California Code of Regulations
Title 10 - Investment
Chapter 7.75 - California Film Commission
Article 4 - California Soundstage Filming Tax Credit Program
Section 5540 - Credit Certificate Issuance Process - Phase C
Universal Citation: 10 CA Code of Regs 5540
Current through Register 2024 Notice Reg. No. 52, December 27, 2024
(a)
(1) Within 48 months of the date of the
30-month completion deadline for the qualified motion picture, as specified in
subdivision (c), every applicant allocated tax credits under the California
Soundstage Filming Tax Credit Program shall do one of the following:
(A) Submit the documents specified in this
section, in an electronic format and/or hardcopy, as directed by the CFC;
or,
(B) Submit a written notice to
the CFC stating that they will not be requesting certification for the
allocated credits; or,
(C) For an
applicant with insufficient tax liability to initiate the process at the
timeframe set in paragraph (1) above, request an extension in writing.
1. 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 clause 2. below and submits a statement of insufficient tax liability to
initiate use of the allocated tax credits.
2. The applicant shall request an extension
no less than thirty (30) business days prior to the expiration of the timeline
specified in paragraph (1) above or prior to the expiration of a previously
approved extension for the request to be considered by the CFC.
(D) Failing to comply with the
requirements of this paragraph shall constitute forfeiture of an applicant's
allocated tax credits.
(2) Within the timeframe specified in
paragraph (1) above, after an applicant's Phase A and B submissions are
approved by the CFC, and the qualified motion picture has been produced and the
final element has been created, the applicant may proceed to submit the
documentation described in this section along with the diversity report
described in section
5537 and the CFC's approval or
rejection of that report. The CFC shall not certify any tax credit until it has
received a final diversity report from the Phase B applicant and has determined
that the Phase A applicant that owns the certified soundstage or soundstages on
which the qualified motion picture project is filmed has complied with the
annual workforce certification requirements in section
5538 for that soundstage or
soundstages.
(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 information as
set forth below. The applicant shall ensure that all contact information
provided is correct and up to date.
(A)
Section 1. Applicant Information, including the applicant entity, type of
entity, taxpayer ID, address(es), phone number(s), contact person(s) and their
title(s), parent company information (if applicable), CPA information. Input
copyright registration number and seller's permit number, if
applicable.
(B) Section 2. 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 Soundstage Local Community Expenditure Report Form (July
28, 2023), hereby incorporated by reference, for each county outside of Los
Angeles County if applicable. Provide PP stage shooting days in total and PP
stage shooting days on the soundstage or soundstages certified as part of the
certified studio construction project from Phase A.
(E) Section 5A. Production and Financial
Statistics. Provide total number of cast, base crew, extras and stand-in man
days, residents and non-residents, number of outside zone local
hires.
(F) Section 5B&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 (excludes independent films with
qualified expenditure budgets of ten million dollars ($10,000,000) or
less).
(G) Section 5D. Subject to
self-reported voluntary information, include separate listings regarding the
ethnicity and gender statistics of all individuals that received qualified
wages and all individuals that received non-qualified wages.
(H) Section 6. Career Readiness and Pilot
Skills Training Program.
1. Verification of
fulfillment of career readiness requirement utilizing one of the required forms
for Soundstage Career Readiness verification, Forms SCR1, SCR2, SCR3, SCR4, and
SCR5 (March 11, 2022), hereby incorporated by reference. If applicable, verify
submission of career readiness payment.
2. Verification of payment of 0.5 percent of
the approved credit amount to the Career Pathways Training Program with date
paid and amount, utilizing required Form SCPP (July 28, 2023), hereby
incorporated by reference.
(I) Section 7. Uplifts (as per Soundstage AUP
findings)
1. Out of zone Uplift.
(Non-independent films only)
(i) Enter total
out of Los Angeles zone wages excluding Local Hire Labor (applicable
period).
(ii) Enter total out of
Los Angeles zone non-wages (applicable period) excluding the total
consumables.
(iii) Enter total
non-wage expenditures totally consumed outside Los Angeles Zone (applicable
period).
(iv) Calculate total out
of Los Angeles zone uplift amount.
2. Local hire labor uplift: Total of out of
zone local hire labor eligible for uplift.
3. 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.
4. Total
additional tax credit: Calculate the following: The total out of Los Angeles
zone amount (non-independent films only) and total California VFX amount and
total local hire labor amount which is eligible for an additional tax credit.
(i) Multiply total out of zone amounts by
.05
(ii) Multiply total VFX amount
by .05
(iii) Multiply total Local
Hire Labor amount by .10 for Non-Independent Films and by .05 for Independent
Films and Relocating Television Series
(iv) (Calculate total additional amount of
(i) + (ii) + (iii) above)
5. Total Diversity Goals Potential Increase:
Calculate based on the CFC-approved percentage point increase, up to four
percent for meeting or making a good faith effort to meet the diversity goals
in the applicant's diversity workplan, as evidenced by the applicant's
CFC-approved diversity report.
(J) Section 8. Credit Amount. As per the
findings of the CPA performing the Soundstage AUP report, 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, subject to verification and to the
cap sum specified in sections
17053.98(k)(8)(B)
and
23698(k)(8)(B)
of the Revenue and Taxation Code.
(K) Section 10. Signature certification. 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 their knowledge or at least the knowledge of
what would be expected of a reasonable person in the same capacity.
(6) An AUP report in compliance
with the Soundstage AUP. The Soundstage AUP 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) The same public
accounting firm is not permitted to perform the Soundstage AUP report required
pursuant to this section if it is providing or has provided services related to
Phase A for the soundstage or soundstages where the Phase B qualified motion
picture is being produced, such as the Certified Studio Construction Project
Verification Report required pursuant to section
5532 or the annual soundstage
workforce report required pursuant to section
5538.
(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
5536.
(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)
and
23698(g)(3)(C)(i)(I)
of the Revenue and Taxation Code. Updated information as per section
5533(d)(8)(K) is
also required.
(12) Documentation
verifying that the required fee was paid by the qualified taxpayer to fund the
Career Pathways Training Program.
(c) The production shall be completed within 30 months from the issuance date of the CAL, Form SD (August 12, 2022), hereby incorporated by reference 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.
(f) The CFC shall approve or disapprove the request for the tax credit certificate, Form SM (August 12, 2022), hereby incorporated by reference.
(1) 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.
(2) Upon approval, the tax credit certificate
shall be issued to the applicant.
(A) 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: 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(k)(13), 17053.98(b), 17053.98(c), 17053.98(d), 17053.98(e), 17053.98(g), 17053.98(i), 23698(k)(1)-(5), 23698(k)(8), 23698(k)(10), 23698(k)(13), 23698(b), 23698(c), 23698(d), 23698(e), 23698(g) and 23698(i), 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(k)(13), 17053.98(b), 17053.98(c), 17053.98(d), 17053.98(e), 17053.98(g), 17053.98(i), 23698(k)(1)-(5), 23698(k)(8), 23698(k)(10), 23698(k)(13), 23698(b), 23698(c), 23698(d), 23698(e), 23698(g) and 23698(i), Revenue and Taxation Code; and Section 14998.1, Government Code.
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