EMPLOYMENT / LABOR TAX CREDIT

The new law provides that until July 1, 2006, a motion picture production company is entitled to a tax credit for the employment of La. residents in connection with production of a nationally distributed motion picture, video, television series, or commercial made in Louisiana.

The credit is equal to 10% of the total aggregate payroll for residents employed in connection with such production when total production costs in Louisiana equal or exceed $300,000 but less than $1 million during the taxable year. The credit shall be equal to 20% of the total aggregate payroll for residents employed in connection with such production when total production costs in Louisiana equal or exceed $1 million during the taxable year.

Note: The term "total aggregate payroll" does not include the salary of any employee whose salary is equal to or greater than $1 million.

The credit may be applied to any income tax or corporation franchise tax liability applicable to the motion picture production company. Provides that if the motion picture production company is an entity not subject to income or franchise tax, the credit shall flow through its partners or members as follows:

(1) Corporate partners or members shall claim their share of the credit on their corporation income or corporation franchise tax returns.

(2) Individual partners or members shall claim their share on their individual income tax returns.

(3) Partners or members that are estates or trusts shall claim their share of the credit on their fiduciary income tax returns.

Any unused credit may be carried forward no more than 10 years from the date the credit was earned.

Eligibility

Ten Percent (10%) State Tax Credit:
A motion picture production company; and Production costs in Louisiana equal or exceed three hundred thousand dollars but less than one million dollars during the taxable year.

Twenty Percent (20%) State Tax Credit:
A motion picture production company; and Production costs in Louisiana equal or exceed one million dollars during the taxable year.

Amount of Credit
The credit is based on the total aggregate payroll of the employment of Louisiana residents.

Application Procedure
The Commission will provide a standard form which applicants will use to apply for tax credit. The application will contain, but not be limited to, detailed descriptions of the following:

1. Name of the production company;

2. Phone number of the production company;

3. Name and phone number of a company contact person;

4. List the first pre-production date through last production date in Louisiana;

5. Louisiana production office address

6. Louisiana production office phone number;

7. Total budget of the project;

8. Total expenditures in Louisiana;

9. The level of employment of Louisiana cast and crew; and

10. The script (including a synopsis); and principal creative elements list (principal cast, producer, and director).

Submission and Review Procedure
Applicants must submit their completed application to the director of the Louisiana Film and Video Commission. Submitted applications will be reviewed and evaluated by the director. Upon determination that an application meets the eligibility for this program, the director will send a certification letter to the production company and the Department of Revenue.

Use of the credit
Motion picture production companies that are corporations may apply the credit to their corporation's income tax or corporation franchise tax liability.

Motion picture production companies that are not subject to income or franchise tax may be claimed by the corporate partners or members on their corporation income or corporation franchise tax returns.

Individual partners or limited liability members may claim their share of the credit on their individual tax returns.

Partners or limited liability members that are estates must claim their share of the credit on their fiduciary income tax returns.

Unused Credit
Any unused credit may be carried forward no more than ten years from the date the credit was earned.

Reporting Requirements

· A completed expenditure/questionnaire report (form to be provided by the Commission).

· A final cast and crew list for the project.