California Code of Regulations
Title 10 - Investment
Chapter 7.75 - California Film Commission
Article 4 - California Soundstage Filming Tax Credit Program
Section 5533 - Proposed Motion Picture Production Application - Phase B
Universal Citation: 10 CA Code of Regs 5533
Current through Register 2024 Notice Reg. No. 12, March 22, 2024
(a) After a Phase A applicant receives approval from the CFC for its studio construction project and has received a Soundstage Certification Letter or Letters, Form SCL (August 12, 2022), hereby incorporated by reference, the Phase B applicant may proceed to submit the following described application.
(b)
(1) If the Phase A applicant and the Phase B applicant are the same entity, the applicant shall initiate the online application process for Phase B with the same login credentials used for their Phase A application. The applicant will be required to input the unique identifier for the soundstage or soundstages, certified as part of the applicant's certified studio construction project, upon which the motion picture will be filmed.
(2) If the Phase A applicant and the Phase B applicant are different entities, the Phase B applicant must create an account in the online portal. In both cases, the Phase B application must include the information set forth below:
(A) Applicant entity and taxpayer ID number.
(B) Identify if the applicant is a corporation, limited liability company, individual proprietorship, subchapter S corporation, partnership, or other.
(C) 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, and parent company contact.
(E) Input the identifier listed on the SCL for each soundstage or ancillary building upon which the Phase B qualified motion picture project will be filmed.
1. Each soundstage or ancillary building, or group of buildings, approved as part of a Phase A certified studio construction project is assigned a unique identifier. This identifier must be provided for each soundstage, ancillary building, or group of buildings that the Phase B applicant will utilize in production of their qualified motion picture project.
(c) Following initiation of the online application for Phase B and review of the applicant and contact information, the applicant shall select the appropriate production category from the following: feature film, independent film, new television series, recurring television series, pilot, miniseries, relocating television series.
(d) Next, the application shall include, and the applicant shall fill in, the following requested information set forth below regarding the motion picture being filmed on the studio construction project facility certified by the CFC in Phase A:
(1) Section 1: Additional applicant information.
(A) The applicant must attest that it is the qualified taxpayer that meets the criteria specified in sections 17053.98(k)(2)(B)(iii) and 23698(k)(2)(B)(iii) of the Revenue and Taxation Code.
(B) The applicant must provide the production title, date submitted, production category, principal photography start date, post-production end date, soundstage identifiers, estimated tax credit. Estimated tax credit must be based on qualified expenditure estimates, regardless of the cap sum specified in sections 17053.98(k)(8)(B) and 23698(k)(8)(B) of the Revenue and Taxation Code, and must not exceed that cap sum.
(2) Section 2: 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 for all motion picture categories.
(B) For independent films: In addition, 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.
(3) Section 3: 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 per episode 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. If it is a miniseries, indicate the number of episodes and confirm over forty (40) minutes of running time per episode 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, if available.
(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.
(4) Section 4: Production shoot days.
(A) Principal photography (PP) Days. Note that to qualify for this Program, a motion picture must be produced by the qualified taxpayer and at least 50 percent of the qualified motion picture's principal photography stage shooting days must be on the soundstage or soundstages certified as a certified studio construction project. An applicant shall utilize the certified studio construction project soundstage(s) for six hours or more for the day to be considered a principal photography stage shooting day.
1. Enter the requested data for PP Days.
(i) Enter total PP days in Los Angeles (LA) zone.
(ii) Enter total PP days outside LA zone, but in California.
(iii) Total California PP days equals (i) plus (ii)
(iv) Total percentage of PP days outside LA zone equals (ii) divided by (iii) x 100.
(v) Enter total non-California PP days.
(vi) Total PP days equals (iii) plus (v)
(vii) Total percentage of California PP days equals (iii) divided by (vi) x 100.
(B) If shooting outside of Los Angeles zone, indicate the California counties where filming will occur.
(C) Enter the data for PP days on soundstages.
1. Indicate the overall total number of PP stage shooting days. This number must include PP stage shooting days on certified soundstages as well as PP stage shooting days on non-certified soundstages.
2. Indicate the total number of PP stage shooting days on a certified soundstage or soundstages. Input the unique identifier for each certified soundstage used.
3. Percentage of PP stage shooting days on the soundstage or soundstages certified as the certified studio construction project equals (4)(C)2. divided by (4)(C)1. and multiplied by 100. A qualified motion picture must film 50% of stage shooting days on certified stages during the production period.
(5) Section 5: 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, Form SM (August 12, 2022), hereby incorporated by reference: 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, and total California VFX budget amount. 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).
(6) Section 6: Additional tax credit calculation: Uplifts and diversity goals increase. A list of eligible expenditures and wages are provided as stated in section 5535(a)(1) and 5539(i) and (j), as applicable.
(A) Out of zone Uplift. (Non-independent films 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 Soundstage AUP (August 28, 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 (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.
(D) Total Diversity Goals Potential Increase: The applicant may achieve up to a four-percentage point increase in its credit percentage if it meets or makes a good faith effort to meet the diversity goals in its diversity workplan, as described in sections 17053.98(k)(3) and 23698(k)(3) of the Revenue and Taxation Code.
1. The CFC will review the Phase B applicant's diversity workplan, required pursuant to section 5534, and the applicant's subsequent diversity report, required pursuant to section 5537, to make a case-by-case determination of whether the applicant has met or made a good faith effort to meet their diversity workplan goals at the time of Phase C tax credit certification.
2. For purposes of the Phase B tax credit allocation, credits shall be calculated based on the assumption that the applicant's qualified motion picture project will meet its diversity goals and qualify for the four-percentage point increase.
(E) Total Additional Tax Credit: Enter the following: The total out of zone amount (non-independent films only) and total California VFX amount and total local hire labor amount (includes independent films 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 films and by .05 for independent films and relocating television series.
4. (Total additional amount of 1 + 2 + 3 above)
(7) Section 7: Estimated Credit Allocation.
(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 films and the first one hundred million ($100,000,000) of qualified expenditures eligible for uplifts.)
(G) Total tax credit uplift amount.
(H) Additional four percentage point increase in credit percentage for planned achievement of diversity goals.
(I) Total tax credit amount including uplifts and diversity goals potential increase.
(8) Section 8. Supporting Documentation. The applicant shall submit the following:
(A) An electronic copy of the qualified expenditure budget in a motion picture industry standard budgeting program, such as, but not limited to, Movie Magic Budgeting or Showbiz. 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:
1. 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.
2. For non-independent films (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.
3. 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 clauses (8)(A)1. And 2. Of this subdivision.
i. 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.
4. 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.
5. No motion picture may be allocated more than the cap sum specified in sections 17053.98(k)(8)(B) and 23698(k)(8)(B) of the Revenue and Taxation Code under this Program, regardless of additional tax credit allowances achieved through uplifts or any other mechanism.
(B) 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 must be included as a line item in the budget, if incurred.
(C) One-Line Schedule ("production board"). Applicant shall submit in PDF or equivalent non-proprietary document 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.
1. A television series may submit in PDF or equivalent non-proprietary document 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.
(D) Applicant shall submit in PDF or equivalent non-proprietary document 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.
(E) 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 nonproprietary document format. If the CFC is unable to verify at least 60% of production financing based on the supporting documentation provided, the application shall be considered incomplete.
(F) Pick-up order. A pilot, new television series, recurring television series, or relocating television series shall submit evidence, in PDF or equivalent non-proprietary document format, that the pilot or series is scheduled for photography, e.g., a pick-up order, when applying for a credit allocation. The number of episodes indicated on the pick-up order must match the number of episodes in the application.
(G) Narrative statement pursuant to sections 17053.98(g)(2)(A)(viii) and 23698(g)(2)(A)(viii) of the Revenue and Taxation Code. Recurring television series in their second or subsequent seasons are not required to submit a narrative statement if the statement is already in the applicant's online submission portal.
(H) Relocating statement. Applicant certifies that the credit provided is the primary reason for relocation to California (if applicable). The Applicant must state that at least 75 percent of principal photography days of its most recent season was filmed outside of California. The submitted budgets must be no less than one million dollars ($1,000,000) per episode. 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 non-proprietary document format.
(I) Unlawful harassment policy. Applicant shall submit company's written policy against unlawful harassment as set forth in sections 17053.98(g)(2)(A)(ix) and 23698(g)(2)(A)(ix) of the Revenue and Taxation Code.
(J) 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.
(K) 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) A diversity workplan as described in section 5534.
(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 their 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.
(e) Upon approval of an applicant's Phase B submission, a CAL, Form SD (August 12, 2022), hereby incorporated by reference, shall be issued to the applicant indicating the amount of tax credits allocated. The amount of tax credits allocated may be reduced prior to issuance of the final tax credit certificate based on the Soundstage AUP and the applicant's submissions following completion of the qualified motion picture and CFC verification of such submissions as compared to the criteria for the Program. The applicant may never receive more tax credits than as provided on the CAL and in no event more than the cap sum specified in sections 17053.98(k)(8)(B) and 23698(k)(8)(B) of the Revenue and Taxation Code.
(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 (2) and subparagraphs (E) and (K) of paragraph (8) of subdivision (d) of this section.
3. An updated production schedule, required pursuant to subparagraph (B) of paragraph (3) of subdivision (d) 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.
(f) An applicant that begins principal photography in California prior to receiving a CAL shall be disqualified from receiving such letter for that particular production.
(g) An applicant shall not submit a duplicate application for a project. Submittal of duplicate applications will disqualify an applicant from the tax credit program.
(1) Submitting an application for an allocation of credits under the California Film and Television Tax Credit Program 3.0 or its successor programs simultaneously with an application for an allocation of tax credits under the California Soundstage Filming Tax Credit Program shall constitute a "duplicate application."
(2) Submitting an application for an allocation of credits under the California Soundstage Filming Tax Credit Program for a project that has applied for but has confirmation that it is not receiving credits under the California Film and Television Tax Credit Program 3.0 or its successor programs for the project shall not constitute a "duplicate application."
(h) 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 allocation for that particular production.
(i) Any expenditures for services, wages, or goods incurred prior to the date of CAL issuance shall not be considered qualified expenditures with the exception of production facility, office rentals, completion bonds and insurance premiums, which are permitted on a prorated basis, to include the expenditures which are incurred on or after CAL issuance.
(j) An applicant of a television series shall submit one application for a season of that television series. A television series with an order for additional episodes for the same season may submit an additional application for the additional episodes, however, the season as a whole shall be subject to the credit allocation cap.
(k) Within thirty (30) business days of receipt of the completed application and all supporting documents required pursuant to this section and section 5534, the Director of the CFC, or their designee, will notify the applicant whether its Phase B submission is approved or rejected.
(1) If revisions to the diversity workplan required pursuant to section 5534 are required, the re-submission of the amended document pursuant to subdivision (c) of section 5534, will count as the application date for purposes of the timeframe specified in subdivision (k) above and for purposes of determining the order of applications received by the CFC.
Note: Authority cited: Sections 17053.98(k)(10) and 23698(k)(10), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98(k)(1)-(5), 17053.98(k)(8), 17053.98(k)(10), 17053.98(a), 17053.98(b), 17053.98(g), 23698(k)(1)-(5), 23698(k)(8), 23698(k)(10), 23698(a), 23698(b) and 23698(g), Revenue and Taxation Code; and Section 14998.1, Government Code.
Note: Authority cited: Sections 17053.98(k)(10) and 23698(k)(10), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98(k)(1)-(5), 17053.98(k)(8), 17053.98(k)(10), 17053.98(a), 17053.98(b), 17053.98(g), 23698(k)(1)-(5), 23698(k)(8), 23698(k)(10), 23698(a), 23698(b) and 23698(g), Revenue and Taxation Code; and Section 14998.1, Government Code.
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