PRODUCTION INCENTIVES

Michigan

Type of Incentive:	Refundable and transferable business tax credit (or non-refundable, non-transferable income tax credit); non-refundable, transferable infrastructure investment tax credit (and non-refundable, non-transferable qualified job training expenditure credit for resident below-the-line crew with a 10-year carry forward)

Maximum Benefit:	42% of qualifying direct production expenditures in "core communities" or 40% of direct production expenditures in other locations; 30% of qualified personnel expenditures, i.e. nonresident below-the-line crew (or 50% qualified job training expenditure credit for resident below-the-line crew); 25% infrastructure investment tax credit

Compensation and Project Caps/ Funding Per Year:	$2,000,000 cap per person for compensation for personal services for direct production and qualifying personnel expenditures; $20,000,000 annual cap for infrastructure investments

Project Criteria:	Minimum local spend = $50,000 for direct production and qualifying personnel credit; $250,000 for infrastructure investment tax credit

Sunset/Review:	Annual report required for the direct production and qualifying personnel credits; September 30, 2015, for the infrastructure investment credit

Application Considerations:	Fee = $100 per registration and .5% of each credit is deducted as an application and redemption fee payable to the "Michigan Film Promotion Fund," reducing the benefit to 41.5%, 39.5%, and 29.5% respectively for production and personnel, 49.5% for qualified job training, and 24.5% for infrastructure investment; submit initial application before production commences; application approval required before production can start claiming Michigan spend (approval response = 4 - 8 weeks)

Loan-Out Company Considerations:	Income tax withholding is required on payments qualifying as "direct production expenditure" and "qualifying personnel expenditure"; section 206.351 sets forth the general withholding requirements for employers to withhold on payment to employees; loan-out companies must be registered to do business in MI, failure to do so will raise an issue on audit but will not disqualify the production company's credit if the proper withholding tax has been paid.

Crew Base Considerations:	Mostly union crew base; several hundred crew members with majority in metro Detroit but small bases in Grand Rapids, Traverse City, and Lansing areas

Film Commission:	Michigan Film Office 300 N. Washington Square, 4th Floor Lansing, MI 48913 Carrie Jones Phone: 517.335.6539 or 800.477.3456 Fax: 517.241.0867

Additional Exemptions

Hotel Occupancy Tax Relief Available

Qualified Production Expenditures

In-State Vendors:	YES
Out-of-State Vendors:	NO (confirm with local Film Office)

Fringes Paid for Qualified Payroll:	YES

Taxes Paid for Qualified Payroll:	NO

* Please read the Qualified Production Expenditures Introduction & Assumptions.

Qualified Compensation Expenditures

Above-the-Line:	Residents:	YES (see Loan-Out Company Considerations above; withholding requirements must be met for payments to qualify)
Above-the-Line:	Non-Residents:	YES (see Loan-Out Company Considerations above; withholding requirements must be met for payments to qualify)

Below-the-Line:	Residents:	YES (see Loan-Out Company Considerations above; withholding requirements must be met for payments to qualify)
Below-the-Line:	Non-Residents:	YES (see Loan-Out Company Considerations above; withholding requirements must be met for payments to qualify)

* Please read the Qualified Compensation Expenditures Introduction & Assumptions.

Nontraditional Programming

Talk Shows:	NO (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)	News:	NO (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)

Reality Shows:	YES	Webisodes:	YES (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)

Game Shows:	NO (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)	Animation:	YES (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)

Documentaries:	YES (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)	Commercials:	YES (only for commercials made for a project filmed in Michigan)

Industrials:	NO (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)	Music Videos:	YES (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)

Sporting Events:	NO (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)	Interactive Media/ Video Games:	YES (explicit allowance/disallowance in law, regulations, guidelines, rules, etc.)

* Please read the Qualified Nontraditional Programming Introduction & Assumptions.

Loan Program Information

Loan program is not currently funded.

Proposed Legislation

Two film incentive disclosure bills (SB 0889 and SB 1405) are progressing in the legislature. Bills introduced to modify the film tax credits remain in Committee (search for bills at the Michigan Legislature site).

Updated July 29, 2010
For more specific information, please contact the EP Production Incentives Group.

NOTE: These materials have been prepared by Entertainment Partners for informational purposes only and should not be construed as tax advice or relied on for specific projects. Though every effort has been made to remain current, laws and incentives change and, therefore, this information may have been revised. Please contact the EP Production Incentives Group or your legal or tax advisors to confirm any laws or the effect of incentives on your project.