Want to ask a question? Click here

How does the N.C. film incentive work?

Amy Hotz
StarNews

North Carolina offers what amounts to a rebate on money spent in the state, an incentive meant to make filming in North Carolina more attractive.

Filmmakers and legislators justify this by pointing to the “secondary” taxes put into the state treasury by film productions through other sales, gas, employment, property and other taxes. Some critics, however, wonder why the film industry should be singled out for special treatment and whether North Carolina can compete with packages offered by other states and still benefit.

Here’s how the plan works:

To qualify for the incentive, a production must prove it has spent at least $250,000 within the state. Withholding taxes still must be paid.

The company then files form NC-415, which triggers an audit. Once all the rules are determined to have been followed, tax collectors cut the production a check for 25 percent of that money. The check may not exceed $20 million.

For example, if Sony Pictures spent $300,000 in lumber, paint, wardrobe, rental cars and all the other incidentals that make movies happen, the company would receive a check for $75,000.

Compensation and wages paid to individual employees (up to $1 million) on which withholding payments were remitted to the N.C. Department of Revenue are eligible for the tax credit regardless of whether they are paid to residents or non-residents.

North Carolina must also receive on-screen credit.

A more complete description of the rules can be found on the N.C. Film Office’s website.

Some backers don’t think the current plan makes North Carolina competitive enough. Gov. Beverly Perdue raised the incentives July 10, 2010, when she ratified House Bill 1973 and on July 11, 2010, when she ratified House Bill 713.

These bills raised the incentive from 15 percent to 25 percent and raised the production cap from $7.5 million to $20 million. The new bills also expanded the list of what is defined as a qualifying expense and eliminated the 6.9 percent corporate income tax which allows the production company to receive its full 25 percent benefit.

But there was also a movement to do away with the $1 million cap on highly compensated individuals. This measure did not pass the General Assembly.

Pro-incentive folks argue that these changes would attract the mega-million-dollar blockbusters to the state. And that tourism from film fans and other factors provide benefits that can’t be calculated by accountants. I’ve interviewed people who also point to the environmental factor. They say that unlike some industries that emit harmful pollutants, movie-making is pretty clean.

Those against any kind of film incentives argue that if preferential treatment is given to one industry, it should be offered to all industries in North Carolina. Many point out that the state’s once thriving textile and furniture industries were left out in the cold, leaving thousands without jobs. Some also argue that as other states inch up their incentives packages, North Carolina will be forced to do the same, possibly creating a fiscal environment that may not be beneficial for the state.

NOTE: The N.C. Film Office confirmed in April 2012 that this information is still current.

Related links:

Strengthened film incentives face uphill battle

Where do movies stars typically stay when shooting a film in Wilmington?

Why are no more films being made in Wilmington?

What are the best and worst movies ever made in the Wilmington area?

What is the economic impact and number of jobs created by film productions?

User-contributed question by:
Ed

Got a comment about this post or know more about the answer? Click here to let us know!


Bookmark and Share

One Response to “ How does the N.C. film incentive work?”

  1. On January 20, 2011 at 4:47 pm Jim Ware wrote:

    This answer was updated on Jan. 20, 2011, by Amy Hotz.



X
Ask a question
X

Ask a question

If you’re looking for answers about living in coastal North Carolina, you’ve come to the right place. If we don’t have the answer to your question, we’ll find out or try to find someone who does. Hey, that’s our job! So, ask your question below and we’ll do our best to find the answer. Once we do, we’ll post it in an appropriate category.





Can we use your name to credit you by name (no e-mail or other contact information) with this question when we post an answer?
Yes
Your question:

Post a comment
X

Talk to us!

Have a comment about this post or know more about the answer? Use this form to let us know. Note that all comments are moderated and must be approved before they are posted, although you may see your own comments the first time you post them.





Your comment: