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Groundbreaking Bill Will Boost and Revitalize NJ Film and TV Industry


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7/7/2018
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Groundbreaking Bill Will Boost and Revitalize NJ Film and TV Industry

Gov. Phil Murphy signed a law Tuesday called the "Garden State Film and Digital Media Jobs Act" providing film and production companies with business tax and gross income tax credits for certain expenses incurred while filming in New Jersey.

Senate Bill No. S122 takes effect immediately and provides credits of 30% for expenses incurred between 2019 and 2023 for filming in North Jersey counties and 35% for filming in South Jersey counties.  Digital companies can get credits of 20% and 25% respectively.

"The film and digital media industry is poised to become a dynamic part of New Jersey's economy, one that will create good-paying union jobs and countless residual benefits to the economy," Murphy said in a statement. "By signing this legislation, we are allowing these companies to take advantage of New Jersey's unique culture, location, and geography."

The Office of Legislative Services estimates the program will cost New Jersey $85 million a year -- or $425 million over five years -- in lost tax revenue.  Defending the tax revenue losses, State Assemblyman Gordon Johnson, D-Bergen said the law "bring more jobs and revenue" to New Jersey, and "crew members will then eat, sleep, and do countless other things in our great state." This is the classical Republican argument for job creation; that favorable business environments attract jobs and jobs beget spending and spending begets greater tax revenues.

Both houses of the legislature passed the bill in April. The state Senate passed the measure 31-3 and the Assembly passed the measure 59-14.  New Jersey has not had tax incentives for film and production since 2010 and the Christie administration opposed these measures, famously impugning the “Jersey Shore” series for providing unfavorable stereotypes of New Jerseyans.  The prior New Jersey film tax credit program gave $420,000 to MTV's "Jersey Shore" in 2011, and Christie got rid of the law based on his view that New Jersey was being portrayed in an unfavorable light.

One area the bill will help is with New Jersey based reality TV shows. "Cake Boss" star Buddy Valastro, whose flagship bakery location is based in Hoboken, and Jersey City Mayor Steve Fulop reportedly lobbied for the change, according to a report by Politico. The law Murphy signed Tuesday applies to reality shows.  A few reality shows with regular New Jersey filming or a NJ theme include "The Real Housewives of New Jersey," "Jersey Couture," "Cake Boss," "Jersey Shore," "Jerseylicious," and “Love & Hip Hop New York” (“LHHNY”). 

Other popular shows with a New Jersey theme, like “Boardwalk Empire” were filmed in New York due to more favorable filming laws and tax credit opportunities, and the New Jersey 30% refundable credit was based on existing New York laws that have been in place since 2004. 

New York offers over $420 million of credits annually for producers and directors filming in the Empire State.  Production companies are eligible for a refundable credit of 30% of qualified production costs and post-production costs incurred in New York State.  Between 2015-2022, New York implemented an additional 10 percent credit on qualified labor expenses in selected counties outside the Five Boroughs and Westchester. https://esd.ny.gov/sites/default/files/AdditionalCreditMap_PRODUCTION.pdf.

New York is a bit ahead of New Jersey, marketing its “film friendly” locale with its own “Made in NY” campaign on City subways put out by the Mayor’s Office of Media and Entertainment.  New York’s Film Production Tax Credit Program has been in place since 2004 and is going strong.  And today, cities and states across the Nation are offering special tax incentives for film production in a competition to vie for the economic boost that flows from the big screen. But, where did this all begin?  In 1997, Canada led the “film subsidies” charge, passing laws allowing producers to suddenly receive rebates on as much as 70 percent of expenditures for films made in Canada.  After that, many U.S.-themed films and shows were shot in Canadian stand-in cities. For example, Chicago (2002), New York Minute (2004), and Hollywoodland (2006) were all shot in Toronto.

Perhaps, the obsession of TV and Film with New Jersey is fitting, considering the industry got its start in North Jersey. Thomas Edison pioneered the motion picture camera and first movie studio, the Black Maria, at his laboratory in West Orange.

Steve Gorelick, of New Jersey's Motion Picture and Television Commission, cited to an estimate that the latest rendition of the “Jersey Shore” reality series is expected to net Garden State businesses $2 million. 

In an interview with Steven Gorelick, he explained that one of the legal issues to clear on any film shoot is getting all necessary local permits, which can differ from county to county and town to town.  With 21 counties and 566 municipalities, there are a lot of local rules and regulations to know about. https://www.nj.gov/state/njfilm/njfilm-regulations-guidelines.html. And filming locally requires not only reviewing local ordinances but speaking with local officials, who often work with film producers to bend standardized rules to fit particular projects.

If you are in the film and production industry, there are a number of advantageous tax benefits you can take advantage of.  New Jersey exempts from sales tax purchases of props, set building materials, cameras, lighting, machinery, tools and equipment from NJ Sales Tax.  Producers should provide Form ST-4 to Sellers so they can maintain a record of the exempt purchase. https://www.nj.gov/state/njfilm/forms/st4.pdf

https://nj.gov/governor/news/news/562018/approved/20180703b_film_and_digital.shtml

https://www.nj.com/politics/index.ssf/2018/07/murphy_signs_snooki_law_to_revive_nj_film_tax_cred.html

http://newjersey.news12.com/story/34878070/reality-shows-continue-obsession-with-new-jersey

http://newjersey.news12.com/story/34878068/interview-about-reality-shows-set-in-nj

http://ccbjournal.com/articles/4544/entertainment-law-new-jersey-century-supporting-motion-picture-industry

http://nj1015.com/nj-may-give-75m-in-tax-breaks-to-spark-more-film-production/

https://esd.ny.gov/new-york-state-film-tax-credit-program-production

https://esd.ny.gov/industries/tv-and-film

https://www.villagevoice.com/2017/10/11/new-york-is-throwing-money-at-film-shoots-but-who-benefits/

https://www.villagevoice.com/2017/10/11/new-york-is-throwing-money-at-film-shoots-but-who-benefits/

https://deadline.com/2018/07/mpaa-cheers-new-jersey-film-tv-tax-credits-1202421046/



Category: Tax Law


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