Georgia Film Tax Credit

Background:

In 1973, Georgia Governor, Jimmy Carter, founded the Georgia State Film Commission. Since then, the Georgia Film and Media industry has brought an estimated $4 billion a year to Georgia’s economy. With this, Georgia has benefited from the creation of jobs, business opportunities, and recognition as a hub for distinguished actors, producers, and studios.

In 2005, Georgia signed into law its second most progressive tax incentive, the Georgia Entertainment Industry Investment Act. The incentive allowed qualified productions a transferable income tax credit of 20% of all in-state costs for film and television investments of $500,000 or more. Since then, changes resulting from the passage of Georgia House Bill 1037, the amendment of Georgia Code Section 48-7-40.26 of the Official Code of Georgia Annotated (O.C.G.A), and the amendment of Georgia Rule 560-7-8-.45 have impacted requirements to receive the tax credits, including mandatory audits requirements.

The State Agencies responsible for the administration of the Georgia Entermaint Industry Investment Act include:

  • Georgia Department of Economic Development (GDEcD)

    • Certify projects that meet the qualifications for the Film Tax Incentive.

  • Georgia Department of Revenue (GDOR)

    • Oversees the earning and claiming of the credits.

Production must submit (within one year from the date of completion of principal photography) the following:

  • GDEcD Certification Letter

  • Mandatory Audit Application

  • Required GDOR fees via GDOR webpage

Steps to apply and obtain Film Tax Credit:

  1. Obtain a Credit Certification Number(s) from GDEcD

    • GDEcD will issue its certification for productions engaged in

      qualified production activities –“State Certified Production”

      • Productions must spend a minimum of $500,000 in

        base investment to be eligible for a 20% transferable tax credit

      • An additional 10% Georgia Entertainment Promotion (GEP) uplift

        can also be earned

      • For additional information, please refer to the GDEcD application instructions

  2. Complete the Mandatory Audit Application by GDOR and choose an Auditor

    • A mandatory audit will be required for the following:

      • Projects certified by GDEcD on or after January 1, 2021 to a production company, if such tax credit sought for the project exceeds $2.5 million

      • Projects certified by GDEcD on or after January 1, 2022 to a production company, if such tax credit sought for the project exceeds $1.25 million

      • Projects certifed by GDEcD on or after 1/1/2023

    • In preparation for submitting a Mandatory Film Tax Credit Audit Application,

      the production should have the following documents and information:

      • GDEcD authorization certificate, mentioned in step 1

      • Total qualified Georgia production costs

      • Georgia's principal photography completion date

      • Selection of Auditor to conduct the audit

      • Productions FEI number

      • Productions reporting parent FEI number

      • Production contact name, phone number and email address for the audit

      • The Mandatory Audit Application may be found here. In addition, further details regarding GDOR regarding guidance in applying for the Film Tax Credit can be found here.

    • Once the application is submitted, GDOR will reach out to the production to begin the audit or provide RFG with approval to begin the audit. RFG has summarized Documentation that may be requested by Auditors.

    • Upon the completion of RFG’s Audit, the Department of Revenue will provide a last review before issuing the Film Tax Credit Audit Final Certification letter. The letter will state:

      • Total amount of qualified expenditures

      • Film tax credit amount

      • Film tax credit certificate number and

      • Tax year to be used by the production when reporting Film Tax Credit on the income tax return.

  3. Report Film Tax on Income Tax Return

    • Following the conclusion of the compulsory Film Tax Credit Audit procedure, the production company will receive a Film Tax Credit Certificate Number, which is required to be disclosed on the company's income tax return.

  4. Sale or transfer of Film Tax credit

    • In general, Tax credits will be available for use against Georgia income tax liability or the company’s Georgia withholding. The production company can make a one-time sale or transfer of the film credit to a Georgia taxpayer(s). (See GDOR IT-TRANS form) Tax credits can be carried forward for three years.

    • The expiration of the carry-forward period is based on the end of the tax year in which the production company was issued its final certification. Any unused film tax credit, for the production company or any transferees, can be carried forward for three years from the close of the taxable year in which the film tax credit was issued its final certification. For additional details, please see the Georgia Department of Revenue’s Film Tax Credit Rules & Regulations (560-7-8-.45).

Film Tax Credit Auditors or Consultants

RFG is among the twelve firms nationally sanctioned by the Georgia Department of Revenue (GDOR) to conduct mandatory audits for film tax credits for production companies. On December 2023, RFG was chosen as one of the twelve firms nationwide qualified to conduct such audits, given the firm's extensive experience in audits in Georgia and other tax-related qualifications nationally.

Josue Rosales, the leader of RFG’s Audit and Consulting practice and head of governmental affairs, expressed, "RFG understands the need to find a consultant, or an auditor, who understands the many twists and turns that come with the production incentive in Georgia." The firm looks forward to collaborating with major film and television studios across the United States, offering accounting and consulting guidance for production and entertainment companies throughout the Mandatory Film Tax Credit Audit Application, audit review, and film tax credit approval process.