|
News continued...tax incentives
1. A gross receipts tax deduction : also known as the "NTTC"
program, this
is a deduction taken at the point of sale on many production costs,
or
2. A 15% film production tax credit : a fully refundable credit
of 15% of
eligible direct production costs against the filmmaker's New Mexico
income
tax.
To qualify, production companies must register with the New Mexico
Film
Office.
Qualifying companies may choose one incentive per expenditure .
For long-form features, television programs, documentaries, shorts
and
national advertisements that are exhibited in theaters, we advise
that you
apply for both incentives at the start to allow yourself maximum
flexibility. Long-form features must include an on-screen credit
for the
State of New Mexico.
For local advertisements or for those companies who prefer an up-front
deduction, we advise applying only for the NTTC program.
1. GROSS RECEIPTS TAX DEDUCTION ("NTTC")
The state of New Mexico levies a gross receipts, or sales, tax
on receipts
from engaging in business in the State. Since 1996, New Mexico offers
a
deduction for filmmakers for specified production costs. This deduction
authorizes the issuance of "nontaxable transaction certificates"
(NTTCs -
Type 16) to be used at the point-of-sale, so that no gross receipts
tax is
passed on to you by the supplier.
Who Qualifies:
Aimed primarily at producers of local, regional and national advertisements
as well as films (see below), this delivers a 5% to 7% savings on
eligible
production costs, depending on the vendor's business location.
A "film" is defined as a single medium or multi-media
program fixed on film,
videotape, computer disc, laser disc, or other delivery medium,
that can be
viewed or reproduced and that is exhibited in theaters or by individual
television stations, groups of stations, networks, cable television
stations
or other means or licensed for home viewing.
What Qualifies:
(a) the cost of a story and scenario to be used for a film;
(b) salaries of talent, management and labor; including payments
to personal
services corporations with respect to the services of qualified
performing
artists, as determined under Section 62b(a)(A) of the Internal Revenue
Code
of 1986; (c) cost of the construction and operations, wardrobe,
accessories
and related services;
(d) costs of sound synchronization, lighting and related services;
(e) costs of editing and related services;
(f) rental of facilities and equipment (including location fees);
or
(g) other direct costs of producing the film not including lodging,
rental
of vehicles or catering.
For a complete information report on this deduction, see the New
Mexico
Taxation and Revenue's FYI 280: Sales to Qualified Film Production
Companies.
How to proceed:
The following PDF's are also downloadable from www.state.nm.us/tax/
.
1. Print and fill out the Application for Business Tax Identification
and
the Film Production Company Registration Form , and the Application
for
Nontaxable Transaction Certificates . Send to the New Mexico Film
Office,
c/o John Raymond Armijo, 1100 St. Francis Dr., Santa Fe, NM 87505-4147
or
fax 505-827-9799. You will receive a New Mexico Business I.D. number
and
CRS-1 Filer's Kit from the Taxation and Revenue Department.
2. You will receive Type 16 NTTC Certificates from the New Mexico
Taxation
and Revenue Department. Present to vendor at the time of purchase,
and tax
will not be added on the vendor's bill to you.
2. 15% FILM PRODUCTION TAX CREDIT
A fully refundable income tax credit based on 15% of New Mexico-based
production expenditures that are taxable in the State of New Mexico.
Claim
it on the production company's income tax return for the year.
Who Qualifies:
Aimed primarily at producers of film (see below), television programs
or
national advertising that has been exhibited in theaters. This is
a fully
refundable income tax credit of 15% based on New Mexico-based, taxable
production expenditures that are not purchased under a Type 16 NTTC.
A "film" is defined as a single medium or multi-media
program, including
national advertising messages, fixed on film, videotape, computer
disc,
laser disc, or other delivery medium, that can be viewed or reproduced
and
that is exhibited in theaters or by individual television stations,
groups
of stations, networks, cable television stations or other means
or licensed
for home viewing.
What Qualifies:
(a) the cost of a story and scenario to be used for a film;
(b) wages or salaries of talent, management and labor if they are
New Mexico
residents;
(c) cost of set construction and operations, wardrobe, accessories
and
related services;
(d) costs of photography, sound synchronization, lighting and related
services;
(e) costs of editing and related services;
(f) rental of facilities and equipment (including location fees);
(g) leasing of vehicles, food or lodging;
(h) airfare if purchased through a New Mexico-based travel agency
or
company;
(i) insurance and bonding if purchased through a New Mexico-based
insurance
agent;
(j) other direct costs.
Rebate Guidelines: The tax credit applies only to expenditures
that are
subject to taxation in New Mexico.
Note: Please distribute the list of rebate guidelines to your department
heads.
Employee fringes paid to a payroll company do qualify for the tax
credit.
Not included in fringe benefits that qualify are the state unemployment
tax
and the workers compensation tax. FICA and Federal unemployment
taxes do not
qualify for the tax credit. Keep a summary of vendors and receipts.
A
Declaration of Residency* form, and an I-9 form is needed for the
payroll of
every NM resident you include for the tax credit. *You must get
some proof
of residency from the employees you hire also make certain that
the employee
completely fills out his/her residency statement, and include a
copy of the
residency statement in your ledger/summary report.
Expenditures made to Section 501 (c) organizations do not qualify
since
these organizations are tax exempt. These include Goodwill, Salvation
Army,
churches, museums, schools, and the like. Purchases made on the
Internet do
not qualify either.
Payments made to the State or Federal Government do not qualify.
This would
include permits, parking, and postage. Payments made to Native Americans
on
their land do not qualify. This includes location fees, service
stations,
restaurants, hotels, grocery stores, etc.
Cell phone reimbursements when the billing address is not New Mexico
do not
qualify.
The address on your registration form should be your corporate,
home or
primary office and not your production office.
At the completion of your production send a ledger/summary of all
your New
Mexico expenditures to: Jerry Montoya, Audit & Compliance Division/Film
Credit Auditor, Dept. of Taxation and Revenue, PO Box 630, Santa
Fe, NM
87502-0630 or 1200 St. Francis Drive, Santa Fe, NM 87501. Jerry's
direct
line is (505) 827-0929; fax is (505) 827-0940; jerrym@state.nm.us.
Note:
After reviewing your summary statement, the Dept. of Taxation and
Revenue
will return the form to you with the approved amount.
How to proceed:
The following PDF's are also downloadable from www.state.nm.us/tax/
.
1. Print and fill out the Application for Business Tax Identification
and
the Film Production Company Registration Form , and send to the
New Mexico
Film Office, c/o John Raymond Armijo, 1100 St. Francis Dr., Santa
Fe, NM
87505-4147 or fax 505-827-9799. We will expedite the processing
and tracking
of these forms and notify you when they are complete. You will also
receive
back a NM Business I.D. number and CRS-1 Filer's Kit from the Taxation
and
Revenue Department.
2. During production, save your company's I-9 Forms, print, fill
out and use
the Declaration of Residency Forms and a ledger of New Mexico expenditures
with copies of receipts (print or on CD). From these, compile a
summary of
New Mexico vendors and amounts and calculate total New Mexico expenditures
and 15% credit amount. Expenditures utilizing a Type 16 NTTC are
not
eligible for the income tax credit .
3. Please print and fill out the Application For Film Production
Tax Credit
Form , attach summary compiled in step three and send to the New
Mexico
Taxation and Revenue Department, P.O. Box 630, Santa Fe, NM 87504-0630.
The
Department will return the form to you with the approved amount.
4. Last, print, fill out and file the Film Production Tax Credit
Claim Form
with an income tax return (Using: Forms PIT, CIT, PTE or FID-1)
. Attach the
application form with the approved credit amount and send to the
Taxation
and Revenue Department. The credit will then be applied to any tax
liability
you have incurred, with any excess credit refunded back to your
production
company.
|
