The Georgia Film Tax Credit
With apologies to David Letterman and annoying know-it-alls, here are the top 10 things you didn’t know about the Georgia film tax credit:
#1: The State wants people to buy film tax credits. You are not getting into a dodgy tax shelter, but rather participating in a public-private partnership where you are helping the state attract economic development from the entertainment industry by purchasing their otherwise unusable tax credits. The tax credits are expressly intended to be transferrable by statute. Tell your neighbors.
#2: Anyone can purchase these tax credits to reduce their Georgia income tax liability. Many accounting firms can refer you to brokers who help film, television, and digital gaming companies sell their tax credits to individual and corporate buyers. Many brokers/sellers have no minimum purchase price so buying these credits is not just for large corporations and high-income individuals. Transaction costs are low.
#3: By buying these credits, you are creating lots and lots of jobs in Georgia. According to figures provided by the Georgia Department of Economic Development, the entertainment industry had a $9.5 billion economic impact on Georgia and was responsible for over 92,000 jobs in the state in the fiscal year 2017. Film and television companies based outside Georgia, or who aren’t yet profitable, can’t use their income tax credits here, so they can only benefit if buyers purchase their tax credits.
#4: By buying these credits, you are creating a lot of investment in the state from companies that don’t even get the benefit of the loans. As a result of the incentive program, there has been massive investment in motion picture studio complexes in Georgia rivaling those located in Los Angeles, including Pinewood Atlanta Studios, the largest motion picture studio complex in North America. Motion picture sound stages, lighting companies, equipment vehicle rental companies and other vendors that support the entertainment industry can’t claim film tax credits, so we as a state are getting them for free as tag-along.
#5: Buying the credits allows for limited time travel (for tax purposes). You can purchase tax credits for prior tax years. When you do so, it is like you went back in time and made an additional estimated tax payment for that year for most tax purposes. You can go back up to three tax years.
#6: The credits don’t just support filmmaking. In addition to filmmaking, Georgia has transferable tax credits for making television shows and pilots, television sizzle reels, television commercials, digital games, music videos, and for postproduction and visual effects.
#7: Producers can use the credits for soft money up front. Some lenders will advance funds against a production’s tax credits up front, so you don’t have to raise all of the production budgets. Most of these lenders will want a completion bond and other financing in place first.
#8: When you buy the credits, you are becoming a film financier. You are indirectly financing a portion of film and television production in the state when you purchase film tax credits. Arguably, this should make you more interesting at cocktail parties. Please don’t feel like you have to dress the part though.
#9: The credits are helping content creators in Georgia. The boom in entertainment production and the need for experienced hires has led to the creation of the Georgia Film Academy, a joint educational program of the Georgia university system and local technical schools, as well as the expansion of film schools across the state (including the creation of the multi-million-dollar Creative Media Industries Institute at Georgia State). These schools are churning out future content creators. Also, many producers and showrunners are working here so much they are moving to the state.
#10: Please don’t refer to our entertainment industry as “Y’allywood” or “Hollywood of the South.” Although still dependent on film and television production from outside the state, our native entertainment industry is reaching critical mass and is not derivative of anybody, thank you.