Georgia Entertainment Tax Credits
By Bobby Hoffman
Perhaps you’ve seen movie cameras, crews, and even movie stars around town. Maybe you’ve wondered why so many studios would choose Georgia to film. It all comes down to one of life’s certainties: taxes.
Film, TV and digital entertainment tax credits of up to 30% create significant cost savings for companies producing feature films, television series, music videos and commercials, as well as interactive games and animation. Georgia’s Entertainment Industry Investment Act provides a 20% tax credit for companies that spend $500,000 or more on production and post-production in Georgia, either in a single production or on multiple projects. The state grants an additional 10% tax credit if the finished project includes a promotional logo provided by the state. If a company has little or no Georgia tax liability, it can transfer or sell its tax credits. (https://www.georgia.org/film-television-and-digital-entertainment)
Georgia Entertainment Tax Credits, which grew from $141 million in 2010 to an estimated $870 million in 2019, have been a policy mainstay over the past two Republican administrations. Governor Kemp recently bragged that Georgia remains “the Hollywood of the South,” pointing to $2.9 billion in direct spending from film and TV production in the state along with $9.5 billion in overall economic impact in 2018 and the creation of 92,000 jobs. However, recent political uncertainty and looming budget cuts to the $27 billion dollar state budget have some supporters worried. (https://www.ajc.com/blog/politics/analysis-georgia-film-and-incentives-could-become-part-2020-budget-battle/WChRc5e9JFmxjkMv3nJi4N/)
A paper published by J.C. Bradbury, a Kennesaw State University economist reports that the numbers being claimed by the state are inaccurate and that the tax credit impact is far less. On top of that a new challenge to the tax credit policy is emerging as some politicians would like to see a reduction in film production credits — the largest pot of tax incentives offered by the state — as a way of avoiding some of the serious cuts to the state budget ordered by the governor.
Regardless, “Here’s what can’t get lost in any consideration of the tax credit — tens of thousands of Georgians work in the state’s film and television production industry,” said Beth Talbert, the president of the Georgia Studio & Infrastructure Alliance.
Georgia’s film and TV tax credit system also has two unique features. First, there is no cap. The supply of tax forgiveness is endless and second, the tax credits are transferable. So even if the film company doesn’t need the tax credit, taxpayers remain on the hook. Bradbury, the KSU professor, explained it in his paper:
“Tax credits are transferred via private market brokers at a discount of approximately 10 percent,” he wrote. “For example, an entity facing a state tax liability of $1 million could purchase $1 million in tax credits from a film production company for around $900,000. The buyer purchasing the credits submits the tax credits to the treasury rather than making a tax payment of $1 million.”
If you are interested in using Georgia Entertainment Tax Credits, please give Hoffman & Associates a call today to discuss. Some of these transferable credits are currently being offered at a discount and are available on a first-come, first-serve basis. Contact us at info@hoffmanestatelaw.com or 404-255-7400 for more information.
