Film Credit and Sales Tax Exemption
On July 20, 2007, Massachusetts enacted an Act Providing Incentives to the Motion Picture Industry ("the new Act"). See St. 2007, c. 63. This Act made revisions to statutory provisions enacted by a prior Act with the same title that was signed into law on November 23, 2005 (the "prior Act"). See St. 2005, c. 158; amended by St. 2005, c. 167. The new act is effective on applications received on or after January 1, 2007.
For taxable years beginning on or after January 1, 2006 and before January 1, 2023, Massachusetts allows two credits for motion picture production companies who meet certain qualifications requirements. Production companies who incur at least $50,000 of production costs in the Commonwealth are eligible for income and corporate excise tax credits equal to 25 percent of the total Massachusetts payroll for the production, excluding salaries of $ 1 million and higher. In addition, production companies whose Massachusetts production expenses exceed 50 percent of the total production cost receive an income and corporate excise tax credit of 25 percent of the total Massachusetts production expense.
Production companies who expend over $50,000 in Massachusetts production costs during a consecutive twelve-month period are eligible for a sales tax exemption.
A detailed explanation of the Film Credit Incentive, including a definition of a qualified motion picture production company can be found in Technical Information Release 06-1 as well as Chapter 158 of the Acts of 2005. Further information can also be found in DOR Directive 07-1 and Letter Ruling 06-1. Additionally, the Department has a Technical Information Release TIR 07-15, that further explains the updated law and is available for review.
Note: Technical Information Release 06-01, Letter Ruling 06-01 and DOR Directive 07-01 were issued under the prior film credit Act. The discussion of law section of these public written statements is modified, in part, by the new law as outlined in Technical Information Release 07-15. For example, under the new law a production company must incur a least $50,000 in qualified expenses, not the higher threshold of $250,000 which was effective in 2006. In addition, the new withholding rules explained below and contained in 830 CMR 62B.2.3, Motion Picture Production Company Withholding , modifies, in part, DOR Directive 07-01, in particular Directives number 5 and number 6.
Agreed Upon Procedures
Independent Accountant's Report on Applying Agreed Upon Procedures
Effective December 8, 2008 film credit applications that are submitted with at least $250,000 of qualified film credit expenses must contain an Independent Accountant's Report on Applying Agreed Upon Procedures ("AUPs") or an Audit (See TIR 07-15, footnote 14). The AUPs must be performed by a Massachusetts CPA. Productions with less than $250,000 of qualified film credit expenses may choose to include the AUPs or an Audit with their film credit applications, but it is not required. The Department will not assert transferee liability if the original film credit application is submitted with the AUPs or Audit (See DOR Directive 07-01 for a description of transferee liability).
New Withholding Rules
Production companies must now register and withhold on payments to independent contractors (1099s) and loan-outs made on or after February 18, 2010. Waivers from withholding will no longer be issued, however, a valid withholding waiver issued to a loan-out before February 18, 2010, for a production that commenced filming before February 18, 2010, will remain effective for the production for which the waiver was issued.
Production companies must register and make withholding payments on the Department's MassTaxConnect web site under the performer withholding registration page. For administrative efficiency, this new type of withholding --- "MPPC Withholding" --- will share the payment and registration web functions with performer withholding, but is not subject to the performer withholding rules. The employer withholding rules and registration for w_2 employees remains unchanged.
An authorized representative of the production company, an authorized representative of the loan-out and the individual providing services to the loan-out must sign the Loan-Out Affidavit/Allocation Form .
For more details and examples explaining the new withholding requirements see the regulation, Motion Picture Production Company Withholding.
2017 Applications and Forms:
- Form FP , Application for Payroll/Production Credit
- Form LOA , Loan-Out Affidavit/Allocation
- Form ST-12 , Exempt Use Certificate
- Form STE , Application for Sales Tax Exemption
- Form TSA , Film Credit Transfer or Sale Application
Massachusetts Department of Revenue
Film Credit Unit
200 Arlington Street, Room 4300
Chelsea, MA 02150
Business Income Audit Bureau
200 Arlington St., Room 4300
Chelsea, MA 02150
Phone: (617) 887-6974
Fax: (617) 660-9897
For further information, visit the the Massachusetts Film Office at www.mafilm.org.