Haw. Code R. § 18-235-17-03

Current through September, 2024

Section 18-235-17-03 - Claim for credit; procedures; production reports; multiple entities involved

(a) Every taxpayer claiming the credit is required to prequalify for the credit under section 235-17(f), HRS, by submitting a preproduction registration to the Hawaii film office. All taxpayers must submit a preproduction registration for each qualified production to the Hawaii film office no later than seven days before the principal photography start date. The preproduction registration shall include:

(1) A proof of registration with every state agency requiring registration to do business in the State;

(2) A detailed synopsis of the production;

(3) An estimated budget; and

(4) An estimated number of Hawaii resident and non-resident hires, including above-the-line, below-the-line, and extras.

The Hawaii film office will review each request for preproduction registration and issue a letter to each production, notifying the production that it has successfully prequalified under section 235-17(f), HRS. This letter shall also state the amount of credits that were tentatively allocated under section 18-235-17-04(c).

Failure to obtain preproduction registration approval and a tentative allocation of credit under section 18-235-17-04(c) from the Hawaii film office shall constitute a waiver of the credit.

(b) The production report required under section 235-17(h), HRS, shall be made on a calendar year basis. Not later than ninety days following the end of each calendar year in which qualified production costs were incurred, all taxpayers must submit a production report to the Hawaii film office. Failure to file a timely production report shall constitute a waiver of the credit. The production report must include:

(1) A sworn statement identifying qualified production costs incurred during the calendar year;

(2) Data on the production as prescribed by the Hawaii film office;

(3) A detailed expenditure report with summary by department and category made on the form prescribed by the Hawaii film office;

(4) A list of vendors in the format prescribed by the Hawaii film office, including the general excise tax license number of each vendor that is engaged in business in the State;

(5) A list of loan-out companies in the format prescribed by the Hawaii film office, including the general excise tax license number of each loan-out company that is engaged in business in the State;

(6) A list of costs for which use tax was properly paid and substantiation of such payment in the format prescribed by the Hawaii film office;

(7) Crew list;

(8) Confirmation of efforts to hire local talent and crew as described in section 18-235-17-16;

(9) Confirmation of educational or workforce development contributions as described in section 18-235-17-17;

(10) Verification of compliance with section 18-235-17-18(a);

(11) A verification review as described in section 18-235-17-14; and

(12) Information necessary to estimate the benefit of the credit provided in section 235-17, HRS, including:

(A) The number of Hawaii resident and non-resident hires: above-the-line, below-the-line, and extras;

(B) Salary and wage information for resident actors, producers, directors, and other hires;

(C) Salary and wage information for nonresident actors, producers, directors, and other hires; and

(D) Any other information the Hawaii film office determines necessary to estimate the benefits of the credit provided in section 235-17, HRS.

Example: Tommy Taxpayer is a fiscal year taxpayer whose tax year begins on April 1 and ends on March 31. Tommy Taxpayer submits his production report that covers production costs incurred from April 1, 2019 to December 31, 2019 to the Hawaii Film Office on April 20, 2020. Tommy Taxpayer's production report is not timely because it was not submitted within ninety days from the end of the calendar year as required under section 18-235-17-03(b).

(c) With respect to fiscal year taxpayers and the production report due on March 30, 2020, fiscal year taxpayers shall only report qualified production costs incurred from the first day of the taxpayer's fiscal year to December 31, 2019.

For production reports due on March 31, 2021, March 31, 2022, March 31, 2023, March 30, 2024, and March 31, 2025, fiscal year taxpayers shall report qualified production costs incurred from January 1 to December 31 of the preceding calendar year as if they were calendar year taxpayers.

Fiscal year taxpayers shall be allowed to submit final production reports that report qualified production costs incurred from January 1, 2025 to the last day of the taxpayer's fiscal year that began after January 1, 2024. This final report shall be due no later than ninety days following the end of the taxpayer's fiscal year; provided that in no case shall any claims for credit be made after December 31, 2025.

Example 1: FIS Productions is a fiscal year taxpayer whose tax year begins on April 1, 2019 and ends on March 31, 2020. FIS Productions may only report qualified production costs incurred from April 1,2019 to December 31, 2019 because for fiscal year taxpayers' production reports due on March 30, 2020, only qualified production costs incurred from the first day of the taxpayer's fiscal year to December 31, 2019 may be reported.

Example 2: Assume the same facts as Example 1. For the production report due on March 31, 2021, FIS Productions may report qualified production costs incurred from January 1, 2020 to December 31, 2020.

Example 3: Assume the same facts as Example 1. FIS Productions may submit a final production report under section 18-235-17-03(c) reporting qualified production costs incurred from January 1, 2025 to March 31, 2025, the end of FIS Productions' fiscal year. This final report is due June 29, 2025, ninety days from the end of FIS Productions' fiscal year.

(d) The Hawaii film office shall not certify the credit under section 18-235-17-04(d) if the production report is incomplete. In certifying the credit, the Hawaii film office may require any taxpayer to provide substantiation for any production costs.

(e) The Hawaii film office shall issue a certificate to the taxpayer stating the amount of qualified production costs and the amount of credit that was certified under section 18-235-17-04(d). To properly claim the credit, the taxpayer must attach a copy of the certificate to the taxpayer's income tax return, along with any other required forms.

(f) If a taxpayer produces more than one qualified production in a calendar year, the Hawaii film office shall issue a separate certificate for each qualified production.

(g) The Hawaii film office shall issue a single certificate per qualified production per calendar year. If multiple taxpayers participate in one qualified production, each taxpayer shall attach a copy of the certificate issued to the qualified production to the taxpayer's income tax return; provided that the amount of credit claimed shall not exceed the amount to which the taxpayer is entitled.

(h) The $ 15,000,000 cap shall be applied per qualified production, not per taxpayer. If a taxpayer produces multiple qualified productions in one calendar year, the taxpayer may receive total credit for that calendar year in excess of $15,000,000.

(i) Claims for credit under section 235-17, HRS, must correspond with the taxpayer's accounting method, except as provided in section 18-235-17-03(c). In general, a cash method taxpayer must claim all qualified production costs in the calendar year in which the costs were paid, as provided in section 461 of the Internal Revenue Code of 1986, as amended. Costs that remain unpaid at the time the production report is submitted to the Hawaii film office are not qualified production costs. Any unpaid costs at the time the production report is submitted will not be considered incurred. An accrual method taxpayer must claim all qualified production costs in the year in which the costs were properly incurred under section 461 of the Internal Revenue Code of 1986, as amended.

(j) Subsection (i), relating to the claiming of qualified production costs in the year the costs are properly accounted for based upon a taxpayer's accounting method, is not intended to conflict with the definitional requirement of a qualified production contained in section 18-235-17-07. A taxpayer must independently satisfy the $200,000 qualified production cost definitional requirement to qualify for the tax credit under section 235-17, HRS. For additional discussion on the definitional requirement of a qualified production, see section 18-235-17-07.

(k) Fiscal year taxpayers shall claim the credit for the fiscal year during which the calendar year ends.

Example: FYT Productions is a taxpayer with a fiscal tax year that begins on April 1 and ends on March 31. FYT Productions incurs qualified production costs during calendar year 2019 and receives a certificate from the Hawaii film office for these costs. FYT Productions must claim the credit for the tax year that begins on April 1,2019 and ends on March 31,2020 because the end of calendar year 2019 falls within this fiscal year.

Haw. Code R. § 18-235-17-03

[Eff 11/17/2019] (Auth: HRS § 231-3(9)) (Imp: HRS § 235-17)