Section 5520 - Definitions(a) "Applicable period" refers to production outside the Los Angeles zone, but in the state of California, that commences with preproduction and ends when original photography concludes outside the Los Angeles zone. It includes the time necessary to strike a remote location and return to the Los Angeles zone.(b) "Applicant" is any person, corporation, partnership, limited partnership, limited liability company (LLC) or other entity that is principally engaged in the production of a "qualified motion picture" and that controls the film or television program during preproduction, production and postproduction. The applicant is the qualified taxpayer that upon final approval will receive the tax credit certificate.(c) "California Film Commission" (CFC) is a state entity established and described in Government Code section 14998 et seq. that, among other functions, facilitates and promotes motion picture and television production in the State of California.(d) "California in-state Vendor" is a vendor or supplier which has an office or other place of business in California, and is registered or qualified with the California Secretary of State, or is required to file a return with the California Franchise Tax Board under Parts 10 or 11 of the Revenue and Taxation Code.(e) "Credit Allocation Letter" (CAL) is the document issued by the California Film Commission reserving an amount of tax credits to an applicant having a qualified motion picture based on an estimate of qualified expenditures.(f) "Contracted Services" means the hiring of a third party to work or perform services on behalf of the applicant including, but not limited to, visual effect shot costs, makeup prosthetic packages, sound mixing, and creation of postproduction delivery items.(g) "Documentary" means a film or television project dealing with factual events, that are photographed in actual occurrence or depicted through techniques including, but not limited to partial reenactment, stock footage, stills, animation, or stop-motion.(h) "Feature Film" means a production of a film with a minimum budget of one million dollars ($1,000,000) that has a running time of at least seventy-five (75) minutes.(i) "Force Majeure" means an event or series of events, which are not under the control of the qualified tax payer, including death, disability, disfigurement or breach by the motion picture director or principal cast member, an act of God, including, but not limited to, fire, flood, earthquake, storm, hurricane or other natural disaster, labor disruption, terrorist activities or government sanction.(j) "Hiatus" means a break or interruption in the continuity of work.(k) "Independent film" means a film with a running time of at least seventy-five (75) minutes with a minimum budget of one million dollars ($1,000,000) which is produced by a company that is not publicly traded and a publicly traded company does not own, directly or indirectly, more than twenty-five percent (25%) of the producing company.(l) "Jobs Ratio" means the amount of qualified wages paid to qualified individuals divided by the amount of tax credit as further described in Revenue and Taxation Code section 17053.98(b)(7) and 23698(b)(7).(m) "Limited series" shall be understood to have the same meaning as "miniseries," as defined in section 5520(o) of this subdivision, and the terms may be used interchangeably for purposes of the California Film and Television Tax Credit Program.(n) "Local Hire Labor" refers to qualified individuals who reside in California, but outside the Los Angeles zone, and who are working outside the Los Angeles zone during the applicable period.(o) "Miniseries" means a motion picture based on a single theme or storyline that is resolved within the piece. A miniseries consists of two or more episodes each longer than 40 minutes of running time, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000) per episode.(p) "Office or other place of business" means real property with a physical address in California that is owned or leased by a vendor for the purpose of conducting business. For purposes of these regulations, conducting business includes maintaining a product inventory or otherwise creating, assembling or offering for sale the product purchased or leased by a motion picture production company.(q) "Outside Los Angeles zone vendor" means a vendor or supplier in California which maintains an office or place of business outside the Los Angeles zone, and is registered or qualified with the California Secretary of State, or is required to file a return with the California Franchise Tax Board under Parts 10 or 11 of the Revenue and Taxation Code and employs one or more full-time employees, or is a sole proprietor working at the place of business outside the Los Angeles zone. Pass-through businesses do not qualify as an "Outside Los Angeles zone vendor."(r) "Pass-through business" means a company maintaining an office or other place of business in California that primarily fulfills orders from a production company for products or third-party services from sources other than its own inventories or employees.(s) "Pick-up order" means a contractual obligation from a licensee-exhibitor that a pilot or television series has been ordered or renewed for the production of an initial episode or episodes to be delivered within a specific time frame.(t) "Pilot" means the initial episode produced for a proposed television series that is longer than 40 minutes of running time, exclusive of commercials, with a minimum production budget of one million dollars ($1,000,000).(u) "Principal photography days" means the number of days shot by the principal unit with the director present and lead actors usually present. "Principal photography days" in California does not include the filming of primarily backgrounds, visual effects, action, and/or crowd scenes by the second, stunt, or visual effects units.(v) "Producer" means any individual who receives an on-screen producer credit including but not limited to any of the following titles: producer, co-producer, line producer, executive producer, co-executive producer, associate producer, supervising producer, post producer, or visual effects producer.(w) "Production budget" means the budget used by the applicant and production company and shall include qualified and non-qualified expenditures. Production budget shall include wages, goods, and services performed and incurred within and outside of California. It does not include costs which are not directly associated with the preproduction, production or postproduction of the project, such as, but not limited to, distribution prints and advertising, marketing, film festival participation, financing, or distribution costs such as DVD manufacturing.(x) "Reality television program" means a program depicting real events and non-actors through actual footage which presents persons in purportedly unscripted or partially scripted situations.(y) "Reasonable Cause" means unforeseen circumstances beyond the control of the applicant, including, but not limited to: an event of force majeure; the cancellation of a television series prior to the completion of the scheduled number of episodes; failure by third parties to perform; a change in essential talent such as the director, principal cast and the associated costs; and/or a change in production financing exigencies resulting in a significant reduction to the production budget.(z) "Recurring Series" means any television series that was approved and issued a CAL in a previous allocation period.(aa) "Scripted series" means a fictional episodic television series based upon scripted materials.(bb) "Television Project" means pilots for new television series, new television series, miniseries, and recurring television series.(cc) "Television Season" means the initial exhibition of a set of interrelated new television episodes lasting no less than six (6) episodes and no more than thirty (30) episodes within a period of twelve (12) months.(dd) "Television Series" also known as "episodic television," means a regularly occurring production and may include a series with multiple episodes available to the public in a single viewing and without regard to distribution transmission.(ee) "Television series that relocated to California" means a television series without regard to episode length or initial media exhibition, with a minimum production budget of one million dollars ($1,000,000) per episode, that filmed at least 75 percent of principal photography days in its most recent season outside of California or has filmed all seasons outside of California and for which the taxpayer certifies that the credit is the primary reason for relocating to California; also known as a Relocating TV series.(ff) "Television series that relocated to California" in fiscal years 2021-22 and 2022-23 means a television series without regard to episode length or initial media exhibition, with a minimum production budget of one million dollars ($1,000,000) per episode that both filmed at least 75 percent of principal photography days for at least one episode outside of California and has not filmed more than 25 percent of principal photography days for any episode inside of California; also known as a Relocating TV series.(gg) "Visual effects" (VFX) means the creation, alteration or enhancement of images that cannot be captured on a set, or location during live action photography and therefore is primarily accomplished in post-production. Visual effects research, development, creation, alteration, or enhancement of images may also occur in pre-production or principal photography. Visual effects includes, but is not limited to, matte paintings, animation, set extensions, computer generated objects, characters and environments, compositing (combining two or more elements in a final image), and wire removals. "Visual effects" does not include fully animated projects, whether created by traditional or digital means.Cal. Code Regs. Tit. 10, § 5520
Note: Authority cited: Sections 17053.98(b), 17053.98(e), 17053.98(i), 23698(b), 23698(e) and 23698(i), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 6902.5, 17053.98 and 23698, Revenue and Taxation Code; and Section 14998.1, Government Code.
Note: Authority cited: Sections 17053.98(b), 17053.98(e), 17053.98(i), 23698(b), 23698(e) and 23698(i), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 6902.5, 17053.98 and 23698, Revenue and Taxation Code; and Section 14998.1, Government Code.
1. New article 3 (sections 5520-5528) and section filed 7-1-2020; operative 7-1-2020 pursuant to Government Code section 11343.4(b)(3)(Register 2020, No. 27).
2. Amendment relettering former subsection (aa) as new subsection (cc), new subsections (aa)-(bb) and amendment of Note filed 2-10-2022; operative 2/10/2022 pursuant to Government Code section 11343.4(b)(3) (Register 2022, No. 6).
3. New subsections (g), (m), (x) and (aa) and subsection relettering filed 12-22-2023; operative 12/22/2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 51).