Opinion Number ( 2007 )

Dear Rep. Cazayoux, Jr.:

Your request for an Attorney General's Opinion has been assigned to me for research and reply. You have asked for our opinion concerning several questions relating to the Louisiana Motion Picture Incentive Act. Specifically you ask the following questions:

1. Whether La.R.S. 47:6007(C)(1)(a)(i) and (ii) allow an investor in a state-certified production to earn tax credits of ten or fifteen percent respectively of its actual investment, i.e., total production budget, for state-certified productions on or after January 1, 2004, so long as the certification is issued after December 31, 2005; and

2. Whether La.R.S. 47:6007(C)(1)(b)(i) allows an investor in a state-certified production to earn tax credits of twenty-five percent of its base investment, i.e., in-state spend, for state-certified productions on or after January 1, 2006; and

3. Whether La.R.S. 47:6007(C)(1)(b)(ii) allows and investor to earn tax credits of ten percent of the payroll paid out of the base investment for state-certified productions on or after January 1, 2006, excluding that portion of any salary to any individual exceeding one million dollars; and

4. Whether the tax credits in sub-paragraphs "a", "b", and "c" above are cumulative tax credits for investors in state-certified productions on or after January 1, 2006.

In order to address the questions presented, we must look to the specific language of the statute. Louisiana Revised Statute 47:6007(C) provides, in pertinent part, the following:

C. Investor tax credit; specific projects.

(1) There is hereby authorized a tax credit against state income tax for Louisiana taxpayers, other than motion picture production companies. The tax credit shall be earned by investors at the time expenditures are made by a motion picture production company in a state-certified production. However, credits cannot be applied against a tax or transferred until the expenditures are certified by the Governor's Office of Film and Television Development and the Department of Economic Development. For state-certified productions, expenditures shall be certified no more than twice during the duration of a state-certified production unless the motion picture production company agrees to reimburse the Governor's Office of Film and Television Development and the Department of Economic Development for the costs of any additional certifications. The tax credit shall be calculated as a percentage of the total base investment dollars certified per project.

(a) For state-certified productions approved by the Governor's Office of Film and Television Development, on or after January 1, 2004:

(i) If the total base investment is greater than three hundred thousand dollars and less than or equal to eight million dollars, each taxpayer shall be allowed a tax credit of ten percent of the actual investment made by that taxpayer.

(ii) If the total base investment is greater than eight million dollars, each taxpayer shall be allowed a tax credit of fifteen percent of the actual investment made by that taxpayer.

(b) For state-certified productions approved by the Governor's Office of Film and Television Development, on or after January 1, 2006, and for state-certified infrastructure projects approved by the Governor's Office of Film and Television Development, on or after July 1, 2005:

(i) If the total base investment is greater than three hundred thousand dollars, each investor shall be allowed a tax credit of twenty-five percent of the base investment made by that investor.

(ii)To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars.

(c) For state-certified productions approved by the Governor's Office of Film and Television Development and the Department of Economic Development, on or after July 1, 2010:

(i) If the total base investment is greater than three hundred thousand dollars, each investor shall be allowed a tax credit of twenty percent of the base investment made by that investor.

(ii) To the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars. (Emphasis added).

As you probably are aware, Act No. 456 of the 2005 Regular Session amended the Louisiana Motion Picture Incentive Act and changed the calculation of tax credits effective January 1, 2006 by providing that an investor receive a tax credit of a percentage of only the expenditures in Louisiana. Act 456 provided that it did not apply to state-certified productions that received an effective initial certification prior to December 31, 2005. For projects certified in 2004 and 2005, each investor in a state-certified production received a tax credit based upon a percentage of the total production budget, no matter where it was spent, but in no case would the tax credit exceed the total expenditures in Louisiana.

Section 2 of Act 456 provided the following:

This Act shall become effective for taxable years beginning after December 31, 2005, and shall not apply to state-certified productions that have received an effective initial certification date that is prior to December 31, 2005. For state-certified infrastructure projects, this Act shall become effective on or after July 1, 2005. (Emphasis added)

Therefore with respect to question (1) above, productions certified on or after January 1, 2004 would have received their effective initialcertification prior to December 31, 2005. As a result, La.R.S.47:6007(C)(1)(a)(i) and (ii), as amended by Act 456, would not apply. Accordingly, we are unable to offer a response to question (1). With respect to question (2) above, subsection (b) (i) provides that for state-certified productions approved by the Governor's Office of Film and Television on or after January 1, 2006, and state-certified infrastructure projects approved on or after July 1, 2005, each investor shall be allowed a tax credit of twenty-five percent of the base investment made by the investor. "Base investment" is defined as theactual investment made and expended by: (a) A state-certified production in the state as production expenditures incurred in this state that are directly used in a state-certified production or productions, (b) A person in the development of a state-certified infrastructure project.See La.Rev.Stat. 47:6007(B)(1).

Thus, we are of the opinion that La.R.S. 47:6007 (C)(1)(b)(i) allows an investor to earn a tax credit of twenty-five percent of his base investment on productions approved and certified by the Governor's Officeof Film and Television on or after January 1, 2006, or infrastructureprojects approved by the Governor's Office of Film and Television on orafter July 1, 2005. As required by statute, the credits cannot be applied or transferred until the expenditures are certified by the Governor's Office of Film and Television Development and the Department of Economic Development.

With respect to question (3), subsection (b) (ii) provides that "to the extent that base investment is expended on payroll for Louisiana residents employed in connection with a state-certified production, each investor shall be allowed an additional tax credit of ten percent of such payroll. However, if the payroll to any one person exceeds one million dollars, this additional credit shall exclude any salary for that person that exceeds one million dollars".

Accordingly, we are of the opinion that La.R.S. 47:6007 (C)(1)(b)(ii) allows an investor to earn an additional tax credit of ten percent, of that portion of his base investment that is expended as payroll for Louisiana residents, who are employed in connection with a state-certified production. In the event the payroll to any one person exceeds one million dollars, no additional tax credit may be earned on that portion of the salary which exceeds one million dollars.

With respect to your final question, our review of La.R.S. 47:6007 reveals an effort by Legislature the specifically grant a certain level of tax relief which varies according to the year a qualified project is certified. As such, we are of the opinion that the tax credits in sub-paragraphs "a", "b", and "c" are not cumulative.

We trust this adequately responds to your request. If you should have any questions about the response contained herein, please feel free to contact our office.

Yours very truly, CHARLES C. FOTI, JR. Attorney General

BY: _________________________ MICHAEL J. VALLAN Assistant Attorney General

CCF, JR/MJV/dam