2023 New Mexico Statutes › Chapter 7 - Taxation › Article 2F - Film Production Tax Credit › Section 7-2F-2 - Definitions.

As used in the Film Production Tax Credit Act:
A. "affiliated person" means a person who directly or indirectly owns or controls, is owned or controlled by or is under common ownership or control with another person through ownership of voting securities or other ownership interests representing a majority of the total voting power of the entity;
B. "background artist" means a person who is not a performing artist but is a person of atmospheric business whose work includes atmospheric noise, normal actions, gestures and facial expressions of that person's assignment; or a person of atmospheric business whose work includes special abilities that are not stunts; or a substitute for another actor, whether photographed as a double or acting as a stand-in;
C. "below-the-line crew" means a person in a position that is off-camera and who provides technical services during the physical production of a film. "Below-the-line crew" does not include a person who is a writer, director, producer or background artist or performing artist for the film;
D. "commercial audiovisual product" means a film or a video game intended for commercial exploitation;
E. "direct production expenditure" means a transaction that is subject to taxation in New Mexico and is certified pursuant to Subsection A of Section 7-2F-12 NMSA 1978:
(1) including an expenditure for:
(a) payment of wages, fringe benefits or fees for talent, management or labor to a person who is a New Mexico resident;
(b) payment for standard industry craft inventory when provided by a below-the-line crew that is a New Mexico resident in addition to its below-the-line crew services;
(c) payment for wages and per diem for a performing artist who is not a New Mexico resident and who is directly employed by the film production company; provided that the film production company deducts and remits, or causes to be deducted and remitted, income tax from the first day of services rendered in New Mexico at the maximum rate pursuant to the Withholding Tax Act [Chapter 7, Article 3 NMSA 1978];
(d) payment to a personal services business for the services of a performing artist if: 1) the personal services business pays gross receipts tax in New Mexico on the portion of those payments qualifying for the tax credit; and 2) the film production company deducts and remits, or causes to be deducted and remitted, income tax at the maximum rate in New Mexico pursuant to Subsection H of Section 7-3A-3 NMSA 1978 on the portion of those payments qualifying for the tax credit paid to a personal services business where the performing artist is a full or part owner of that business or subcontracts with a personal services business where the performing artist is a full or part owner of that business; and
(e) any of the following provided by a vendor: 1) the story and scenario to be used for a film; 2) set construction and operations, wardrobe, accessories and related services; 3) photography, sound synchronization, lighting and related services; 4) editing and related services; 5) rental of facilities and equipment; 6) the first one hundred fifty dollars ($150) of the daily expense of leasing of vehicles, not including the chartering of aircraft for out-of-state transportation; however, New Mexico-based chartered aircraft for in-state transportation directly attributable to the production shall be considered a direct production expenditure; 7) food; 8) the first three hundred dollars ($300) of lodging per individual, per day; 9) commercial airfare if purchased through a New Mexico-based travel agency or travel company for travel to and from New Mexico or within New Mexico that is directly attributable to the production; 10) insurance coverage and bonding if purchased through a New Mexico-based insurance agent, broker or bonding agent; 11) subcontracted goods and services from businesses; provided that the ordinary course of business of the vendor procuring the goods and services from the subcontractor directly relates to standard film industry goods and services; and 12) other direct costs of producing a film in accordance with generally accepted entertainment industry practice; and
(2) does not include an expenditure for:
(a) a gift with a value greater than one hundred dollars ($100);
(b) artwork or jewelry, except that a work of art or a piece of jewelry may be a direct production expenditure if: 1) it is used in the film production; and 2) the expenditure is less than two thousand five hundred dollars ($2,500);
(c) entertainment, amusement or recreation;
(d) subcontracted goods or services provided by a vendor when the subcontractors providing those goods or services to the vendor are not subject to state taxation, such as equipment and locations provided by the military, government and organizations that demonstrate to the taxation and revenue department that they have been granted exemption from the federal income tax by the United States commissioner of internal revenue as organizations described in Section 501(c)(3) of the United States Internal Revenue Code of 1986, as amended or renumbered;
(e) subcontracted services provided by a vendor when the subcontracted services are provided by a person who is below-the-line crew and is not a New Mexico resident;
(f) hidden or other indirect service fees, costs, commissions or other remuneration received by third parties and that are not directly paid by the film production company or expressly enumerated on a film production company's filing to claim a new film production tax credit;
(g) wages for a person who is not a New Mexico resident and who falsely claims to be a New Mexico resident. The wages of such person shall not be considered an eligible expense for two years from the date in which the person is determined by the taxation and revenue department as having made a false claim, regardless of whether the person becomes a New Mexico resident within that time frame; or
(h) which the film production company receives funding pursuant to Section 21-19-7.1 NMSA 1978;
F. "division" means the New Mexico film division of the economic development department;
G. "federal new markets tax credit program" means the tax credit program codified as Section 45D of the United States Internal Revenue Code of 1986, as amended;
H. "film" means a single medium or multimedia program, including television programs but excluding advertising messages other than national or regional advertising messages intended for exhibition, that:
(1) is fixed on film, a digital medium, videotape, computer disc, laser disc or other similar delivery medium;
(2) can be viewed or reproduced;
(3) is not intended to and does not violate a provision of Chapter 30, Article 37 NMSA 1978; and
(4) is intended for reasonable commercial exploitation for the delivery medium used;
I. "film production company" means a person that produces one or more films or commercial audiovisual products or any part of a film or commercial audiovisual product;
J. "fiscal year" means the state fiscal year beginning on July 1;
K. "New Mexico film partner" means a film production company that has made a commitment to produce films or commercial audiovisual products in New Mexico and has purchased or executed a ten-year contract to lease a qualified production facility;
L. "New Mexico resident" means an individual who is domiciled in this state during any part of the taxable year or an individual who is physically present in this state for one hundred eighty-five days or more during the taxable year; but any individual, other than someone who was physically present in the state for one hundred eighty-five days or more during the taxable year and who, on or before the last day of the taxable year, changed the individual's place of abode to a place without this state with the bona fide intention of continuing actually to abide permanently without this state is not a resident for the purposes of the Film Production Tax Credit Act for periods after that change of abode;
M. "performing artist" means an actor, on-camera stuntperson, puppeteer, pilot who is a stuntperson or actor, specialty foreground performer or narrator; and who speaks a line of dialogue, is identified with the product or reacts to narration as assigned. "Performing artist" does not include a background artist;
N. "personal services business" means a business organization, with or without physical presence, that receives payments pursuant to the Film Production Tax Credit Act for the services of a performing artist;
O. "physical presence" means a physical address in New Mexico from which a vendor conducts business, stores inventory or otherwise creates, assembles or offers for sale the product purchased or leased by a film production company and the vendor or an employee of the vendor is a resident;
P. "postproduction expenditure" means an expenditure, certified pursuant to Subsection A of Section 7-2F-12 NMSA 1978, for editing, Foley recording, automatic dialogue replacement, sound editing, special effects, including computer-generated imagery or other effects, scoring and music editing, beginning and end credits, negative cutting, soundtrack production, dubbing, subtitling or addition of sound or visual effects; but not including an expenditure for advertising, marketing, distribution or expense payments;
Q. "principal photography" means the production of a film during which the main visual elements are created;
R. "qualified production facility" means a building, or complex of buildings, building improvements and associated back-lot facilities in which films are or are intended to be regularly produced and that contain at least one:
(1) sound stage with contiguous floor space of at least seven thousand square feet and a ceiling height of no less than eighteen feet; or
(2) standing set that includes at least one interior, and at least five exteriors, built or re-purposed for film production use on a continual basis and is located on at least fifty acres of contiguous space designated for film production use; and
S. "vendor" means a person who sells or leases goods or services that are related to standard industry craft inventory, who has a physical presence in New Mexico and is subject to gross receipts tax pursuant to the Gross Receipts and Compensating Tax Act [Chapter 7, Article 9 NMSA 1978 ] or income tax pursuant to the Income Tax Act [Chapter 7, Article 2 NMSA 1978] or corporate income tax pursuant to the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978] but excludes a personal services business and services provided by nonresidents hired or subcontracted if the tasks and responsibilities are associated with the standard industry job position of director, writer or producer.
History:
1978 Comp., § 7-2F-2, enacted by Laws 2003, ch. 127, § 2; 2005, ch. 104, § 10; 2006, ch. 78, § 2; 2007, ch. 172, § 4; 2011, ch. 177, § 4; 2013, ch. 160, § 6; 2015, ch. 143, § 2; 2019, ch. 87, § 4; 2023, ch. 211, § 31.
ANNOTATIONS
Repeals.
— Laws 2013, ch. 160, § 13 repealed Laws 2011, ch. 165, § 3, effective June 14, 2013.
Cross references.
— For the federal Internal Revenue Code of 1986,
see
26 U.S.C. § 1.
The 2023 amendment,
effective June 16, 2023, defined "New Mexico film partner"; added a new Subsection K; and redesignated former Subsections K through R as Subsections L through S, respectively.
Applicability.
— Laws 2023, ch. 211, § 43 provided:
A. The provisions of Laws 2023, ch. 211, § 9 apply to taxable years beginning on or after January 1, 2023.
B. The provisions of Laws 2023, ch. 211, §§ 31 through 35 apply to film production companies that commence principal photography for a film or commercial audiovisual product on or after July 1, 2023.
The 2019 amendment,
effective July 1, 2019, defined "below-the-line crew", "direct production expenditure", "film production company" and "vendor", revised the definition of certain terms as used in the Film Production Tax Credit Act, and removed the definition of "industry crew"; added new Subsections C, E, I and R and redesignated the succeeding subsections accordingly; deleted former Subsection H, which defined "industry crew"; in Subsection N, after "company and the", deleted "business owner" and added "vendor", and after "employee of the", deleted "business" and added "vendor"; in Subsection O, added "certified pursuant to Subsection A of Section 7-2F-12 NMSA 1978"; and in Subsection Q, Paragraph Q(1), after "contiguous", deleted "clear-span", and after "ceiling height of no less than", deleted "twenty-one" and added "eighteen.
Applicability.
— Laws 2019, ch. 87, § 11 provided that the provisions of Sections 4 and 7 through 9 of Laws 2019, ch. 87 apply to film production companies that commence principal photography for a film or commercial audiovisual product on or after July 1, 2019.
The 2015 amendment,
effective June 19, 2015, amended certain definitions as used in the Film Production Tax Credit Act; added a new Subsection B, and redesignated former Subsection B as Subsection C; deleted former Subsection C, which defined "direct production expenditure"; deleted former Subsection G, which defined "film production company", and redesignated former Subsection H as Subsection G; added a new Subsection H; added a new Subsection J and redesignated former Subsections J, K and L as Subsections K, L and M, respectively; in Subsection K, after "business organization", added "with or without physical presence", after "receives payment", added "pursuant to the Film Production Tax Credit Act"; in Subsection L, after "film production company", added "and the business owner or an employee of the business is a resident"; added a new Subsection N and redesignated former Subsection M as Subsection O; in Subsection O, after "buildings", deleted "and their" and added "building", after "contain at least one", added a colon and designated the remainder of the former section up to "twenty-one feet" as Paragraph (1) of Subsection O and added "; or"; added new Paragraph (2) of Subsection O and deleted "and"; and deleted former Subsection N, which defined "vendor".
The 2013 amendment,
effective June 14, 2013, defined terms to provide for additional eligibility requirements and to change the scope of direct production expenditures for which film production tax credits may be claimed; added Subparagraph (b) of Paragraph (1) of Subsection C; in Subparagraph (c) of Paragraph (1) of Subsection C, after "qualifying for the tax credit; and 2)", deleted "deducts and remits withheld income tax pursuant to Subsection I of Section 7-3A-3 NMSA 1978" and added the remainder of the sentence; added Subparagraphs (d) and (e) of Paragraph (2) of Subsection C; in Subsection K, after "New Mexico", deleted "but does not include a post office box or other mail drop enterprise unless the physical presence is for a business and the business is providing mail services to a film production company"; added Subsection M; and in Subsection N, in the introductory sentence, after "Franchise Tax Act", added the remainder of the sentence and added Paragraphs (1) and (2).
Applicability.
— Laws 2013, ch. 160, § 14 provided that:
1. Subsections A, B and D through N, and Paragraph (1) and Subparagraphs (a) through (d) of Paragraph (2) of Subsection C of Laws 2013, ch. 160, § 6 apply to direct production expenditures and postproduction expenditures made on or after April 15, 2013; and
2. Subparagraph (e) of Paragraph (2) of Subsection C of Laws 2013, ch. 160, § 6 applies to productions starting principal photography on or after January 1, 2014.
The 2011 amendment,
effective July 1, 2011, added definitions of "affiliated person", "division", "fiscal year", "New Mexico resident", "personal services business", "physical presence", and "vendor"; provided that payments to performing artists qualify as direct production expenditures only if income tax withholding is deducted from the payments; provided that only the first one hundred dollars of daily expenses for leasing a passenger vehicle and the first one hundred fifty dollars for lodging per person per day qualify as direct production expenditures; and excluded expenditures for certain gifts and entertainment as direct production expenditures.
The 2007 amendment,
effective July 1, 2007, changed the payments that qualify as direct production expenditures.
The 2006 amendment,
effective May 17, 2006, added a new Subsection C to define "federal new markets tax credit program".
The 2005 amendment,
effective July 1, 2005, added the definition in Subsection A of "commercial audiovisual product" and the definition in Subsection E of "postproduction expenditure".