Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Within 48
months of the 30-month completion deadline for the qualified motion picture, as
specified in subdivision (c), every applicant allocated tax credits under the
California Film and Television Tax Credit Program 3.0 shall do one of the following:
(1) Submit the documents specified in this
section, in an electronic format and/or hardcopy, as directed by the CFC;
or,
(2) Submit a written notice to the
CFC stating that they will not be requesting certification for the allocated
credits; or,
(3) An applicant with
insufficient tax liability to initiate the process at the timeframe set in
subdivision (a) above can request an extension in writing.
(A) The applicant may request one or more
extensions of up to twelve (12) months and the CFC will approve the extension for an
applicant that requests such an extension within the timeframe specified in
paragraph (B) below and submits a statement of insufficient tax liability to
initiate use of the allocated tax credits.
(B) The applicant shall request an extension no
less than thirty (30) business days prior to the expiration of the timeline
specified in subdivision (a) above or prior to the expiration of a previously
approved extension for the request to be considered by the CFC.
(4) Failing to comply with the requirements of
this subdivision shall constitute forfeiture of an applicant's allocated tax
credits.
(b) The applicant
shall be required to submit the following documents upon completion of the qualified
motion picture.
(1) Proof of copyright
registration of the screenplay, teleplay, motion picture, television series or
pilot.
(2) Documentation indicating the
date of completion of post production. Documentation may include, but not be limited
to, the facility invoice evidencing the date the final element was completed or
other reasonable documentation as determined by the CFC.
(3) List of all Cast and Crew for the project with
Social Security numbers redacted, if applicable.
(4) Copy of Script Supervisor's Lined Script or
the continuity/spotting log of the project. TV series must submit episodes 2 and 5
of the series.
(5) Expenditure Summary
Report as set forth on the CFC website. The applicant shall revise any contact
information changes in the application portion of the CFC website including the CPA
firm performing the Agreed Upon Procedures (AUP).
(A) Section 1. Applicant Information. The on-line
application will automatically generate the applicant information. Input copyright
registration number and seller's permit number, if applicable.
(B) Section 2. Contact Information. The on-line
application will automatically generate the contact information for parent company
and CPA firm.
(C) Section 3. Project
Information. If television series, indicate number of completed episodes. Report
start date of pre-production, principal photography, hiatus start date if
applicable, hiatus return date if applicable, end of principal photography, end date
of post-production (creation of final element), projected or actual release date (if
known).
(D) Section 4. Production Shoot
Days and Locations. Provide production shooting days inside and outside the Los
Angeles zone, counties outside the LA zone, other states or countries; and provide
Local Community Expenditure Report Form LE3. (Rev. July 28, 2023), incorporated by
reference, for each county outside of Los Angeles county if applicable.
(E) Section 5 A. Production and Financial
Statistics. Provide total number of cast, base crew, extras and stand-in man days,
residents and non-residents, CA Vendors, number of outside zone local
hires.
(F) Section 5 B&C. Financial
Statistics. Provide total worldwide expenditures; total California expenditures;
qualified and non-qualified; total worldwide VFX expenditures; total CA
expenditures, qualified and non-qualified; total qualified California VFX
expenditures eligible for uplifts and/or bonus points (excludes independent films
with qualified expenditure budgets of ten million dollars ($10,000,000) or
less).
(G) Section 5 D. Total California
music scoring/recording wages eligible for bonus points (excludes independent films
with qualified expenditure budgets of ten million dollars ($10,000,000) or
less).
(H) Section 5 H. Subject to
self-reported voluntary information, include separate listings regarding the
ethnicity and gender statistics of all individuals that received qualified wages
(excluding background performers) and all individuals that received non-qualified
wages.
(I) Section 6. Career Readiness
and Pilot Skills Training Program.
(i)
Verification of fulfillment of career readiness requirement utilizing one of the
required forms CR1, CR2, CR3, CR4, CR5 (Rev. July 28, 2023), incorporated by
reference. If applicable, verify submission of career readiness payment.
(ii) Verification of pilot skills training program
contribution with date paid and amount, utilizing required form CPP (New. July 28,
2023), hereby incorporated by reference.
(J) Section 7. Uplifts and Bonus Points (as per
AUP findings)
(i) Out of zone Uplift.
(Non-Independent productions only)
1. Enter total
out of Los Angeles zone wages excluding Local Hire Labor (applicable
period).
2. Enter total out of Los
Angeles zone non-wages (applicable period) excluding the total
consumables;
3. Enter total non-wage
expenditures totally consumed outside Los Angeles Zone (applicable
period).
4. Total out of Los Angeles
zone uplift amount is calculated.
(ii) Local hire labor uplift: Total of out of zone
local hire labor eligible for uplift.
(iii) 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.
(iv) Total music wages eligible for bonus points
(excludes independent films with qualified expenditure budgets of ten million
dollars ($10,000,000) or less).
(v)
Total additional tax credit: The online application will automatically calculate the
following: The total out of Los Angeles zone amount (non-Independent productions
only) and total California VFX amount and total local hire labor amount 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
calculated automatically)
(K) Section 8. Credit Amount. As per the findings
of the CPA performing the AUP, provide the Total Qualified Wages; Total Qualified
Non-Wages; and completion bond fee, if applicable. Total Qualified Expenditures, Tax
Credit Amount, Uplifts tax credit amount, and Total Adjusted Credit Amount will be
automatically calculated by the on-line application.
(L) Section 9. Jobs Ratio and Final Tax Credit.
The online application automatically calculates the Jobs Ratio and the percentage
change from the CAL jobs ratio amount. If there is an overstatement, the penalty
will be indicated. The final credit amount indicated will be the least of the CAL
amount, the adjusted credit amount or the Amount with Penalty.
(M) Section 10. Signature certification. Print the
Expenditure Summary Report. By signing the Report, the applicant acknowledges,
agrees and certifies that the applicant has read and reviewed the summary, and that
the content provided 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. Submit to the CPA performing the AUP.
(6) An agreed upon procedures report in compliance
with the Program 3.0 AUP dated September 27, 2023, hereby incorporated by reference.
The agreed upon procedures report shall be prepared and certified by a certified
public accountant (CPA) who meets the following criteria:
(A) Maintains an active license or has proof of a
valid out-of-state accounting firm registration for the firm practicing attest
services in California.
(B) The
accounting firm performing the assurance services shall provide documentation from
the California Society of Certified Public Accountants or other organization
administering said review, indicating that a Peer Review Report was completed within
the last three years and the rating was a Pass. If the firm performing attest
services is newly formed, the firm must provide evidence it is registered for review
by an organization administering the review in the state in which the firm
resides.
(C) Successful completion of a
California Film Commission Orientation Meeting for CPAs performing Agreed Upon
Procedures for the California Film and Television Tax Credit Program 3.0. The
frequency of training shall be offered on an as needed basis as determined by the
CFC.
(7) The actual layout of
the main and end titles produced by a title house or other postproduction
facility.
(8) Documentation from each
visual effects, title, digital effects and/or post sound company contracted by the
production company, indicating the total dollar amount of work performed within the
State of California shall be certified by managerial level personnel with knowledge
of the project.
(9) Documentation from
the designated representative of the California Community Colleges Chancellor's
office and/or the California Department of Education or the CFC, verifying
participation in the career-based learning and training program as required in
Section 5525 (a)(4).
(10) A miniseries shall submit documentation
verifying that its initial distribution consists of two or more episodes longer than
forty (40) minutes each exclusive of commercials.
(11) A listing of other jurisdictions in which any
member of the applicants combined reporting group has produced a qualified motion
picture in the preceding year pursuant to Section 17053.98 (g)(3)(C)(i)(I) of the
Revenue and Tax Code. Updated information as per Section
5521(k)(11) is also
required.
(12) Documentation verifying
that the applicable fee was paid by the qualified taxpayer to fund a pilot career
pathways technical skills training program.
(c) The production shall be completed within 30
months from the issuance date of the CAL as required in sections
17053.98(b)(18)(B)(ii) and 23698(b)(18)(B)(ii) of the Revenue and Taxation
Code.
(d) The Qualified Motion Picture
shall be considered complete when the process of postproduction has been finished
and a final composite answer print, delivery air master, or digital cinema files of
the qualified motion picture is completed.
(e) The CFC shall review all the required
materials submitted by the applicant to determine the sufficiency of the required
documentation and that the applicant meets all the criteria for the program. During
the review, the CFC may reject insufficient documentation not in compliance with the
requirements found in this section or may request additional documentation to
determine if the production is a qualified motion picture and to verify the
qualified expenditures. The CFC shall approve or disapprove the request for the tax
credit certificate.
(f) Upon rejection
of insufficient documentation or disapproval of the request for a tax credit
certificate, the CFC shall provide the applicant with a notice of disapproval
stating the reasons for the disapproval. Disapproval is final and shall not be
subject to administrative appeal or review.
(g) Upon approval, the tax credit certificate, CFC
Form M3 (New. June 25, 2019), hereby incorporated by reference, shall be issued to
the applicant beginning on July 1, 2020. If the entity that incurs the qualified
expenditures is a partnership, limited liability company or subchapter S corporation
(pass-through entity), that entity is the applicant for purposes of filing the tax
credit application and receiving the final tax credit certificate.
Note: Authority cited: Section 17053.98(a), 17053.98(d),
17053.98(e), 17053.98(f), 23698(a), 23698(d), 23698(e) and 23698(f), Revenue and
Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98 and
23698, Revenue and Taxation Code; and Section 14998.1, Government Code.
Note: Authority cited: Section
17053.98(a),
17053.98(d),
17053.98(e),
17053.98(f),
23698(a),
23698(d),
23698(e)
and
23698(f),
Revenue and Taxation Code; and Section
11152,
Government Code. Reference: Sections
17053.98
and
23698,
Revenue and Taxation Code; and Section
14998.1,
Government Code.
