§ 26-4-208 - Application for incentive.
26-4-208. Application for incentive.
(a) Any motion picture production company that intends to film all or parts of a motion picture in Arkansas and desires to take advantage of the tax incentive provided for in this subchapter shall provide an estimate of total expenditures to be made in Arkansas in connection with the filming or production of the motion picture. The estimate of expenditures shall be filed with the Motion Picture Office prior to the commencement of filming in Arkansas.
(b) At the time the motion picture production company provides the estimate of expenditures to the office, it shall also designate a member or representative of the motion picture production company to work with the office and the Revenue Division on the reporting of expenditures and other information necessary to take advantage of the tax incentive afforded by this subchapter.
(c) Within two (2) weeks after principal photography begins, the motion picture production company shall begin filing weekly expenditure reports. Failure to file weekly expenditure reports may result in a delay in the disbursement of the tax incentive benefit as provided in 26-4-209. The weekly expenditure report shall be filed in accordance with, but not limited to, the following provisions:
(1) In order to be eligible for the tax incentive provided for by this subchapter, payments shall be made from a checking account from any Arkansas financial institution;
(2) Direct cash payments by the production company to Arkansas vendors, businesses, or citizens hired as cast or crew which are accompanied by receipts shall be allowed if the sum of the cash payments does not exceed forty percent (40%) of the total verifiable expenditures;
(3) Per diem expenditures by the cast or crew for lodging when accompanied by receipts shall be eligible expenditures;
(4) Expenditure reports shall include, but are not limited to, check identification number, date of payment, name of payee, address of payee, amount paid, name of financial institution, and other such information as may be deemed necessary by the Revenue Division to insure compliance with this subchapter;
(5) Payments for salaries or wages are limited to Arkansas residents who filed an Arkansas income tax return in the previous tax year; and
(6) Payments for penalties or fines, payments to nonprofit organizations, and payments to federal and state entities that do not pay state taxes are to be excluded.
(d) The twelve-month period during which expenditures may qualify for the tax incentive provided by this subchapter begins on the date of the earliest expenditure reported.
(e) Upon completion of filming or production in Arkansas, the motion picture production company shall file an application for the tax incentive afforded by this subchapter. The application shall include a final expenditure report giving a total amount of expenditures which were made in the state in connection with the filming or production of a motion picture and which comply with the provisions of this subchapter. The motion picture production company shall provide documentation for expenditures in accordance with regulations promulgated by the Revenue Division.
(f) Applications for the tax incentive provided by this subchapter shall be accepted only from those motion picture production companies which report expenditures in the state in excess of one million dollars ($1,000,000) in connection with the filming or production of one (1) or more motion pictures in the state within a twelve-month period or five hundred thousand dollars ($500,000) in connection with the filming or production of one (1) motion picture in the state within a six-month period.
(g) (1) When a motion picture production company hires a payroll service company to handle the payroll of a production, the payroll payments otherwise allowable under 26-4-201 et seq. shall be allowed as eligible expenditures if:
(A) Payments made by the motion picture production company to the payroll service company are paid through an Arkansas financial institution account; and
(B) The payroll checks issued by the payroll service company are drawn on a bank or other entity which is outside the State of Arkansas, and the out-of-state bank or other entity guarantees payment of the checks at an Arkansas financial institution;
(2) When a motion picture production company hires a food catering service company which is outside the State of Arkansas, payments otherwise allowable under 26-4-201 et seq., which are made by the out-of-state food catering service to food businesses located in Arkansas, shall be allowed as eligible expenditures if actual receipts or copies of invoices from the food businesses located in Arkansas are filed with the weekly expenditure reports and payments made by the motion picture production company to the out-of-state food catering service company are paid through an Arkansas financial institution account; and
(3) Preproduction and postproduction expenses, which otherwise qualify, may be made from a checking account from a financial institution located outside of Arkansas.