Written by Senior Editor, Mollee D. Harper
Georgia Film News recently spoke with Partner-in-Charge of State and Local Tax (SALT) Services, Jeff Glickman, J.D., LL.M., and Senior Tax Manager, Tina Chunn, of Atlanta CPAs Habif Arogeti and Wynne LLP (HA&W), one of the largest and most prominent certified public accounting and business advisory firms in the Southeast since 1952. During our time together, Glickman and Chunn provide insights into their full-service state and local tax consulting practice based out of Atlanta, and share how they are helping businesses within the entertainment industry with all facets of tax strategy including navigating tax credits and realizing the advantages of doing business in Georgia.
Glickman explained, “We are a full service state and local tax consulting practice. We have five team members that are devoted exclusively to helping clients with tax issues in any state in the country. We serve all industries but mainly serve businesses in the technology, manufacturing, entertainment, hospitality and construction sectors. Our specific services include state tax nexus reviews, general tax consulting/research projects, mergers and acquisitions (i.e., due diligence and structuring deals), and assisting clients with all types of tax credits, mostly in Georgia. We also have a tax administrative practice assisting clients with audit defense and with other issues involving state tax authorities, such as Voluntary Disclosures and obtaining private letter rulings. There really isn’t an issue we can’t handle for our clients.”
CPAs Habif, Arogeti and Wynne LLP also familiarly known as HA&W is the largest tax, audit and business advisory firm headquartered in Georgia with a second office in New York and an international reach. The award-winning HA&W firm provides expertise across a broad range of financial services including: Audit, Accounting, Tax Planning & Preparation, Business Valuation, Risk Management, Dispute Resolution, Mergers & Acquisition, Financial Benchmarking, Wealth Management, Retirement Planning, Financial Reporting Advisory Services, International Services, Captive Insurance, Compliance Success for Title Agents, Payroll, and Client Accounting Services.
Glickman commented, “I joined the firm almost three years ago after spending 15 years practicing in SALT at a national law firm based in Atlanta. Tina joined in July 2007. Tina has the most varied work experience of anybody in our group, having been employed at a state Department of Revenue, two Fortune 100 companies, as well as in public accounting. She’s seen the practice from all sides.”
Chunn explained, “We have been working with entertainment and production companies since before the film tax credit legislation was significantly amended in 2008. It’s not new to us. In 2008, the Georgia legislature made significant changes to the film tax credits that have caused the film industry to boom here.”
Chunn continued, “We saw there was a need to help both traditional film production businesses that come into the state as well as the gaming companies understand the tax credit. We help our clients understand what they need to do to become eligible for the credit. We help them categorize their expenses in order to identify and maximize those expenses that qualify, calculate the credit, and we help them with all of the procedural hurdles necessary to claim the credit. In addition, we make sure our clients understand what their options may be for utilizing the credit: (i) take the credit against their Georgia corporate income tax liability, (ii) pass the credit to the company’s owners if it is a partnership or S-corporation, (iii) apply the credit against the company’s payroll withholding taxes, or (iv) sell it. We are a full service firm to the entertainment industry all the way to their tax returns and audits, if necessary. We service our clients all the way through the process.”
Production companies engaging in an approved project in Georgia may receive a tax credit of up to 30 percent on qualifying expenses spent on production and certain post-production activities in Georgia, with a minimum spend of $500,000. Unused tax credits can be carried forward for five years. There is also a credit for qualifying interactive entertainment production companies of up to 30% on qualifying expenses. Unlike the credit for traditional production, the interactive credit is capped at $1.5 million per taxpayer with an aggregate cap of $12.5 million for all taxpayers for the year, and this credit is set to expire at the end of 2018.
In 2013, Georgia’s tax credit program was the largest in the U.S. In 2015 alone, Georgia-based feature films, television, commercials and other entertainment productions generated an economic impact of $6-7 billion for the state.
Glickman described, “Even though the tax credits are one statute, there are really two credits. There is one for traditional film and television production companies, and then one for interactive entertainment companies, sometimes referred to as the gaming credit. These are two distinct credits as they have different eligibility requirements and procedures for claiming the credit. Because the gaming credit has an aggregate annual cap of $12.5 million, companies looking to claim that credit must submit a pre-approval form to the Georgia Department of Revenue, and the credits are allocated on a first-come first-served basis. Both provide a credit equal to 20% of qualifying expenses, and there is an additional 10% credit, referred to as the Georgia Entertainment Production uplift, that is approved when you incorporate a Georgia logo on approved projects and a link to TourGeorgiaFilm.com. Therefore, the total potential credit is 30%.”
Glickman continued, “With regard to the film and gaming tax credits, we have three main goals. First, we help our clients understand what expenses do and don’t qualify so that they can maximize their credits. For example, production companies may spend a lot of money on transportation (e.g., flying talent and other workers to the production site). Some client may not realize that those travel expenses qualify only if purchased through a Georgia travel agency. Second, we make sure that they follow all of the rules for properly claiming the credits, such as obtaining the requisite approvals and filing the correct tax forms. Finally, we issue reports explaining the credit and making a determination that the credit claimed meets the requirements of the Georgia rules. Since most of our clients (and I suspect most production companies generally) choose to sell the credits, these reports allow our clients to show prospective purchasers that the credit was properly claimed.”
“I would say our film and gaming tax credit work is between 15 and 20 percent of our practice and growing.” Chunn added, “For a lot of our film clients, credits are not the only service we provide. Our goal is not just to help them get their credit and sell it; it’s to help them with all of their needs. We have a lot of relationships we can provide support through. While some CPAs focus on just the film credit, we provide a full range of advisory and business services.”
Glickman concluded, “We want to utilize our talent at HA&W to assist clients with any needs they may have, such as wealth management, payroll, as well as more traditional tax and audit services.. For international production companies that may be looking to produce in Georgia, HA&W is unique because our employees speak 29 different languages. Our goal is to be a one stop shop for all of their needs.”
Jeff Glickman, J.D., LL.M joined the practice in February 2014, and serves as Partner-in-Charge for HA&W’s State & Local Tax (SALT) practice. Prior to joining HA&W, Glickman was an attorney with SALT group of Alston & Bird, LLP in Atlanta. He served as Adjunct Professor at Emory Law School for nine years. Glickman received his LL.M in Taxation in 1999 and his J.D. in 1998 from New York University of Law. He received his B.S. with distinction from Cornell University in 1995.
Glickman explained, “There is definitely a need for smaller and mid-sized production companies to make sure that they get the assistance they need to understand and claim the credits. For example, on a film with $1 million in qualifying expenses, they can receive a $300,000 credit, most of which can be converted to cash upon sale. This provides an immediate and significant return on their investment.”
Chunn added, “Sometimes we have an out-of-state production client that shoots the film here and then anticipates handling the post-production editorial work back at its home studio. We will inform the client that those post-production expenses that they incur here may be eligible for the credit. It helps them reshape the way they think about their production and post-production activities so that they use more talent and resources here in Georgia. This provides more economic benefit to the state and allows the client to increase its credit.”
Glickman continued, “We can help with other smaller projects outside the traditional film and TV series that qualify for the credit. Those small projects can be aggregated to meet the minimum requirement of $500,000 so they can take advantage of those credits.”
Tina Chunn joined the firm in July 2007 and serves as Senior Tax Manager for HA&W’s State & Local Tax (SALT) practice. Before joining HA&W, Chunn served as Tax Manager for United Parcel Service (UPS) from 2001 to 2007 and BellSouth from 1998 to 2001. She started in the industry as a Revenue Examiner II for the Alabama Department of Revenue from 1993 to 1997 and then worked for KPMG from 1997-1998. Chunn received her BA in accounting from Auburn University and her MBA in accounting and tax from Auburn University at Montgomery. Chunn is a Certified Public Accountant, and a member of GSCPA and AICPA.
Chunn concluded, “The best advice I would offer to a new client in the entertainment industry would be to make sure they understand Georgia’s tax credit programs fully before they spend money. Planning is important to take full advantage of the program.”
Glickman added, “I would also add to that the importance of reaching out for assistance early so that you make sure that you are addressing all of the procedural requirements in order to qualify and maintain your eligibility for the credit. It would be a shame if a procedural ‘foot fault’, such as a missed approval, caused a company to lose out on this credit.”
For more information on the Jeff Glickman, Tina Chunn and CPAs Habif, Arogeti and Wynne LLP, visit http://www.hawcpa.com/.