California Motion Picture and Television Production Credit
On February 20, 2009, SB X3 15 was chaptered, creating a credit based on expenditures incurred for film and television productions, which will be allowable to offset California income, franchise or sales and use tax liabilities for taxable years beginning on or after January 1, 2011. This credit is referred to as the “old credit”. The amount of credit allocated for distribution was $100 million for each fiscal year starting July 1, 2009. The fiscal year for California is from July 1st to June 30th of the following year.
Subsequently, AB 1839, chaptered on Sept. 18, 2014, expanded the credit. This credit is referred to as the “new credit.” The amount available for allocation was increased to $330 million starting fiscal year 2015/2016. The new bill is effective from taxable year beginning January 1, 2016, and will continue until fiscal year 2019/2020.
To claim the credit, qualified taxpayers must first apply to the California Film Commission (CFC). CFC issues credit certificates (certificate) to qualified taxpayers who claim the credit in the taxable year CFC issues the certificate. Under limited circumstances, qualified taxpayers may assign or sell their credit.
Once the credit certificates are issued by the CFC, taxpayers can use the old and the new credit at the same time to reduce their income, franchise, or sales and use tax liabilities. Taxpayers are required to report allocation, assignment, purchase, sale and application of credit against income/franchise tax with FTB or sales and use tax with the California Department of Tax and Fee Administration on FTB Form 3541, California Motion Picture and Television Production Credit.
FTB reporting requirements
- File separate Form 3541 to report the old and new credits.
- Provide the certificate numbers when reporting or using credits.
- Use the name California Motion Picture and Television Production credit and the code 223 when reporting the use of the old credit (certificate numbers below 5000).
- Use the name New California Motion Picture and Television Production credit and code 237 when reporting the use of the new credit (certificate numbers 5000 and above).
- Frequently asked questions
- Form 3541 - California Motion Picture and Television Production Credit
- 2016 Instructions for Form FTB 3541
- Form 3551 - Sale of Credit Attributable to an Independent Film
- California Film Commission (CFC) - The CFC is administering the tax credit program.
- Fact Sheet: Using the Tax Credits - Developed by the CFC.
- California Department of Tax and Fee Administration - Information on claiming the tax credits against sales and use tax liabilities.
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