(a) Within 48 months of the 30-month completion deadline for the qualified motion picture, as specified in subdivision (c), every applicant allocated tax credits under the California Film and Television Tax Credit Program 3.0 shall do one of the following:
(1) Submit the documents specified in this section, in an electronic format and/or hardcopy, as directed by the CFC; or,
(2) Submit a written notice to the CFC stating that they will not be requesting certification for the allocated credits; or,
(3) An applicant with insufficient tax liability to initiate the process at the timeframe set in subdivision (a) above can request an extension in writing.
(A) 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 paragraph (B) below and submits a statement of insufficient tax liability to initiate use of the allocated tax credits.
(B) The applicant shall request an extension no less than thirty (30) business days prior to the expiration of the timeline specified in subdivision (a) above or prior to the expiration of a previously approved extension for the request to be considered by the CFC.
(4) Failing to comply with the requirements of this subdivision shall constitute forfeiture of an applicant's allocated tax credits.
(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 as set forth on the CFC website. The applicant shall revise any contact information changes in the application portion of the CFC website including the CPA firm performing the Agreed Upon Procedures (AUP).
(A) Section 1. Applicant Information. The on-line application will automatically generate the applicant information. Input copyright registration number and seller's permit number, if applicable.
(B) Section 2. Contact Information. The on-line application will automatically generate the 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 Local Community Expenditure Report Form LE3. (Rev. July 28, 2023), incorporated by reference, for each county outside of Los Angeles county if applicable.
(E) Section 5A. Production and Financial Statistics. Provide total number of cast, base crew, extras and stand-in man days, residents and non-residents, CA Vendors, 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 and/or bonus points (excludes independent films with qualified expenditure budgets of ten million dollars ($10,000,000) or less).
(G) Section 5D. Total California music scoring/recording wages eligible for bonus points (excludes independent films with qualified expenditure budgets of ten million dollars ($10,000,000) or less).
(H) Section 5H. Subject to self-reported voluntary information, include separate listings regarding the ethnicity and gender statistics of all individuals that received qualified wages (excluding background performers) and all individuals that received non-qualified wages.
(I) Section 6. Career Readiness and Pilot Skills Training Program. (i) Verification of fulfillment of career readiness requirement utilizing one of the required forms CR1, CR2, CR3, CR4, CR5 (Rev. July 28, 2023), incorporated by reference. If applicable, verify submission of career readiness payment. (ii) Verification of pilot skills training program contribution with date paid and amount, utilizing required form CPP (New. July 28, 2023), hereby incorporated by reference.
(J) Section 7. Uplifts and Bonus Points (as per AUP findings)
(i) Out of zone Uplift. (Non-Independent productions only)
1. Enter total out of Los Angeles zone wages excluding Local Hire Labor (applicable period).
2. Enter total out of Los Angeles zone non-wages (applicable period) excluding the total consumables;
3. Enter total non-wage expenditures totally consumed outside Los Angeles Zone (applicable period).
4. Total out of Los Angeles zone uplift amount is calculated.
(ii) Local hire labor uplift: Total of out of zone local hire labor eligible for uplift.
(iii) Visual Effects (VFX) uplift and/or bonus points (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 and/or additional bonus points.
(iv) Total music wages eligible for bonus points (excludes independent films with qualified expenditure budgets of ten million dollars ($10,000,000) or less).
(v) Total additional tax credit: The online application will automatically calculate the following: The total out of Los Angeles zone amount (non-Independent productions only) and total California VFX amount and total local hire labor amount 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 productions and by .05 for Independent Films and Relocating Television Series.
(K) Section 8. Credit Amount. As per the findings of the CPA performing the AUP, 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 will be automatically calculated by the on-line application.
(L) Section 9. Jobs Ratio and Final Tax Credit. The online application automatically calculates the Jobs Ratio and the percentage change from the CAL jobs ratio amount. If there is an overstatement, the penalty will be indicated. The final credit amount indicated will be the least of the CAL amount, the adjusted credit amount or the Amount with Penalty.
(M) Section 10. Signature certification. Print the Expenditure Summary Report. 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 his or her knowledge or at least the knowledge of what would be expected of a reasonable person in the same capacity. Submit to the CPA performing the AUP.
(6) An agreed upon procedures report in compliance with the Program 3.0 AUP dated September 27, 2023, hereby incorporated by reference. The agreed upon procedures 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) Successful completion of a California Film Commission Orientation Meeting for CPAs performing Agreed Upon Procedures for the California Film and Television Tax Credit Program 3.0. The frequency of training shall be offered on an as needed basis as determined by the CFC.
(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 5525 (a)(4).
(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) of the Revenue and Tax Code. Updated information as per Section 5521(k)(11) is also required.
(12) Documentation verifying that the applicable fee was paid by the qualified taxpayer to fund a pilot career pathways technical skills training program.
(c) The production shall be completed within 30 months from the issuance date of the CAL 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. The CFC shall approve or disapprove the request for the tax credit certificate.
(f) 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.
(g) Upon approval, the tax credit certificate, CFC Form M3 (New. June 25, 2019), hereby incorporated by reference, shall be issued to the applicant beginning on July 1, 2020. 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.
Credits
Note: Authority cited: Section 17053.98(a), 17053.98(d), 17053.98(e), 17053.98(f), 23698(a), 23698(d), 23698(e) and 23698(f), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98 and 23698, Revenue and Taxation Code; and Section 14998.1, Government Code.
History
1. New section filed 7-1-2020; operative 7-1-2020 pursuant to Government Code section 11343.4(b)(3) (Register 2020, No. 27).
2. New subsections (a)-(a)(4), subsection relettering and amendment of newly designated subsections (b), (b)(3), (b)(5)(D), (b)(5)(I) and (b)(6) filed 12-22-2023; operative 12-22-2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 51).
This database is current through 4/26/24 Register 2024, No. 17.
