We all know the cost of making a film or television show continues to rise every year and that incentives are one way for a state to remain competitive and to help attract film production to their state. The Colorado Legislature passed the state's first ever film incentive in 2006. These film incentives offer filmmakers who qualify for the program a cash rebate instead of a tax credit.

The Colorado Film Incentive program rebates 10% of the below the line cost of producing a film, documentary or television program when that project is produced and filmed in Colorado; the production company spends 75% of it's below the line budget with Colorado businesses; and hires 75% of their crew locally.

4 -6 weeks before principal photography or production production companies seeking to participate in the Film Incentive Program must complete and submit a Statement of Intent Application to the Colorado Office of Film Television & Media, which will review applications for the Colorado Economic Development Commission. In addition, the production company must be notified, in writing, that their Statement of Intent Application has been approved by the Colorado Office of Film Television & Media and the Colorado Economic Development Commission prior to commencing principal photography.

Statement of Intent Application, all relevant Procedures and Definitions and Colorado Film Incentive Program Legal Clarifications can be found at the links below:

Ø  Film Incentive Rebate Statement of Intent to Film in Colorado Application
Ø  Film Incentive Program Procedures & Definitions
Ø  Film Incentive Bill
Ø  Film Incentive Declaration of Residency
Ø  Film Incentive Proof of Performance

On a national level, filmmakers should be aware of The American Jobs Creation Act passed by Congress and taken effect on October 22, 2004. This Act is the closest thing to a federal tax rebate as possible. Designed to curb the trend of run-away production in the US, this Act is the closest thing to a federal tax rebate as possible. These provisions of the Internal Revenue Service code can be applied to film and television productions in addition to any state incentive plan.

• The incentives are for all taxpayers, including companies, as long as they pay taxes.
• Section 181 - any taxpayer, individual or company that invests in a qualifying film receives 100% loss in the year or years the money is spent.
• The limit is up to $15 million per film and $15 million per episode for TV with a maximum of 44 episodes. The incentive, unless extended, expires at the end of 2008.
• Section 199 applies to film, music, video and all other manufacturing companies. As to music, it would apply only to those who compose, manufacture and receive income from the sale of their music. The same holds true for film and video. The deduction is 3% until 2007, 6% from 2007 to 2010 and then 9% from 2010 on.

For more information on this legislation, please check out the link below:
Ø  Legal Clarification - Courtesy of Funkhouser Vegosen Liebman & Dunn Ltd