Lights, Camera, Action And Tax Cut! Spotlight On The Film Incentive Reform Act of 2014

Rep. Collin Peterson, D-Minn., has introduced new legislation that if passed into law would amend I.R.C. § 181 to disqualify certain movie and television producers from receiving tax incentives from the federal government if any of the production is performed outside the United States or its possessions. The bill, known as the Film Incentive Reform Act of 2014, would amend I.R.C. § 181, to change the requirements required to expense the cost of qualified film, television, and theatrical productions.

As a background, The American Federation of Musicians (hereinafter “AFM”) strategically lobbied Congress in 2003 and 2004 to add § 181 to the Code through the American Job Creation Act of 2004 which outlines the treatment of qualified film and television production expenditures for the purposes of providing tax incentives for domestic film production within the United States and its possessions. According to the AFM, more than $ 400 million per year in I.R.C. § 181 tax incentives are claimed by U.S. film producers since its inception into the Code in 2004.

The Film Incentive Reform Act would remove a loophole in the current statute allowing offshore film production to be claimed. Rep. Collin Peterson, D-Minn., said in a prepared statement that “The Film Incentive Reform Act of 2014 would close this loophole, ending the tax break to companies that send American jobs offshore. This legislation will save taxpayer money and keep more jobs in the United States”. Noting, the AFM estimates that musicians lose at least $30 million in salaries each year through the offshoring of television and film music soundtrack jobs. The legislation would modify the current statute to require film producers to spend 100 percent of its production costs within the United States and its possessions, effectively keeping taxpayer money at home.

For legislative updates from Capitol Hill and complete coverage of the latest statutory, administrative, and judicial interpretations please connect with Peter J. Scalise on TaxConnections.

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC a member of The Prager Metis International Group. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty years of progressive public accounting experience developing, managing and leading multi-million dollar tax advisory practices on both a regional and national level.

Peter is a highly acclaimed thought leader in the fields of accounting and taxation with deep subject matter expertise in connection to designing, implementing and defending sustainable methodologies for specialty tax incentives including, but not limited to, research tax incentives; orphan drug credits; therapeutic discovery credits; accounting methods and periods; energy tax incentives in connection to green building envelope efficiency and benchmarking, solar energy, bio energies, fuel cells, wind turbines, micro turbines, and geothermal systems; and comprehensive fixed asset analysis incorporating principles of construction tax planning, cost segregation analysis and the final treasury regulations governing tangible property.

Peter is a renowned keynote speaker and an extensively published author on specialty tax incentives, tax controversy matters, and legislative updates from Capitol Hill for NAREIT, AGRION, USGBC, AICPA, ASTP, NATP, ABA, AIA, and TEI. Peter serves as a member of the Tax Faculty for CPAacademy, iShade and TaxConnections University (“TCU”). Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (“ASTP”) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable.

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