Illinois’ film tax credit is giving Chicago’s spot production a shot in the arm. Productions under 30 minutes that spend $50,000 in the state can earn a 20% tax credit of their expenditures in the state?one of the best incentives around.
Here are the eight steps necessary to utilize the credit:
- Find an application at www.filmillinois.state.il.us. Give the application to the Illinois Film Office at least 24 hours before your shoot.
The application is a simple form that asks for some basic information on the project, such as shoot dates and estimates of crew size, etc. You need a copy of the production contract if the application is made by someone other than the holder of the copyright on the project (usually the ad agency).
- Applicants are required to submit a diversity plan. It’s a statement of your plan to make a good faith effort to hire crews that reflect the diversity of Illinois’ population. (See a sample plan on the IFO website.) The IFO has a diversity officer to guide you through the process, and a guide to minority crew members and vendors.
The application also asks about a training program for minorities. If your production company is a union signatory, these may call for the employer to pay into a training program, some of which have strong diversity components.
- Applicants are required to demonstrate a competitive need for the credit. This statement says you have bid your project for Illinois and another area and Illinois was selected because of the savings offered by the Illinois Film Tax Credit.
Boards that require a shot of the Sears Tower would not pass this test, but a higher cost bid from another part of the globe demonstrate the competitive need of the credit.
- Shoot and edit your spot. Save your receipts. All your Illinois production costs, including preproduction, postproduction and talent costs, can be included. Your talent use fees for the first year are applicable.
- After production is completed, compile your talent, labor and vendor invoices. Remember that virtually everything spent in the production of the spot in Illinois counts toward the 20%. See a detailed list of qualified expenditures on the IFO website.
- Add up these costs and submit them to an independent CPA for compilation and authentication. The CPA computes the credit and submits it the IFO.
- The IFO reviews the submitted information and issues a credit.
- The final credit can be applied against Illinois tax liability or sold to someone else who has Illinois tax liability. A number of brokers have emerged that have found a market for these credits.
The credit is against Illinois income tax; it may be transferred (sold) once; it may be split; and it may be carried forward, or used in part, over five years.