Section 121.5 - Eligible and Ineligible In-State Spending(a) The following are eligible expenditures:(1) Wages paid to Texas Residents for work performed in Texas, including additional compensation paid as part of a contractual or collective bargaining agreement.(2) Additional compensation or reimbursements paid to Texas Residents, including, but not limited to: (A) mileage or car allowance;(B) housing allowance; and(C) box or kit rentals for use of personal equipment.(3) Workers compensation insurance premiums for Texas Residents, but only if the premiums are paid to a Texas-based insurance company or broker.(4) Payroll company service fees for Texas Residents, but only if paid to a Texas-based payroll company that processes payroll within Texas.(5) Payments made to Texas-domiciled entities, sole proprietorships, or individuals for goods and services used in Texas that are directly attributable to the Physical Production of the project. In the case of Digital Interactive Media Productions, Visual Effects Projects, and animated projects, the amount attributable to Pre-Production and research and development costs shall be limited to an amount not to exceed 30% of the project's overall in-state spending.(6) Payments for shipping on shipments originating in Texas.(7) Air travel to and from Texas on a Texas-based airline or on a Texas-based air charter service, provided that an itemized receipt showing an itinerary and passenger name from the airline is provided confirming payment.(8) Rentals of vehicles registered and licensed in the State of Texas or rented from a Texas-domiciled entity or sole proprietorship, including, but not limited to, national rental car companies with one or more physical outlets in Texas.(9) Fees paid to Texas Residents to compose, orchestrate, and perform music that is specifically created for the project.(10) Legal fees directly attributable to the Physical Production of the project that are paid to Texas-based lawyers or law firms.(11) Internet purchases, but only if purchased from a Texas-domiciled entity or sole proprietorship or a retailer with a physical store or outlet in Texas. Items purchased must be shipped directly to Texas.(12) Capital expenditures that are:(A) less than $1,000 for an individual item from a Texas-domiciled entity or sole proprietorship; or(B) equal to or greater than $1,000 for an individual item purchased that is not exhausted during the course of Production, so long as such item is sold or appropriately disposed of at the end of Production and evidence of such sale or disposition is furnished to the Texas Film Commission (Commission). Evidence of sale or disposition must show that only the difference between the purchase price and the sale price is submitted as an eligible expenditure and a copy of the check or receipt for the sale must be included as back up with the original purchase documentation.(13) Location fees, if an executed location agreement by and between the Applicant and the location owner or owner's representative is provided to the Commission with the Applicant's Expended Budget.(b) The following are ineligible expenditures:(1) Payments made to non-Texas-domiciled entities, or if a sole proprietorship or individual, to non-Texas Residents.(2) Payments made for goods and services not used in Texas.(3) Payments made for goods and services that are not directly attributable to the Physical Production of the project.(4) Payments made by Digital Interactive Media Productions, Visual Effects Projects, and animated projects for Pre-Production costs that exceed 30% of the project's overall in-state spending.(5) Expenses related to distribution, publicity, marketing, or promotion of the project, including, but not limited to, promotional stills.(6) Payments, other than properly allowable location fees, for facilities and automobiles that are part of a permanent/continuous business operation including, but not limited to, rental, lease or mortgage payments, utilities, software, and insurance.(7) Wages paid to non-Texas Residents, including additional compensation paid as part of a contractual or collective bargaining agreement.(8) Payments made to a company, entity, association, or person that acts as an agent or broker for companies, entities, associations, or persons outside of Texas to provide goods, services, or labor for the purpose of taking advantage of the Texas Moving Image Industry Incentive Program (also known as "pass-through" entities).(9) Fees for story rights, music rights, or clearance rights and licensing fees.(10) Additional compensation or reimbursements paid to non-Texas Residents, including, but not limited to: (A) mileage or car allowance;(B) housing allowance; and(C) box or kit rentals for use of personal equipment.(11) Workers' compensation insurance payments for non-Texas Residents.(12) Payroll company service fees for non-Texas Residents or those paid to a non-Texas-based payroll company.(13) Payments for shipments originating outside of Texas.(14) Payments for mobile and landline telephone service if the service or billing address is not in Texas.(15) Payments for alcoholic beverages, cigarettes, and tobacco products.(16) Payments to adult-oriented businesses or for adult-oriented material.(17) Payments for entertainment, including, but not limited to, parties, event tickets, movies, hotel mini-bar items, meals unrelated to the Physical Production of the project, and personal gifts.(18) Payments for tips and gratuities.(19) Capital expenditures for an individual item over $1,000 which item is not exhausted during the course of Production, unless such purchase is from a Texas-domiciled entity or sole proprietorship, the item is sold at the end of the Production and evidence of such sale is furnished to the Commission. The documentation provided to the Commission must show that only the difference between the purchase price and the sale price is submitted as an eligible expenditure and a copy of the check or receipt for the sale should be included as back up with the original purchase documentation.(20) Payments to any business that sells alcohol or tobacco products reflected on receipts which are not itemized, even if the submitted item itself is otherwise eligible.(21) Any "talent handling fees," "overage fees," and "production fees" for a Commercial where the Applicant is a Production Company rather than the client or advertisement agency, other than the following items which must have been budgeted on the original, awarded bid to be eligible expenditures: the Applicant's insurance fees from the actual column of the actual Association of Independent Commercial Producers (AICP) budget (if it does not exceed the original, awarded bid and if a Texas-based insurance company or broker is used); editorial or Postproduction fees from the actual column of the AICP budget (if such fees do not exceed the Postproduction fees on the original, awarded bid); and any bona fide internal billing items which do not exceed the usual and customary cost of the goods or services, such as when Production Company employees work directly on the production using equipment and/or studio space owned by the Applicant that is "rented" to the production in lieu of using an outside vendor.(22) Any payments made other than by the Applicant, including, but not limited to, payments made on behalf of the Applicant by a third party, unless a production services agreement or similar documentation is provided to show sufficient proof, as determined by the Commission in its sole discretion, of the relationship between the Applicant and the third party.(c) The Commission reserves the right to determine which expenses are eligible or ineligible.13 Tex. Admin. Code § 121.5
The provisions of this §121.5 adopted to be effective March 10, 2008, 33 TexReg 2019; amended to be effective November 22, 2009, 34 TexReg 8029; amended to be effective August 28, 2011, 36 TexReg 5201; amended to be effective September 5, 2013, 38 TexReg 5714; Amended by Texas Register, Volume 48, Number 19, May 12, 2023, TexReg 2486, eff. 5/21/2023