Frequently Asked Questions

1. Entertainment tax credits are tax incentives for production companies to encourage economic development within the state.

2. The most common entertainment tax credits that we broker are Georgia film tax credits. The State of Georgia implemented the Georgia Entertainment Industry Investment Act (the “Act”) in 2008. The Act incentivizes production companies to locate their production activities in Georgia by offering a transferrable entertainment tax credit to the production company up to 30% of their qualified expenditures. These tax credits are transferable (only once) to any taxpayer (individual or corporation) with a Georgia income tax liability.

1. Generally, any individual or entity who has state income tax liability in the state where the credit is generated may benefit. This includes individuals, corporations, partnerships, limited liability companies, trusts and insurance companies (insurance premiums tax). However, there are some exceptions, such as Connecticut tax payers and their related entertainment tax credits. In Connecticut, film tax credits will offset insurance premium tax up to 55% and corporations can offset state income tax up to 70%. However, Connecticut film tax credits are not eligible to offset individual income tax liability.

2. Film tax credits may be used to amend prior year tax returns. Each state governs its entertainment tax incentive program differently so please speak with your tax advisor or contact one of our representatives concerning the specifics for your state of residency (and/or states where you have nexus).

Each state has different regulations that govern the rules and restrictions for their state’s entertainment tax credits. For additional information, please speak with your CPA or tax advisor.

Georgia

1. Each state governs their entertainment tax credit incentive program differently and determines how many tax credits are generated from each production company and the related transfer limitations. Several states also have limits on the total amount of credits that can be generated in a given year.
2. Since each state manages its entertainment tax incentive program differently, please speak with your tax advisor or contact one of our representatives concerning the specifics for your state of residency.
3. Click here to view our current inventory of film tax credits.

1. Entertainment tax credits have an extremely low level of risk which is further mitigated by obtaining a comfort letter prepared by an independent CPA or having an audit completed by the issuing state’s Department of Revenue, both of which are discussed further in a separate tab.

    

2. The entertainment tax credits are authorized and managed by the specific state offering the incentive. Each state is very specific regarding the rules related to awarding and transferring these credits, which reduces the risk to the purchaser (taxpayer) and seller (production company).

    

3. All entertainment tax credits brokered by State Tax Incentives are verified through either an audit performed by the issuing state’s Department of Revenue or a CPA comfort letter that independently verifies that the production company qualifies for the entertainment tax credits and guarantees the credit if recapture should occur.

The Department of Revenue looks at the expenditures made by the production company to verify that they qualify to receive tax credits and then issue an audit letter. The advantage of these tax credits is that they have already been approved by the state Department of Revenue and no recapture will occur. 

The CPA comfort letter looks closely at the production companies qualified expenditures and supports the accuracy of the film tax credits that the production company is claiming. However, if recapture occurs, the production company will repay the buyer’s original purchase price for the tax credits including any penalties, interest and attorney’s fees.

State Tax Incentives brokers tax credits for quality production companies that use reputable, independent CPA firms to verify that all tax credits awarded are fully substantiated.

1. The Buyer’s tax information is needed to complete the tax credit transfer agreement, which includes the following:

• • • Full Legal Name, as used on tax documents.

• • • Address to buyer either home or office.

• • • Social Security Number or Federal Tax Id number.

• • • Email Address to buyer

• • • Cell number

• • • Amount of Credits to be Purchased

• • • Tax Year to be applied to

• • • CPA Contact Information for communication proposes.

2. The Buyer will receive a secure email from DocuSign that will include your invoice and transfer agreement to view and sign;

3. The Buyer will wire or send a check for their payment according to the invoice;
4. Depending on the project, either State Tax Incentives or the production company will file the necessary information with the Department of Revenue to secure the purchase and transfer of the tax credits;

5. State Tax Incentives will provide the final tax filing document which is referred to as the IT-TRANS form (in Georgia). This form is needed for claiming the tax credit. Your tax advisor will need to include a copy with your state tax return.

The full purchase and transfer process can take between 2 to 3 weeks.