We receive weekly calls from film producers inquiring about the film tax credit transfer process and the best way to monetize their credit. Let’s take a look at a few common situations and solutions that Clocktower Tax Credits can offer to producers when they anticipate earning, or have already earned, their Massachusetts Film and Television Tax Credit.
The most common situations we encounter are:
- A producer is considering filming in Massachusetts and needs to monetize their tax credit;
- A producer is in the middle of production or has filed for the tax credit and wants the benefits of the tax credit immediately and not after the film is made;
- A producer has a tax credit in hand and is looking to sell as soon as possible
It is advantageous for producers to contact Clocktower as soon as they know that they’ll be filming in Massachusetts. This creates a number of benefits that producers can realize early on. First, we can either write the producer a Letter of Intent, stating our interest in selling their tax credit. A Letter of Intent is a powerful tool for producers when they approach investors or lenders as the Letter of Intent demonstrates a third party’s involvement and the producer’s ability to partially finance the production. Second, if a producer is already filming, or has a track record of completing productions, we can formally engage the producer and start marketing their tax credit. This is extremely beneficial to the producer because we can identify a buyer for their tax credit even before it is issued by the state. We will draft Purchase and transfer documents, and once the credit is issued, the transfer will occur. If a producer needs the proceeds from the tax credit transaction immediately, Clocktower can facilitate a loan against the tax credit for post-production expenses. Finally, many producers call us with tax credits already issued by the Massachusetts Department of Revenue that they are looking to immediately sell. We have a network of experienced tax credit buyers with Massachusetts Income, Personal, or Premium Tax liability that we contact in order to obtain the best offer to purchase the tax credit. Purchase documents are signed by both parties and the transfer forms are submitted to the state. Once the buyer of the credit receives the transfer confirmation in their MassTax Account or via mail, the buyer wires the funds to the producer to complete transaction.
Producers may note that the Massachusetts Film and Television Tax Credit Program provides for an optional rebate from the state. The state will pay out $0.90 per tax credit dollar to the producer in the form of a rebate check. However, to receive the rebate from the state may take a year or longer. Given this long timeframe, only about 3% of producers elect to use the rebate, while about 97% sell their tax credits on the private market via a broker like Clocktower Tax Credits. Third-party transactions are much more efficient, take about half the amount of time, and can yield higher prices for the producer.
Please call Nathan Howe at (978) 460-4244 or NHowe@ClocktowerTC.com with any questions that you may have regarding monetizing your Massachusetts Film Tax Credit – or to get started!