Receive a 25% Tax Rebate on all direct production and post production expenditures, including New Mexico crew, that are subject to taxation by the State of New Mexico. Eligible productions include feature films, independent films, television, regional and national commercials, documentaries, animation, video games, webisodes, and post-production (including “stand-alone” post production). Non-resident actors and stunt performers will also qualify under a separate tax structure.

Do you qualify?

1. Are you a film production company?
   Definition of “Film Production Company”: a person that produces one or more films or any part of a film.
2. Is your project a “film” or “commercial audiovisual product”?
   “Film” means a single media or multimedia program, excluding advertising messages other than national or regional advertising messages intended for exhibition that is fixed on film, digital medium, videotape, computer disc, laser disc or other similar delivery medium; can be viewed or reproduced; is not intended to and does not violate a provision of Chapter 30, Article 37 NMSA 1978; and is intended for reasonable commercial exploitation for the delivery medium used.

“Commercial audiovisual product” means a film or videogame intended for commercial exploitation

3. Is your production intended for exhibition?
4. Is your production intended for reasonable commercial exploitation?

The following types of productions will qualify as long as you answered YES to the four (4) questions above:

• Feature films
• Independent films
• Television (MOW, pilots, series, reality)
• Documentaries
• Student films
• Short films
• Animation
• Video games (make sure you are an “approved film production company”)
• New media such as webisodes
• Music videos
• Infomercials

Regional and national commercials (proof of national or regional broadcast required) also qualify

Stand-alone post production will also qualify

• Script cannot be obscene in nature. Any non-scripted projects (reality television, documentaries, etc…) or stand-alone post production must submit a treatment/synopsis/storyboard/other medium-appropriate outline and indicate if it involves any potentially hazardous conditions, minors or animals, and is in compliance with state laws.
• A long-form narrative film production shall contain an acknowledgment that the production was filmed in the State of New Mexico.
• Production shall agree to pay all obligations the film production company has incurred in New Mexico.
• Production shall agree to publish, at completion of principal photography, a notice at least once a week, for three consecutive weeks, in local newspapers in regions where filming has taken place to notify the public of the need to file creditor claims against the film production company by a specified date. This information will also be posted on the web site of the New Mexico Film Office until all financial obligations have been paid.
• Production shall agree to enter into a contract with the New Mexico Film Office (Production Tax Credit Agreement), accepting the terms of the above.

Note: Expenditures attributable to a production for which the film production company receives a tax credit pursuant to the federal new markets tax credit program will only qualify for a 20% rebate.

Any of the following “direct production expenditures” (meaning a transaction that is subject to taxation in New Mexico), including:

• Wages or salaries, fringe benefits or fees for talent, management, and labor to a person who is a New Mexico resident for purposes of the Income Tax Act.

A resident is defined under Section 7-2-2(S) NMSA 1978 of the Income Tax act as follows:

"resident" means an individual who is domiciled in this state during any part of the taxable year; but any individual, who on or before the last day of the taxable year changed his place of abode to a place without this state with the bona fide intention of continuing actually to abide permanently without this state is not a resident for the purposes of the Income Tax Act. Additionally, the resident must file Resident or First-Year Resident tax returns. Anyone filing Part-Year Resident or Non-Resident tax returns will NOT qualify.

• Payment to a personal services corporation for the services of a non-resident performing artist (actors and stunt performers only) if: the personal services corporation pays gross receipts tax in New Mexico on the portion of those payments qualifying for the tax credit; and the performing artist receiving payments from the personal services corporation pays New Mexico income tax.

As applied to direct production expenditures for the services of performing artists, the film production tax credit authorized by this section shall not exceed five million dollars ($5,000,000) for services rendered by all performing artists in a production for which the film production tax credit is claimed, meaning collectively, actors’ salaries, including tax, up to $20 million are eligible.

CLICK HERE FOR DETAILED INFORMATION ABOUT NON-RESIDENT ACTORS.

• Costs of a story and scenario to be used for a film if writer is a New Mexico resident
• Costs of set construction and operations, wardrobe, accessories, and related services
• Costs of photography, sound synchronization, lighting, and related services
• Costs of editing and related services
• Rental of facilities and equipment (including location fees)
• Leasing of vehicles, not including the chartering of aircraft for out-of-state transportation; however New Mexico-based chartered aircraft for in-state transportation directly attributable to the production shall be considered a direct production expenditure
• Food and lodging
• Commercial airfare if purchased through a New Mexico-based travel agency or company for travel to and from New Mexico or within New Mexico that is directly attributable to the production
• Insurance coverage and bonding if purchased through a New Mexico-based insurance agent
• Post-production expenditures that are directly attributable to the production of a commercial film or audiovisual product, for services performed in New Mexico; and subject to taxation by the State of New Mexico
• Other direct costs of producing a film in accordance with generally accepted entertainment industry practices

New Mexico Taxation and Revenue Department (TRD) Film Production Tax Credit
Section 7-2F-1 and 7-2F-2 NMSA 1978
http://www.tax.newmexico.gov/SiteCollectionDocuments/Tax-Library/Statutes-and-Department-Directives/Recent-Regulation-Changes/Film_Production_Tax_Credit_Act.pdf

• Nonresident performing artists (actors and stunt performers only) will qualify. For details, see “What Qualifies?” and our FAQs. Fringes for non-resident actors do not qualify.
• Other nonresident ATL such as directors, producers and writers do not qualify.
• Non-resident crew members do not qualify; however, their per diem and housing do.
• Employee fringe benefits paid to a payroll company do qualify for the tax rebate, including Pension, Health & Welfare, Holiday, Vacation. The following does not: SUI, FICA, FUI and Workers Compensation fee. Workers Compensation Insurance will qualify only if purchased through a New Mexico based agent.
• It is not necessary to register the production company (filing entity) to do business in New Mexico. Tax & Rev will use your Federal ID number (or social security number if individual) to process the rebate/return.
• Only expenditures directly incurred and paid by the qualified film production company (approved and on file with the film office) to the vendor of the services or property will qualify. Expenditures incurred and paid by a third party and claimed by the qualified film production company will not qualify.
• New Mexico-based chartered aircraft for in-state transportation directly attributable to the production will qualify; however the chartering of aircraft for out-of-state transportation will not.
• Commercial airfare if purchased through a New Mexico-based travel agency or company for travel to and from New Mexico or within New Mexico that is directly attributable to the production will qualify.
• Scouting expenditures prior to production do qualify. (See bullet above when making scouting plans!)
• Expenditures made to Section 501 (c), non-profit organizations do not qualify because these organizations are tax exempt. These include Goodwill, Salvation Army, churches, museums, schools, etc.
• The filing entity (“film production company”) cannot be a non-profit organization.
• Purchases made on the Internet do not qualify unless the seller is located in New Mexico and GRT is attached.
• Payments made to the State or Federal Government do not qualify. This would include permits and postage… Parking lots are the exception and will qualify!
• FedEx or UPS packages will only qualify if they’re being sent from New Mexico.
• Purchases made on Native American tribal lands do not qualify because they are tax exempt. This includes gas stations, restaurants, hotels, etc… located on these lands.
• Cell phone reimbursements when the billing address is outside of New Mexico do not qualify.
• Background talent (Extras) do not need to fill out Declaration of Residency forms. However, New Mexico resident principal talent do need to fill out Declaration of Residency forms.
• Purchases made using petty cash must be documented by vendor receipts. Copy the front of each petty cash envelope and include with your summary report. The vendor to whom the petty cash was paid is needed, not the crew member who was given the petty cash.
• Credit card purchases, Fuel cards (location of purchase), Shipping, and P-cards must include backup/detail.

You should verify New Mexico residency before production to ensure that the crew members you are hiring will, to the best of TRD’s knowledge*, qualify for the rebate

Each New Mexico resident employed on your production (excluding Background Talent) must complete a Declaration of Residency (DOR) form, a document which they sign under penalty of perjury stating that they are in fact a New Mexico resident, and which also authorizes TRD (Tax & Rev) to disclose their residency status to the production company, so you can verify their residency status on the front end!

In order for New Mexico residents to be rebateable, they must be filing New Mexico Resident or First-Year Resident tax returns. Residents must also provide proof of residency, which must be one (1) of the following:

a. A copy of last year’s New Mexico personal income tax return (filing as a Resident or First-Year Resident)

b. A valid New Mexico driver’s license

c. Voter registration card

d. Other clear and convincing evidence showing intent to maintain a permanent residence in New Mexico

Please remember that the DOR is just a tool that we have created to assist you in determining residency; it is not a guarantee that the crew member will qualify for the rebate. The film company can choose to obtain additional proofs of residency or set additional criteria – whatever is going to make you feel as certain as you can that they are residents or will be residents!

Tips for preparation of your “bibles” for your Tax Rebate Package!

Keep detailed accounts (“bibles”) in both print and, if possible, on CD, of all rebateable expenditures incurred in New Mexico during pre-production, production and post (if applicable). KEEP ALL RECEIPTS for purposes of the audit.

Here are some guidelines for preparing your Package (For stand-alone post-production, please concentrate on applicable items):

Create three (3) separate comprehensive bibles (for very small projects, having everything contained in one bible is acceptable):

BIBLE #1: Payroll & Declaration of Residency forms: Make copies of each employee’s Declaration of Residency form and proofs of residency (attaching them) and sort alphabetically by last name. If possible, please include a Payroll Summary Report as well.

BIBLE #2: Petty cash: Make copies of petty cash envelope summaries, copying the front of each petty cash envelope and sort by PC envelope number.

BIBLE #3: Vendors/Accounts Payable (AP)/all other transactions: Full vendor names must be clearly visible on ledgers.

• Only include New Mexico rebateable expenditures.
• Preferred format: Excel or any kind of Text format.
• Please include a Chart of Accounts.
• Any credit card purchases must include detail of purchases/vendor names; it can’t just say “Visa.”
• Submit backup for fuel cards (invoices with location address); it can’t just say, “Shell.”
• Submit backup for shipping (FedEx, etc…).
• If qualifying nonresident cast via a “super loan-out,” please include a summary of the transactions: (actors, salaries, and proof of the Gross Receipts Tax being paid).
• Although no other receipts are required at this time*, YOU MUST KEEP ALL RECEIPTS for purposes of the audit.
• *It is advisable for very small productions, such as student films and shorts, to include all receipts with their tax rebate package.
• Do not submit your tax rebate package until you’ve spent every last penny in New Mexico, which includes post production

Please do not begin this process until you are officially greenlit/fully financed and in prep.
Stand-alone post production: Review page 10 first before you begin.

This clear-cut, step-by-step, bomb-proof document was created to make your experience and understanding of our tax rebate process as painless as possible. If you don’t have 20 minutes and need a quick overview, simply head to our Fast Facts or our FAQs. But please,
f o l l o w   t h e   s t e p s when applying.

Step Two: Take 20 minutes and Repeat Step One (We promise – it’s an easy read and well worth it.)

Complete the following two (2) forms. Forms can be found at www.nmfilm.com under “Incentives,” and they’re also included at the back of this document.  There is no deadline to submit these forms; however, we ask that they are submitted before principal photography begins, or for stand-alone post-production, before post has been completed.

1) Film Production Company Registration
2) Production Tax Credit Agreement (Stand-alone post production has a separate form)

Mail, fax or email to:
John Raymond Armijo ¦ New Mexico Film Office ¦ 418 Montezuma Ave. ¦ Santa Fe, NM 87501
Fax: 505.476.5601 ¦ Email: john@nmfilm.com (please do not cc Jennifer)

After we approve the Registration Form, a signed copy of the Agreement will be faxed to you for your records.

Step Four: Submit script

Submit script to the NMFO*. Any non-scripted projects (reality television, documentaries, etc…) or stand-alone post production must submit a treatment/synopsis/storyboard/other medium-appropriate outline and indicate if it involves any potentially hazardous conditions, minors or animals, and its compliance with state laws.

Preferred method for sending script: Final Draft or PDF via email to jennifer@nmfilm.com or hard copy (to support our Green efforts, printing double-sided would be appreciated) to:

Jennifer Schwalenberg ¦ New Mexico Film Office ¦ 418 Montezuma Ave. ¦ Santa Fe, NM 87501

*We may already have your script on file, so check with Jen first before submitting!

Call or email Jennifer Schwalenberg to schedule a pre-production meeting* with the New Mexico Taxation & Revenue Dept. and the New Mexico Film Office. This meeting should include your Head Accountant, Payroll Accountant, other accountants if deemed necessary, Line Producer and/or UPM and/or Production Supervisor. Jennifer Schwalenberg: (505) 476-5610 or jennifer@nmfilm.com

*For budgets under $1M, this meeting is optional.

C O M P L E T E    Y O U R    P R O D U C T I O N

Enjoy our state, be safe, and please contact us if you need any assistance along the way.

(Stand-alone post-production submissions are excluded from this requirement.)

In compliance with the Production Tax Credit Agreement, please provide proof of the following:

“Production shall agree to publish, at completion of principal photography, a notice at least once a week, for three consecutive weeks, in local newspapers in regions where filming has taken place to notify the public of the need to file creditor claims against the film production company by a specified date.” Ads can be of any size. Please include production title, address phone, fax, and/or contact name(s) for your primary or corporate office – not your New Mexico production office, as vendors need to be able to contact you after you have closed your NM office. Please submit this information to John Raymond Armijo at john@nmfilm.com and fax or email a copy of the invoice for all three weeks or send copies of all three ads: (505) 476-5601 fax

This information will also be posted on the web site of the NMFO until all financial obligations have been met. To view a sample newspaper ad, please contact John Raymond Armijo: john@nmfilm.com

Email sharmaine@nmfilm.com for verification that payment of all financial obligations incurred in the State of New Mexico has been made and that you do not have any outstanding financial obligations. The NMFO will provide a letter to TRD confirming that this requirement, per law, has been fulfilled. Until we have confirmation that all financial obligations in the state have been met, we cannot, by law, submit your tax rebate package to TRD.

Please email john@nmfilm.com the following information. Stand-alone post production: please send applicable items. Please send a Word document for the stats (no PDFs please) or paste the info into the body of the email.

PRODUCTION INFORMATION

1. Title of production:
2. Type of production (Feature Film, Television Series, Documentary, etc…):
3. Prep dates AND Number of prep days:
4. Shoot dates AND Number of shoot days:
5. Average New Mexico crew size (per day) for prep:
6. Average New Mexico crew size (per day) for shoot:
7. Estimated total number of New Mexico crew members hired (please include prep crew, construction, caterers, teamsters, production office, etc… Do not include day players or actors)
8. List of all New Mexico cities/towns/Native American lands for locations:
9. Attach to email: Final Crew list and Final Vendor list (for productions with budgets over $1 million only):

10) Total budget:

11) Total dollar amount spent in New Mexico (including New Mexico labor):

12) Total dollar amount spent on nonresident BTL crew payroll while working in NM:

13. Total dollar amount spent in New Mexico on:

a. New Mexico Crew (All New Mexico resident crew: ATL and BTL, plus security, etc…):

b. New Mexico Talent (Principals and Background/Extras):

c. New Mexico Facility/Property Rental: Stage Space, Production Office, Location Fees:

d. New Mexico Lodging/Accommodations:

e. New Mexico Food (Catering, Craft Service, Other):

f. New Mexico Rental Vehicles/Non-Film Vehicles:

g. New Mexico “Rolling Equipment” Rentals (Trucks, Trailers, Cranes, Picture Cars):

h. New Mexico Film Equipment Rentals (Grip, Lighting, Camera, other):

i. New Mexico Construction costs (Lumber, Hardware, Supplies, other):

j. New Mexico Set Dressing:

k. New Mexico Wardrobe:

l. New Mexico SPFX/Props:

m. New Mexico Post Production expenditures:

n. Other New Mexico expenditures (remaining amount):

Why do you need to submit this statistical data when you’re already sending your bibles?
Although we receive your complete tax rebate package, including your bibles, the New Mexico Film Office protects the confidentiality of your financials and does not review any of your reports. This proprietary information is only examined by the New Mexico Taxation & Revenue Department for purposes of the audit.

What will the Film Office do with this information?
This information will NOT be made available to the public on a per-production basis; however, we will release yearly aggregates for categories a – n based on all film/television programs within that fiscal year. We believe this policy will protect truly proprietary information while fulfilling our fundamental responsibility to the people of New Mexico to provide meaningful, accurate data regarding this program.

Complete the following form: Application for Film Production Tax Credit (RPD-41229) Form can be found on the NMFO website: www.nmfilm.com or at the back of this document. The address on this form should be your corporate, home or primary office – not your New Mexico production office, because your rebate check will be sent to the address you list if you do not choose direct deposit.

REVIEW “Tips for Preparation of your bibles” before proceeding!

Physically mail your TAX REBATE PACKAGE (email submissions are not acceptable), which must include:

 Application for Film Production Tax Credit form (RPD-41229)
 Bible #1: Payroll (One printed/hard copy and one CD if possible). Included in the Payroll Bible should be Declaration of Residency forms with proofs of residency attached to the forms and sorted alphabetically by last name. If possible, please include Payroll Summary Report.
 Bible #2: Petty cash: Copies of petty cash envelopes, sorted by PC envelope number
 Bible #3: Vendor/Accounts Payable (If possible, include CD)
 Remember to include:

• Backup for fuel cards (invoices with location address)
• Backup for P-cards/credit cards
• Backup for shipping
• Chart of Accounts
• Transaction summary for non-resident cast (actors, salaries, and proof of GRT being paid)

 For productions over $1M: Submit hard copy Final Crew list and Final AP Vendor list

FEWER MISTAKES EQUAL A FASTER REBATE!

Send your completed Tax Rebate Package to:

John Raymond Armijo
New Mexico Film Office
418 Montezuma Ave.
Santa Fe, NM 87501

Upon review by the NMFO and after confirmation that all financial obligations in the state have been met, this package will be forwarded to the New Mexico Taxation & Revenue Department (TRD). TRD performs an audit and will review your claim line by line. TRD may require receipts or invoices, so please have these available. After a review of the audit, they will return the Application for Film Production Tax Credit form to you with the approved amount.

How long does the audit take?
Depending upon the amount of submissions (TRD performs audits based upon the order in which they are received) TRD projects that the average audit process will take approximately sixty (60) – seventy-five (75) days to complete; however, it is imperative to provide TRD with any documentation immediately upon request in order to stay within this timeframe. Please note this projection is not guaranteed by TRD though they make every effort to stay within this timeframe. After you have signed off on the approved amount and filed your New Mexico tax return (step twelve below), it will take an additional 3 – 4 weeks to receive your rebate.

Step Ten: After you receive your “approved amount” application, file your tax return and wait for your cash

After you receive the form back from TRD with the approved amount, file an income tax return* (Using forms: PIT, CIT, PTE or FID-1). For a quicker check, be sure to check the “REFUND EXPRESS” box for direct deposit.

Filing a tax return is just the mechanism for receiving your rebate. You’re basically filing a “dummy” return.

*If you need help figuring out which income tax return to use, Jerry Montoya (contact info below) can walk you through the process.

Attach a copy of the approved Application for Film Production Tax Credit to your income tax return and send to:

Jerry Montoya
Audit and Compliance Division, Director’s Office
P.O. Box 630
Santa Fe, NM 87504-0630

The credit will then be applied to any tax liability you have incurred (franchise fees, if applicable), with the excess credit refunded back to your production company. Once TRD has received your approved Application and tax return, it will take approximately 3 – 4 weeks to receive your rebate. Sorry, no, we cannot expedite the process.

If you didn’t find your question or answer in this document, please contact:
Jennifer Schwalenberg, Deputy Director, NMFO: 505.476.5610 or jennifer@nmfilm.com
Jerry Montoya, Audit Review, TRD: 505.827.0929 or jerrym@state.nm.us
Mary Ann Fernandez, Supervisor, Film Unit, TRD: 505.827.0919 or maryann.fernandez@state.nm.us

How to apply for Stand-alone post production:

Stand-alone post production

Important Note: Only the producing entity can claim the rebate. If you are hired or subcontracted by a film production company to complete a post-production aspect of a film/media production, the film production company will claim the rebate, not the post-production company. Remember, you must be the “film production company” in order to claim the rebate.

What qualifies? Post production expenditures made in New Mexico that:

• are directly attributable to the production of a commercial film or audiovisual product;
• are for services performed in New Mexico;
• are subject to taxation by the state of New Mexico;
• exclude post production expenditures for which another taxpayer claims the credit

Definition:

“Post-production expenditure” means: an expenditure for editing, Foley recording, automatic dialogue replacement, sound editing, special effects, including computer-generated imagery or other effects, scoring and music editing, beginning and end credits, negative cutting, soundtrack production, dubbing, subtitling or addition of sound or visual effects; but not including an expenditure for advertising, marketing, distribution or expense payments.

This definition of Post Production means that expenditures such as travel, hotel, per diem, etc… normally allowed for the rebate under Production would NOT be allowed when incurred under Post Production.

Process: Complete the following steps:

Step One: Complete.
Step Two: Complete.
Step Three: Complete.
Step Four: Complete.
Step Five: Do not complete. Not required.
Step Six: Do not complete. Not required.
Step Seven: Complete.
Step Eight: Complete.
Step Nine: Complete. See below.

STEP NINE:

Complete the following form: Application for Film Production Tax Credit (RPD-41229)

Physically mail your TAX REBATE PACKAGE (email submissions are not acceptable), which must include:

Application for Film Production Tax Credit form (RPD-41229)
Ledger of detailed post production expenditures

Send your completed tax rebate package to:

John Raymond Armijo ¦ New Mexico Film Office ¦ 418 Montezuma Ave. ¦ Santa Fe, NM 87501

Step Ten: Complete.

NEW MEXICO’S 25% TAX REBATE
HANDY – DANDY CHECKLIST

Before Production:

Collected Declaration of Residency forms and proofs of residency, and verified New Mexico residency through TRD up front
Sent script (for non-scripted projects: synopsis or other medium-related outline)
Sent Film Production Company Registration form
Sent Production Tax Credit Agreement
Pre-production meeting with NMFO & TRD (if applicable)

After Production:

Completed requirement for Newspaper Ad (if applicable)
Confirmed that all New Mexico financial obligations have been paid
Completed Stats (Step Eight)
Mailed the Tax Rebate Package, including the Application for Film Production Tax Credit, to NMFO
If long-form narrative, follow up to ensure that the State of New Mexico receives a credit, a requirement per statute!

After TRD confirms your approved “Tax Rebate Amount”:

Send New Mexico Income Tax Return and copy of approved Application for Film Production Tax Credit to Jerry Montoya at TRD

NEW MEXICO'S 25% TAX REBATE
FAQs - Frequently Asked Questions

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