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STATE OF NEW MEXICO - TAXATION AND REVENUE DEPARTMENT

RPD-41229

Application for Film Production Tax Credit Instructions

Rev. 07/2007

ABOUT THIS CREDIT: Beginning January 1, 2002, the film

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can be viewed or reproduced;

production tax credit, Section 7-2F-1 NMSA 1978, provides

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is not intended to and does not include sexually oriented

a tax credit for an eligible film production company. Effective

material harmful to minors or does not otherwise violate a

January 1, 2006, the amount of the credit is equal to 25% of

provision of Chapter 30, Article 37 NMSA 1978, and

direct production and direct postproduction expenditures

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is intended for reasonable commercial exploitation for the

made in New Mexico that are subject to taxation by the State

delivery medium used.

of New Mexico and directly attributable to the production of

a film or commercial audiovisual product. The production

"Direct production expenditure" means a transaction

must be in New Mexico for direct production expenditures. A

subject to taxation in New Mexico, including:

20% credit rate applies for expenditures for which the

(1) payment of wages, fringe benefits or fees for talent,

taxpayer receives a new markets tax credit from the federal

management or labor to a New Mexico resident for purposes

government. Important: expenditures must be directly attrib-

of the Income Tax Act;

utable to film production in New Mexico and subject to

(2) payment to personal services corporations for the services

taxation by the State of New Mexico. The film production tax

of a performing artist, if (a) the personal services corporation

credit shall not be claimed for expenditures for which the film

pays gross receipts tax in New Mexico on those payments;

production company has delivered a nontaxable transaction

and (b) the performing artist receiving payments pays New

certificate pursuant to Section 7-9-86 NMSA 1978.

Mexico income tax (See Limit For Performing Artists below);

and

Effective July 1, 2007, the 25% rate of credit becomes

(3) any of the following provided by a vendor:

permanent; the definitions of direct production expenditure,

(a) the story and scenario to be used for a film;

postproduction expenditure and film production company

(b) set construction and operations, wardrobe, accessories and

were modified (see this page); direct production expenditures

related services;

and postproduction expenditures exclude expenditures for

which another taxpayer claims the film production tax credit,

services;

and there is a limit of $5 million per year for credit claimed on

(d) editing and related services:

services of performing artists in connection with one produc-

(e) rental of facilities and equipment;

tion.

(f) leasing of vehicles, not including the chartering of aircraft

for out-of-state transportation (New Mexico -based char-

To be eligible for the film production tax credit a film

tered aircraft for in-state transportation directly attributable

production company must first be approved by the New

to the production shall be considered a direct production

Mexico Film Division of the Economic Development Depart-

expenditure);

ment. After approval, the company may apply for the credit

(g) food or lodging;

by submitting a completed form RPD-41229, Application for

(h) commercial airfare if purchased through a New Mexico-

Film Production Tax Credit, to the Taxation and Revenue

based travel agency or travel company for travel to and from

Department. The Department may approve the credit and

New Mexico or within New Mexico that is directly attribut-

issue a document granting it. Please allow four to six weeks

able to the production;

to process the application.

(i) insurance coverage and bonding if purchased through a

New Mexico-based insurance agent, and

To claim the approved film production tax credit the film

(j) other direct costs of producing a film in accordance with

production company may apply all or a portion of the film

generally accepted entertainment industry practice.

production tax credit against personal income tax liability or

corporate income tax liability. If the amount of the credit

Limit For Performing Artists: The film production tax credit is

exceeds the tax liability for the tax year in which the credit is

limited to $5,000,000 for the direct production expenses

being claimed, the excess shall be refunded. To claim

attributable to services rendered by all performing artists in a

approved credits against tax liabilities, complete Form RPD-

production.

41228, Film Production Tax Credit Claim Form, and submit

the form with the return for which the taxpayer wishes to claim

Postproduction expenditure means an expenditure for

the credit.

editing, Foley recording, automatic dialogue replacement,

sound editing, special effects, including computer-generated

"Film" means a single medium or multimedia program,

imagery or other effects, scoring and music editing, beginning

excluding advertising messages other than national or re-

and end credits, negative cutting, soundtrack production,

gional advertising messages intended for exhibition, that:

dubbing, subtitling or addition of sound or visual effects; but

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is fixed on film, digital medium, videotape, computer disc,

not including advertising, marketing, distribution or expense

laser disc or other similar delivery medium;

payments.

Application For Film Production Tax Credit Instructions - State Of New Mexico - Taxation And Revenue Department - 2007

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