Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 20 - TAX CREDITS/DEDUCTIONS
Part 5 - Rules and Regulations for the Certification of Motion Picture Production Tax Credits (280-RICR-20-20-5)
Section 280-RICR-20-20-5.5 - Definitions

Universal Citation: 280 RI Code of Rules 20 20 5.5

Current through September 18, 2024

A. "Above-the-line person" means a motion picture director, writer, producer or featured actor. Motion picture directors, writers, producers, featured actors and their fees are grouped within the "pre-production," "production" and/or "post-production section of a typical motion picture budget, above a solid, bold line, separating these few "above-the-line" persons from the majority of the "below-the-line" crew, other production and post-production expenses.

B. "Accountant's certification" means a certified audit by a Rhode Island certified public accountant licensed in accordance with R.I. Gen. Laws § 5-3.1-5.

C. "Act" means R.I. Gen. Laws Chapter 44-31.2, as amended.

D. "Alternative distribution method" for the purposes of the production tax credit means an executed agreement among all participants of a pass-through entity, or among all owners of a motion picture having multiple owners, setting forth the method for allocation of the motion picture production tax credit agreed upon by and among the participants or co-owners. An alternative distribution method may include, without limitation, a partnership agreement, an operating agreement of a limited liability company, a shareholders agreement, or any other instrument executed by all participants or co-owners.

E. "Amended production" means one additional separate and distinct application that is allowable for the same production for purposes such as "re-shoots", "retakes", added scenes or any additional production expenditures incurred and paid within the State of Rhode Island (but not previously included in the cost report) provided that the motion picture has already met the conditions required for, and has already been approved for final certification by the film office and the Division of Taxation. The amended application must individually meet the statutory requirements for a state certified production including, but not limited to, a total production budget of a minimum of one hundred thousand dollars ($100,000). The additional production expenditures shall be included in a separate cost report, require a separate accountant's certification, and be subject to a separate review by the Division of Taxation.

F. "Applicant" means a motion picture production company domiciled in Rhode Island, which is a corporation, partnership, limited partnership, or other entity or individual, submitting an application to the film office and the Division of Taxation for initial or final certification of a production.

G. "Application year" means within the calendar year the motion picture production company files any application for the tax credit.

H. "Certificate of motion picture production tax credit" means a certificate issued by the Division of Taxation, which states the amount of the motion picture production tax credit for which the production has qualified. A motion picture production company is prohibited from using State funds, State loans or State guaranteed loans to qualify for the motion picture tax credit. The certificate shall include, but not be limited to, the following information: specific and unique certificate number, name and address of the approved applicant, name of the state certified production, name of the qualified film to which the credit applies, date on which production completed, date of final certification by the Division of Taxation, the name and taxpayer identification number of production company that incurred and paid state certified Rhode Island production expenditures, total amount of state certified Rhode Island production expenditures, name of initial holder of this certificate, taxpayer identification number of initial holder of this certificate, and amount of credit allocated to initial holder of this Certificate.

I. "Completion of a production" means the date of completion of a motion picture's production in the State of Rhode Island as certified to the film office and the Division of Taxation as part of the production's cost report.

J. "Costs"

1. include, but are not limited to, the following pre-production, production and post-production expenses which shall qualify when incurred within the State of Rhode Island and paid to a qualified vendor:
a. set construction, set dressing and operation - labor and materials provided by a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island;

b. wardrobes, make-up, accessories, props, expendables, supplies and related services;

c. costs associated with photography and sound synchronization, lighting, and related services and materials including animation costs - labor and materials provided by a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island;

d. editing and related services including, but not limited to, film processing, transfers of film to tape or digital format, sound mixing, computer graphics services, special effects, and animation services - provided the work is performed or procured in the state of Rhode Island;

e. salary, wages, and other compensation, including related benefits paid by the employer for health insurance, pension/retirement benefits, and life insurance of persons employed, either directly or indirectly, in the production of a film including, but not limited to, writer, actor, motion picture director, and producer (provided the work is performed in the State of Rhode Island);

f. rental of facilities, site locations, including preparation, security, clean-up and equipment located and procured in the State of Rhode Island;

g. leasing of vehicles from a qualified vendor where the vehicles are actually and physically delivered, provided, supplied, consumed or used within Rhode Island;

h. costs of food and lodging - procured or performed by a qualified vendor where the food and lodging are actually and physically provided, delivered, supplied, consumed or used within Rhode Island;

i. music, if performed, composed, or recorded by a Rhode Island musician, or released or published by a person domiciled in Rhode Island;

j. travel expenses incurred to bring persons employed, either directly or indirectly, in the production of the film to Rhode Island (but not expenses of such persons departing from Rhode Island); and

k. legal (but not expense of completion bond or insurance) and accounting fees and expenses related to the production's activities in Rhode Island provided such services are provided by Rhode Island licensed attorneys or accountants.

2. costs that do not qualify as state certified production costs, include without limitation, the following:
a. any salaries, wages, and other compensation, including related benefits to individuals who are performing services outside the State of Rhode Island;

b. any travel expenses for persons departing from the State of Rhode Island;

c. any expense attributable to a completion bond;

d. insurance expenses, including workers' compensation insurance and temporary disability insurance;

e. any cost associated with the promotion or marketing of the production including premier showings, special screenings and advertising;

f. costs that were not incurred in Rhode Island;

g. costs that have not been paid at the time of the application for final certification;

h. costs which have not been the subject of the Rhode Island accountant's certification;

i. bank fees or charges;

j. federal and state withholding tax amounts;

k. payments to the Rhode Island Secretary of State's office;

l. payments to the Rhode Island Division of Taxation, including, but not limited to, payments for tax filings, letter of good standing requests, and audits conducted under R.I. Gen. Laws Chapter 44-31.2;

m. payments to the Rhode Island film office;

n. expenses incurred for the preparation of the cost report;

o. payments made to a nonqualified vendor;

p. costs incurred prior to filing a completed initial certification application with the film office; and

q. costs that are not arms-length transactions.

3. In the case where props and other production assets, with a cost of more than two thousand five hundred dollars ($2,500), are purchased, created or acquired for a Rhode Island production and kept in inventory for future use, there must be deducted from the cost incurred in Rhode Island the fair market value of the assets remaining after initial use in Rhode Island. The fair market value shall be attested to by an independent appraiser in a manner prescribed by the director of the Rhode Island film office in conjunction with the Rhode Island Division of Taxation.
a. Example:
(1) A prop is purchased from a qualified vendor for use in a production in the State of Rhode Island at a cost of $5,000 and placed in storage at the end of production. The fair market value of the prop at the end of production is certified to be $4,000 by an independent appraiser. For purposes of the cost report, only the $1,000 value consumed during production will be allowed.

K. "Costs incurred within the state" means, in the case of tangible property, which is acquired from or through a qualified vendor will constitute a cost incurred within the State of Rhode Island where goods and materials are actually and physically provided, supplied, consumed or used within Rhode Island and, in the case of services, shall mean services performed within the State of Rhode Island.

1. Examples
a. Wardrobe purchased or rented from a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island will constitute a cost incurred within the state. However, wardrobe purchased or rented from a non-qualified vendor and shipped to Rhode Island will not constitute a cost incurred within the state.

b. Catering expenses and services provided by a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island will constitute a cost incurred within the state. However, catering services rendered outside of Rhode Island or by a non-qualified vendor will not constitute a cost incurred within the state.

c. Props purchased or rented from a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island will constitute a cost incurred within the state. However, props acquired from a non-qualified vendor or created outside of Rhode Island will not constitute a cost incurred within the state.

d. Set construction materials, such as lumber and steel, purchased or rented from a qualified vendor where the labor and materials are actually and physically provided, supplied, consumed or used within Rhode Island will constitute a cost incurred within the state. However, materials acquired from a non-qualified vendor or constructed outside of Rhode Island will not constitute a cost incurred within the state.

e. Shipping expenses incurred to send materials and supplies to Rhode Island will constitute a cost incurred within the state. However, shipping expenses for materials and supplies shipped from Rhode Island to an out of state location will not constitute a cost incurred within the state.

L. "Division of Taxation" means that office within the Department of Revenue that operates under the authority and direction of the tax administrator, pursuant to R.I. Gen. Laws § 44-1-1 et seq.

M. "Documentary production" means a non-fiction production intended for educational or commercial distribution that may require out of state principal photography.

N. "Domiciled in Rhode Island" means a corporation incorporated in Rhode Island or a partnership, limited liability company, or other business entity formed under the laws of the State of Rhode Island for the purpose of producing motion pictures, or an individual who is a domiciled resident of Rhode Island as defined in the R.I. Gen. Laws § 44-30-5. Such individual, corporation, partnership, limited liability company, or other entity, is subject to the General Laws of the State of Rhode Island including, but not limited to, R.I. Gen. Laws Chapters 44-11 and 44-30.

O. "Feature-length film" means a production intended for commercial distribution to a motion picture theater or directly to the home video market that has a running time of at least seventy-five (75) minutes in length.

P. "Film office" means an office within the Rhode Island State Council on the Arts that has been established in order to promote and encourage the locating of film and television productions within the State of Rhode Island. The office is also referred to within as the "Rhode Island film and television office."

Q. "Film office director" means the Director of the Rhode Island Film and Television Office.

R. "Final production budget" means and includes the total pre-production, production and post-production out of pocket costs incurred and paid in connection with the making of the motion picture. The final production budget excludes costs associated with the promotion or marketing of the motion picture.

S. "Inspection" means a visit by an authorized representative of the film office and/or the Division of Taxation to a property, including a set, a soundstage, a location or a production office for services performed in Rhode Island.

T. "Loan-out company" means and includes a corporation, partnership, limited liability company, S-corporation, association, nominee trust, or any other entity through which an artist or other person is loaned out to perform services for the motion picture production company. Regardless of structure, employees or other persons of such loan-out companies and the loan out company itself shall be subject to all applicable provisions of the Rhode Island personal income tax and any applicable payroll or other tax provisions. A loan-out company shall be registered with the Rhode Island Secretary of State and the Rhode Island Division of Taxation.

U. "Motion picture" means feature-length film, documentary production, video, television series, or commercial made in Rhode Island, in whole or in part, for theatrical or television viewing or as a television pilot or for educational distribution. Motion picture shall not include the production of television coverage of news or athletic events, nor shall it apply to any film, video, television series or commercial or production for which records are required under 18 U.S.C. § 2257, to be maintained with respect to any performer in such production or reporting of books, films, etc. with respect to sexually explicit conduct.

V. "Motion picture production company" means

1. a corporation, partnership, limited liability company, or other business entity, domiciled in Rhode Island, and engaged in the business of producing one or more motion pictures. Generally, the motion picture production company controls the state certified motion picture during production and is responsible for payment of the direct production expenses (including pre- and post-production), and is a signatory to the state certified motion picture's contracts with its payroll company and facility operators.

2. motion picture production company shall not mean or include:
a. any company owned, affiliated, or controlled, in whole or in part by any company or person which is in default:
(1) on taxes owed to the state; or

(2) on a loan made by the state in the application year; or

(3) on a loan guaranteed by the state in the application year; or

b. any company or person who has discharged an obligation to pay or repay public funds or monies by:
(1) filing a petition under any federal bankruptcy, or state receivership, or insolvency law against such company or person;

(2) having a petition filed under any federal bankruptcy, or state receivership, or insolvency law against such company or person;

(3) consenting to, acquiescing in, or joining in a petition named in §§ 5.5(V)(2)(b) ((1)) or ((2)) of this Part above;

(4) consenting to, acquiescing in, joining in the appointment of a custodian, receiver, trustee, or examiner for such company's or person's property; or

(5) making an assignment for the benefit of creditors, or admitting in writing or in any legal proceeding its insolvency or inability to pay debts as they become due.

W. "Participant" means a partner in a partnership, member of a limited liability company, shareholder of an S-corporation, a beneficial owner of a trust, or any other person having an interest in a pass-through entity.

X. "Pass-through entity" means a partnership, limited liability company, S-corporation, association, nominee trust, or any other entity, the tax attributes of which are passed through to the participants in such entity.

Y. "Post-production" means the final stage in a state certified motion picture's production after principal and ongoing photography is completed, including, but not limited to, editing, Foley recording, automatic dialogue replacement, sound editing, special effects, scoring and music editing, beginning and end credits, negative cutting, soundtrack production, the addition of sound/visual effects, dubbing, and subtitling. Advertising and marketing activities and expenses are not included in post-production.

Z. "Pre-production" means costs directly related to the production, which are incurred prior to the first day of principal photography for a state certified motion picture. For example, the establishment of a dedicated production office, the hiring of key crew members such as a unit production manager, line producer and location manager, and includes, but is not limited to, activities such as location scouting, hiring of crew, and execution of contracts with vendors of equipment and stage space.

AA. "Primary locations" means the locations within which

1. at least fifty-one percent (51%) of the motion picture's total principal photography days are filmed; or

2. at least fifty-one percent (51%) of the motion picture's final production budget is spent and at least five (5) individuals were employed by the production company during the production in this State; or

3. for documentary productions, the location of at least fifty-one percent (51%) of the total productions days, which shall include pre-production and post-production locations.

BB. "Principal photography and/or animation" means the filming and/or animation of major and significant portions of a state certified production that involves the lead actors and/or animators.

CC. "Qualified vendor" means any individual, partnership, corporation, limited liability company or other business entity that

1. provides goods and services in this state to a state certified motion picture during production;

2. maintains a place of business in Rhode Island;

3. is subject to Rhode Island taxation;

4. is registered with the Rhode Island Division of Taxation; and

5. is registered with the Rhode Island Secretary of State's office and is qualified to do business in Rhode Island.

DD. "Rhode Island film and television office" means an office within the Rhode Island Council on the Arts that has been established in order to promote and encourage the locating of film and television productions within the State of Rhode Island. The office is also referred to within as the "film office."

EE. "State certified production" means a motion picture production approved by the Rhode Island film and television office and produced by a motion picture production company domiciled in Rhode Island, whether or not such company owns or controls the copyright and distribution rights in the motion picture; provided that such company has either:

1. signed a viable distribution plan; or

2. is producing the motion picture; or
a. a major motion picture distributor; or

b. a major theatrical exhibitor; or

c. a television network; or

d. a cable television programmer; or

e. web-based streaming distribution.

3. Additionally, the production must be produced with the motion picture's "primary locations" being filmed within the State of Rhode Island and with a "total production budget" of a minimum of one hundred thousand dollars ($100,000).

FF. "State certified production costs" means any pre-production, production, and post-production cost directly attributable to activity within this state that a motion picture company incurs and pays to the extent that it occurs within the State of Rhode Island. The term refers to a production certified by the State of Rhode Island under the Act and should not be taken to infer that the State of Rhode Island is certifying the production costs. State certified production costs do not include costs paid for using State funds, State loans or State guaranteed loans to qualify for the motion picture tax credit.

GG. "Television pilot" means the initial episode produced for a proposed episodic television series. This category will include shorter formats which are known as "television presentation", a production of at least fifteen (15) minutes in length, produced for the purposes of selling a proposed television series, but not intended for broadcast.

HH. "Television series" which may also be known as "episodic television series" means a regularly occurring production, live action, animation or a combination of the two, intended in its initial run for broadcast on television, whether free or via subscription-based service, that has a running time of at least thirty (30) minutes in length (inclusive of commercial advertisement and interstitial programming).

II. "Total production budget" means and includes the motion picture production company's pre-production, production and post-production costs incurred for the production activities of the production company in Rhode Island in connection with the making of the state certified production. The budget shall not include costs associated with the promotion or marketing of the film, video, or television product; costs not incurred within Rhode Island; costs not paid; or costs provided by nonqualified vendors.

Disclaimer: These regulations may not be the most recent version. Rhode Island may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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