Picture state tax credit in your future

Sandra Bullock may have a state tax credit waiting for you.

Seriously.

Sandra Bullock in "The Blind Side"

Sandra Bullock in "The Blind Side"

There is at least $40 million in unclaimed tax credits from film companies shooting in Georgia that you or a corporation can use to reduce state taxes.

Part of those tax credits are from “The Blind Side,” which was filmed around Atlanta and starred Bullock.

The credits can be used to reduce a company’s 2009 state tax liability, which is due to be filed March 15. They also can be used to cut individual state taxes, due April 15.

There is still enough time to get the paperwork done, officials said.

We’re talking taxes here, so it’s a little complicated to explain. Bear with me.

Here are the basics, which I got by interviewing Bill Thompson, head of Georgia’s Film, Music & Digital Entertainment division, and Denise Elsbree, a partner in Georgia Film Credit Consultants:

To prop up the state’s film industry, legislators passed a special tax credit in 2008 for entertainment companies (film, TV, music video and video games) to do their production work in Georgia.

Bill Thompson

Bill Thompson

The credit is primarily responsible for production skyrocketing in the state to $770 million in 2009, from $295 million in 2008, Thompson and Elsbree said. About 7,500 workers are employed in the industry.

The entertainment production companies, which can get a 30 percent tax credit for their spending here, cannot take full advantage of the incentive by themselves. That’s because their state tax liability is generally far lower than the credit is worth.

That’s where you or a company can come in. To enjoy more of the tax credit, the film companies need to share them with a third party, which is allowed by the legislation.

For example, a film company that spends $100 million would be eligible for a $30 million state credit. But its tax liability might only be $6 million, leaving $24 million on the table.

To avoid that, the company is willing to give up 10 percent to 15 percent of that $24 million, so it can get the remainder of the credit. In this case, you or another company would get a tax credit of between $2.4 million and $3.6 million.

The larger film producers generally want to deal with corporations with sizable state tax liabilities. But the smaller film companies are willing to deal with individuals, possibly those who owe as little as $10,000 in state taxes.

By the way, the credits are good for five years, but they cannot be transferred again.

Denise Elsbree

Denise Elsbree

There has not been much marketing or publicity about this credit because Thompson and other state officials have been spending most of their time trying to attract film companies to produce here.

But the word needs to get out, officials said, so the companies are able to take full advantage of the credit or they can decide to move to other states where they can. Some 40 states offer incentives to attract these companies.

For more details, you can go to the gacredits.com Web site or call the state’s Economic Development Department at 404-962-4052.

Now that I’ve shilled for Bullock’s film, do you think I can get her autograph?

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11 comments Add your comment

TnGelding

March 2nd, 2010
7:47 am

And they wonder why revenues are down. This loophole needs to be eliminated. Why allow a credit larger than taxes owed? Seems unsavory to me.

Paul

March 2nd, 2010
9:10 am

Henry,

Your explanation was confusing. What happens is the production company can sell their unused tax credits to Georgia taxpayers. These credits often sell for $.85 – $.90 on the dollar. So referencing your example, if the studio has $24M in unused credits and they can sell these for $.90/credit($21.6M), the public saves 10% on their tax bill and the studio nets most of the $21.6M after a fee is taken by a placement agent.

Tony Kiene

March 2nd, 2010
10:43 am

First, TnGelding, the credits generated filming in Georgia last year that brought nearly 900 million dollars in spending in the local economy. The credit is an economic incentive to bring more business into the state. It is far from unsavory.
What IS unsavory however is this article. This article is a veiled advertisement for the Warner Brother credits that Denise Ellsbree has overpriced at .90. This article shows favoritism towards both Denise as well as Warner Brothers. Our firm, Stateside Entertainment Partners carries high quality, guaranteed entertainment credits at .88 . Our credits come from producers such as Lions Gate, Weinstein and others. If you are interested in these entertainment credits, call us at 404-250-4134.
Thanks

GT

March 3rd, 2010
8:33 am

I appreciate this information. For a taxpayer it is very helpful. Maybe Warner Brother and Denise Ellsbree had the wonderful idea of giving this information to the paper and Stateside Entertainment Partners did not. Maybe Warner Brothers will go down on price if Stateside is that competitive, so thanks to both. Also there are lots of state tax credits out there cheaper than this. If you can buy early in a quarter and not wait for the last minute the land easement tax credits have been selling for 75 cents on the dollar. Henry has not got a dog in this hunt and I say good job getting this out.

alphadog

March 3rd, 2010
9:34 am

OK, so how do I claim the credit?

Robert Tolliver

March 3rd, 2010
10:24 am

The movie credits are obviously successful as I have seen production taking place all around the state. I’m glad to know Georgia taxpayers can benefit by buying the credits earned from all the new productions.

Bibay

March 3rd, 2010
11:00 am

alphadog- I am on the Stateside Entertainment site right now (statesideentertainment.com). You can buy them from Stateside or I am sure some other company that does the same thing.

Jo-el

March 3rd, 2010
1:02 pm

I see a huge scam appearing rapidly. Many people are going to buy these credits and three years from now find out that they have to pay it back to the state with interest and penalties. Watch for the news on this at that time.

The problem becomes how do you know it s being transferred correctly without incurring big legal fees?

The basic deal is party A selling party B the right to buy a product from party C at a discount.

One deal that was going around was that a car dealer would sell you a car and there was a $10,000 mail in rebate. But the rebate could not be requested until 3 years had passed. Then there were many hoops in the way and if all was not exactly right no rebate. The real scam I think was that the rebate company would not be around in three years.

Extended warranties are the same thing. Te warranty is not from the manufacturer or the dealer but a third party company with a website address only or maybe am 800 number only. Many of these companies disappear within 18 months.

Imagine that you had a credit coming. What price would you sell it for as a percentage of its value?

Another one: gold. All the ads for gold say that gold will be going way up. These ads are from people selling gold from their inventory!

In a cartoon once the husband was sitting at a desk with his papers. His wife was saying “Instead of figuring out how to make your money work harder why don’t you work harder?”

Tony Kiene

March 3rd, 2010
3:18 pm

Jo-El
This is not a scam at all. This program is administered by the Georgia Film Commission, The GEDA and the Georgia Department of Revenue.
If you would like more information on this program please feel free to call Crissie Merrill at 404-250-4190.
Thanks

Ben

March 4th, 2010
3:05 pm

This is a great video I found that explains the Entertainment Tax Credit transfer process. http://www.youtube.com/watch?v=CMw1Y6lj5E8&feature=youtube_gdata