Illinois Film Production Services Tax Credit Act

In 2003 Illinois introduced a wage-based tax credit for film producers. In December of 2008 Illinois passed the Illinois Film Production Tax Credit Act, offering producers a credit of 30% of all “qualified expenditures,” including post-production, and has no expiration. To promote growth and job opportunities in the Illinois film industry, the Act is to beneficial to local vendors, union leaders and filmmakers, in addition to stimulating diversity in the workforce. Here are some Frequently Asked Questions about the applicability of the Act:

Who Is Eligible:

Illinois Production Spending of at least $50,000 for Commercials or at least $100,000 for Entertainment. The Act was changed to “Illinois Production Spending” form “Illinois Wages” to improve the eligibility threshold particularly for commercials.

What is the Amount of the Credit?

The Illinois Film Production Services Tax Credit Act provides for a 30% tax credit (as of 2009) based on “Illinois Production Spending” plus an additional 15% tax credit based on Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment.

What is “Illinois Production Spending?”

“Illinois Production Spending” means the expenses incurred by the applicant for an accredited production from final script stage through post production, including, without limitation, all of the following: (1) expenses to purchase, from vendors within Illinois, tangible personal property that is used in the accredited production; (2) expenses to acquire services, from vendors in Illinois, for film production, editing, or processing; and (3) the compensation, not to exceed $100,000 for any one employee, for contractual or salaried employees who are Illinois residents performing services with respect to the accredited production.

Are Credits Transferable?

A transfer of this credit may be made by the taxpayer earning the credit within one year after the credit is awarded in accordance with rules adopted by the Department of Commerce and Economic Opportunity. The credit may not be carried back. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, the earlier credit shall be applied first. In no event shall a credit under this Section reduce the taxpayer’s liability to less than zero.

What is “Diversity?”

One of the main purposes of the Act is “to promote and encourage the training and hiring of Illinois residents and utilization of vendors and service providers who represent the diversity of the Illinois population.”

Applicants must file a “Diversity Plan” that sets forth specific goals and details: (a) the manner in which the Applicant proposes to achieve its goals to ensure employment of minorities that represent the State of Illinois rather than merely to assure nondiscrimination, (b) “good faith efforts” in attempting to achieve a racially diverse crew, and (c) progress in reaching the State’s diversity goals by using the “Diversity Plan Tracking Sheet” provided by the IFO.

When Does the Tax Credit Expire?

Teh Tax Credit is available to productions commencing on or after January 1, 2009.  No expiration date exists for this credit.

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