Massachusetts Tax Credit information
On July 20, 2007, Massachusetts enacted an Act Providing Incentives to the Motion Picture Industry (“the new Act”). 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”). 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 as well as Chapter 158 of the Acts of 2005 . Further information can also be found in DOR Directive 07-1 (see below: Questions Concerning the Film Credit; Qualifying Expenses, Transferee Liability and Withholding Procedures) 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.
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). 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 Directive
07-01 for a description of transferee liability).
Transition Rules:
Productions with at least $250,000 of qualified film credit expenses filing film credit applications in December, 2008 may satisfy the requirement of an Audit or AUPs at a later date. The credit issued will still be a “2008” credit, however, the credit will not be issued until the Audit or AUPs requirement is satisfied. Productions with less than $250,000 of qualified film credit expenses choosing to include the AUPs or an Audit with their film credit applications, may also file in December, 2008 with the option to supplement the application with the AUPs or an Audit. Productions wishing to avail themselves of this transition rule should attach a statement to the application making this election. The general rules for the completeness of a film credit application remain unchanged, e.g., that expenses must be paid, not just incurred. (See Directive 07-01, issues 10, 11 & 12).
Exempt Use Certificate
Massachusetts Department of Revenue
Film Credit Unit
200 Arlington Street, Room 4300
Chelsea, MA 02150
IMPORTANT DOCUMENTS TO DOWNLOAD:
Agreed Upon Procedures
Independent Accountant’s Report on Applying Agreed Apon Procedures
Applications and Forms:
Application for Payroll/Production Credit – Motion Picture Production
Film Credit Transfer or Sale Application
Form TSA (Transfer/Sale of Film Credit)
Questions Concerning the Film Credit; Qualifying Expenses, Transferee Liability and Withholding Procedures
Questions Concerning the Film Credit
Other Useful Documents
830 CMR 2.5A-MA Source Payroll
(more documents coming, please check back soon)