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Pennsylvania

INCENTIVES:

10/06:
Pennsylvania has recently changed the way it lures productions to the keystone state. It has replaced its ìFilm Production Tax Creditî with a new program, dubbed the ìCreativity in Focus: The Pennsylvania Film Production Grant Initiative.î

The new production incentive, effective since July, refunds up to 20% of expenses for qualified productions that spend at least 60% in Pennsylvania. Such expenses include wages under a million dollars, equipment rentals, construction and other costs. Other incentives include fee-free locations for state-owned property, tax exemption for hotel stays over 30 days, and free sales tax for nationally distributed feature films. Details can be found at www.film.org.

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Pennsylvania Film Office
Harrisburg, PennsylvaniaÝ USA
ra-film@state.pa.us
Pennsylvania Film Office
Commonwealth Keystone Building
400 North Street, 4th Floor
Harrisburg, PA 17120-0225
(voice) 717-783-3456
(fax) 717-787-0687
Jane Shecter
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Philadelphia Film Office, Greater - www.film.org.
Philadelphia, PennsylvaniaÝ USA
mail@film.org
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Pittsburgh Film Office
Pittsburgh, PennsylvaniaÝ USA
info@pghfilm.org
Incentives Information
Newest - Incentive Info on the Assignable Tax Credit
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PA Production Tax Incentive Summary

The Governor is expected to sign the bill, which would take effect
immediately. The amended version of HB 147 provides a tax credit (which can
be assigned or sold in whole or in part to another taxpayer) equal to 20% of
the ìqualified film production expenses,î against personal income taxes,
corporate, and capital stock-franchise taxes for all in-state qualified
production costs including wages, tangible property and services.
Additionally, a production company must spend at least 60% of their
aggregate production expenses in the State to qualify for the credit. The
credit may be carried forward for 3 years but it may not be carried back.
The bill also includes a provision, which places a $10 million cap on the
total amount of tax credits approved by the state in any fiscal year. If
there are multiple eligible taxpayers, the credits will be apportioned (the
allocation formula is located on page 12 of the legislation).

Films are defined as features and television series or shows at least 15
minutes long. Eligible production expenses include: wages and salaries of
individuals employed in the production of the film on which the taxes
imposed under articles III and IV (personal income taxes, corporate net
income taxes) are paid or accrued, construction costs, operations, editing,
photography, sound synchronization, lighting, wardrobe and accessories,
facility and equipment rentals. Marketing and advertising expenses are not
considered eligible production costs.

Qualified Tax Liability is defined as taxes imposed under articles III
(personal income taxes), IV (corporate net income taxes) or VI (capital
stock/franchise tax), but does not include any personal income tax withheld
by an employer from an employee.

The amended bill adds a definition of pass-through entities (Partnerships
and S Corporations) and describes the method of transfer of any unused tax
credit. It states ìthe pass-through entity may elect in writing to transfer
the full or partial credit to the shareholders, members or partners in
proportion to the share of its distributive income to which the shareholder,
member or partner is entitled.î Pennsylvania law defines partnership in
Pennsylvania Statute Section 301(N.0) as ìa domestic or foreign general
partnership, joint venture, limited partnership, limited liability company,
business trust or other unincorporated entity that for federal income tax
purposes is classified as a partnership.î

Sale or assignment: The taxpayer may assign or sell a portion or the entire
credit. The amount of the credit that the purchaser or assignee may use
against any qualified tax liability may not exceed 50% of the tax liability
for the taxable year. The assignee or purchaser may not obtain a refund,
carry forward, carry back or assign the credit. The bill lays out specific
rules for assigning the credit on page 11.

The credit applies to qualified film production expenses incurred after June
30, 2004 and taxable years commencing after December 31, 2003. The tax
credits will not be allowed for taxable years ending after December 31,
2012.
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ASSIGNABLE TAX CREDIT

PHILADELPHIA: Governor Edward G. Rendell today signed House Bill 147 into law which provides for a 20 percent Film Production Tax Credit for film production expenses incurred in Pennsylvania during the taxable year. The bill was signed into law at the Prince Music Theater in Philadelphia. "Filmmakers continue to discover that Pennsylvania is an ideal location for film production," said Governor Rendell. "With widely diverse locales and innovative benefits, Pennsylvania is dedicated to helping filmmakers make their projects a reality."

The tax credit is available for feature films, television series and television shows of 15 minutes or more in length, intended for a national audience. Production expenses that are eligible for a tax credit include wages and salaries, construction, operations, editing, photography, sound synchronization, lighting, wardrobe and accessories and the cost of rental of facilities and equipment. Marketing and advertising costs cannot be applied toward the tax credit.
In order to further qualify for the tax credit, 60 percent of the total production expenses must be incurred in Pennsylvania.

Taxpayers who incur a qualified film production expense must submit an application for a film production tax credit to the Pennsylvania Department of Revenue by February 15. The Department of Revenue will notify that taxpayer of the amount of the approved tax credit by August 15 of the calendar year following the close of the taxable year.

If the taxpayer cannot use the entire amount of the approved tax credit for the taxable year in which it was first approved, the excess may be carried over to the succeeding three taxable years and used as a credit against the qualified tax liability of the taxpayer. In addition, upon approval by the Pennsylvania Department of Community and Economic Development, a taxpayer may sell or assign, in whole or in part, a Film Production Tax Credit.

"The crucial carry over component will allow Pennsylvania's budding filmmakers who may not yet have a tax liability to sell or assign their unused credits for cash to qualified taxpayers," said Governor Rendell. "The increased cash flow will allow the developing filmmakers to continue or even increase their film production work flow."

The Film Production Tax Credit will be jointly administered by the Department of Revenue and the Pennsylvania Film Office. Since 1977, the Film Office has been providing support services to the film industry as part of the Pennsylvania Department of Community and Economic Development.

For more information of the Film Production Tax Credit, please call the Pennsylvania Film Office at (voice) 717-783-3456 or visit www.inventpa.com.

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Sales Tax Exemption

In Pennsylvania, feature film productions are not subject to sales tax at the point of retail sale or use by a producer of a feature-length motion picture distributed to a national audience. The exemption is not a rebate. It begins at the time of purchase.

For a list of approved exemptions and to receive exemption certificates, contact the Pennsylvania Film Office at (voice) 717-783-3456.
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Free Use of State-Owned Property

Except for extraordinary activities, no department or agency of the Commonwealth may charge a fee or other cost, except the actual costs incurred by the affected department or agency, for the use of State-owned property for the purpose of making commercial motion pictures. We invite you to contact the Pennsylvania Film Office for further explanation of this program.

A 6% sales and use tax exemption for the purchase or rental of any tangible personal property in Pennsylvania used directly in the production of a feature length commercial motion picture distributed to a national audience. The exemption covers props, sets, supplies, tools, production and postproduction services, including processing, editing, etc.
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"Next time, call me in Lehigh Valley, Pennsylvania. You can pay the air fare to LV
International Airport and yourself and still spend half that much. Very low fees if any for public property, guards are $16-25 an hour,
large vehicle site parking is free, cars are 50 cents an hour, the police are dying to be in the show, and I'll set the whole thing up for
you! We also have old and new courtrooms (weekends), a county prison, main streets that can be closed on weekends, side streets that can
close anytime, producers, crew, SAG actors, free or low-cost extras -- "the whole catastrophe!" (Forgive me. I'm so old that I quote
40-year-old movies -- that one was ZORBA THE GREEK.)"

Kathy McAuley
Lehigh Valley Pennsylvania Locations and Extras
610-791-0124
fax 610-791-3243

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MovieMaker 2004 "Top 10 Cities for Moviemakers" - Our fourth annual ranking of the best places in the US to live and make movies (Movie Maker Mag Website)
by James L. Menzies

Government Incentives
Film Production Tax Credit Pennsylvania provides up to a 20% film production tax credit for film production expenses incurred in the Commonwealth. The tax credit is available for feature films, television series and shows of 15 minutes or more in length that are intended for a national audience. In order to qualify for the tax credit, 60% of the total production expenses must be incurred in Pennsylvania during the taxable year. .............READ MORE

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FILMING IN THE TRI-STATE REGION - Of New York, New Jersey and Pennsylvania
From Production Update Magazine June 2004 - By Virginia Comer
While all city- and state-owned locations have no filming fees, Pinkenson reports, "Tax incentives are on the verge of becoming even better with twelve pieces of legislation having passed in the state's house of representatives. A vote is waiting in the full state senate, which if passed will constitute the strongest tax legislation for film production on the East Coast ........................READ MORE