1) The minimum spend for most film projects was lowered to $250,0002) The maximum amount of tax credits available for a film project is now $10,000,0003) The salary, wages, and other compensation paid to Writers, Directors and Producers are not included in total direct costs4) A new category of films was created for Maryland small or independent film entities (Maryland Small Films) with total direct costs greater than $25,0005) 10% of the annual authorized credit amount is now set aside for Maryland Small Films6) The statute authorizes $8,000,000 in credits for FY2019, $11,000,000 in credits for FY2020, 14,000,000 in credits for FY2021, $17,000,000 in credits for FY2022, and $20,000,000 in credits for FY2023 and each fiscal year thereafter.
1) BEFORE beginning any film production activity in the State, an Application for Qualification or an Application for Qualification – MD Small Film MUST be submitted to the Department along with ALL required attachments, including the Application Addendum.
2) WITHIN 180 days after the completion of all film production activity in the State (the "completion date"), an Application for Final Tax Credit Certification or an Application for Final Tax Credit Certification – MD Small Film MUST be submitted to the Department along with ALL required final documentation.
1) BEFORE the start of principal photography in the State, a Form for Additional Documentation & Information MUST be submitted to the Department along with ALL required attachments. (Maryland Small Films excepted)
2) BEFORE the conclusion of principal photography in the State, the Department must approve the draft engagement letter for the independent, third-party CPA outlining sample sizes and percentages for the Agreed Upon Procedures. The Department will determine sample sizes and percentages. (Maryland Small Films with total direct costs less than $250,000 excepted)
• All statutory requirements must be met.
• The submitted Application for Qualification must be complete and signed.
• The film production entity must be able to demonstrate complete financing.
• The film production entity must be able to show acceptable evidence of national distribution.
• 50% of principal photography must occur in the State.
• Principal photography must be scheduled to begin within 120 days of receiving the Letter of Qualification from the Department, which may be extended by the Department for up to 90 days at the discretion of the Department based on facts and circumstances beyond the control of the film production entity.
• The total direct costs projected to be incurred in the State must exceed $250,000; or, $25,000 for Maryland Small Films.
• The film production entity must have been organized in Maryland for at least one year prior to the date of application; or, for an individual, unincorporated association, sole proprietorship, or general partnership which is not registered with the Maryland State Department of Assessment and Taxation, has been in active business in Maryland for at least one year prior to the date of application.
• The film production entity must be independently owned and operated.
• The film production entity may not be a subsidiary of another entity. A subsidiary is defined as an entity in which more than 50% of the voting interests are owned or controlled by, either direct or indirectly, another entity.
• The film production entity may not be dominant in its field of operation.
• The film production entity may not employ more than 25 full-time employees.
NOTE: A draft engagement letter outlining sample sizes and percentages must be approved by the Department prior to the conclusion of principal photography on the film production activity in the State. The Department will determine sample sizes and percentages.
• ALL goods and services must be provided by a qualified vendor. A qualified vendor is a vendor that (1) Is qualified to do business in the State and, if applicable, registered and in good standing with the State’s Department of Assessments and Taxation; (2) Maintains a physical location in the State from which employees of the vendor are based; (3) Provides good and services to the film production entity which are provided in the vendor’s historic ordinary course of business; and, (4) The goods and services provided by the vendor to the film production entity are generated from the vendor’s physical location in the State, unless generated from an on-line order. Goods or services which are specialized or technical in nature and are not reasonably available from a qualified vendor may be provided by a non-qualified vendor with the prior approval of the Department.
• The total direct costs may not include any salary, wages or "other compensation" of an individual who receives more than $500,000 for personal services in connection with the film production activity. Compensation includes any payments of wages and/or benefits made to the individual whether paid directly to the individual through cash or a payroll company OR paid to the individual as a loan out or personal services corporation. "Other compensation" includes employer fringes and payments made directly to the employee (i.e., per diem, housing allowance, travel allowance, meal allowance, car allowance, cell phone allowance, kit/box rental, relocation fees, etc.). Salary, wages and "other compensation" are included in calculating the $500,000 threshold. If that $500,000 threshold is reached, then no costs, including the "other compensation," qualify. In addition, the $500,000 in salary, wages or "other compensation" is for the length of the production activity (prep, pre-production, principal, post); not just for time in Maryland.
• The total direct costs may not include any salary, wages or "other compensation" for writers, directors or producers, which are defined as crew members whose credited position contains either writer, director or producer in the title. Those positions include, but are not limited to, Directors, 2nd Unit Directors, 1st ADs, 2nd ADs, Executive Producers, Associate Producers, etc. For crew members whose credited position is a strictly technical role, such as Lighting Director, Casting Director, Director of Photography and Art Director, and assistants whose credited position contains writer, director or producer in the title, their wages, salary and other compensation are eligible direct costs. "Other compensation" includes employer fringes and payments made directly to the employee (i.e., per diem, housing allowance, travel allowance, meal allowance, car allowance, cell phone allowance, kit/box rental, relocation fees, etc.).
• Direct costs must be PRO-RATED based upon the time personnel or materials are IN Maryland and working or used in connection with the film production activity. Insurance premiums, and the like, will be considered as direct costs for the portion allocable to the time spent in Maryland.
• The total direct costs may not include costs associated with filming outside of Maryland borders, including Washington, DC. Costs paid in a lump sum for activities occurring both in and out of the State must be PRO-RATED for the time and costs allocable to the time in Maryland only.
• The total direct costs must be reasonable and negotiated at arms-length.
• Only direct costs directly incurred by the film production entity are authorized.
• Direct costs may only be attributed to the film production activity once.
• Direct costs must be the NET cost of the goods or services, i.e., security deposits must be netted out, etc.
• For all materials or goods with an initial cost greater than $1,000, the direct cost will be the initial cost of the material or good less its value, or resale, upon the completion of the film production activity in the State.
• Only travel expenses INTO Maryland are authorized as a direct cost. Thus, the end point of that leg of travel must be in Maryland. The cost of round trip fares into Maryland would be divided in half.
• Either a relocation fee OR housing is authorized as a direct cost, not both.
• The total direct costs may not include costs for Entertainment, Gifts or Gratuities or any costs coded as such.
• The total direct costs may not include costs for the purchase of vehicles, or other items, which are used primarily for personal use.
• The total direct costs may not include costs for any materials, goods or services that have been recouped by any insurance policies.
• The total direct costs may not include costs for taxes and fees paid to other jurisdictions, including the Federal Government.
• The total direct costs may not include costs for penalties, fines, overages or similar costs.
Maryland Film Office
410-767-6340 / 1-800-333-6632
401 East Pratt Street, 14th Floor | Baltimore, MD 21202