Film Credits

Monetizing Moviemaking in the State of Georgia

Since its passage in 2008, the Georgia Entertainment Industry Investment Act (the “Act”) has become widely known, and the tax credits it creates – called “film credits” – have led to the growth of the film industry in Georgia.

In 2013, the direct investment in the State of Georgia attributable to the Act exceeded $1 billion, with a resulting economic impact of approximately $3.1 billion. In Georgia, the entertainment industry now employs some 25,000 people and engages over 1,000 production suppliers and vendors. Since passage of the Act, over 700 entertainment productions have been filmed in Georgia.

Planning and accounting are key to maximizing the amount of revenue from the sale of film credits and minimizing the amount of time it takes to monetize the credits. Setting up an accounting system on the front end that not only tracks expenses but also identifies the qualifying Georgia expenses will save both time and money when it comes time to sell the film credits.

Overview of the Act

Film credits are available for qualified production expenditures incurred in Georgia as part of a state-certified production in Georgia. The base credit is equal to 20 percent of the qualified production expenditures in Georgia, and an additional credit equal to 10 percent is available for using a Georgia film logo in the credit crawl. The total credit with the Georgia logo is 30 percent of qualified production expenditures in Georgia. The credit applies to pre-production, production and post-production activities in Georgia. Film credits are not issued for the cost of a script.

The buyers of film credits are taxpayers with a Georgia income tax liability. Usually a broker puts buyers and sellers together. Buying credits can save 10 percent or more of an expected state tax liability. There’s not a legal minimum, but, as a practical matter, sellers or brokers usually have a minimum sales amount of at least $10,000.

Prior to the beginning of principal filming, the production company submits an application to the Georgia Film Office for certification of the production (minimum expenditures of $500,000). After submission, the Film Office certifies that the production qualifies for film credits, but does not specify the actual amount of the credits.

The production company makes qualified production expenditures in Georgia. The accrued credits may be used by the production company against income taxes or employer withholding taxes, or sold to a third party for use against income tax, but not employment tax.

Georgia has several excellent brokers for sales of film credits. The price is determined by market forces in the transferrable tax credit markets with a minimum of 60 cents per dollar; however, the actual market is usually 85 to 90 cents per dollar.

Credits are treated as payments in the year in which the credit was created. This means that a taxpayer with a prior-year liability can purchase prior-year credits and eliminate interest and penalties, which can be a large additional savings.

There are several ways a buyer of credits can satisfy itself that the credits are bona fide. First, the Georgia Department of Revenue will audit qualifying expenditures and issue a binding letter setting forth the Department’s findings. Alternatively, purchasers often rely on a “comfort letter” provided by an independent CPA firm. And, of course, a seller with sufficient assets can provide a binding guarantee. State audits have a slight premium over comfort letters from independent CPAs because the audits are binding and are not subject to adjustment. The disadvantage of the state audit is timing – the wait for the state audit is often at least six months after production. The state audit is preferred by larger production companies, but smaller production companies are often in a hurry to monetize the credits.


There is a fundamental difference between an IRS audit and a film credit audit. Only qualified Georgia expenditures are eligible for the film credits. In addition to showing that an expenditure was made, it is necessary to show it was made in Georgia. If the accounting system is not set up correctly, the result can be a delay or, at worst, a loss of the film credits. The key for a seller is to get assistance and input from qualified advisors when setting up the accounting system before starting production, and, if planning to rely on a CPA comfort letter, to have the accounting firm commit at the time of engagement to the timing of the post-production audit. In summary, using experienced advisors will save time and money.

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