Local Industry | Reports

Tax Time

1 Jan , 2007  

Written by Gita Pullapilly | Posted by:

Massachusetts shakes its tax-heavy reputation with some incentives for film productions which already have begun paying off.

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Film producers are always watching the bottom line and film directors are always trying to expand it. Before long, the project either stalls or is made with a number of artistic compromises. But before you close the books on your film just yet, you might want to consider searching for film sets in "tax incentive" states.

Recently passed tax incentives in Massachusetts are drawing in more film and television production and is providing more business to the local and national entertainment industry. The Massachusetts Production Coalitions (MPC), the organization that spearheaded the passage of these incentives, is already seeing a dramatic rise in the number of locally filmed and produced projects.

Recent Massachusetts films include Martin Scorsese’s The Departed, Ben Affleck-directed Gone Baby Gone, and The Game Plan starring Dwayne "The Rock" Johnson.

Industry professionals, like Chris O’Donnell, an early founder of MPC, says this tax incentive not only helps the producer and director but it also helps the entire production crew. "As the Business Manager of the International Alliance of Theatrical Stage Employees (IATSE) Local 481, I represent over 300 of the 400 IATSE motion picture technicians living and working in Massachusetts. From grips to sound mixers, prop makers to costumers, these skilled technicians make a living working on commercials, television programming, studio and independent feature films shot in the Commonwealth," said O’Donnell.

Already, O’Donnell says this law has had a significant economic impact on the state as well as his local union.

"Since the passage of the law a year ago we have seen a healthy increase in motion picture production in the Commonwealth: the number of weeks that studios will shoot principal photography in Massachusetts in 2006 will easily surpass that of 1998, previously one of the best on record. Local 481 has a growing membership, including 25% more Massachusetts members today than a year ago, a sure sign of a growing industry. And those Massachusetts members have earned nearly 30% more in the first three quarters of 2006 than in the same period of 2005.  There is no doubt this law has succeeded in creating many well-paying jobs that provide health and retirement benefits. With Sony Pictures bringing 21 to shoot in Massachusetts, 2007 is off to a good start."

So what are these tax incentives? There are three types of tax exemptions or credits available to motion picture companies that spend a minimum of $250,000 in Massachusetts on feature length films, commercials, and television productions:

1) Sales & Use Tax Exemption is applied to the production costs incurred in the state

2) A transferable 20% Payroll Credit is available for companies that spend at least $250,000 in production costs on a production in the state during a consecutive 12 month period and

3) A transferable 25% Production Expense Credit which applies to productions that spend more than 50% of a motion picture’s total production expenses in the state or shoots more than 50% of a production in the state.

These credits apply to pre-production, production and post-production expenses. This includes wages and salaries, costs incurred for building the set, editing, sound mixing, lighting, wardrobe, make-up, film processing, transfer, special effects, music, location fees and facilities and equipment.

The tax credits can be carried forward 5 years and also can be transferred or sold (if you do not have a state tax liability).

In other states, similar incentive packages for film and television have led to significant economic growth. Not only does the local production community grow, but there is a significant boost in revenue for vendors servicing the entertainment industry as well as for tourism and travel in the state. Industry professionals say a good example of this is in New Orleans. Prior to Hurricane Katrina, revenue from film and television production rose from $22 million per year to over $250 million in three years after its tax package went into effect.

Susi Walsh, executive director of the Center for Independent Documentary and founding member of the MPC, also believes smaller budget filmmakers will also reap the rewards from this tax incentive. "This is a step forward for the smaller film producer because there will be more corporate and commercial work for them. I know a lot of filmmakers left Boston because they couldn’t find the kind of work that this tax incentive will bring. This commercial work may even extend to jobs that you might not have gotten before including those in the technical sphere."

Bonnie Waltch, the executive director of Filmmakers Collaborative, says this incentive will not only benefit the Massachusetts economy but make the state competitive with New York and Rhode Island. "It will bring in many productions to the state that might have gone elsewhere employing all kinds of film-related workers, from production crews to caterers, and bringing new business to equipment rental houses, hotels, and anyone else serving film productions coming to town. Because we’re a non-profit, Filmmakers Collaborative won’t benefit directly from tax incentives, but some of our members have their own for-profit production companies that may qualify for the tax incentives, so they stand to benefit."

So when you yell "wrap" out in the field, your end credits may be worth more than you think… at least here in Massachusetts.

For more information on the tax credit, visit:

MA Dept. of Revenue – www.dor.state.ma.us/Business/FilmCredit.htm

Alliance for Independent Motion Media – www.motionmedia.org

Center for Independent Documentary – www.documentaries.org

Gita Pullapilly is a film producer for Dungby Productions (www.dungbyproductions.com) in Boston, MA.


For more information on the tax credit, visit: MA Dept. of Revenue – www.dor.state.ma.us/Business/FilmCredit.htm Alliance for Independent Motion Media – www.motionmedia.org Center for Independent Documentary – www.documentaries.org Gita Pullapilly is a film producer for Dungby Productions (www.dungbyproductions.com) in Boston, MA.

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