The first step: Pre-Certification
Once there is an awarded estimate, SF puts an application in to the State of Louisiana for pre-certification. To do this we require an awarded budget, script, treatment, talent estimate, names and titles of key players (director, producer, celebrity talent), schedule for production. This must be done prior to shoot. Would typically need 2-3 weeks prior to filming.
What qualifies for rebate?
Budgets with over 300K in Louisiana expenditure will qualify. All expenses, particularly local spends, will go through Strong Films accounts. Any expenditure made within Louisiana is applicable for a 30% tax credit. This includes hotels, meals, car and truck rentals, camera, grip and lighting hire, studio expenses, art department, set building, catering, entertainment, etc.
All non-resident crew and talent payroll will qualify at 30% for any work done in Louisiana. Any crew or talent that is a Louisiana resident is eligible for an additional 10%, taking the rebate up to 40%. Payroll must be paid to an individual and have 6% State tax withheld in Louisiana to qualify. We distribute the necessary documents for all crew and talent to sign on set for payroll withholdings. Crew or talent paid by W9 as a company, without 6% State tax withholdings for Louisiana will not qualify.
Upon wrap of production, the job goes through post-production accounting and pre-audit preparation in house at Strong Films. The job is paid out completely and all supporting documents are compiled and packaged into a comprehensive report delineating local vendor, local crew while deducting out-of-town costs and sales tax. It is then sent to a State chosen independent CPA for an official audit.
Once the audit is complete, the cost report goes to the State of Louisiana for final review. The State usually has questions and requires additional documentation. We respond to all questions and provide any additional backup.
Once Strong Films receives Final Certification of the Tax Credits they are ready to sell for cash. SF sells back to the State at 85 cents on the dollar, or to an independent broker where rates fluctuate based on supply and demand. Sometimes the broker rates are higher and sometimes lower, but they are always faster!! The State can take up to a year, sometimes longer, to monetize tax credits depending on current status of Tax Credit Cap.
It's that simple!
What does it cost?
Strong Films' fee is 30% of the final tax credit proceeds. For this fee Strong Films is your local production services company in Louisiana, and is responsible for handling, processing, certifying, and brokering of tax credits.
The client typically pays for any outgoing hard costs for application fee, newspaper ads and audit fees. We ask for an Audit Deposit Fee of 10K upfront, as we are required to pay a $7500 audit deposit and an application fee equal to 0.5% of estimated tax credit amount, prior to pre-certification.
For our advertising clients, most agencies will ask production companies to add the 10K audit deposit fee to their estimates when bidding, as a Tax Credit Audit Deposit Fee.
We are flexible; depending upon the project, we can come up with an agreement that works for all parties involved, and all budget levels.