Section 5509 - Application Process for Tax Credit Allocation(a) The open allocation periods for the California Film & Television Tax Credit Program 2.0 shall be announced by the Director of the CFC prior to each new fiscal year on the CFC website. The California fiscal year is from July 1 to June 30. The announcement shall identify the application categories: Independent films, feature films, relocating television series, and television projects that may be submitted in each application period.(b) An applicant that begins principal photography in California prior to receiving a credit allocation letter shall be disqualified from receiving such letter for that particular production.(c) An applicant shall not submit a duplicate application for a project during any given allocation period. Submittal of duplicate applications shall be good cause to disqualify an applicant from the tax credit program.(d) An applicant may submit an additional application for the same project during any fiscal year if the qualified production did not receive or retain a tax credit allocation from a previous allocation period in the same fiscal year.(e) An applicant that has been issued a tax credit allocation for a particular production, that begins, but does not complete, principal photography of that production shall not be eligible to reapply for a tax credit reservation for that particular production.(f) Any expenditures for services, wages, or goods incurred prior to application approval shall not be considered qualified expenditures.(g) An applicant of a television series, shall submit one application for a television season of that television series.(h) The application process for tax credit allocation shall occur in two phases. Phase 1 requires applicants to complete and submit the online application as set forth on the CFC website. The applicant shall initiate the online application process by selecting a production category from the following: feature film, independent film, television project. The application shall include the information set forth below: (1) Section 1: Applicant information. (B) Applicant entity and Tax ID Number;(C) A definition of the applicant that will receive the tax credit is included in this section.(2) Section 2: Contact information. (A) Enter the contact type and provide the contact name, title, address, email and phone for each of the following, as applicable: Production company, parent company, Producer, Line producer, Production manager, Production accountant, Director, Executive producer(s), Lead actors, Payroll service, Distributor, CPA firm, other.(B) Identify the primary contact and if they are authorized to act on behalf of the Applicant with the CFC.(3) Section 3: Business structure. (A) Identify if the applicant is a corporation, limited liability company, individual proprietorship, subchapter S corporation, partnership, or other.(4) Section 4: Financing sources. (A) List the following information for financing sources:1. Names of funds, amounts, percentage of funding.2. Indicate if the supporting documentation is readily available to confirm financing sources.(5) Section 5: Proposed project. (A) Type of production. If the production category is television, indicate if it is one of the following production types: movie of the week, pilot, recurring television series, or new television series. If it is a new television series indicate if TV Pilot was initially accepted in the program, number of episodes, and confirm over forty (40) minutes of running time exclusive of commercials. If it is a relocating television series indicate previous location, number of episodes previously shot, and number of episodes included in this season.(B) Production schedule. Provide start date of principal photography, end date of principal photography, estimated end date of post-production, projected, or actual release date.(C) Synopsis. The synopsis must be a minimum of 1600 and a maximum of 6000 characters and include a description of the main characters, plotline, beginning and ending, and major scene descriptions.(6) Section 6. Production shoot days and determination of additional percentage points. (A) Principal photography (PP) Days. 1. Enter the requested data for PP Days. The online application shall automatically calculate the totals. a. Enter total PP days in Los Angeles (LA) zone.b. Enter total PP days outside LA zone, but in California.c. Total California PP days equals a. plus b.d. Total percentage of PP days outside LA zone equals b. divided by c. x 100.e. Enter total non-California PP days.f. Total PP days equals c. plus e.g. Total percentage of California PP days equals c. divided by f. x 100h. Enter estimated total California 2nd unit, stunt, and VFX days.i. Enter total PP days at Facility.j. Total percentage PP facility days equals i. divided by c. x 100.(B) Visual Effects. Enter total California qualified VFX expenditures eligible for additional percentage points. A list of eligible expenditures and wages are provided as stated in section 5511(a)(1).(C) If shooting outside of Los Angeles zone, indicate the California counties where filming will occur.(D) If shooting outside California, indicate state and/or country where filming will occur.(7) Section 7: Production statistics. (A) Provide the following information regarding labor statistics for in-state work: 1. Estimated total number of cast members.2. Estimated total number of base crew members. (Base crew is the average number of staff and shooting crew employed per principal photography day).3. Estimated total extras/stand-in man days. (The sum of the number of days, full or partial, a person is estimated to work).(B) Provide the following information regarding Budget information. 1. Provide total California expenditures (qualified and non-qualified).2. Indicate if seventy-five percent (75%) or more of total production budget will be spent in California.(C) Indicate if the total California qualified VFX is equal to 75% of total worldwide VFX budget or if the California qualified VFX is at least $10 million.(8) Section 8: Uplift: The additional tax credit calculation. A list of eligible expenditures and wages are provided as stated in section 5511(a)(1).
(A) Out of zone. 1. Enter total budgeted non-wages (applicable period) excluding the total consumables;2. Total percentage of principal photography outside Los Angeles Zone (number is the same as subsection (h)(6)(A)1.d. above and entered automatically.)3. Total non-wage non-consumable expenditures (equals 1. multiplied by 2.)4. Enter total non-wage expenditures totally consumed outside Los Angeles Zone.5. Multiply subsection a. and subsection b.6. Enter total out of zone wages for the applicable period.7. Total eligible out of zone amount for additional 5% tax credit.(B) Total California Qualified Visual Effects (VFX).1. Indicate if the total California qualified VFX is a minimum of 75% of total worldwide VFX budget or if the California qualified VFX is at least $10 million.2. If answer to subsection (b)(8)(B)1. above is yes, then enter total dollar amount for California VFX visual effects eligible for additional 5% tax credit [same as subsection (h)(6)(B)].(C) Total music Enter total qualified music budgeted expenditures.
(D) Total Additional Tax Credit: The total out of zone amount and total California VFX amount and total music amount which is eligible for an additional 5% tax credit.(E) Multiply (D) by .05 for total additional credit amount.(9) Section 9: Estimated Credit Allocation. (A) Qualified Wages 1. Enter total qualified wages.(B) Qualified Non-wages 1. Enter total qualified non-wages.(C) If applicable, enter total contingency, which can be no more than 10% of qualified expenditures.(D) If applicable, enter total completion bond fee, which can be no more than 2% of qualified expenditures.(E) The total qualified expenditures shall be calculated based on the sum of the totals provided in this section multiplied by 25% if production category is an independent project or relocating television series; totals in this section shall be multiplied by 20% for all other production categories. (Credit allocation applies only to the first ten million ($10,000,000) of qualified expenditures for independent productions. Credit allocation applies only to the first one hundred million ($100,000,000) of qualified expenditures for non-independent productions.)(10) Section 10: Jobs ratio ranking. (A) A jobs ratio ranking shall be assigned to the application, based on the criteria in Section 5515 and the information provided by the applicant in this application. The jobs ratio number for the production will be indicated once the application is complete.(11) Section 11. Certification. (A) By clicking submit on the Application Summary, such action is the applicant's acknowledgement, agreement and, certification that the applicant has read and reviewed the application, including all its attachments, and that the content provided in the application by the applicant is true and accurate to the best of his or her knowledge or at least the knowledge of what would be expected of a reasonable person in the same capacity.(B) Provide name, title, and date.(i) Applicants shall be selected for Phase 2 of the application process based on the jobs ratio ranking of their application, pursuant to Section 5515.(j) The CFC shall notify, by electronic mail, the top ranked projects in each category of qualified motion pictures, as provided for in sections 17053.95(i) and 23695(i) of the Revenue and Taxation Code. These projects shall provide the additional materials and supporting documentation as requested by CFC as described in subsection (k) below within the timeframe provided on the electronic notification, which shall be no less than three (3) business days and no more than seven (7) business days from the electronic notification date. (Phase 2 of the Application Process.)(k) The applicant shall submit the following: (1) An electronic copy of the qualified expenditure budget in an industry standard budgeting program. The electronic copy shall be uploaded to the online application for the qualified motion picture. The industry standard budgeting program shall provide the following: (A) Qualified wage expenditures and qualified non-wage expenditures. If applicable, also indicate if incurred outside the Los Angeles zone during the applicable period.(B) For non-independent productions (excluding relocating series in their first season in California) indicate those accounts for which an additional five percent (5%) in tax credits is allowed for the following qualified expenditures: qualified wage and expenditures purchased or rented and used outside the Los Angeles zone during preproduction through strike on location; qualified visual effects if at least ten million dollars ($10,000,000) or seventy-five percent (75%) of worldwide visual effects will be paid or incurred in the state; and expenses related to music track recording and/or music scoring.(C) A television series shall submit a qualified expenditure budget including all pattern and amortization costs, or separate amortization and pattern budgets. The budget shall be in an industry standard budgeting program uploaded to the online application. The Production Budget shall indicate, as applicable, the information required in Section 5509(k)(1)(A) and (B).(2) One-Line Schedule ("production board"). Applicant shall submit in PDF or equivalent format a One-Line Schedule which shall include scene descriptions, scene numbers, and cast numbers and shall indicate which days are scheduled for filming in a production facility and/or outside of the Los Angeles zone.(A) A television series shall submit in PDF or equivalent format a production calendar, including the start and end dates of the season, the number of in-state and out-of-state principal photography days, and the total number of episodes in lieu of a one-line shooting schedule. The production calendar must indicate which days are scheduled for filming in a production facility and/or outside the Los Angeles zone.(3) Screenplay for the production. If the application is for a pilot that does not have a script, this requirement shall be waived. Applicant shall submit in PDF or equivalent format the screenplay for the production.(4) Supporting documentation that confirms at least 60% of production financing. Applicant shall include documentation for each financing source including, but not limited to, commitment letters, financing agreements, term sheets, and/or bank statements in PDF or equivalent format. Applications submitted without the sufficient documentation described above, which shall be determined in the sole discretion of CFC, shall be considered incomplete and good cause to disqualify the application.(5) Pick-up order. A pilot, new television series or relocating television series shall submit evidence, in PDF or equivalent format, that the pilot or series is scheduled for photography, e.g. a pick-up order, when applying for a credit allocation. Recurring Television Series may submit an application without a pick-up order, but shall not receive a credit allocation until proof of a pick-up order has been submitted.(6) Relocating statement. Applicant certifies that the credit provided is the primary reason for relocation to California (if applicable). If submitting Relocating Statement, the detailed narrative statement is not required. The certification shall be submitted in PDF or equivalent format.(l) Within thirty (30) business days of receipt of the completed application and all requested supporting documents, the Director of the CFC, or his or her designee, will notify the applicant whether the application is accepted or disqualified. An approved application shall meet the Eligibility Requirements in Section 5510. Upon approval, a Credit Allocation Letter, CFC Form DD (Rev. 11/27/15) hereby incorporated by reference, shall be issued to the applicant indicating the amount of tax credits allocated, as provided in Section 5514. Failure to submit all requested documents above, as applicable, shall be good cause to disqualify the applicant.(m) As soon as feasible, but not less than four (4) weeks prior to the start of principal photography, the production accountant is required to attend an orientation meeting with the Director of the CFC or his or her designee, along with any or all of the following staff members: a primary producer, unit production manager, or other appropriate personnel as determined by the applicant. Applicants and staff members shall not be required to attend more than one (1) orientation meeting for a motion picture in the program.(n) Any television series, relocated television series and any television series based on a pilot that has been approved and issued a Credit Allocation Letter, shall be given first priority for a credit allocation during an open allocation period in each subsequent year in the life of that series whenever credits are allocated within a fiscal year. (1) Each recurring television series shall submit a new application and pick-up order, if available, for each season prior to any open application period as specified by the CFC in its written notification.(2) Recurring television series will be prioritized in subsequent years based upon the fiscal year of original credit allocation with oldest television series applications entitled to first priority. In the event that further prioritization is necessary, jobs ratios from the most current application for the series shall be used.(o) Principal photography in California shall commence no later than one hundred eighty (180) calendar days after the credit allocation letter is issued. If the production does not begin principal photography prior to the 180-day deadline, the tax credit allocation shall be revoked, unless a Force Majeure event has occurred which directly prevented the production from commencing within the 180-day deadline. With submission of documentation verifying such event, the CFC may grant an extension. If a production implements a hiatus during the principal photography period, any and all hiatus period(s) may be no longer than one hundred twenty (120) calendar days in aggregate for the entire duration of the production.Cal. Code Regs. Tit. 10, § 5509
1. New section filed 4-13-2015 as an emergency; operative 4-13-2015 (Register 2015, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-12-2015 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-15-2015 as an emergency; operative 10-15-2015 (Register 2015, No. 42). A Certificate of Compliance must be transmitted to OAL by 1-13-2016 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 1-7-2016 as an emergency, including further amendment of section; operative 1-7-2016 (Register 2016, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-6-2016 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 1-7-2016 order, including further amendment of section, transmitted to OAL 3-29-2016 and filed 5-11-2016; amendments operative 5-11-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 20). Note: Authority cited: Sections 17053.95(e) and 23695(e), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 6902.5, 17053.95(g) and 23695(g), Revenue and Taxation Code; and Section 14998.1, Government Code.
1. New section filed 4-13-2015 as an emergency; operative 4/13/2015 (Register 2015, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-12-2015 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-15-2015 as an emergency; operative 10-15-2015 (Register 2015, No. 42). A Certificate of Compliance must be transmitted to OAL by 1-13-2016 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 1-7-2016 as an emergency, including further amendment of section; operative 1-7-2016 (Register 2016, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-6-2016 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 1-7-2016 order, including further amendment of section, transmitted to OAL 3-29-2016 and filed 5-11-2016; amendments operative 5/11/2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 20).