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« Hopkinton man held on child molestation charges | Today | The Score goes silent: R.I. loses its all-sports station » March 10, 2008State floats new curbs on film tax-credit programPROVIDENCE – With critics questioning how much Rhode Island has benefited from the $52 million in tax credits the state has offered – and the $30.8 million in tax credits it has already provided -- to the television and movie industry to film here, the state's Division of Taxation this morning proposed new curbs on the operations of the three-year-old incentive program. To qualify for the 25 percent tax credits, a company has to spend a minimum of $300,000 on production costs that are "directly attributable to activity within the state." As to what that means, the state’s Film and Television Office has, up until now, taken its cues from the private accountants working for the film companies. They have interpreted this phrase to mean: "All goods and services purchased for use in the production of the film in the state of Rhode Island will be included as a ‘state-certified production cost’ even if purchased outside of Rhode Island or from a non-Rhode Island vendor." That interpretation has proved costly to Rhode Island. The production company that spent 26 days here filming Hard Luck, a feature film starring Wesley Snipes and Cybill Shepherd that went straight to DVD, received a $2.65 million tax credit. That represented 25 percent of the roughly $11 million the company reported spending in Rhode Island on the production. But only $1.9 million of the $11 million went to "Rhode Island vendors or residents," according to documents the state film office produced late last month after a 15-month records fight with The Journal. That included amounts spent on payroll, makeup, costumes, building materials, hotel accommodations, location rentals, vehicle leases, unspecified "professional fees" and catering. In a move aimed, at least in part, at boosting the measurable benefits to the Rhode Island economy, state tax officials have now taken the position that an expense only counts if it was performed, purchased, provided or rented by a Rhode Island vendor. See the proposed regulations in full here.
Lest there be any further doubt about what this means, state tax officials provide several examples: “Wardrobe purchased or rented from a vendor within Rhode Island will constitute a cost incurred within the state; however, wardrobe purchased or rented from an out-of-state vendor and shipped to Rhode Island will not.’’ Similarly, “catering expenses and services provided by a vendor within Rhode Island will constitute a cost incurred within the state; however, catering from an out of state vendor will not.’’ The proposed regulations will be aired at a public hearing at 2 p.m. on April 11 at the Department of Administration building, across the street from the State House, on Smith Hill. If they remain intact, they will take effect approximately 20 days later. In an interview this morning, state tax administrator David M. Sullivan said the rules more accurately reflect what the film-tax law says. He would not comment when asked if he believed the state film office has been misinterpreting – or misapplying – the tax-credit law at a hefty cost to the state over the last three years. Instead, Sullivan noted that these are the first rules and regulations the state film office, headed by Steven Feinberg, has had since its inception. For the first time, “we have defined in regulation what is a ‘qualified cost,’ ‘’ echoed Gary Sasse, his boss and the new director of the state’s newly created Department of Revenue. At this point, neither department has analyzed how much Rhode Island taxpayers might have saved in tax giveaways had these rules been adopted earlier. “That’s not really my role. My role is to interpret the law,’’ Sullivan said. Asked whether these rules would apply to productions already in the pipeline for the tax credits, but not yet complete, Sullivan said that would be a more apt question for the film office. Posted by Andrea Panciera CommentsBrenda | March 10, 2008 8:45 PM link Post a commentPlease be civil. Vicious comments, personal attacks and profanity won't be published. Name and email are required; email address will not publish. |
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ProJo 9 to 5 News Blog
Oct 2005 - March 2006
I would just like to know where all the money went that was saved when we gave all those tax credits to the visual medial industry, (if I am understanding this correctly). We should try to do something to try to get more of the media into our neck of the woods. Woonsocket, Pawtucket, and Cumberland are a group of towns that have a lot of history and could benefit from the film industry.