More about Georgia’s Mandate to Audit Film and TV Tax Credits

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Georgia Gov. Brian Kemp has signed a bill that mandates audits for productions claiming the film and TV tax credit, following a state report finding lax controls in the program.

Georgia has by far the largest tax credit for film production in the United States, awarding a record $860 million in credits last year. But it was one of only three states — along with Arkansas and Maine — that did not require state or third-party audits to claim the tax credit.

Kemp signed HB 1037 on Tuesday, and it will go into effect on Jan. 1.

Georgia offers a 30% transferable credit on production costs incurred in the state. That includes 10% for showing the Georgia peach logo in the closing credits, which is intended to promote the state’s image. A state audit released in January found that many productions received the 10% bonus even though the projects were never distributed, or were shown only at film festivals.

The new law requires that productions must first be “commercially distributed” in “multiple markets” to receive the bonus.

The state Department of Audits and Accounts found numerous other abuses, including productions claiming credits for out-of-state expenditures or expenses not directly tied to production. Only 12% of projects were audited in 2016, but even those audits did not uncover about $4 million in ineligible expenditures in eight projects, according to the DOAA.

Under the new law, the Department of Revenue will be required to adopt new audit standards and to maintain a list of independent auditors eligible to complete the work.

“We do expect it to be quite a bit more work for us,” said Charli Traylor, a CPA who specializes in entertainment at the Atlanta-based accounting firm Frazier & Deeter.

She said the new regulations would provide “much needed clarity” for her clients as to what expenses qualify for the credit. See more at Variety.

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