Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Upon
completion of construction or renovation of the soundstage or soundstages that
comprise the certified studio construction project, the soundstage or soundstages
shall be continuously operated, maintained, and repaired in accordance with and by a
workforce as specified in sections
17053.98(k)(13)
and
23698(k)(13)
of the Revenue and Taxation Code
(1) The workforce
must fulfill the requirements of either paragraph (A) or paragraph (B) below, as
applicable:
(A) If the workforce is employed,
directly or through a motion picture payroll services company, by the owner of the
soundstage or its affiliates or by the Phase B applicant leasing the soundstage, the
workforce must be paid at least the general prevailing rate of per diem wages for
the type of work and geographic area, as referenced in sections
17053.98(k)(13)(A)(i)
or
23698(k)(13)(A)(i)
of the Revenue and Taxation Code.
(B) If
the workforce is employed by, and services are provided through a third-party
vendor, the workforce must be a skilled and trained workforce as defined in Chapter
2.9 (commencing with Section
2600) of
Part 1 of Division 2 of the Public Contract Code.
(2) For purposes of this section, "continuously
operated, maintained, and repaired" means ongoing services performed within a
soundstage, or externally, if structural, that keep the soundstage in a state fit
for operation and use. This includes but is not limited to, non-production related
janitorial and security services inside the structure, internal and external
structural upkeep, and soundstage systems maintenance and repairs.
(b)
(1) To certify that the soundstages that are part
of a certified studio construction project meet the requirements set forth in
Revenue and Taxation Code sections
17053.98(k)(13)
and
23698(k)(13),
the applicant must annually provide one or several third-party Soundstage Workforce
Reports, as specified in paragraph (2) of this subdivision, performed by an approved
CPA firm, which meets the requirements specified in subparagraph (A) of paragraph
(1) of this subdivision, documenting compliance with the requirements of the
California Soundstage Filming Tax Credit Program.
(A) The public accounting firm performing the
Soundstage Workforce Report for an applicant shall provide documentation that a peer
review was administered by the American Institute of Certified Public Accountants
("AICPA") National Peer Review Committee ("NPRC") within the last three years and
that the peer review resulted in a rating of "Pass." This documentation shall
include the firm's most recent peer review report and the acceptance of that report
by the NPRC.
1. An applicant may use the same
accounting firm and the same certified public accountant for the Soundstage
Workforce Report as the applicant used for the Certified Studio Construction Project
Verification Report specified in section
5532. However, the same public
accounting firm is not permitted to perform the Agreed Upon Procedures report
required pursuant to section
5540 for a Phase B applicant filming on
a soundstage or soundstages approved as part of a Certified Studio Construction
Project for which the public accounting firm is providing or has provided services
related to Phase A.
(2) The applicant must provide one annual report
for each Phase B qualified motion picture project filming on the soundstage or
soundstages that make up the certified studio construction project during the year
under review. The report for one Phase B qualified motion picture project must
include all soundstages utilized by that project during the year under review.
(A) The required information for a soundstage that
is in use by more than one Phase B project shall be included in all relevant
workforce reports and count toward the total sums of all the individual reports in
which it is included.
(B) If the
certified studio construction project includes one or more certified soundstages
that have not been in use by any Phase B qualified motion picture project allocated
tax credits under the California Soundstage Filming Tax Credit Program during the
year under review, those unused soundstages shall be grouped together in one
report.
(3) Each annual
report must evidence that the applicant met its statutory obligations, including the
percentages as stipulated in sections
17053.98(k)(13)(C)
and
23698(k)(13)(C)
of the Revenue and Taxation Code.
(A) Each report
shall include:
1. The total amount of payments to
third-party vendors or qualified wages for operation, maintenance, and repair of the
certified soundstage.
2. The amount, and
percentage of the total amount, of payments to third-party vendors or qualified
wages for operation, maintenance, and repair of the certified soundstage performed
by each workforce described in subparagraph (a) of this section.
(B) If the percentage paid to workers
employed directly or through a motion picture payroll services company, as described
in 5538(a)(1)(A), is certified to be 90 percent or more of the total amount listed
pursuant to 5538(b)(3)(A)1. the Phase B applicant shall be entitled to 100 percent
of the applicable credit issued for the period.
(C) If the percentage paid to workers employed
directly or through a motion picture payroll services company, as described in
5538(a)(1)(A), is certified to be less than 90 percent of the total amount listed
pursuant to 5538(b)(3)(A)1. but greater than or equal to 75 percent of that amount,
the Phase B applicant shall be entitled to 50 percent of the applicable credit
issued for the period.
(D) If the
percentage paid to workers employed directly or through a motion picture payroll
services company, as described in 5538(a)(1)(A), is certified to be less than 75
percent of the total amount listed pursuant to 5538(b)(3)(A)1. the Phase B applicant
shall not be entitled to any credit issued for the period.
(4) Annual reports are required:
(A) Throughout the certified studio construction
project's period of certification; or,
(B) Until the total amount of credits authorized
under Revenue and Taxation Code sections
17053.98(k)
and
23698(k)
has been allocated by the CFC, if that occurs prior to the timeframe outlined in
paragraph (A) above; or,
(C) Throughout
the production period of any Phase B project allocated credits under the California
Soundstage Filming Tax Credit Program and filming on a certified soundstage or
soundstages that is part of the certified studio construction project, if that
extends beyond the timeframes outlined in paragraph (A) or paragraph (B)
above.
(5) Each annual
Soundstage Workforce Report must be submitted to the California Film Commission no
more than thirty (30) calendar days after the anniversary date of the issued
Soundstage Certification Letter or Letters, Form SCL (August 12, 2022), hereby
incorporated by reference, for the soundstage or soundstages included in the report.
(A) Applicants shall submit the report or reports
electronically to SoundstageIncentive@film.ca.gov.
(6) A Phase A applicant who leases a certified
studio construction project in its entirety and for the duration of the period of
certification to a producer of qualified motion pictures and who has delegated all
operation, maintenance, and repairs of the soundstages in the certified studio
construction project to that producer may also delegate the responsibility of
submitting the annual Soundstage Workforce Report to that same entity.
(A) The declaration of delegated responsibility
must be made by the Phase A applicant in writing on company letterhead and submitted
to the CFC.
(B) The declaration of
delegated responsibility must include as an attachment a statement of accepted
responsibility, on company letterhead, signed by a representative of the entity to
which the responsibility is delegated.
(C) The declaration of delegated responsibility
and statement of accepted responsibility must be submitted within ninety (90)
calendar days following certification of the studio construction project.
(c) Pursuant to subdivision
17053.99(b)(2)(E) of the Revenue and Taxation Code, if not all contractors and
subcontractors performing work on the Phase A Certified Studio Construction Project
are subject to a project labor agreement that requires compliance with the skilled
and trained workforce requirement, copies of monthly reports demonstrating
compliance with Chapter 2.9 (commencing with section
2600) of
Part 1 of Division 2 of the Public Contract Code are required to be submitted while
the project or contract is being performed.
(1) An
applicant required to submit copies of monthly compliance reports in accordance with
this subdivision shall submit them to the CPA firm engaged by the applicant to
verify compliance with the Soundstage Filming Tax Credit Program.
(d) If the Phase A applicant and the
Phase B applicant are separate entities, the Phase A applicant is required to
fulfill approved applicant responsibilities for a soundstage or soundstages on which
a Phase B applicant films its qualified motion picture project and shall furnish the
Phase B applicant with any certified studio construction project information that
may impact the application process or the tax credit certification process for the
Phase B applicant or that is necessary for the Phase B applicant to fulfill its
requirements and responsibilities.
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), 17053.98(k)(13), 17053.99(b), 23698(k)(1) and
23698(k)(13), 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),
17053.98(k)(13),
17053.99(b),
23698(k)(1)
and
23698(k)(13),
Revenue and Taxation Code; and Section
14998.1,
Government Code.
