Procedures for Claiming California Film & Television Tax Credits
The California Film Commission (CFC) administers a program that provides tax credits to qualified taxpayers based on their qualified expenditures for the production of qualified motion pictures, including feature films and television series, in California. The following information will help you file a claim for refund against sales and use tax if you are a qualified taxpayer who has been issued a certified Tax Credit Certificate from the CFC.
The information below does not apply to credits that are assigned to affiliates by qualified taxpayers. The rules for assigning credits are administered by the California Franchise Tax Board (FTB); information about assigning credits can be found on the FTB webpage, FAQs – California Motion Picture and Television Production Credit.
In addition, the information below does not apply to purchased tax credits attributable to an "independent film." Purchased tax credits may not be used to offset or obtain a refund of sales and use taxes.
General Information
- Tax credits cannot be claimed until a Tax Credit Certificate is issued by the CFC.
- A qualified taxpayer may apply the tax credits set forth in its certified Tax Credit Certificate against California franchise or income tax or may irrevocably elect to apply all or a portion of the tax credits set forth in its certificate to obtain a refund of qualified sales and use taxes imposed on the qualified taxpayer. Once this election is made, those credits are no longer available to apply against any California franchise or income tax liability.
- Tax credits can only be claimed against the general fund portion of the sales and use tax. The general fund rate as of April 1, 2009 is 6% and is expected to be 5% on July 1, 2011.
- No interest will be paid on any amount refunded or credited.
- Claims should be sent to the State Board of Equalization (BOE) Refund Section at:
Board of Equalization
Refunds Section, MIC: 39
P.O. Box 942879
Sacramento CA 94279-0039
Claiming Credits – Initial Refund Period
To file a claim for refund of sales and use tax, you must complete form BOE-318, Irrevocable Election to Apply Credits Against Qualified Sales and Use Tax Liability (irrevocable election), and file form BOE-101, Claim for Refund or Credit.
Initial Refund Period
Refunds will be allowed for sales and use taxes remitted during the period
- Beginning on the first day of the calendar quarter commencing immediately before the quarter during which the production period began for the qualified production for which the CFC issued your tax credit certificate, and
- Ending on the date you were required to file your most recent sales and use tax return with the BOE prior to making the irrevocable election.
The production period for a qualified motion picture begins when preproduction of the qualified motion picture starts. Preproduction means the process of preparation for actual physical production which begins after a qualified motion picture has received a firm agreement of financial commitment.
Example 1:
The qualified taxpayer holds a BOE use tax permit and reports and remits its use tax on a quarterly filing basis. The start date of the qualified film’s pre-production is September 15, 2009 (3rd quarter 2009). The Tax Credit Certificate is issued by the CFC in February 2011 and the qualified taxpayer files an irrevocable election and claim for refund in March 2011.The qualified taxpayer should file a claim for refund for the qualified use tax it reported and paid on returns filed for periods April 1, 2009 to December 31, 2010.
- Start date of the refund period: The production period for the qualified motion picture began during the 3rd quarter of 2009, so the qualified taxpayer’s initial refund period began on April 1, 2009, the first day of the 2nd quarter of 2009, which is the first calendar quarter commencing immediately before the 3rd quarter of 2009.
- End date of the refund period: the irrevocable election was filed in March 2011; the due date for the qualified taxpayer’s most recent BOE use tax return required to be filed prior to making the election was January 31, 2011, - the due date of the return for 4th quarter 2010. December 31, 2010 is the last day of 4th quarter 2010.
Although the date your irrevocable election is made determines the end of your initial refund period, your claim for refund of qualified sales and use taxes remitted during the initial refund period must still be filed within the normal statute of limitations as provided in Revenue and Taxation Code (R&TC) section 6902 (three years from the last day of the month following the close of the quarterly period for which the overpayment was made). Using the information in Example 1, a quarterly filer with a refund period start date of April 1, 2009, would have until July 31, 2012, to file the irrevocable election and claim for refund of qualified sales and use taxes that were reported and paid with a timely filed return for the 2nd quarter of 2009.
After receiving the claim for refund, BOE staff will verify:
- The claimant is the qualified taxpayer that was issued the certified Tax Credit Certificate from the CFC,
- The qualified taxpayer filed an irrevocable election (form BOE-318) to apply credits against qualified sales and use taxes remitted for the initial refund period,
- The claimed refund amount does not exceed the amount of the qualified taxpayer’s unused tax credits,
- The claimed amount is for paid general fund sales and use tax, and
- The claim for refund was filed within the initial refund period and within the statute of limitations under R&TC section 6902.
BOE and FTB staff will also be working together to ensure that the total amount claimed at both agencies does not exceed the amount of the tax credit.
Claiming Credits – Secondary Offset Period
If a qualified taxpayer files an irrevocable election to apply unused tax credits to qualified sales and use taxes and does not claim a refund for sales and use tax previously paid, or claims a refund and still has unused certified credits to which the election applies, the unused credits may be used to offset and obtain a refund of qualified sales and use taxes reported and paid for a secondary offset period. The secondary offset period includes the qualified taxpayer’s reporting periods for the five years following the close of the initial refund period.
To apply unused tax credits against qualified sales and use taxes remitted for the secondary offset period, the qualified taxpayer must file a new form BOE-318, Irrevocable Election to Apply Credits Against Qualified Sales and Use Tax Liability and BOE-101, Claim for Refund or Credit.
As with claims for refunds filed for the initial refund period, after receiving claims for refund of sales and use taxes remitted for the secondary offset period, BOE staff will verify:
- The claimant is the qualified taxpayer that was issued the certified Tax Credit Certificate from the CFC,
- The claimant has filed a new irrevocable election (form BOE-318) to apply unused credits against qualified sales and use taxes remitted for the secondary offset period,
- The claimed refund amount does not exceed the amount of the qualified taxpayer’s unused credits,
- The claimed amount is for paid general fund sales and use tax, and
- The claim for refund was filed within the secondary offset period and within the statute of limitations under R&TC section 6902.
Processing Claims for Refund Over $100,000
BOE staff has been delegated authority to grant claims for refund of $100,000 or less of sales and use taxes after completing the verification processes described above. However, BOE Regulation 5237, Board Approval Required for Refunds over $100,000, requires BOE staff to submit recommendations to grant claims for refund in excess of $100,000 of sales and use taxes to the Board Members for approval at a monthly Board meeting. Claims for refund in excess of $100,000 of sales and use taxes will not be granted until they are approved by the Board Members.
Questions
If you have questions about claiming the film credit against sales and use tax liabilities, please email the Board of Equalization’s Tax Policy Division.