Alabama Administrative Code › Title 281 - ALABAMA DEPARTMENT OF COMMERCE, FORMERLY ALABAMA DEVELOPMENT OFFICE AND ALABAMA TOURISM DEPARTMENT/ALABAMA FILM OFFICE › Chapter 281-3-1 - ALABAMA FILM OFFICE INCENTIVES › Section 281-3-1-.02 - Definitions

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The following
			 definitions apply for purposes of the rules promulgated under Acts of Alabama,
			 2009-144, known as the Entertainment Industry Incentive Act of 2009:
(a)
ABOVE THE LINE EXPENDITURES
.
			 Actual compensation paid by a Qualified Production Company to individuals who
			 guide, influence and add to the creative direction or creative process of a
			 Qualified Production. These expenditures include but are not limited to
			 compensation paid by a Qualified Production Company to the screenwriter,
			 producer, director and principal actors.
(b)
ACT
. Acts of Alabama 2009-144,
			 known as the Entertainment Industry Incentive Act of 2009 as amended by Act No.
			 2011-695, Act No. 2012-167, Act No. 2012-212 and Act No. 2013-34.
(c)
ADVISORY BOARD
. Group of
			 individuals to advise the Office in matters related to the administration of the
			 Act.
(d)
ALABAMA-BASED
			 COMPANY
. Any Company organized under the laws of the State of Alabama or
			 qualified to do business in the State of Alabama with the Alabama Secretary of
			 State; which maintains and has maintained throughout the twelve month period
			 immediately preceding the commencement of production of a Qualified Production, a
			 physical office within the State of Alabama staffed by one or more employees who
			 work a minimum of 36 hours for the Company during a typical work week; are paid
			 and supervised directly by the Company and who typically devote all of their
			 workday to performing services for the Company within the State of
			 Alabama.
(e)
APPLICANT.
A Company, intending to produce a Qualified Production that applies for
			 Incentives.
(f)
APPLICATION.
Form to be completed by an Applicant requesting
			 Incentives and submitted to the Office for approval by the Office.
(g)
BELOW THE LINE EXPENDITURES.
Payroll and Production Expenditures other than Above the Line Expenditures. These
			 expenditures include but are not limited to actual compensation paid by a
			 Qualified Production Company to individuals who are non-starring cast members.
			 Examples of the positions in this category are director of photography, assistant
			 directors, gaffer and grips.
(h)
CHART OF PRODUCTION EXPENDITURES.
A list of examples of expense
			 items and whether they constitute Production Expenditures if Expended in Alabama
			 by a Qualified Production Company on a State-Certified Production.
(i)
COMPANY.
A corporation,
			 partnership, limited liability company, or any other business entity.
(j)
CPA
. A certified public
			 accountant, having passed the uniform certified public accountant examination,
			 who is licensed to practice accountancy by a state board of public accountancy,
			 or its designee, and is in good standing with said state board of public
			 accountancy, or its designee.
(k)
DEPARTMENT.
The Alabama Department of Revenue.
(l)
END CREDIT.
A statement
			 displayed at the end of the credits, where applicable, of a State-Certified
			 Production proclaiming "FILMED ON LOCATION IN ALABAMA," or other comparable form
			 of acknowledgement, along with a state logo submitted and approved by the Alabama
			 Film Office.
(m)
ENTERTAINMENT
			 INDUSTRY.
Those persons or entities engaged in the production of
			 entertainment content.
(n)
EXPENDED IN ALABAMA.
In the case of tangible property, property
			 which is acquired or leased from a source within the State of Alabama; in the
			 case of services, services performed in the State of Alabama for a Qualified
			 Production project.
(o)
FINAL
			 INCENTIVE AUDIT.
An audit, performed by a CPA, of the books and records of
			 a Qualified Production Company performed upon completion of the production
			 activities in the State of Alabama associated with a State-Certified Production.
			 Such audit shall verify each Production Expenditure claimed by a Qualified
			 Production Company.
(p)
INCENTIVES.
The Rebate and exemptions from the state portion, but
			 not the local portion, of any sales, use, and lodgings taxes available to certain
			 Qualified Production Companies for Production Expenditures under the
			 Act.
(q)
LOAN-OUT
			 AFFIDAVIT.
A form to be designed and distributed by the Alabama Department
			 of Revenue to be completed and delivered by each Loan-Out Company who received
			 payment for goods and services which the Applicant requests to be treated as
			 Qualified Production Expenses for a State-Certified Production.
(r)
LOAN-OUT COMPANY.
A Company,
			 owned in whole or in part by a person performing services for a Qualified
			 Production Company with respect to a State-Certified Production with which a
			 Qualified Production Company contracts and pays for the performance of such
			 services by said person.
(s)
OFFICE
. The Alabama Film Office.
(t)
PAYROLL.
All salary, wages,
			 and other compensation, including specifically, but not limited to, compensation
			 and benefits, related benefits, and any corresponding state and federal income,
			 unemployment, or other payroll tax obligation, and workers compensation provided
			 to resident and non-resident producers, directors, writers, actors, and other
			 personnel involved in qualified production projects in Alabama.
(u)
PRODUCTION EXPENDITURES.
1. Preproduction, production, and
			 postproduction expenditures incurred in the State of Alabama subsequent to the
			 approval by the Office as a State-Certified Production, except as provided in
			 Ala. Admin. Code r. 281-3-11-.04(1)(g), that are directly used in a
			 State-Certified Production, including, but not limited to, the following: set
			 construction and operation, wardrobe, makeup, set accessories, and related
			 services; costs associated with photography and sound synchronization, lighting,
			 and related services and materials; editing and related services; rental of
			 facilities and equipment leasing of vehicles; costs of food and lodging; cost of
			 catering; digital or tape editing, film processing, transfer of film to tape or
			 digital format; transfer direct to DVD, cable, or satellite for distribution;
			 sound mixing, special and visual effects including duplication, firm processing
			 digital, DVD, music composition, and satellite distribution; total aggregate
			 payroll; music; airfare; insurance costs of bonding; and or other similar
			 production expenditures.
2. The term
			 includes financial contributions or educational or workforce development in
			 partnership with related educational institutions, or local industry
			 organizations, or both, contributed toward the furtherance of the local
			 entertainment media industries.
3.
			 The term does not include postproduction expenditures for marketing or any
			 amounts that are paid to persons or entities as a result of their participation
			 in profits from the exploitation of a motion picture production.
4. There is a rebuttable presumption that the
			 term does not include expenditures paid by a Qualified Production Company to a
			 Related Party for goods or services.
5. The term does not include finance fees or
			 similar charges.
(v)
QUALIFIED PRODUCTION.
1. The term
			 means entertainment content created in whole or in part within the state,
			 including motion pictures; soundtracks for motion pictures; documentaries; long-
			 form, specials, miniseries, series, sound recordings, videos and music videos,
			 and interstitials television programming; interactive television; interactive
			 games; video games; commercials; infomercials; any format of digital media,
			 including an interactive website that is intended for national or international
			 distribution or exhibition to the general public; and any trailer, pilot, video
			 teaser, or demo created primarily to stimulate the sale, marketing, promotion, or
			 exploitation or future investment in either a product or a qualified production
			 via any means and media in any digital media format, film, or videotape, provided
			 such program meets all the underlying criteria of a qualified
			 production.
2. The term does not
			 include any ongoing television program created primarily as news, weather, or
			 financial market reports, a production featuring current events, sporting events,
			 an awards show or other gala event, a production whose sole purpose is
			 fund-raising, a long-form production that primarily markets a product or service,
			 a production used for corporate training or in-house corporate advertising or
			 other similar productions; nor does the term include any production for which
			 records are required to be maintained under  18 U.S.C. §
											2257  with respect to
			 sexually explicit content; nor does the term mean or include any form of
			 gambling, gaming, wagering, or pari-mutuel wagering activity or enterprise; nor
			 does the term include any music festival, concert, show, commemorative service or
			 exhibition which is conducted primarily for the entertainment, education or
			 enrichment of a live audience.
(w)
QUALIFIED PRODUCTION COMPANY.
1. A Company engaged in the business of
			 producing a Qualified Production.
2.
			 The term does not mean or include any Company owned, affiliated, or controlled,
			 in whole or in part, by any Company or person which is in default on a
			 loan.
(x)
REBATE.
Incentive available to a Qualified Production Company equal
			 to 25% of its Production Expenditures, excluding payroll paid to Residents of
			 Alabama, on a State-Certified Production plus 35% of all payroll paid to
			 Residents of Alabama for the State-Certified Production that may be used to
			 offset any Alabama income tax liability of the Qualified Production Company for
			 the tax year during which production activity in Alabama on the State-Certified
			 Production concludes, with the excess by which the Rebate exceeds the Qualified
			 Production Company's Alabama income tax liability being refunded to the Qualified
			 Production Company; provided that such amount shall not exceed the amount of
			 total Incentives available to a Qualified Production Company less the amount of
			 any state, but not local, sales, use, and lodgings taxes that would have been
			 paid but for the exemption from the same.
(y)
RELATED PARTY.
A person or
			 Company that bears a relationship to a Qualified Production Company described in
			  26 U.S.C. §§
										267(b), (c), or (e), as amended or any other person or
			 entity owned by a person with a financial interest in a Qualified Production
			 Company.
(z)
REPORT
.
			 Statement of a CPA issued upon the completion of the Final Incentive Audit that
			 provides a summary of the Production Expenditures Expended in Alabama.
(aa)
RESIDENT OF ALABAMA.
A
			 natural person and, for the purpose of determining eligibility for the Incentives
			 provided by the Act, any person domiciled in the State of Alabama and any other
			 person who maintains a permanent place of abode within the State and spends in
			 the aggregate more than 6 months of each year within the State of
			 Alabama.
(bb)
STATE-CERTIFIED
			 PRODUCTION.
A Qualified Production approved by the Office, produced by a
			 Qualified Production Company.