Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The open
allocation periods for the California Film & Television Tax Credit Program 3.0
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 CAL 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 a
new 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, including any affiliated
entities, 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 with the exception of production facility, office
rentals, completion bonds and insurance premiums, which may be prorated to include
the expenditures which are incurred on or after CAL issuance.
(g) An applicant of a television series shall
submit one application for a television season of that television series. A
television series with an order for additional episodes for the same season may
apply in a subsequent television allocation period.
(h) The application process for tax credit
allocation shall occur in two phases. Phase I requires applicants to complete and
submit the online application as set forth on the CFC website. Phase II occurs after
all applicants have been ranked by jobs ratios and the highest ranked productions
per category are required to submit their documentation. The applicant shall
initiate the online application process by selecting a production category from the
following: Feature film, independent film with a qualified expenditure budget of ten
million dollars ($10,000,000) or less, independent film with a qualified expenditure
budget over ten million dollars ($10,000,000), new television series, recurring
television series, pilot, mini-series, relocating television series. The application
shall include the information-set forth below:
(1)
Section 1: Applicant information.
(A) Production
title, date submitted, production category, principal photography start date, post
production end date, estimated tax credit, Application Jobs Ratio, applicant entity
and taxpayer ID number; Identify if the applicant is a corporation, limited
liability company, individual proprietorship, subchapter S corporation, partnership,
or other. If Relocating TV Series is selected under production category dropdown
menu, for fiscal years 2021-22 and 2022-23, by checking the box, Applicant attests
that the television series (without regard to episode length or initial media
exhibition) that wishes to relocate to California has a minimum budget of at least
$1 million per episode, filmed at least 75% of principal photography days for at
least one episode outside of California, and has not filmed more than 25% of
principal photography days for any episode inside of California. (A definition of
the applicant that will receive the tax credit is included as per section
5520(b)).
(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:
applicant contact, primary contact, production company contact, parent company
contact, budget and schedule contact.
(3) Section 3: Financing sources and ownership.
(A) List the following information for financing
sources:
1. Names of financing sources, amounts,
percentage of funding. Named sources must total a minimum of 60% of total production
budget.
(B) For Independents:
List names of all equity investors including, without limitations, all partners
(including percentage of ownership). Attest that applicant entity is not owned
directly or indirectly more than 25% by a publicly traded company.
(4) Section 4: Proposed project.
(A) 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. Indicate if the previous season was
filmed in California and if so, the number of principal photography days inside
California and outside California. (The previous question is disabled if the
applicant attests in Section (1)(A) that their relocating television series falls
under the definition in Section
5520(ff) for fiscal
years 2021-22 and 2022-23.) If it is a mini-series, indicate the number of episodes
and confirm over forty (40) minutes of running time exclusive of
commercials.
(B) Production schedule.
Provide start date of principal photography, end date of principal photography,
estimated end date of post-production and projected or actual release
date.
(C) Key Creatives: Provide names
of executive producer(s), producer(s), writer(s), director, lead actor(s), director
of photography, and location manager.
(D) 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.
(5) Section 5: Production shoot days
and Bonus Points.
(A) Principal photography (PP)
Days.
1. Enter the requested data for PP Days. The
online application will 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
(B) If shooting outside of Los Angeles zone,
indicate the California counties where filming will occur.
(C) If shooting outside California, indicate state
and/or country where filming will occur.
(6) Section 6: 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 background performers/stand-in
man-days. (The sum of the number of days, full or partial, a person is estimated to
work).
4. By checking the box, Applicant
acknowledges the following required documentation will be submitted if and when the
Applicant applies for a tax credit certificate: Subject to self-reported voluntary
information, include separate listings regarding the ethnicity and gender statistics
of all individuals who received qualified wages and all individuals who received
non-qualified wages.
(B)
Provide the following budget information.
1.
Provide total production budget.
2.
Provide total California expenditures (qualified and non-qualified).
3. Indicate if seventy-five percent (75%) or more
of total production budget will be spent in California.
(C) Visual Effects: (excludes independent films
with qualified expenditure budgets of ten million dollars ($10,000,000) or less).
Provide total worldwide VFX budget amount, total California VFX budget amount, and
total California VFX budget eligible for bonus points. Indicate if the total
California qualified VFX is equal or greater than 75% of total worldwide VFX budget
or if the California qualified VFX is at least ten million dollars
($10,000,000).
(7) Section 7:
Additional tax credit calculation: Uplifts and bonus points.
A list of eligible expenditures and wages are provided as stated
in section 5523(a)(1) and
5524(e) and (f), as
applicable.
(A) Out of zone Uplift.
(Non-Independent productions excluding relocating TV series)
1. Enter total budgeted out of zone wages
excluding local hire labor (applicable period).
2. Enter total budgeted out of zone non-wages
(applicable period) excluding the total consumables.
3. Enter total non-wage expenditures totally
consumed outside Los Angeles Zone (applicable period).
4. Applicable period is defined as in Section
5520 (a).
(B) Local Hire Labor Uplift: Total of
out of zone local hire labor eligible for additional tax credits (includes
independent films and relocating TV series).
1.
The applicant is responsible for collecting proof of identity and proof of the
location where the qualified individual resides for local hire labor at the time of
hire and for providing copies to the CPA performing the AUP (September 27, 2023),
hereby incorporated by reference. Without proof of identity and proof of the
location where the qualified individual resides for a crewmember the Local Hire
Labor Uplift shall not be applied for that individual.
(i) Acceptable proof of identity is a California
Driver's License, a State ID Card, or a Passport.
(ii) For purposes of sections 17053.98(a)(4)(E)
and 23698(a)(4)(E) of the Revenue and Taxation Code, acceptable proof of the
location where the qualified individual resides is a current home or apartment
rental agreement, or a utility bill, mortgage statement, internet or phone provider
bill, renter's or homeowner's insurance bill, or equivalent document, issued within
the previous three months.
(C) Total California Qualified Visual Effects
(VFX) Uplift and/or bonus points. (excludes independent films with qualified
expenditure budgets of ten million dollars ($10,000,000) or less). Total dollar
amount for California VFX eligible for additional 5% tax credit and/or additional
bonus points.
(D) Music Wages: (excludes
independent films with qualified expenditure budgets of ten million dollars
($10,000,000) or less).
Enter total California music scoring wages eligible for bonus
points.
(E) Total Additional Tax
Credit: The online application will automatically calculate the following: The total
out of zone amount (non-independent productions only) and total California VFX
amount and total local hire labor amount (includes independents and relocating TV
series) which is eligible for an additional tax credit.
1. Multiply total out of zone amounts by
.05
2. Multiply total VFX amount by
.05
3. Multiply total local hire labor
amount by .10 for non-independent productions and by .05 for independent films and
relocating television series.
4. (Total
additional amount of 1 + 2+ 3 above)
(8) Section 8: Estimated Credit Allocation and
Jobs Ratio.
(A) Qualified Wages
(B) Qualified Non-wages
(C) If applicable, enter total contingency, which
can be no more than 10% of qualified expenditures. The contingency cannot be
included as a line-item within the body of the budget.
(D) If applicable, enter total completion bond
fee, which can be no more than 2% of qualified expenditures. The completion bond fee
cannot be included as a line-item in the body of the budget. Completion bond costs
for any filming outside of California must be excluded proportionately.
(E) Total qualified expenditures.
(F) Total tax credit uplifts
Total qualified expenditures shall be multiplied by 25% if
production category is an independent film 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 films and the first ten million ($10,000,000) of
qualified expenditures eligible for uplifts. Credit allocation applies only to the
first one hundred million ($100,000,000) of qualified expenditures for
non-independent productions and the first one hundred million ($100,000,000) of
qualified expenditures eligible for uplifts.)
(G) Total tax credit uplift amount.
(H) Total tax credit amount including uplifts.
A jobs ratio shall be assigned to the application, based on the
criteria in Section
5527 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.
(9) Section 9. Certification.
(A) Clicking submit on the Application Summary 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
5527.
(j) The CFC shall notify, by electronic mail, the
top ranked projects in each category of qualified motion pictures, as provided for
in sections 17053.98(i) and 23698(i) of the Revenue and Taxation Code. These
applicants 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 within three (3) business days and
can be extended to no more than seven (7) business days from the electronic
notification date for legitimate business reasons.
(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 portal 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 costs which will be incurred
outside the Los Angeles zone during the applicable period.
(B) For non-independent productions (excluding
relocating TV series in their first season in California) indicate those accounts
for which an additional five percent (5%) tax credit is allowed for qualified
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 paid or incurred in the state; and qualified wages for services performed
outside the Los Angeles zone during preproduction through strike by individuals who
reside within the Los Angeles Zone. Productions shall also indicate those accounts
for which an additional ten percent (10%) tax credit is allowed for local hire
labor.
(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 subsection (k) (1)(A) and
(B) above.
1. Television series applicants
submitting more than one budget shall submit only the pattern and amortization
budgets; no additional budgets or budget versions will be accepted.
(D) For independent films and
relocating television series in their first season in California, indicate those
accounts for which an additional five percent (5%) tax credit is allowed for local
hire labor.
(2) Fringe
Benefit Matrix: Applicant shall submit information on fringe benefit payments
included in the qualified expenditure budget. After entering project title,
category, and date, applicant provides a detailed breakdown of qualified fringe
benefit payments for union and/or non-union background performers, union and/or
non-union crew, Director's Guild of America (DGA) crew, as applicable. Fringe
payments include: state unemployment tax, payroll/handling fees, pension, health,
vacation and holiday, workers compensation, DGA fringes benefit payments, and
non-union health insurance payments. Casting fees are not included as fringe benefit
payments but should be included as a line item in the budget.
(3) One-Line Schedule ("production board").
Applicant shall submit in PDF or equivalent format a One-Line Schedule which shall
include scene descriptions, scene numbers, holidays and cast numbers and shall
indicate which days are scheduled for filming outside of the Los Angeles zone.
(A) A television series may 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,
holidays, 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 outside
the Los Angeles zone.
(4)
Applicant shall submit in PDF or equivalent format the screenplay, including scene
numbers that match the submitted schedule for the production. If the application is
for a pilot that does not have a script, this requirement shall be waived. This
requirement is waived for recurring television series.
(5) Applicant shall submit 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.
(6) 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
applications without a pick-up order but shall not receive a credit allocation until
proof of a pick-up order has been submitted. Any recurring television series that
has not supplied a pick-up order within 140 calendar days of the CAL date for the
allocation period for which it submitted an application will be removed from the
queue and may reapply during the next television allocation period. The number of
episodes indicated on the pick-up order must match the number of episodes in the
application.
(7) Narrative statement
pursuant to sections 17053.98(g)(2)(A)(viii) and 23698(g)(2)(A)(viii) of the Revenue
and Taxation Code.
(8) Relocating
statement. Applicant certifies that the credit provided is the primary reason for
relocation to California (if applicable). The Applicant must state either that (1)
at least 75 percent of principal photography days of its most recent season was
filmed outside of California; or (2) For fiscal years 2021-22 and 2022-23, the
television series (without regard to episode length or initial media exhibition)
that wishes to relocate to California has a minimum budget of at least $1 million
per episode, filmed at least 75% of principal photography days for at least one
episode outside of California, and has not filmed more than 25% of principal
photography days for any episode inside of California. If submitting a relocating
statement, the detailed narrative statement as per Revenue and Taxation code
sections 17053.98 (g)(2)(A)(viii) and 23698(g)(2)(A)(viii) is not required. The
certification shall be submitted in PDF or equivalent format.
(9) Unlawful harassment policy. Applicant shall
submit company's written policy against unlawful harassment as set forth in section
17053.98(g)(2)(A)(ix) and 23698(g)(2)(A)(ix) of the Revenue and Taxation
Code.
(10) Applicants that administer
voluntary programs to increase the representation of women and minorities, or have
access to such programs, shall submit a summary of those programs including a
description of what the program is designed to accomplish and information about how
the programs are publicized to interested parties as set forth in sections
17053.98(g)(2)(A)(xi) and 23698(g)(2)(A)(xi) of the Revenue and Taxation
Code.
(11) Company and financial
information, if available and as applicable, as required by sections
17053.98(g)(2)(A)(v), 17053.98(g)(2)(A)(xii), 23698(g)(2)(A)(v), and
23698(g)(2)(A)(xii) of the Revenue and Taxation Code.
(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
5522. Upon approval, a Credit
Allocation Letter, (CAL) CFC Form D3 (Rev. July 28, 2023), hereby incorporated by
reference, shall be issued to the applicant indicating the amount of tax credits
allocated, as provided in Section
5526. Failure to timely submit all
requested documents above, as applicable, shall be good cause to disqualify the
applicant.
(1) Each CAL is issued to the specific
project described and outlined in the synopsis, script, schedule, and budget that
were submitted with the application. Exchanging the approved project for a different
project is prohibited and will result in revocation of the CAL.
(2) A qualified motion picture project that is
taken over by an entity other than the applicant entity and wishes to retain the
project's allocation of tax credits must comply with the following:
(A) The original applicant entity must submit a
statement on company letterhead declaring that they no longer retain the project and
specify the business entity that will take over the project, including that business
entity's taxpayer ID.
(B) The applicant
entity taking over the project must submit:
1.
Applicant contact, production company contact, and budget contact.
2. Documentation required pursuant to paragraph
(3) of subdivision (h) and paragraphs (5) and (11) of subdivision (k) of this
section.
3. An updated production
schedule, required pursuant to subparagraph (B) of paragraph (4) of subdivision (h)
of this section.
(C) A
qualified motion picture project described in paragraph (2) above can only be
transferred to a different business entity prior to the start of principal
photography.
(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, 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 and
available within a fiscal year.
(1) Each recurring
television series shall submit a new application and pick-up order, if available,
for each season during any open television project application period as specified
by the CFC in its written notification. The application shall reflect the estimated
qualified expenditures but the allocation will not exceed the amount approved in the
previous season's credit allocation letter(s). The narrative statement requirement
as set forth in sections 17053.98(g)(2)(A)(viii) and 23698(g)(2)(A)(viii) of the
Revenue and Taxation Code for all projects shall be deemed as met for recurring
television series with the statement submitted by that series when it was accepted
into the program as a pilot, new or relocating television series.
(2) The allocation amount requested by a
relocating TV series applying for tax credits in subsequent fiscal years as a
recurring TV series shall not exceed the amount approved in the previous season's
credit allocation letter(s).
(o) Principal photography in California shall
commence no later than one hundred eighty (180) calendar days after the credit
allocation letter is issued. Qualified motion pictures with qualified expenditures
of at least one hundred million dollars ($100,000,000) must begin principal
photography (as defined in Section
5520(u)) no later than
two hundred and forty (240) calendar days after CAL issuance. If the production does
not begin principal photography prior to the 180 or 240 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 deadline. With
submission of documentation verifying such event, the CFC shall 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.
Note: Authority cited: Sections 17053.98(e), 17053.98(g),
17053.98(i), 17053.98(j), 23698(e), 23698(g), 23698(i) and 23698(j), Revenue and
Taxation Code; and Section 11152, Government Code. Reference: Sections 6902.5,
17053.98(g) and 23698(g), Revenue and Taxation Code; and Section 14998.1, Government
Code.
Note: Authority cited: Sections
17053.98(e),
17053.98(g),
17053.98(i),
17053.98(j),
23698(e),
23698(g),
23698(i)
and
23698(j),
Revenue and Taxation Code; and Section
11152,
Government Code. Reference: Sections
6902.5,
17053.98(g)
and
23698(g),
Revenue and Taxation Code; and Section
14998.1,
Government Code.
