Form Tir 07-15: An Act Providing Incentives To The Motion Picture Industry printable pdf download

TIR 07-15: An Act Providing Incentives to the

Motion Picture Industry

TIR 07-15 Updates and Clarifies DOR Directive 07-1

On July 20, 2007, Massachusetts enacted an Act Providing Incentives to the Motion Picture Industry

(“the new Act”). See St. 2007, c. 63. This Act made revisions to statutory provisions enacted by a

prior Act with the same title that was signed into law on November 23, 2005 (the “prior Act”). See St.

2005, c. 158; amended by St. 2005, c. 167. This Technical Information Release (TIR) discusses the

statutory provisions as amended (collectively, the “Film Statute”), including an explanation of the

provisions of the new Act and their effective

dates.[1]

1. Background

A. The Prior Act

The prior Act provided personal income tax and corporate excise credits and a general sales tax

exemption as incentives to the motion picture industry. It was effective for taxable years beginning

January 1, 2006 with a sunset date of January 1, 2013. The credits and sales tax exemption applied

to qualifying motion picture production companies; the sales tax exemption also applied to qualifying

film school students. See M.G.L. c. 62, § 6(l), c. 63, § 38T and c. 64H, § 6(ww). Where eligible, a

taxpayer could take both the credits and the exemption in connection with a qualifying motion picture.

Also, an eligible taxpayer could transfer one or both credits, or a portion thereof.

Specifically, the prior Act provided a payroll credit and a production expense credit, each of which

could be taken by an eligible motion picture production company (the “taxpayer,” unless the context

requires differently) against either its personal income tax or corporate excise liability. M.G.L. c. 62, §

6(l) and c. 63, §

38T.[2]

Each credit had different qualification requirements, but shared a minimum

expense threshold of $250,000, required to be met in a twelve-month period. The payroll and

production expense credits could be claimed in an amount equal to 20% or 25% of a taxpayer’s

qualifying payroll or production expenses, respectively; however, there was a $7,000,000 limitation on

the amount of the combined credits that could be taken in connection with any one motion picture.

B. The New Act

The new Act amends the Film Statute as set forth at M.G.L. c. 62, § 6(l), c. 63, § 38T and c. 64H, § 6

(ww). It is effective for film credit applications that are received on or after January 1, 2007 (see the

discussion of effective date issues, below). Pursuant to the new Act, 90 per cent of any payroll and

production expense credits not used in the year claimed may now be refunded to a taxpayer, at the

taxpayer’s election. In addition, the new Act effects the following changes: the minimum expenditure

threshold required to be met in a twelve-month period has been lowered from $250,000 to $50,000;

the payroll credit has been increased to apply to 25% of a taxpayer’s qualifying expenditures; the

$7,000,000 limitation on the amount of credits taken on any one motion picture has been eliminated; a

“digital media project” is now included in the definition of a “motion picture”; and, the sunset date for

the Film Statute has been extended from January 1, 2013 to January 1, 2023.

2. Discussion

A. General; motion picture; motion picture production company; qualification period

The credits and sales tax exemption that are available under the Film Statute relate to the making of a

“motion picture.” A “motion picture” is defined to be “a feature-length film, a video, digital media

project, a television series defined as a season not to exceed 27 episodes, or a commercial made in

the Commonwealth, in whole or in part, for theatrical or television viewing or as a television pilot.“

M.G.L. c. 62, § 6(l)(1) and c. 63, § 38T(a). The term motion picture shall not include

…a production featuring news, current events, weather and financial market reports, a talk show,

Form Tir 07-15: An Act Providing Incentives To The Motion Picture Industry

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