Alabama Administrative Code
Title 281 - ALABAMA DEPARTMENT OF COMMERCE, FORMERLY ALABAMA DEVELOPMENT OFFICE AND ALABAMA TOURISM DEPARTMENT/ALABAMA FILM OFFICE
Chapter 281-3-1 - ALABAMA FILM OFFICE INCENTIVES
Section 281-3-1-.02 - Definitions
Universal Citation: AL Admin Code R 281-3-1-.02
Current through Register Vol. 42, No. 5, February 29, 2024
(1) The following definitions apply for purposes of the rules promulgated under Acts of Alabama, 2009-144, known as the Entertainment Industry Incentive Act of 2009:
(a)
ABOVE THE LINE EXPENDITURES.
Actual compensation paid by a Qualified Production Company to individuals who
guide, influence and add to the creative direction or creative process of a
Qualified Production. These expenditures include but are not limited to
compensation paid by a Qualified Production Company to the screenwriter,
producer, director and principal actors.
(b)
ACT. Acts of Alabama 2009-144,
known as the Entertainment Industry Incentive Act of 2009 as amended by Act No.
2011-695, Act No. 2012-167, Act No. 2012-212 and Act No. 2013-34.
(c)
ADVISORY BOARD. Group of
individuals to advise the Office in matters related to the administration of the
Act.
(d)
ALABAMA-BASED
COMPANY. Any Company organized under the laws of the State of Alabama or
qualified to do business in the State of Alabama with the Alabama Secretary of
State; which maintains and has maintained throughout the twelve month period
immediately preceding the commencement of production of a Qualified Production, a
physical office within the State of Alabama staffed by one or more employees who
work a minimum of 36 hours for the Company during a typical work week; are paid
and supervised directly by the Company and who typically devote all of their
workday to performing services for the Company within the State of
Alabama.
(e)
APPLICANT.
A Company, intending to produce a Qualified Production that applies for
Incentives.
(f)
APPLICATION. Form to be completed by an Applicant requesting
Incentives and submitted to the Office for approval by the Office.
(g)
BELOW THE LINE EXPENDITURES.
Payroll and Production Expenditures other than Above the Line Expenditures. These
expenditures include but are not limited to actual compensation paid by a
Qualified Production Company to individuals who are non-starring cast members.
Examples of the positions in this category are director of photography, assistant
directors, gaffer and grips.
(h)
CHART OF PRODUCTION EXPENDITURES. A list of examples of expense
items and whether they constitute Production Expenditures if Expended in Alabama
by a Qualified Production Company on a State-Certified Production.
(i)
COMPANY. A corporation,
partnership, limited liability company, or any other business entity.
(j)
CPA. A certified public
accountant, having passed the uniform certified public accountant examination,
who is licensed to practice accountancy by a state board of public accountancy,
or its designee, and is in good standing with said state board of public
accountancy, or its designee.
(k)
DEPARTMENT. The Alabama Department of Revenue.
(l)
END CREDIT. A statement
displayed at the end of the credits, where applicable, of a State-Certified
Production proclaiming "FILMED ON LOCATION IN ALABAMA," or other comparable form
of acknowledgement, along with a state logo submitted and approved by the Alabama
Film Office.
(m)
ENTERTAINMENT
INDUSTRY. Those persons or entities engaged in the production of
entertainment content.
(n)
EXPENDED IN ALABAMA. In the case of tangible property, property
which is acquired or leased from a source within the State of Alabama; in the
case of services, services performed in the State of Alabama for a Qualified
Production project.
(o)
FINAL
INCENTIVE AUDIT. An audit, performed by a CPA, of the books and records of
a Qualified Production Company performed upon completion of the production
activities in the State of Alabama associated with a State-Certified Production.
Such audit shall verify each Production Expenditure claimed by a Qualified
Production Company.
(p)
INCENTIVES. The Rebate and exemptions from the state portion, but
not the local portion, of any sales, use, and lodgings taxes available to certain
Qualified Production Companies for Production Expenditures under the
Act.
(q)
LOAN-OUT
AFFIDAVIT. A form to be designed and distributed by the Alabama Department
of Revenue to be completed and delivered by each Loan-Out Company who received
payment for goods and services which the Applicant requests to be treated as
Qualified Production Expenses for a State-Certified Production.
(r)
LOAN-OUT COMPANY. A Company,
owned in whole or in part by a person performing services for a Qualified
Production Company with respect to a State-Certified Production with which a
Qualified Production Company contracts and pays for the performance of such
services by said person.
(s)
OFFICE. The Alabama Film Office.
(t)
PAYROLL. All salary, wages,
and other compensation, including specifically, but not limited to, compensation
and benefits, related benefits, and any corresponding state and federal income,
unemployment, or other payroll tax obligation, and workers compensation provided
to resident and non-resident producers, directors, writers, actors, and other
personnel involved in qualified production projects in Alabama.
(u)
PRODUCTION EXPENDITURES.
1. Preproduction, production, and
postproduction expenditures incurred in the State of Alabama subsequent to the
approval by the Office as a State-Certified Production, except as provided in
Ala. Admin. Code r. 281-3-11-.04(1)(g), that are directly used in a
State-Certified Production, including, but not limited to, the following: set
construction and operation, wardrobe, makeup, set accessories, and related
services; costs associated with photography and sound synchronization, lighting,
and related services and materials; editing and related services; rental of
facilities and equipment leasing of vehicles; costs of food and lodging; cost of
catering; digital or tape editing, film processing, transfer of film to tape or
digital format; transfer direct to DVD, cable, or satellite for distribution;
sound mixing, special and visual effects including duplication, firm processing
digital, DVD, music composition, and satellite distribution; total aggregate
payroll; music; airfare; insurance costs of bonding; and or other similar
production expenditures.
2. The term
includes financial contributions or educational or workforce development in
partnership with related educational institutions, or local industry
organizations, or both, contributed toward the furtherance of the local
entertainment media industries.
3.
The term does not include postproduction expenditures for marketing or any
amounts that are paid to persons or entities as a result of their participation
in profits from the exploitation of a motion picture production.
4. There is a rebuttable presumption that the
term does not include expenditures paid by a Qualified Production Company to a
Related Party for goods or services.
5. The term does not include finance fees or
similar charges.
(v)
QUALIFIED PRODUCTION.
1. The term
means entertainment content created in whole or in part within the state,
including motion pictures; soundtracks for motion pictures; documentaries; long-
form, specials, miniseries, series, sound recordings, videos and music videos,
and interstitials television programming; interactive television; interactive
games; video games; commercials; infomercials; any format of digital media,
including an interactive website that is intended for national or international
distribution or exhibition to the general public; and any trailer, pilot, video
teaser, or demo created primarily to stimulate the sale, marketing, promotion, or
exploitation or future investment in either a product or a qualified production
via any means and media in any digital media format, film, or videotape, provided
such program meets all the underlying criteria of a qualified
production.
2. The term does not
include any ongoing television program created primarily as news, weather, or
financial market reports, a production featuring current events, sporting events,
an awards show or other gala event, a production whose sole purpose is
fund-raising, a long-form production that primarily markets a product or service,
a production used for corporate training or in-house corporate advertising or
other similar productions; nor does the term include any production for which
records are required to be maintained under 18 U.S.C. §2257 with respect to
sexually explicit content; nor does the term mean or include any form of
gambling, gaming, wagering, or pari-mutuel wagering activity or enterprise; nor
does the term include any music festival, concert, show, commemorative service or
exhibition which is conducted primarily for the entertainment, education or
enrichment of a live audience.
(w)
QUALIFIED PRODUCTION COMPANY.
1. A Company engaged in the business of
producing a Qualified Production.
2.
The term does not mean or include any Company owned, affiliated, or controlled,
in whole or in part, by any Company or person which is in default on a
loan.
(x)
REBATE. Incentive available to a Qualified Production Company equal
to 25% of its Production Expenditures, excluding payroll paid to Residents of
Alabama, on a State-Certified Production plus 35% of all payroll paid to
Residents of Alabama for the State-Certified Production that may be used to
offset any Alabama income tax liability of the Qualified Production Company for
the tax year during which production activity in Alabama on the State-Certified
Production concludes, with the excess by which the Rebate exceeds the Qualified
Production Company's Alabama income tax liability being refunded to the Qualified
Production Company; provided that such amount shall not exceed the amount of
total Incentives available to a Qualified Production Company less the amount of
any state, but not local, sales, use, and lodgings taxes that would have been
paid but for the exemption from the same.
(y)
RELATED PARTY.A person or
Company that bears a relationship to a Qualified Production Company described in
26 U.S.C. §§267(b), (c), or (e), as amended or any other person or
entity owned by a person with a financial interest in a Qualified Production
Company.
(z)
REPORT.
Statement of a CPA issued upon the completion of the Final Incentive Audit that
provides a summary of the Production Expenditures Expended in Alabama.
(aa)
RESIDENT OF ALABAMA. A
natural person and, for the purpose of determining eligibility for the Incentives
provided by the Act, any person domiciled in the State of Alabama and any other
person who maintains a permanent place of abode within the State and spends in
the aggregate more than 6 months of each year within the State of
Alabama.
(bb)
STATE-CERTIFIED
PRODUCTION. A Qualified Production approved by the Office, produced by a
Qualified Production Company.
Author: Department of Commerce/Alabama Film Office
Statutory Authority: Code of Ala. 1975, §§ 41-7A-40 through -48.
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