State-by-state production incentives

New York

New York State Governor’s Office for Motion Picture and TV Development
Pat Kaufman, Executive Director
pkaufman@empire.state.ny.us
t: (212) 803-2330
f: (212) 803-2339
www.nylovesfilm.com

Mayor’s Office of Film, Theatre, & Broadcasting
Katherine Oliver, Commissioner
info@film.nyc.gov
t: (212) 489-6710
f: (212) 307-6237
www.nyc.gov/film

New York State offers 30% below-the-line refundable tax credits of qualified New York expenditures for feature films and episodic television shows that do at least one day of their filming on qualified soundstages in New York State. $420 million per year (“Pool 2”) has been allocated through calendar year 2014, with no per-project caps. Up to $7 million per year of this total amount will be available to the newly created, separately administered NY State Post-Production credit.

NY State offers a below-the-line credit only; talent, producers, writers and directors do not qualify. The state website includes a detailed budget template, indicating specifically what is qualified.

There are now two types of eligible feature film and television productions, Level 1 (aka “independent” productions – defined in the law) and Level 2 productions.

A LEVEL 1 production is a qualified production that:

• Has a production budget of no more than $15 million, and
• Is being produced by a company in which no more than five percent of the beneficial ownership is owned, directly or indirectly, by a publicly traded entity.

A LEVEL 2 production is a qualified production that:

• Has a production budget over $15 million, or
• Is being produced by a company
  in which more than five percent of the beneficial ownership is owned, directly or indirectly, by a publicly traded entity.

There are three threshold requirements:

Facility Threshold refers to qualified costs incurred during and related to work at a production facility.

Location/Other Threshold refers to principal photography shoot days in NY State outside a production facility.

Post-Production Threshold refers to qualified costs directly related to post production.

A production must meet the facility threshold, but does not have to meet all three of the above thresholds, in order to participate in the program; the specifics of the threshold differ for Level 1 and Level 2 productions.

In New York City there will now also be two levels of Qualified Production Facilities (“QPF”), called Level 1 and Level 2 facilities. Level 2 productions filming on a QPF within the five boroughs of NY City ONLY, will have to use a Level 2 facility. (Level 2 productions may use any QPF outside of NYC.) For a complete list of Level 2 facilities please call 212-803-2330.

For a Level 1 feature film or television project to be eligible for the NY State tax credits, the production must satisfy the following:

1. Shoot at least one full day on a set built expressly for the production at a NY State QPF.
2. Any QPF located anywhere in NY State or City, whether is it called a Level 1 or Level 2 facility, will do for a Level 1 production.
3. At least 75% of the total of all expenses related to work (excluding post-production) done at all facilities anywhere utilized by the production must be related to work done at the QPF.

For a Level 2 feature film or television project to be eligible for the NY State tax credits, the production must satisfy the following:

1. Shoot on a set built expressly for the production on a stage located in a QPF;
2. If the QPF is located within the five boroughs of the City of New York, it must be a Level 2 QPF (if the QPF is located within NY State but outside NYC, there is no distinction and any QPF can be utilized by the Level 2 production)
3. At least 10% of the total principal photography shooting days spent in the production of a Level 2 qualified production (other than pilots) must be spent at the appropriate QPF; and
4. At least 75% of the total of all expenses related to work (excluding post-production) done at all facilities anywhere utilized by the production must be related to work done at the QPF.

Pilots are exempted from this 10% of principal photography days requirement, even if they are Level 2 productions, but pilots will still have to shoot one day at a Level 2 stage.

In the Location/Other threshold, there is no distinction between Level 1 and Level 2 productions; everything is the same for both types of production.

For location work, pre-production and all costs related to work other than post-production work done in New York outside the facility to be eligible, either:

1. At least 75% of all principal photography days shot on location outside the facility must be in NY State, or
2. The production must spend at least $3 million related to work at the QPF. (In which case, there is no percentage for location days).

If you have met the appropriate Stage filming requirement, and you meet one of these two thresholds, all costs related to stage filming, location filming, pre production and all below-the-line costs other than post production will qualify for the credit.

For post production costs to qualify;

• You must have met the Facility threshold.
• You must have met the Location/Other threshold and,
• At least 75% of the total of all qualified post production costs spent anywhere must be spent in
  NY State.

Note that in the calculation of thresholds, only qualified costs (as indicated by “Yes” on Form B) are counted, so costs for talent, music licenses/rights etc, which are not qualified costs, are not included and do not count against the 75%.

Specific end credits requirements have been made mandatory by the new law; failure to comply with the end credit requirements will result in rejection of the final application for the credit.

There are two ways a production can meet the end credit requirements. Either:

1. Include in the end credits of each qualified film “Filmed With the Support of the New York State Governor’s Office for Motion Picture and Television Development” and the New York © Film logo provided by the Film Office, or:
2. Include in each qualified film distributed by DVD, or other media for the secondary market, a New York promotional video approved by the Governor’s Office for Motion Picture and Television Development.

Prior to the issuance of a final Certificate of Tax Credit, every production will be required to provide proof of compliance with the end credit requirements in the form of a still shot, frame grab, edited DVD, or other materials which the Film Office may request.

It is not necessary to use vendors based in New York State; however, only purchases from vendors who have registered to collect and remit sales tax in NY State will qualify. To determine if a given individual or company is registered, get their NY State Sales Tax Vendor ID Number, and go to: https://www7b.nystax.gov/TIVL/tivlGateway, and enter the Vendor Tax I.D. number.

Both programs require productions to file New York state and city tax returns. New York state tax credits are payable over one year if less than $1 million, over two years (in equal 1/2 payments) if between $1 million – $5 million, and over 3 tax years (in equal amounts of 1/3) if greater than $5 million.

Credits earned under the program may be applied against the New York State taxes of the person or entity that owns or controls the applicable qualified film. If the person or entity is not able to use all or some credits during the year in which the credit is earned, that person or entity may get a refund from the State of New York of the unused amount of the credit.

These credits will be offered on a first-come, first-served basis. To apply for the credits, a production company will need to first notify the New York State Office for Motion Picture and Television Development. Separate from the increased incentive, New York provides a waiver of sales tax for most below-the-line expenses. To take advantage of this benefit, the producer must first become a registered vendor, by filling out Form DTF-17, which is available at www.nylovesfilm.com/tax.asp.