Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The open allocation periods for the California
Film & Television Tax Credit Program 2.0 shall be announced by the Director of
the CFC prior to each new fiscal year on the CFC website. The California fiscal year
is from July 1 to June 30. The announcement shall identify the application
categories: Independent films, feature films, relocating television series, and
television projects that may be submitted in each application period.
(b) An applicant that begins principal photography
in California prior to receiving a credit allocation letter shall be disqualified
from receiving such letter for that particular production.
(c) An applicant shall not submit a duplicate
application for a project during any given allocation period. Submittal of duplicate
applications shall be good cause to disqualify an applicant from the tax credit
program.
(d) An applicant may submit an
additional application for the same project during any fiscal year if the qualified
production did not receive or retain a tax credit allocation from a previous
allocation period in the same fiscal year.
(e) An applicant that has been issued a tax credit
allocation for a particular production, that begins, but does not complete,
principal photography of that production shall not be eligible to reapply for a tax
credit reservation for that particular production.
(f) Any expenditures for services, wages, or goods
incurred prior to application approval shall not be considered qualified
expenditures.
(g) An applicant of a
television series, shall submit one application for a television season of that
television series.
(h) The application
process for tax credit allocation shall occur in two phases. Phase 1 requires
applicants to complete and submit the online application as set forth on the CFC
website. The applicant shall initiate the online application process by selecting a
production category from the following: feature film, independent film, television
project. The application shall include the information set forth below:
(1) Section 1: Applicant information.
(A) Production title;
(B) Applicant entity and Tax ID Number;
(C) A definition of the applicant that will
receive the tax credit is included in this section.
(2) Section 2: Contact information.
(A) Enter the contact type and provide the contact
name, title, address, email and phone for each of the following, as applicable:
Production company, parent company, Producer, Line producer, Production manager,
Production accountant, Director, Executive producer(s), Lead actors, Payroll
service, Distributor, CPA firm, other.
(B) Identify the primary contact and if they are
authorized to act on behalf of the Applicant with the CFC.
(3) Section 3: Business structure.
(A) Identify if the applicant is a corporation,
limited liability company, individual proprietorship, subchapter S corporation,
partnership, or other.
(4)
Section 4: Financing sources.
(A) List the
following information for financing sources:
1.
Names of funds, amounts, percentage of funding.
2. Indicate if the supporting documentation is
readily available to confirm financing sources.
(5) Section 5: Proposed project.
(A) Type of production. If the production category
is television, indicate if it is one of the following production types: movie of the
week, pilot, recurring television series, or new television series. If it is a new
television series indicate if TV Pilot was initially accepted in the program, number
of episodes, and confirm over forty (40) minutes of running time exclusive of
commercials. If it is a relocating television series indicate previous location,
number of episodes previously shot, and number of episodes included in this
season.
(B) Production schedule. Provide
start date of principal photography, end date of principal photography, estimated
end date of post-production, projected, or actual release date.
(C) Synopsis. The synopsis must be a minimum of
1600 and a maximum of 6000 characters and include a description of the main
characters, plotline, beginning and ending, and major scene
descriptions.
(6) Section 6.
Production shoot days and determination of additional percentage points.
(A) Principal photography (PP) Days.
1. Enter the requested data for PP Days. The
online application shall automatically calculate the totals.
a. Enter total PP days in Los Angeles (LA)
zone.
b. Enter total PP days outside LA
zone, but in California.
c. Total
California PP days equals a. plus b.
d.
Total percentage of PP days outside LA zone equals b. divided by c. x 100.
e. Enter total non-California PP days.
f. Total PP days equals c. plus e.
g. Total percentage of California PP days equals
c. divided by f. x 100
h. Enter
estimated total California 2nd unit, stunt, and VFX days.
i. Enter total PP days at Facility.
j. Total percentage PP facility days equals i.
divided by c. x 100.
(B) Visual Effects. Enter total California
qualified VFX expenditures eligible for additional percentage points. A list of
eligible expenditures and wages are provided as stated in section
5511(a)(1).
(C) If shooting outside of Los Angeles zone,
indicate the California counties where filming will occur.
(D) If shooting outside California, indicate state
and/or country where filming will occur.
(7) Section 7: Production statistics.
(A) Provide the following information regarding
labor statistics for in-state work:
1. Estimated
total number of cast members.
2.
Estimated total number of base crew members. (Base crew is the average number of
staff and shooting crew employed per principal photography day).
3. Estimated total extras/stand-in man days. (The
sum of the number of days, full or partial, a person is estimated to
work).
(B) Provide the
following information regarding Budget information.
1. Provide total California expenditures
(qualified and non-qualified).
2.
Indicate if seventy-five percent (75%) or more of total production budget will be
spent in California.
(C)
Indicate if the total California qualified VFX is equal to 75% of total worldwide
VFX budget or if the California qualified VFX is at least $10
million.
(8) Section 8:
Uplift: The additional tax credit calculation.
A list of eligible expenditures and wages are provided as stated
in section 5511(a)(1).
(A) Out of zone.
1. Enter total budgeted non-wages (applicable
period) excluding the total consumables;
2. Total percentage of principal photography
outside Los Angeles Zone (number is the same as subsection (h)(6)(A)1.d. above and
entered automatically.)
3. Total
non-wage non-consumable expenditures (equals 1. multiplied by 2.)
4. Enter total non-wage expenditures totally
consumed outside Los Angeles Zone.
5.
Multiply subsection a. and subsection b.
6. Enter total out of zone wages for the
applicable period.
7. Total eligible out
of zone amount for additional 5% tax credit.
(B) Total California Qualified Visual Effects
(VFX).
1. Indicate if the total California
qualified VFX is a minimum of 75% of total worldwide VFX budget or if the California
qualified VFX is at least $10 million.
2. If answer to subsection (b)(8)(B)1. above is
yes, then enter total dollar amount for California VFX visual effects eligible for
additional 5% tax credit [same as subsection (h)(6)(B)].
(C) Total music
Enter total qualified music budgeted
expenditures.
(D) Total
Additional Tax Credit: The total out of zone amount and total California VFX amount
and total music amount which is eligible for an additional 5% tax credit.
(E) Multiply (D) by .05 for total additional
credit amount.
(9) Section 9:
Estimated Credit Allocation.
(A) Qualified Wages
1. Enter total qualified
wages.
(B) Qualified Non-wages
1. Enter total qualified
non-wages.
(C) If applicable,
enter total contingency, which can be no more than 10% of qualified
expenditures.
(D) If applicable, enter
total completion bond fee, which can be no more than 2% of qualified
expenditures.
(E) The total qualified
expenditures shall be calculated based on the sum of the totals provided in this
section multiplied by 25% if production category is an independent project or
relocating television series; totals in this section shall be multiplied by 20% for
all other production categories. (Credit allocation applies only to the first ten
million ($10,000,000) of qualified expenditures for independent productions. Credit
allocation applies only to the first one hundred million ($100,000,000) of qualified
expenditures for non-independent productions.)
(10) Section 10: Jobs ratio ranking.
(A) A jobs ratio ranking shall be assigned to the
application, based on the criteria in Section
5515 and the information provided by
the applicant in this application. The jobs ratio number for the production will be
indicated once the application is complete.
(11) Section 11. Certification.
(A) By clicking submit on the Application Summary,
such action is the applicant's acknowledgement, agreement and, certification that
the applicant has read and reviewed the application, including all its attachments,
and that the content provided in the application by the applicant is true and
accurate to the best of his or her knowledge or at least the knowledge of what would
be expected of a reasonable person in the same capacity.
(B) Provide name, title, and
date.
(i) Applicants
shall be selected for Phase 2 of the application process based on the jobs ratio
ranking of their application, pursuant to Section
5515.
(j) The CFC shall notify, by electronic mail, the
top ranked projects in each category of qualified motion pictures, as provided for
in sections
17053.95(i)
and
23695(i)
of the Revenue and Taxation Code. These projects shall provide the additional
materials and supporting documentation as requested by CFC as described in
subsection (k) below within the timeframe provided on the electronic notification,
which shall be no less than three (3) business days and no more than seven (7)
business days from the electronic notification date. (Phase 2 of the Application
Process.)
(k) The applicant shall submit
the following:
(1) An electronic copy of the
qualified expenditure budget in an industry standard budgeting program. The
electronic copy shall be uploaded to the online application for the qualified motion
picture. The industry standard budgeting program shall provide the following:
(A) Qualified wage expenditures and qualified
non-wage expenditures. If applicable, also indicate if incurred outside the Los
Angeles zone during the applicable period.
(B) For non-independent productions (excluding
relocating series in their first season in California) indicate those accounts for
which an additional five percent (5%) in tax credits is allowed for the following
qualified expenditures: qualified wage and expenditures purchased or rented and used
outside the Los Angeles zone during preproduction through strike on location;
qualified visual effects if at least ten million dollars ($10,000,000) or
seventy-five percent (75%) of worldwide visual effects will be paid or incurred in
the state; and expenses related to music track recording and/or music
scoring.
(C) A television series shall
submit a qualified expenditure budget including all pattern and amortization costs,
or separate amortization and pattern budgets. The budget shall be in an industry
standard budgeting program uploaded to the online application. The Production Budget
shall indicate, as applicable, the information required in Section
5509(k)(1)(A) and
(B).
(2) One-Line Schedule ("production board").
Applicant shall submit in PDF or equivalent format a One-Line Schedule which shall
include scene descriptions, scene numbers, and cast numbers and shall indicate which
days are scheduled for filming in a production facility and/or outside of the Los
Angeles zone.
(A) A television series shall submit
in PDF or equivalent format a production calendar, including the start and end dates
of the season, the number of in-state and out-of-state principal photography days,
and the total number of episodes in lieu of a one-line shooting schedule. The
production calendar must indicate which days are scheduled for filming in a
production facility and/or outside the Los Angeles zone.
(3) Screenplay for the production. If the
application is for a pilot that does not have a script, this requirement shall be
waived. Applicant shall submit in PDF or equivalent format the screenplay for the
production.
(4) Supporting documentation
that confirms at least 60% of production financing. Applicant shall include
documentation for each financing source including, but not limited to, commitment
letters, financing agreements, term sheets, and/or bank statements in PDF or
equivalent format. Applications submitted without the sufficient documentation
described above, which shall be determined in the sole discretion of CFC, shall be
considered incomplete and good cause to disqualify the application.
(5) Pick-up order. A pilot, new television series
or relocating television series shall submit evidence, in PDF or equivalent format,
that the pilot or series is scheduled for photography, e.g. a pick-up order, when
applying for a credit allocation. Recurring Television Series may submit an
application without a pick-up order, but shall not receive a credit allocation until
proof of a pick-up order has been submitted.
(6) Relocating statement. Applicant certifies that
the credit provided is the primary reason for relocation to California (if
applicable). If submitting Relocating Statement, the detailed narrative statement is
not required. The certification shall be submitted in PDF or equivalent
format.
(l) Within thirty (30)
business days of receipt of the completed application and all requested supporting
documents, the Director of the CFC, or his or her designee, will notify the
applicant whether the application is accepted or disqualified. An approved
application shall meet the Eligibility Requirements in Section
5510. Upon approval, a Credit
Allocation Letter, CFC Form DD (Rev. 11/27/15) hereby incorporated by reference,
shall be issued to the applicant indicating the amount of tax credits allocated, as
provided in Section
5514. Failure to submit all requested
documents above, as applicable, shall be good cause to disqualify the
applicant.
(m) As soon as feasible, but
not less than four (4) weeks prior to the start of principal photography, the
production accountant is required to attend an orientation meeting with the Director
of the CFC or his or her designee, along with any or all of the following staff
members: a primary producer, unit production manager, or other appropriate personnel
as determined by the applicant. Applicants and staff members shall not be required
to attend more than one (1) orientation meeting for a motion picture in the
program.
(n) Any television series,
relocated television series and any television series based on a pilot that has been
approved and issued a Credit Allocation Letter, shall be given first priority for a
credit allocation during an open allocation period in each subsequent year in the
life of that series whenever credits are allocated within a fiscal year.
(1) Each recurring television series shall submit
a new application and pick-up order, if available, for each season prior to any open
application period as specified by the CFC in its written notification.
(2) Recurring television series will be
prioritized in subsequent years based upon the fiscal year of original credit
allocation with oldest television series applications entitled to first priority. In
the event that further prioritization is necessary, jobs ratios from the most
current application for the series shall be used.
(o) Principal photography in California shall
commence no later than one hundred eighty (180) calendar days after the credit
allocation letter is issued. If the production does not begin principal photography
prior to the 180-day deadline, the tax credit allocation shall be revoked, unless a
Force Majeure event has occurred which directly prevented the production from
commencing within the 180-day deadline. With submission of documentation verifying
such event, the CFC may grant an extension. If a production implements a hiatus
during the principal photography period, any and all hiatus period(s) may be no
longer than one hundred twenty (120) calendar days in aggregate for the entire
duration of the production.
1. New section
filed 4-13-2015 as an emergency; operative 4-13-2015 (Register 2015, No. 16). A
Certificate of Compliance must be transmitted to OAL by 10-12-2015 or emergency
language will be repealed by operation of law on the following day.
2.
New section refiled 10-15-2015 as an emergency; operative 10-15-2015 (Register 2015,
No. 42). A Certificate of Compliance must be transmitted to OAL by 1-13-2016 or
emergency language will be repealed by operation of law on the following
day.
3. New section refiled 1-7-2016 as an emergency, including further
amendment of section; operative 1-7-2016 (Register 2016, No. 2). A Certificate of
Compliance must be transmitted to OAL by 4-6-2016 or emergency language will be
repealed by operation of law on the following day.
4. Certificate of
Compliance as to 1-7-2016 order, including further amendment of section, transmitted
to OAL 3-29-2016 and filed 5-11-2016; amendments operative 5-11-2016 pursuant to
Government Code section
11343.4(b)(3)
(Register 2016, No. 20).
Note: Authority cited: Sections
17053.95(e)
and
23695(e),
Revenue and Taxation Code; and Section
11152,
Government Code. Reference: Sections
6902.5,
17053.95(g)
and
23695(g),
Revenue and Taxation Code; and Section
14998.1,
Government Code.
