Ala. Admin. Code r. 281-3-1-.02

Current through Register Vol. 43, No. 1, October 31, 2024

Section 281-3-1-.02 - Definitions

(1) The following definitions apply for purposes of the rules promulgated under Acts of Alabama, 2009-144, known as the Entertainment Industry Incentive Act of 2009:

(a)ABOVE THE LINE EXPENDITURES. Actual compensation paid by a Qualified Production Company to individuals who guide, influence and add to the creative direction or creative process of a Qualified Production. These expenditures include but are not limited to compensation paid by a Qualified Production Company to the screenwriter, producer, director and principal actors.

(b)ACT. Acts of Alabama 2009-144, known as the Entertainment Industry Incentive Act of 2009 as amended by Act No. 2011-695, Act No. 2012-167, Act No. 2012-212 and Act No. 2013-34.

(c)ADVISORY BOARD. Group of individuals to advise the Office in matters related to the administration of the Act.

(d)ALABAMA-BASED COMPANY. Any Company organized under the laws of the State of Alabama or qualified to do business in the State of Alabama with the Alabama Secretary of State; which maintains and has maintained throughout the twelve month period immediately preceding the commencement of production of a Qualified Production, a physical office within the State of Alabama staffed by one or more employees who work a minimum of 36 hours for the Company during a typical work week; are paid and supervised directly by the Company and who typically devote all of their workday to performing services for the Company within the State of Alabama.

(e)APPLICANT. A Company, intending to produce a Qualified Production that applies for Incentives.

(f)APPLICATION. Form to be completed by an Applicant requesting Incentives and submitted to the Office for approval by the Office.

(g)BELOW THE LINE EXPENDITURES. Payroll and Production Expenditures other than Above the Line Expenditures. These expenditures include but are not limited to actual compensation paid by a Qualified Production Company to individuals who are non-starring cast members. Examples of the positions in this category are director of photography, assistant directors, gaffer and grips.

(h)CHART OF PRODUCTION EXPENDITURES. A list of examples of expense items and whether they constitute Production Expenditures if Expended in Alabama by a Qualified Production Company on a State-Certified Production.

(i)COMPANY. A corporation, partnership, limited liability company, or any other business entity.

(j)CPA. A certified public accountant, having passed the uniform certified public accountant examination, who is licensed to practice accountancy by a state board of public accountancy, or its designee, and is in good standing with said state board of public accountancy, or its designee.

(k)DEPARTMENT. The Alabama Department of Revenue.

(l)END CREDIT. A statement displayed at the end of the credits, where applicable, of a State-Certified Production proclaiming "FILMED ON LOCATION IN ALABAMA," or other comparable form of acknowledgement, along with a state logo submitted and approved by the Alabama Film Office.

(m)ENTERTAINMENT INDUSTRY. Those persons or entities engaged in the production of entertainment content.

(n)EXPENDED IN ALABAMA. In the case of tangible property, property which is acquired or leased from a source within the State of Alabama; in the case of services, services performed in the State of Alabama for a Qualified Production project.

(o)FINAL INCENTIVE AUDIT. An audit, performed by a CPA, of the books and records of a Qualified Production Company performed upon completion of the production activities in the State of Alabama associated with a State-Certified Production. Such audit shall verify each Production Expenditure claimed by a Qualified Production Company.

(p)INCENTIVES. The Rebate and exemptions from the state portion, but not the local portion, of any sales, use, and lodgings taxes available to certain Qualified Production Companies for Production Expenditures under the Act.

(q)LOAN-OUT AFFIDAVIT. A form to be designed and distributed by the Alabama Department of Revenue to be completed and delivered by each Loan-Out Company who received payment for goods and services which the Applicant requests to be treated as Qualified Production Expenses for a State-Certified Production.

(r)LOAN-OUT COMPANY. A Company, owned in whole or in part by a person performing services for a Qualified Production Company with respect to a State-Certified Production with which a Qualified Production Company contracts and pays for the performance of such services by said person.

(s)OFFICE. The Alabama Film Office.

(t)PAYROLL. All salary, wages, and other compensation, including specifically, but not limited to, compensation and benefits, related benefits, and any corresponding state and federal income, unemployment, or other payroll tax obligation, and workers compensation provided to resident and non-resident producers, directors, writers, actors, and other personnel involved in qualified production projects in Alabama.

(u)PRODUCTION EXPENDITURES.

1. Preproduction, production, and postproduction expenditures incurred in the State of Alabama subsequent to the approval by the Office as a State-Certified Production, except as provided in Ala. Admin. Code r. 281-3-11-.04(1)(g), that are directly used in a State-Certified Production, including, but not limited to, the following: set construction and operation, wardrobe, makeup, set accessories, and related services; costs associated with photography and sound synchronization, lighting, and related services and materials; editing and related services; rental of facilities and equipment leasing of vehicles; costs of food and lodging; cost of catering; digital or tape editing, film processing, transfer of film to tape or digital format; transfer direct to DVD, cable, or satellite for distribution; sound mixing, special and visual effects including duplication, firm processing digital, DVD, music composition, and satellite distribution; total aggregate payroll; music; airfare; insurance costs of bonding; and or other similar production expenditures.

2. The term includes financial contributions or educational or workforce development in partnership with related educational institutions, or local industry organizations, or both, contributed toward the furtherance of the local entertainment media industries.

3. The term does not include postproduction expenditures for marketing or any amounts that are paid to persons or entities as a result of their participation in profits from the exploitation of a motion picture production.

4. There is a rebuttable presumption that the term does not include expenditures paid by a Qualified Production Company to a Related Party for goods or services.

5. The term does not include finance fees or similar charges.

(v)QUALIFIED PRODUCTION.

1. The term means entertainment content created in whole or in part within the state, including motion pictures; soundtracks for motion pictures; documentaries; long- form, specials, miniseries, series, sound recordings, videos and music videos, and interstitials television programming; interactive television; interactive games; video games; commercials; infomercials; any format of digital media, including an interactive website that is intended for national or international distribution or exhibition to the general public; and any trailer, pilot, video teaser, or demo created primarily to stimulate the sale, marketing, promotion, or exploitation or future investment in either a product or a qualified production via any means and media in any digital media format, film, or videotape, provided such program meets all the underlying criteria of a qualified production.

2. The term does not include any ongoing television program created primarily as news, weather, or financial market reports, a production featuring current events, sporting events, an awards show or other gala event, a production whose sole purpose is fund-raising, a long-form production that primarily markets a product or service, a production used for corporate training or in-house corporate advertising or other similar productions; nor does the term include any production for which records are required to be maintained under 18 U.S.C. § 2257 with respect to sexually explicit content; nor does the term mean or include any form of gambling, gaming, wagering, or pari-mutuel wagering activity or enterprise; nor does the term include any music festival, concert, show, commemorative service or exhibition which is conducted primarily for the entertainment, education or enrichment of a live audience.

(w)QUALIFIED PRODUCTION COMPANY.

1. A Company engaged in the business of producing a Qualified Production.

2. The term does not mean or include any Company owned, affiliated, or controlled, in whole or in part, by any Company or person which is in default on a loan.

(x)REBATE. Incentive available to a Qualified Production Company equal to 25% of its Production Expenditures, excluding payroll paid to Residents of Alabama, on a State-Certified Production plus 35% of all payroll paid to Residents of Alabama for the State-Certified Production that may be used to offset any Alabama income tax liability of the Qualified Production Company for the tax year during which production activity in Alabama on the State-Certified Production concludes, with the excess by which the Rebate exceeds the Qualified Production Company's Alabama income tax liability being refunded to the Qualified Production Company; provided that such amount shall not exceed the amount of total Incentives available to a Qualified Production Company less the amount of any state, but not local, sales, use, and lodgings taxes that would have been paid but for the exemption from the same.

(y)RELATED PARTY.A person or Company that bears a relationship to a Qualified Production Company described in 26 U.S.C. §§ 267(b), (c), or (e), as amended or any other person or entity owned by a person with a financial interest in a Qualified Production Company.

(z)REPORT. Statement of a CPA issued upon the completion of the Final Incentive Audit that provides a summary of the Production Expenditures Expended in Alabama.

(aa)RESIDENT OF ALABAMA. A natural person and, for the purpose of determining eligibility for the Incentives provided by the Act, any person domiciled in the State of Alabama and any other person who maintains a permanent place of abode within the State and spends in the aggregate more than 6 months of each year within the State of Alabama.

(bb)STATE-CERTIFIED PRODUCTION. A Qualified Production approved by the Office, produced by a Qualified Production Company.

Ala. Admin. Code r. 281-3-1-.02

New Rule: Filed August 13, 2012; effective September 17, 2012.

Amended by Alabama Administrative Monthly Volume XXXIII, Issue No. 05, February 27, 2015, eff. 3/19/2015.

Author: Department of Commerce/Alabama Film Office

Statutory Authority:Code of Ala. 1975, §§ 41-7A-40 through -48.