limitation
1. No more than fifteen
million dollars ($15,000,000) in total may be issued for any calendar
year beginning after December 31, 2007 for motion picture tax credits
pursuant to R.I. Gen. Laws Chapter 44-31.2 and/or musical and
theatrical production tax credits pursuant to R.I. Gen. Laws Chapter
44-31.3. Said credits shall be equally available to motion picture
productions and musical and theatrical productions. No specific
amount shall be set aside of either type of production.
2. Notwithstanding §
5.10(A)(1) of this Part, the tax credit for any motion picture
production shall not exceed five million dollars ($5,000,000).
3. The tax administrator may
issue a waiver of the five million dollar ($5,000,000) tax credit cap
provided:
a. the production is a
feature-length film or television series;
b. the requested tax credits
do not exceed the remaining portion of the fifteen million dollars
($15,000,000) in total motion picture production company tax credits
available for the calendar year; and
c. the production company
meets all other conditions and requirements under these rules and
regulations.
4. Credits shall be allocated
against the cap established in § 5.10(A)(1) of this Part for the
calendar year determined by film office in the initial certification
notice.
B. In order to comply with the
requirements of § 5.10(A)(1) of this Part the film office has
developed a “queuing” process, which is an equitable process that
will provide applicants some degree of certainty as to what credit
amounts will be available to them at the conclusion of a production.
This queuing process shall consist of the following:
1. Once a production has been
initially certified, the film office will assign a number to that
production. Initial numbers are assigned chronologically and are
based on the date and time that a production has been initially
certified. These productions will be placed in sequence on a “first
come, first served” basis. This sequence is also referred to within
as the “queue”;
2. Based upon the applicant’s
information and availability of credit remaining for the calendar
year for which application is made, the film office shall allocate
the estimated credit amount to that production;
3. This estimated amount will
not be allocated to any other production, except as set forth below
under “loss of place in the queue”;
4. If a production
a. falls out of “good
standing status” with the Secretary of State; or
b. halts production; or
c. declares in writing to the
film office that the estimated state certified production costs will
not be expended in Rhode Island; or
d. fails to meet the deadlines
as indicated in § 5.10(B)(5) of this Part, the production will lose
its place in the queue, and shall be moved to the end of the queue.
5. In order to maintain place
in the queue, filming in Rhode Island shall commence before the
elapse of sixty (60) days from the intended start date indicated on
the initial certification notice. Upon receipt of a written request
the director of the film office is allowed to extend that time for an
additional thirty (30) days, for good cause shown. Furthermore, in
order to continue to be certified, the production’s filming shall
begin no more than one hundred and eighty (180) days from the start
date indicated on the initial certification notice;
6. Upon loss of place in the
queue, the estimated tax credit, which originally had been assigned
to the production, shall be released and made available to other
productions in sequence in the queue;
7. If, at the time of initial
certification, all available tax credits for the calendar year have
been claimed or otherwise assigned, a production shall be put at the
end of the queue for that calendar year’s credit, in the order of
the date of initial certification;
8. Remaining productions in
the queue, which are not qualified for available tax credit in the
calendar year in which applied, must indicate in writing to the film
office their interest in renewing their applications for the next
calendar year’s available tax credit. Any renewal request for the
succeeding calendar year’s available tax credit must be made to the
film office on or before December 1st of the calendar year of the
original application.
5.11 Commencement of Production
A. Once production has begun,
the film office shall be notified in writing by the
applicant/production company that, on a specific date, the actual
production, including the principal photography, has commenced. In
the event that an applicant’s principal photography on a state
certified motion picture does not actually begin within one hundred
eighty (180) days of the start date indicated on the initial
certification notice, the applicant shall be required to resubmit the
application for initial certification.
B. Recurrent Productions: If a
motion picture production company produces a television series, then
production work on any given “season” of such series completed in
any one calendar year shall be considered a separate and distinct
state certified production for the purposes of certification. In the
case that a motion picture production company produces a television
“pilot” or “movies of the week”, then such “pilot” or
“movie of the week” shall be considered a separate and distinct
state certified production for the purpose of the issuance of credit
certificates. Any additional “season”, “pilot” or “movie of
the week” will be treated as a separate production and the
applicant must repeat the application process and the production must
meet all appropriate criteria.
C. Amended Productions: In the
event that the production company requests the film office or the
Division of Taxation to approve an amended production for a motion
picture that has already obtained final certification, the applicant
must repeat the application process and the amended production must
meet all appropriate criteria.
D. Inspection Rights: The film
office and the Division of Taxation shall have the right at
reasonable times to enter upon any set, soundstage, location or
production office that is the subject of an application for
certification, whether the motion picture production is proposed,
ongoing, or completed, to verify that the motion picture production
is as represented.
5.12 Cost Report
A. As a part of the completed
application for final certification of the production and the basis
on which the credits are calculated, the production costs and Cost
Report are crucial to the film office’s and the Division of
Taxation’s deliberations concerning the certification of the
production. As part of the final certification, the Cost Report must
be accompanied by an “accountant’s certification” of the items
to which it pertains. The film office and the Division of Taxation
may rely, without independent investigation, upon the accountant’s
certification confirming the accuracy of the information included in
the Cost Report as well as the motion picture production company’s
compliance with R.I. Gen. Laws § 44-31-2.2(5).
B. The cost report is a
crucial part of and an attachment to the application for final
certification of a production. The cost report shall be in a format
as prescribed by the tax administrator, and must state:
1. the date of completion of
the production in the State of Rhode Island,
2. the amount and listing of
production costs incurred and actually paid within the State of Rhode
Island with respect to the production as set forth in the rules
herein, and
3. that the total production
budget is at least $100,000.
5.13 Determination of Tax Credit
A. The amount of the motion
picture production tax credit shall be determined by the Division of
Taxation to equal twenty-five percent (25%) of the state certified
production costs of a completed state certified production, verified
by the Division of Taxation. The credit is considered earned in the
tax year the production is completed.
B. The motion picture
production tax credit shall be allowed as a credit against a tax
imposed by R.I. Gen. Laws Chapters 44-11, 44-14, 44-17 and 44-30 for
the tax year the credit is earned. Any unused credit may be carried
forward for the next three (3) succeeding tax years.
C. The Division of Taxation
shall determine if the cost included in the cost report meets the
criteria of “costs” as defined in § 5.5 of this Part. If any
cost is denied, the Division of Taxation shall advise the applicant
of the denial in writing, citing the reasons for the denial.
5.14 Issuance of Tax Credit
Certificates
A. Concurrent with the final
certification of the production, the Division of Taxation, based upon
the Certification shall also issue written, individual motion picture
production tax credit certificate[s] to the motion picture production
company, as allocated under its organizational documents, or to one
or more transferees. The motion picture production company must
provide the names, addresses and taxpayer identification numbers of
such Participants or transferees. Credits allowed to a motion picture
production company which is a subchapter S-corporation, partnership,
or limited liability company that is taxed as a partnership, shall be
passed through respectively to the Participants on a pro rata basis
or pursuant to an executed agreement among such persons designated as
subchapter S-corporation shareholders, partners, or members. This
writing documents an alternate distribution method without regard to
their sharing of other tax or economic attributes of such entity.
Each certificate will bear the unique identification number that was
issued to the production as part of its initial certification.
B. Right to Deny or Revoke
Credit - If, at any time, it comes to the attention of the film
office or the Division of Taxation that information is/was misstated,
misrepresented or omitted or is materially inconsistent with
representations made in an application, the film office or the
Division of Taxation may deny the requested certification or revoke a
certification previously given. In such cases, the applicant may
appeal the film office’s or the Division of Taxation’s decision
under the provisions of R.I. Gen. Laws § 44-31.2-8.
C. In relation to granting the
credit, any motion picture production company applying for the credit
shall be required to reimburse the Division of Taxation for its
audits.
1. The reimbursement shall be
at the rate of one quarter of one percent (0.25%) of the final
audited certified production costs and shall not exceed the amount of
$5,000.
2. Such reimbursement shall be
paid to the Rhode Island Division of Taxation prior to the issuance
of any tax credit certificates.
5.15 Hearings and Appeals
A. From an action of the film
office. For matters pertaining exclusively to application,
production, and certification of motion picture productions, any
person aggrieved by a denial action of the film office under R.I.
Gen. Laws Chapter 44-31.2 shall notify the director of the film
office in writing, within thirty (30) days from the date of mailing
of the notice of denial action by the film office and request a
hearing relative to the denial or action. The director of the film
office shall, as soon as is practicable, fix a time and place of
hearing. Following the hearing the direct of the film office shall
render a final decision. Appeals from a final decision of the
director of the film office under R.I. Gen. Laws Chapter 44-31.2 are
to the Sixth (6th) Division District Court pursuant to R.I. Gen. Laws
Chapter 42-35.
B. From denial of tax credit
or a portion thereof. Any person aggrieved by the tax administrator's
denial of a tax credit or tax benefit under R.I. Gen. Laws Chapter
44-31.2 shall notify the tax administrator in writing within thirty
(30) days from the date of mailing of the notice of denial of the tax
credit and request a hearing relative to the denial of the tax
credit. The tax administrator shall, as soon as is practicable, fix a
time and place for a hearing. Following the hearing the tax
administrator shall render a final decision. Appeals from a final
decision of the tax administrator under R.I. Gen. Laws Chapter
44-31.2 are to the Sixth (6th) Division District Court pursuant to
R.I. Gen. Laws Chapter 8-8. The taxpayer's right to appeal is
expressly made conditional upon prepayment of all taxes, interest,
and penalties, unless the taxpayer files a timely motion for
exemption from prepayment with the district court in accordance with
the requirements imposed pursuant to R.I. Gen Laws § 8-8-26.
5.16 Assignment of Tax Credit
Certificates
A. Each motion picture
production tax credit certificate may be assigned, with or without
consideration, transferred, or sold if it has not been previously
claimed, in whole or in part, against the taxes of the motion picture
production company or the taxes of the owner of the certificate. A
single transfer or sale may involve one or more transferees,
assignees or purchasers. The transferors and sellers must submit
notice of the assignment, transfer or sale within thirty (30) days of
the sale of transfer to the tax administrator. The Division of
Taxation shall assess and collect an administrative fee of two
hundred dollars ($200) for issuing multiple tax credit certificates
or for reissuing certificates. In addition, the Division of Taxation
will also collect an administrative fee of two hundred dollars ($200)
on behalf of the film office.
B. Assignment of Certificate:
A motion picture production tax credit certificate may be assigned,
transferred or sold to any person, whether or not such person has an
ownership interest in the state certified production, provided that
no credit has been claimed based on the certificate being assigned,
transferred or sold. The certificate shall be assigned by endorsing
the assignment clause on the certificate and delivery of the original
certificate to the assignee, transferee or purchaser.
C. Notification of Assignment:
1. It shall be required that
written notification is filed with the Division of Taxation of the
assignment, transfer or sale, of all or a portion the motion picture
production tax credit certificates. Notification submitted to the tax
division shall be done in accordance with the rules herein. Failure
to comply will result in the disallowance of the credit until the
taxpayer is in full compliance.
2. Notice to the tax division
shall include:
a. a copy of the credit
certificate, endorsed to the assignee. The original certificate shall
not be included with the notification since it must be retained by
the assignee, transferee or purchaser and attached to
his/her/their/its tax return for the year for which credit is
claimed;
b. the name, address and
telephone number of the assignor, transferor or seller and those of
the assignee, transferee or purchaser;
c. the taxpayer identification
number or social security number of the parties; in addition, for
non-resident corporations, partnerships, limited liability companies,
or other entities the name and address of such entity’s registered
agent in Rhode Island and evidence of qualification to do business in
Rhode Island.
D. Multiple Assignees;
Re-issuance of Certificate - If the holder or assignee of a credit
certificate has not used the credit certificate, in whole or in part,
against its taxes and desires to assign, transfer or sell its
interest in the credit to more than one party, the holder must
request the Division of Taxation to reissue the original certificate
in such number of certificates as the holder requires. The request
must be in writing, must specify the number of new certificates
required and the amount to be specified on each certificate, and must
attach the original certificate for cancellation by the Division of
Taxation.
5.17 Sunset
No Motion Production Tax
Credit shall be issued after the date as prescribed in R.I. Gen. Laws
§ 44-31.2-11.